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Tag: Regulatory Considerations in Hemp

Texas Senate Affairs Committee Hearing on Intoxicating Hemp Products

Written by David Sergi on . Posted in Legislative.

I recently had the privilege of testifying before the Texas Senate Affairs Committee which recently held a hearing to discuss the complexities and challenges surrounding cannabinoid products (both consumable and non-consumable). While it was obvious that Senator Perry has real issues with the state of our industry, it was equally clear that the rest of the panel appeared receptive to the voices form our industry.

The hearing attempted to provide a comprehensive overview of the current landscape, touching on various aspects such as regulatory frameworks, health impacts, and law enforcement challenges. The discussion began with an acknowledgment of the Farm Bill passed in December 2018, which legalized hemp by distinguishing it from marijuana. Hemp, defined as cannabis with less than 0.3% Tetrahydrocannabinol (THC) on a dry weight basis, was excluded from the definition of marijuana.

Regulatory Insights from the Department of Health Services

Tim Stevenson (Ph.D.), a chemist from the Department of Health Services, provided insights into the current regulatory framework for hemp products. Smokable products are treated similarly to consumables, with the state prohibiting their manufacture but allowing their sale. Wholesalers are required to obtain licenses, and the department conducts inspections and tests for Delta-9 (D9) THC, though not for other THC isomers. This regulatory focus is primarily on manufacturers to prevent non-compliant products from reaching retail shelves.

Stevenson explained the chemical similarities between D8 and D9 THC, noting that the primary difference lies in the location of a double bond on their molecular structures. Despite this, both isomers bind to the same receptors in the body. He tried to argue without real data that there are many products on the market that exceed the 0.3% THC limit in retail stores rather than at the manufacturing level

Stevenson also shared detailed statistics about the hemp industry in Texas: 642 licensed manufacturers, 3,633 registered hemp stores, and 7,082 retail locations across the state. The department has plans to hire 12 sanitarian inspectors specifically for hemp to ensure compliance and product safety.

Health Concerns and Medical Perspectives

Dr. Robert Emmick, an emergency physician, represented the Texas Medical Association, Texas Pediatric Society, and the Texas Public Health Coalition. He discussed the health implications of THC ingestion, particularly focusing on three categories of patients: pediatric accidental ingestions, acute psychosis cases, and chronic users suffering from cannabinoid hyperemesis syndrome (CHS). Emmick emphasized the severe neurological issues THC can cause in children and the potential for THC to interact negatively with other medications. As an industry, we agree that children should not consume or be able to purchase cannabinoid products.

He advocated for the Department of Health to have jurisdiction over all consumable hemp products to ensure safety and close regulatory loopholes. He also recommended comprehensive labeling of THC products, investment in laboratory testing, and childproof packaging to protect public health. It should be noted that while not endorsing marijuana legalization, the Texas Medical Association supports the Texas Compassionate Use Program and calls for more research to provide evidence-based guidelines for THC use.

Law Enforcement Challenges

Major Mark Nelson from the Texas Department of Public Safety (DPS) highlighted the difficulties law enforcement faces due to the lack of clarity in current laws regarding various hemp-derived products. He admitted that no reliable roadside tests to distinguish between legal hemp and illegal marijuana, and drug-sniffing dogs cannot make this distinction either. Nelson stressed the need for clear legal definitions to aid law enforcement in prosecuting illegal activities related to these products.

Crumbled weed in the shape of Texas and a joint. (series)

Legislative and Policy Perspectives

Senator Charles Perry, an author of the original hemp bill, expressed disappointment with the industry’s exploitation of legal loopholes to produce intoxicating products. He emphasized the need for a simple regulatory approach rather than chasing ever-evolving chemical formulations. Perry suggested that the Texas Compassionate Use Program is a more controlled environment for THC products, ensuring safety and integrity in the supply chain. It is clear that he wants to establish one or two preferred providers for cannabinoids under TCUP. However, he could not articulate a clear vision as it seemed to dawn on him that if they made hemp-based products illegal he would be handling new business to the cartels and other criminal types and undo the good work done to date while opening the market to those that would use fentanyl.  Finally, he also reluctantly acknowledged the negative impact of these legal ambiguities on the agricultural industry’s focus on hemp fiber production.

Senator Jose Menendez pointed out the legalization of hemp with the lack of distinguishable testing methods, made prosecution nearly impossible. This sentiment was echoed by law enforcement officials who highlighted the difficulties enforcement under the current legal framework.

Impact on the Texas Compassionate Use Program and Medical Market

Nico Richardson, CEO of Texas Original Compassionate Cultivation, detailed the challenges faced by the state’s medical marijuana program due to the proliferation of hemp products. He explained that THCa flower, a prevalent product in the hemp industry, While he mentioned that THCa converts to D9 THC when heated. Richardson was really unable to articulate a coherent argument for why hemp should be regulated as opposed to outlawed as his argument was in essence an economically based argument that was a thinly veiled dig at his competition and showed that those in the TCUPS program were interested only in the economics rather than the cost-effective alternative offered by cannabinoids and hemp industry.

