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New Prop 65 Regulations Are Active!

As of August 30, 2018, California businesses must adhere to the new regulations relating to Prop 65 warnings. By way of background, The Safe Drinking Water and Toxic Enforcement Act of 1986 (a/k/a Prop 65) requires businesses to notify Californians about significant amounts of chemicals in the products they purchase, encounter in their homes or workplaces, or that are released into the environment. Businesses are required to provide a “clear and reasonable” warning before knowingly and intentionally exposing anyone to a listed chemical. Prop 65 allows for private enforcement actions if it is brought “in the public interest.” This indefinite standard has notoriously been exploited by persons seeking attorneys’ fees and settlements rather than improving public safety. In particular, the cannabis industry has experienced its fair share of Prop 65 enforcement actions. For example, in May 2017, a single person sent approximately 700 60-day warning notices to dispensaries, alleging Prop 65 violations due to the presence of Prop-65 listed fungicides and insecticides in edible products. Failing to provide Prop 65 notices can result in penalties as high as $2,500 per violation per day. Due to this enforcement risk, many dispensaries and delivery services are requiring that all products have a Prop 65 warning, regardless of the type of product or if the product does not, in fact, contain any of the Prop 65 chemicals. However, Prop 65 does not apply to all cannabis business or products, therefore, it is essential to understand when (and if) Prop 65 applies, and how to comply. Prop 65’s warning requirements do not apply to: Businesses with less than 10 employees Products that do not...

3 Recalls, 1 Month – Be Prepared!

For anyone in the California cannabis business, July 1, 2018 marked the beginning of a new era of cannabis regulations. In addition to more stringent packaging and labeling requirements, cannabis flower and cannabis products must also now be tested for a second more expansive list of pesticides, as well as residual solvents and foreign materials. While all testing labs adhere to the same set of regulations, there are no standardized methodologies for how labs test for cannabinoid concentration, composition, and contaminants. The lack of standardization is leading to inconsistent testing results and clearly presenting major problems for cannabis producers, evidenced by 3 voluntary product recalls announced within less than 1 month. On July 25th, The Bloom Brand voluntarily recalled a batch of cannabis products that contained Myclobutanil, a fungicide commonly found in food production. The Bloom Brand has not yet explained how the contaminated products made it past laboratory testing and into over 100 retail stores across California. Two days later on July 27, Lowell Herb Co., a producer of cannabis pre-rolls, voluntarily recalled a batch of products from 74 California dispensaries. Interestingly, the recalled product batch was initially cleared for sale after being approved by two different testing labs. However, two weeks after the batch was initially approved, results from a third test reversed the decision for failing to pass the state’s testing standards. The contaminant in question was not identified. On August 19, Venice Cookie Company initiated a voluntary recall of its cannabis-infused beverages due to a change in the passing grade of its compliance testing. The product batch initially passed testing in June, but a month...

Guest Blog: Protecting Cannabis Strains with Plant Patents

In this post, guest author Jeremy Kapteyn, Ph.D., from Rose Law Group, discusses using plant patents to protect new & distinct strains. Evoke Law has also written about protecting strains: “Branding a Cannabis Strain: Don’t Reinvent the Wheel” in mg Magazine’s April/May 2018 special branding issue. Cannabis breeders, cultivators and others developing cannabis genetic resources are almost invariably surprised to learn that cannabis plants are protectable under U.S. patent laws, notwithstanding their illegal status under the Controlled Substances Act (CSA). While the interplay between the CSA and federal trademark laws effectively prohibits federal registration of marks covering goods and services directly related to cannabis products, since registration requires use in commerce, which is unlawful under the CSA, the patent laws have no such use requirement. Thus, the CSA does not preclude the availability of patent protection for cannabis-related inventions, including cannabis plants themselves. Not only can cannabis plants be patented, but they are eligible for two different types of protection: utility patents and plant patents. This article focuses on plant patent protection and provides practical insights into how plant patents can be commercially valuable to cannabis breeders and cultivators. Plant Patent Eligibility Requirements 1. Asexual Propagation A key element of eligibility for plant patent protection is the ability for the plant to be asexually propagated (i.e., multiplied without using seeds). This includes any non-seed methods of propagation, such as by rooted cuttings (a propagation method routinely used for cannabis), as well as tissue culture propagation, which is of increasing interest in the industry. 2. “Distinct” & “New” The other key elements of plant patent eligibility are that the subject...

