USDA Now Offers Plant Variety Protection for Seed-Propagated Hemp

Oregon Cannabis Delivery: How to Enter the Market

In the past year or so, we’ve seen an influx of cannabis delivery businesses enter the Oregon market– specifically in Portland. Those businesses are getting a lot of press, and we have received multiple inquiries from outfits looking to enter this space. Given this growing interest, we thought we would go over some of the basic steps a cannabis delivery company should take before jumping on the bandwagon.

In Oregon, marijuana items may only be delivered to a consumer’s home by an Oregon Liquor Control Commission (“OLCC”)-licensed retailer (“Retailer”) or a Retailer’s representative. A representative is “an owner, director, officer, manager, employee, agent, or other representative of a licensee, to the extent that the person acts in a representative capacity.”

Any person delivering marijuana items on behalf of a Retailer must:

1. be registered in the Cannabis Tracking System (“CTS”) as an “employee” of that Retailer with a valid marijuana worker permit number; and
2. be declared on the required transport manifest as recorded in CTS.

Although drivers must be listed as “employees” in CTS, they do not have to be actual employees of the Retailer. The OLCC requires that any driver who delivers marijuana items to consumers on behalf of the Retailer be listed as an “employee” for lack of a better term in CTS. (You won’t find any of this spelled out in the rules; it’s OLCC policy mostly.) However, it is worth nothing that the Retailer, as the licensee, will be liable for any violative acts or omissions by the driver.

Consequently, the OLCC allows private cannabis delivery companies to deliver marijuana items to Oregon consumers by partnering with Retailers, even if the delivery service does not have a brick-and-mortar presence. Although Oregon law does not expressly provide for this particular type of partnership between a private cannabis delivery company and a Retailer, the Retailer, as the licensee, must ensure compliance with all OLCC rules pertaining to the home delivery of marijuana items.

Nevertheless, cannabis delivery companies should familiarize themselves with OLCC rules as they are about to engage in retail delivery. The most pertinent OLCC rules include:

1. OLCC Approval. Prior to undertaking delivery service of marijuana items, Retailers must obtain approval from the OLCC by filing a Retailer Home Delivery Registration. Therefore, before a company enters into a business agreement with a Retailer, the company should do its due diligence and ensure, at a minimum, that the Retailer (a) possesses a valid OLCC license; and (b) has not been sanctioned for violations pursuant to the OLCC rules.
2. Location of Delivery. A driver may only deliver marijuana items in the jurisdiction in which the Retailer premise(s) is/are licensed. In addition, a delivery may be made only to a residence (i.e., home or apartment, but excluding any residence located on publicly-owned land), which means deliveries are strictly prohibited to dormitories, hotels, motels, bed & breakfasts, or other commercial businesses.
3. Receiving Orders. An order must (a) be placed before 8:00 PM on the day the delivery is to be made; (b) by the person who will receive the order; and (c) contain specific information, such as the requester’s name and date of birth.
4. Delivery Documentation. A Retailer must create a manifest in CTS for each delivery or series of deliveries and must document and retain certain information pertaining to the order and the requester.
5. Delivery Requirements. Deliveries must be made between 8:00 AM and 9:00 PM in a motor vehicle equipped with an alarm system. Every marijuana item must be kept in a lock-box securely inside the delivery vehicle, shielded from public view. Numerous restrictions are imposed on drivers, including: (a) not delivering marijuana items to an individual who is not 21 years of age or older and who is visibly intoxicated at the time of delivery; (b) not making deliveries more than once per day to the same physical address or to the same individual; and (c) not carrying or transporting at any one time more than a total of $3,000 in retail value worth of marijuana items designated for retail delivery.

Cannabis delivery companies should also be aware of the fact that in addition to obtaining OLCC approval, Retailers must generally register with the cities in which their stores are located before they can start operating a recreational marijuana business and delivering items to consumers. However, not every jurisdiction allows it, so companies should consult with knowledgeable attorneys before jumping on the bandwagon of cannabis home delivery.

source https://www.cannalawblog.com/oregon-cannabis-delivery-how-to-enter-the-market/

Are CBD Topicals Allowed in California?

I’ve written quite a bit on the legality of hemp-derived cannabidiol (“Hemp CDB”) products in California over the past few months (see my posts on Hemp CBD in general and my specific posts about Hemp CBD in foods and hemp cultivation). One of the areas I haven’t explored in great detail is topical products, i.e., cosmetics. I will address the murky status of Hemp CBD cosmetics in this post.