It is clear thaty=  availability of cheaper, hemp products has led to a decline in patients within the Texas Original medical program. This trend threatens the future of regulated medical marijuana in Texas, as the hemp market offers more accessible yet potentially safer alternatives so long as the industry is properly regulated by the state.

Research and Development Recommendations

Dr. Peter Stout, President of the Texas Association of Crime Laboratory Directors, explained that testing for cannabis products has become more complex and expensive since the federal legalization of hemp. The turnaround time for lab results has increased from 7 days to up to 120 days due to the need for more detailed analyses. He highlighted the funding challenges faced by crime laboratories, which prioritize more critical drug testing over cannabis due to limited resources. It is interesting to note that when my firm sends products to be tested by KCA or New Bloom the turnaround time is days not weeks and the costs are reasonable.

Balancing Regulation and Innovation

The Texas Senate Affairs Committee hearing on hemp products highlighted the complex interplay between regulation, public health, and industry innovation. The testimony underscored the need for a balanced approach that protects public health, supports law enforcement, and fosters responsible industry growth.

To achieve this balance, stakeholders must address regulatory deficiencies, invest in robust testing, and research, and consider the implications of policy decisions on industry viability and ensuring that hemp is available to our veterans as well as our general population while still being safe and well-regulated. The ongoing dialogue between policymakers, health professionals, and industry leaders will be crucial in navigating the evolving landscape of hemp and cannabis products in Texas.

The committee’s deliberations highlighted the urgent need for clear and comprehensive regulations to ensure the safety and integrity of hemp-derived products. By addressing these challenges head-on, Texas can create a regulatory framework that supports innovation in the hemp industry, growth of the industry and access to the much-needed products to our veterans while safeguarding public health and safety.

Hitting the Mark on Hemp Trademarks

Written by Paul Stevenson on . Posted in Business.

Hemp businesses are booming throughout the nation as legalization is expanding on both the federal and state level. Hemp, or Cannabis sativa L., was banned in the United States for approximately 80 years until Congress passed the 2014 Farm Bill. On December 20, 2018, President Trump signed into law the Agriculture Improvement Act of 2018, more commonly known as the 2018 Farm Bill, which permitted states and tribal nations to participate in hemp production programs and removed hemp from scheduling under federal drug control laws, leading to a resurgence of this non-psychoactive, cannabinoid-rich plant in America.

Due to these recent changes in federal and state laws, hemp goods are being sold into commerce to consumers across the nation. Hemp businesses seeking to capitalize on this monumental legal transition need to ensure that their brand is protected, which can be accomplished by obtaining a trademark with the United States Patent and Trademark Office (USPTO). Easier said than done.

Trademarks Overview

A trademark is a type of intellectual property most often consisting of a word, phrase, or logo that identifies the source of ownership of one’s goods and/or services and legally differentiates such goods or services from others in the industry. Obtaining a federal trademark provides the trademark owner the exclusive right to use the trademark nationwide and allows the owner to pursue an infringement action against others for using an identical trademark or a trademark that is confusingly similar for ordinary consumers.

Regulatory Considerations

The 2018 Farm Bill removed “hemp,” and cannabinoids derived from hemp, such as cannabidiol (CBD), from the Controlled Substances Act’s (CSA) definition of “marihuana.” See 21 U.S. Code § 802. “Hemp” is now defined as “the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids…with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.” 7 U.S. Code § 1639o. Thus, properly sourced hemp and CBD are no longer controlled substances under the CSA. In response to this statutory change, and in light of the growing rates of filings for hemp-derivative goods, on May 2, 2019, the USPTO issued Examination Guide 1-19 for trademark applications for cannabis and cannabis-related goods and services.

The USPTO’s examination guidelines establish that the 2018 Farm Bill removes the CSA as a ground for refusal for registration of trademark applications filed on or after December 20, 2018 (the date the 2018 Farm Bill became law), that include lawfully sourced hemp or CBD goods containing less than 0.3% THC. Where use in commerce commenced prior to December 20, 2018, the USPTO will allow applicants to amend their filing date to that date, and, if needed, to amend their filing basis.

Although the 2018 Farm Bill and the USPTO’s Examination Guide have paved the way for hemp/CBD trademark applications, the 2018 Farm Bill explicitly preserved the United States Food and Drug Administration’s (FDA) authority to regulate products falling under the purview of the Federal Food, Drug and Cosmetic Act (FDCA). The FDA maintains that it is illegal to include CBD and THC products subject to the FDCA, including foods and beverages, or to sell CBD and THC products as dietary supplements, because the substances were investigated and approved as active drug ingredients. See 21 U.S.C. § 331(ll). Consequently, the USPTO, which defers to the FDA’s stance, will refuse registration for any ingestible good subject to the FDCA that contains CBD and/or THC.