Branding a Cannabis Strain: Don’t Reinvent the Wheel

Originally published in the April/May 2018 edition of mg Magazine.  Before you name a strain, you need to know the strain name and the brand name are not the same. A brand name or trademark does not communicate “what” the product is, but rather “who” is providing it, meaning, a trademark doesn’t tell you about a product, but instead communicates the source or origin. When selecting a trademark, always aim to choose a term or phrase that is both distinctive and exclusive, staying away from names that are descriptive, deceptively misdescriptive, or confusingly similar to state or federally registered marks, an applied-for mark, and common-law (unregistered) marks that are used for related goods or services, as well as famous trademarks, which enjoy an even broader scope of protection. If you select a trademark that is also the name of a strain used in your products, the selected mark would be considered merely descriptive of the product and not protectable for such cannabis products. For example, if an edible product named “Blue Dream” incorporates the Blue Dream strain, the manufacturer would not be able to protect the product name because it is merely descriptive of a product feature. Alternatively, if your cannabis product shares a name with a strain but the product does not contain that strain, the selected mark may be found deceptively misdescriptive if consumers would assume (albeit incorrectly) your product contains the particular strain. Marks comprising strain names such as OG Kush, Hardcore OG, and Charlotte’s Web are examples of popular strains the United States Patent and Trademark Office has found potentially descriptive or deceptively misdescriptive. Unique...

Guest Blog: Opportunities in Canada: Intellectual Property Protections

By: Christopher N. Hunter, Partner, Norton Rose Fulbright  & Fahad Diwan, Articling Student, Norton Rose Fulbright The expected legalization of cannabis in Canada this summer presents unique opportunities for cannabis companies from Canada, the United States and abroad. Most importantly, cannabis companies can register trademarks in Canada that are expressly associated with cannabis. The Canadian Intellectual Property Office (CIPO), the authority responsible for regulating trademarks, permits applicants to apply for trademarks covering all types of cannabis goods or services. This differs from the U.S., where the United States Patent and Trademark Office bars applicants from expressly identifying or implying the applied-for goods or services that “touch the plant.” With new amendments to the Canadian Trademarks Act (the Act), businesses with a license to produce cannabis and cannabis-based products may apply for trademarks for a wide variety of cannabis products without first having sold the underlying products. The amendments remove the ‘use’ requirement from the trademark registration process (this amendment is expected to come into force in 2019), allowing Applicants to register a trademark without demonstrating that they have used it in association with their goods or services. Accordingly, cannabis businesses will be able to obtain trademark protection on a variety of products without first having to develop the product and test it in the marketplace. Irrespective of the proposed amendments, cannabis businesses presently do not need to wait for legalization to register and protect their trademark rights as Canada allows businesses to file applications based on proposed use. The amendments to the Act will also permit cannabis businesses to register a variety of non-traditional marks. Once the amendments are in...

Guest Blog: Insurance Challenges for Cannabis Businesses

As the cannabis industry grows and business challenges proliferate, there are a variety of legal issues that are increasingly of interest to cannabis operators. Evoke Law specializes in trademark protection and brand licensing for the cannabis industry, and also offers a wide range of consumer protection legal services, including packaging and labeling compliance, recall plans, and counseling to avoid making impermissible product health claims. We also leverage our extensive network of diverse legal specialists to offer our clients information and resources that will bring additional overall value. Our first Guest Blog is by Jason Horst, Esq., Principle at Horst Counsel, on the topic of insurance. Cannabis companies keep hearing that they need to “cover up.” However, California’s regulations only require those holding distributor licenses to carry general liability insurance, and those regulations do not require non-distributor licensees to carry any liability insurance at all.  Nevertheless, many California cannabis operators are finding themselves subject to other requirements that they carry liability insurance. For example, some local jurisdictions have begun establishing their own insurance requirements. In November 2017, Los Angeles rolled out an ordinance requiring that every permitted cannabis operator in the City carry products liability insurance. Complying with these cannabis insurance requirements is both trickier and more fraught than it might appear, so it is critical for operators to be diligent on multiple levels. When it comes to local cannabis insurance provisions, it is important to understand that these requirements tend to vary significantly from jurisdiction to jurisdiction. Los Angeles requires all operators to carry products liability insurance, while Long Beach requires public liability insurance. The City of Coalinga has gone so...