If you haven’t read my earlier posts, the gist is that the California Department of Public Health (“CDPH”) has taken a fairly hardline stance against adding Hemp CBD to foods and beverages via its now-infamous FAQs. These FAQs, notably, are based on federal law (the Controlled Substances Act which has since been amended so that hemp is no longer scheduled), but also on the federal Food and Drug Administration’s (“FDA”) prohibition on CBD in similar products (which definitely is still the FDA’s current position). Notably, the FAQs are silent on cosmetics and topical products.

While a bit less clear from the FAQs’ text, the CDPH has authority over certain products pursuant to the California Sherman Food, Drug, & Cosmetic Law (not to be confused with the federal Sherman Act). The CA Sherman Law gives the CDPH authority over foods and beverages, but notably also over cosmetics, which are defined as:

[A]ny article, or its components, intended to be rubbed, poured, sprinkled, or sprayed on, introduced into, or otherwise applied to, the human body, or any part of the human body, for cleansing, beautifying, promoting attractiveness, or altering the appearance. The term “cosmetic” does not include soap.

Under this law, the CDPH could theoretically initiate enforcement actions or assess penalties against companies who sell adulterated or misbranded cosmetics. But until now, the CDPH hasn’t been extremely vocal about cosmetics in California—as is evident by reading the FAQs which don’t even mention them. We aren’t aware of any explicit enforcement actions against Hemp CBD topicals. So while the CDPH hasn’t said Hemp CBD topicals are prohibited, it hasn’t necessarily ruled that out.

Adding to the lack of confusion is the federal position, which my colleague, Daniel Shortt, recently discussed. In a nutshell, the FDA may view a cosmetic product as prohibited if its ingredients or the product itself is unsafe, or if it is intended to be used in a way that makes it a “drug” (i.e., it is “intended to affect the structure or function of the body, or to diagnose, cure, mitigate, treat or prevent disease”). In other words, the FDA hasn’t taken as hardline of a stance against cosmetics as it has against foods and unapproved drugs, but we still have a sense of the FDA’s willingness to crack down on products that aren’t safe or that make medical claims.

In spite of the general confusion in California and with the FDA’s policy statement, at least some clarity may soon be taken away if a new piece of California legislation, AB-228, is passed. If passed in its current form, AB-228 would state:

A cosmetic is not adulterated because it includes industrial hemp . . . or cannabinoids, extracts, or derivatives from industrial hemp. The sale of cosmetics that include industrial hemp or cannabinoids, extracts, or derivatives from industrial hemp shall not be restricted or prohibited based solely on the inclusion of industrial hemp or cannabinoids, extracts, or derivatives from industrial hemp.

What this would mean is that if passed, CDPH could not use the CA Sherman Law to find that CBD-containing topicals adulterated simply by virtue of containing Hemp CBD (the same would also apply to foods). This may lead to more clarity for California CBD companies who have topical products.

That said, it’s not yet clear whether the CDPH would continue to follow federal law even in spite of AB-228 passing. The state may find itself in a position of ignoring federal positions (like it has done with marijuana), or the CDPH may continue to follow federal agencies. Even the California Attorney General’s office has recognized that this could happen:

Even if it [AB-228 passes], it is not clear whether changing California law on this adulteration issue would be sufficient to alter the decision calculus of the CDPH, which has to this point relied on the FDA’s interpretation of federal law. That is, it might be the conclusion of these agencies that federal law still prohibits adding CBD to food or dietary supplements, even where derived from industrial hemp.

Though this is just speculation, I don’t think that the CDPH will follow the FDA if AB-228 passes. The FDA’s policy guidelines are so broadly written that they would prohibit the introduction of marijuana into food products in California—yet we don’t see any state agencies pulling those products. This includes products that are manufactured by CDPH licensees.

It’s also important to point out that even if AB-228 passes, the CDPH will be able to find Hemp CBD cosmetic products “misbranded”. However, this is also probably less likely to occur except in cases where products make unsubstantiated or false claims or are advertised in a deceptive manner. This may very well happen for some Hemp CBD products, which is why it’s important to consult with an experienced attorney prior to marketing or advertising new products.