In contrast, the FDA has provided guidance on its website that the sale and marketing of cannabis-derived cosmetics is permissible, so long as these goods are not drugs or adulterated, misbranded, or intended to affect the structure or function of the body, or to diagnose, cure, mitigate, treat or prevent disease. In turn, the USPTO currently permits registration of trademarks for hemp-infused cosmetic or topical goods that are compliant with the regulations of the FDA and 2018 Farm Bill. This is an interesting anomaly, as cosmetic goods are certainly subject to the FDCA.

Registering Hemp/CBD Trademarks

The first step in attempting registration of a hemp or hemp-derivative goods or services trademark with the USPTO is selecting a registerable trademark for your goods and/or services. Trademarks are categorized on the sliding scale of distinctiveness, ranging from highly distinctive marks (fanciful and arbitrary, and suggestive marks), to merely descriptive marks, which merely describe an ingredient, characteristic, quality, or feature of the goods or services. See TMEP § 1209.01.

Fanciful marks are those that have been invented solely for functioning as trademarks (e.g., EXXON); arbitrary marks are comprised of terms that have actual meaning but do not suggest or describe characteristics or purposes of the goods or services (e.g., APPLE for phones); and suggestive marks are those that require imagination or thought in reaching a conclusion regarding the nature of their goods or services (e.g., COPPERTONE for sunscreen). See id. at § 1209.01(a). These “inherently distinctive marks” are typically registerable on the USPTO’s Principal Register, assuming availability of the mark. Meanwhile, merely descriptive marks are those that simply describe ingredients, qualities, characteristics, or uses of the goods or services, and such marks are almost always refused registration by the USPTO under § 2(e)(1) of the Trademark Act, 15 U.S.C. § 1052(e)(1). See id. at § 1209.01(b). Therefore, choosing a highly distinctive trademark is advisable, as this increases the likelihood of registration with the USPTO.

Next, it is strongly recommended to conduct a comprehensive trademark search report to ensure your trademark does not present a potential “likelihood of confusion” with any other trademarks. Under US trademark law, “likelihood of confusion” is the standard for trademark infringement. A full domestic clearance search report provides records from both federal and state databases, as well as common law databases, including domain names and company registries and use of similar trademarks on social media platforms and the Internet. If unable to conduct such a report, it is suggested to at least perform a preliminary search on the USPTO’s Trademark Electronic Search System (TESS) to help determine whether a bar to registration from a similar mark may apply; however, this free search is not nearly as thorough as the comprehensive search report and requires complex Boolean search methods to be effective.

Trademark clearances searches prior to adoption of a mark are critically important because commencing use on an identical, or confusingly similar trademark, could lead to getting sued for trademark infringement, a lawsuit that, on average, costs about $375,000.00 to defend. Moreover, based on §2(d) of the Lanham Act, an Examining Attorney may conclude an applicant’s trademark is confusingly similar with a registered trademark regarding the specified goods or services and issue a “§2(d) likelihood of confusion” refusal. See TMEP § 1207.01.

After the appropriate search, you must create an account with the USPTO to apply for the trademark via the Trademark Electronic Application System (TEAS). If the applicant is currently using her trademark in commerce, meaning sales or shipments across state lines to bona fide purchasers, in conjunction with her goods and/or services, the applicant should select the Use in Commerce filing basis under Trademark Act Section 1(a); however, if the applicant is not currently using her trademark, but has a bona fide intention to use it in conjunction with her goods and/or services, the applicant should select the intent-to-use filing basis under Trademark Act Section 1(b). Further information on the USPTO’s mandatory fees and timelines for processing trademark applications and maintaining registrations may be accessed on the USPTO’s website.

As noted above, due to the FDA’s stance regarding the illegality of CBD and/or THC as dietary supplements or additives to consumables, it is not recommended to apply for trademarks that may include such goods or services until the FDA provides further clarity. However, an applicant can strategically position herself to protect her trademark by fully excluding CBD and THC from such goods, apply for the relevant classes, and await said FDA guidance. Currently, registration of trademarks for compliant, non-ingestible CBD/THC goods are permitted by the USPTO.

If the applicant’s trademark includes the phrase “HEMP,” “CBD,” or a similarly descriptive cannabis-related term, a USPTO Examining Attorney may require the applicant disclaim such term. This disclaimer would simply indicate the applicant does not claim exclusive rights to said descriptive portion of the trademark. Lastly, be prepared for any potential USPTO-issued office actions, as the registration process is subjective since different Examining Attorneys are assigned to various trademarks.

Conclusion

Hemp companies should certainly consider filing for a federal trademark to ensure they can protect their brands. Trademarks are appreciable assets, and their worth grows with the company as more consumers begin to recognize the brand. Due to the complexities in obtaining federal trademarks for the cannabis and hemp industries currently, guidance of counsel is strongly recommended.

Paul Stevenson is an associate attorney with Ritter Spencer PLLC who practices trademark law and represents clients in all facets of the cannabis and hemp industries, including dispensaries, growers, processors, manufacturers, retailers, and more.