In sum, the current state of topical Hemp CBD laws in California is less than clear (which at this point should surprise nobody). Keep following the Canna Law Blog to keep up with all California CBD updates.

source https://www.cannalawblog.com/are-cbd-topicals-allowed-in-california/

Vireo Health Gets a Patent Win on its Tobacco Mitigation Cannabis Product

Top Five Suggested Revisions to California Form Leases for Cannabis Tenants

I cringe every time a form lease comes across my desk for a California cannabis tenant. While C.A.R. and A.I.R. lease forms certainly have their advantages (brokers and veteran landlords are comfortable with them, and they can be cheap and efficient if the transaction is simple), because of the complexity involved in leasing to cannabis industry tenants, they do not work for cannabis tenancies. Redlining form leases is messy, and the addenda I’ve seen tend to create conflicts and ambiguity, making the problems with form usage even worse.

Cannabis is a heavily-regulated industry. The standard language in most lease forms not only fails to account for the nuanced requirements in state and local laws and regulations, but in some cases the forms actually conflict with what the law requires.

Because the C.A.R. and A.I.R. lease forms are prepared by real estate broker associations, their primary purpose is to protect the interests of the brokers (ensuring commissions and limiting broker liability).

Any issue not addressed in the lease will be governed by state law. State law tends to be very protective of tenants in residential leases, but provides little protection to commercial tenants.

My best advice is to avoid use of forms altogether when entering into a lease for cannabis activity. But if the landlord insists on using a lease form, here are my top five suggested revisions and issues to be aware of:

1. Notice and Cure Provisions – Tenants Need More Than Three Days

The C.A.R. commercial lease form does not include notice and cure provisions addressing how long a tenant has to cure a violation of the lease before the landlord can move forward with eviction. Accordingly, state law governs the notice and cure process, which is bad for tenants, especially in the cannabis industry. Code of Civil Procedure section 1161 provides that when a tenant violates a lease covenant and the violation is curable, the landlord may serve a 3-day notice to perform or quit.

Three days is generally not enough time to resolve any issue involving a cannabis business. It usually takes at least that long to get even a canned response from a government agency regarding a generic license or permitting question. Actually resolving an issue involving a government agency takes much longer. We have seen cannabis tenants receive three-day notices to quit for various alleged lease defaults, including violating a use clause (where cannabis was not specifically enumerated as a permitted use), storing or using hazardous materials (which becomes a very complex issue when dealing with manufacturing operations), lack of state or local licenses, and operating as a nuisance, among others.

If a landlord insists on using a form lease that lacks a notice and cure period, tenant should negotiate a revision to the form for cure periods of at least 10–30 days for non-monetary defaults, because most types of default cannot be cured within such a short period of time.

2. Express Allowance of Cannabis Activity and Exclusion of Controlled Substances Act

As mentioned above, we have seen many leases that fail to expressly name cannabis as a permitted use (never a good idea for cannabis tenants). While the lease should expressly include commercial cannabis activity as a permitted use, the applicability of federal law, specifically the Controlled Substances Act, should be expressly disclaimed. While it would be difficult for a landlord to evict on grounds that a tenant is violating federal law where commercial cannabis activity is expressly allowed as a permitted use, if cannabis activity is not specified in the lease, then the tenant should at least eliminate the requirement that tenant comply with federal laws.

The C.A.R. form, for example, requires that tenant not “use the Premises for any unlawful purposes, including, but not limited to, using, manufacturing, selling, storing, or transporting illicit drugs or other contraband, or violate any law or ordinance, or committing a waste or nuisance on or about the Premises.” Tenants should strike this provision from the lease, or at a minimum, exclude cannabis and cannabis products from “illicit drugs,” and make clear that “any law” excludes the federal Controlled Substances Act.

3. Inspection and Access Rights – Make Subject to MAUCRSA

Both the A.I.R. and C.A.R. forms provide access rights to the landlord for repairs, inspections, and showing the property to prospective tenants and purchasers, among other reasons. Neither form provides tenants the right to exclude landlord from restricted areas or to limit access only to authorized people in compliance with MAUCRSA. If a landlord or the landlord’s agents enter into the limited access areas in a licensed cannabis premises in violation of MAUCRSA, the state holds the licensed tenant responsible for such violation. Accordingly, tenants should amend the form to make landlord’s access rights subject to the restrictions and requirements in MAUCRSA governing access to licensed premises.

4. Landlord Authorization Required

While every lease is subject to the covenant of good faith and fair dealing, that covenant only gets a tenant so far. In reality, many landlords enjoy collecting premium rents from cannabis tenants but when tenants ask them to provide authorization to a local or state agency in order to enable the tenant to obtain a license, many landlords get cold feet and refuse to provide the authorization needed.

We have seen many cannabis license applicants pay months of premium rent just to hold a spot in a local application process, only to have the landlord back out at the last minute (this happens far more frequently when the relationship is governed only by an LOI and not a full lease). In order to avoid any ambiguity and to ensure that the cannabis tenant will be able to submit all necessary documentation to obtain a local and state license, the lease should expressly require the landlord to provide the property owner authorization as required under state and local laws.

5. Hazardous Materials or Substances – Exclude Cannabis, Cannabis Products, and Substances Used in Production 

Both the C.A.R. and A.I.R. forms prohibit use and storage of hazardous materials. The C.A.R. form does not define “hazardous materials,” while the A.I.R. form provides a broad definition of “hazardous substances” (anything potentially injurious to the public health, safety or welfare, the environment or the premises). Both forms allow usage if the material or substance is necessary in the normal course of the permitted use in the lease. To avoid any confusion and to protect against potential liability, in addition to making commercial cannabis activity an expressly permitted use, tenant should revise the lease to state that cannabis and cannabis products are not hazardous materials or substances, and disclose any potentially hazardous substances tenant intends to use (this is especially true for manufacturers).

This is not an exhaustive list of all issues that should be addressed in a form lease. Ideally, form leases should not be used for cannabis tenancies, but if the landlord insists, cannabis tenants to make sure they make the changes necessary to enable them to run their business.

For more on California cannabis leasing, check out the following:

• Navigating California Cannabis Leases in 2019
• California Cannabis Landlords: More Regulatory Snags to Avoid
• California Cannabis Leasing: Landlord Pitfalls
• California Cannabis Leasing: The Normalization of Cannabis Landlords
• California Cannabis Leasing: Federal Enforcement Is Not The Only Concern
• California Cannabis: Commercial Leasing Changes in New Emergency Regulations
• California Approves First Commercial Cannabis Landlord Insurance Coverage
• California Commercial Cannabis Leasing: Top 5 FAQs
• California Commercial Cannabis Leases: Planning in a Time of Uncertainty
• California Cannabis: In 2018, Resolve to Make Your Leases Better
• California Commercial Cannabis Leases: Will Courts Enforce Them?
• California Cannabis Leases: Five Keys to Doing Them Right
• California Cannabis Leases: The 101

 

source https://www.cannalawblog.com/top-five-suggested-revisions-to-a-form-lease-for-a-cannabis-tenant/

USDA Expressly Legalizes the Importation of Hemp Seed

Cannabis Patents: The Potential Power of the PCT Application

Last week, Canadian corporation Yield Growth Corp. announced that its subsidiary, Urban Juve Provisions, filed a Patent Co-operation Treaty Application (PCT Application) entitled “Cannabis Root Extract, Method of Manufacture, Method of Use.” The PCT Application claims priority to eleven U.S. patents filed in the last year by the company and contains claims to a method of manufacturing cannabis root oil, as well as use of that oil as an active ingredient in various formulas for cosmetics and therapeutics. Penny Green, CEO of Yield Growth commented in the announcement: “Topical products represent a huge opportunity in the cannabis industry. We intend to be a leader in the industry with our use of powerful ingredients like our proprietary hemp root oil combined with our expertise in global brands and international distribution.”

Yield Growth’s PCT Application can be used as a basis for obtaining this patent protection in over 150 countries simultaneously. As the cannabis industry rapidly develops, it won’t be surprising to see a rise in corresponding cannabis PCT Applications as well.

So, what is a PCT Application? It’s essentially a “placeholder” application that establishes a filing date for your invention, which can then be “nationalized” in any of the 150+ countries that are members of the PCT. It can be the first patent application you ever file, or it can claim priority to an earlier-filed application. The process generally looks like this:

1. You file the PCT Application. You will also designate an International Search Authority (ISA), which is the patent office that will perform an initial review of the claims in your PCT application.
2. Your ISA searches for prior art. Remember when we talked about prior art here? Your ISA will identify what it deems to be relevant prior art in an International Search Report (ISR). Your ISA will then issue a non-binding Written Opinion (WO) that contains its view on the patentability of your claims. (If you designate the U.S. Patent Office, it aims to issue the ISR and WO within 9 months of the PCT filing date if the PCT application is the first application, or 16 months from the priority date if the PCT application is a subsequent filing). If the WO is favorable, you can enter prosecution early in some jurisdictions. If the WO is not favorable, you can amend the claims at various points during the PCT process.
3. Your PCT application publishes approximately 18 months after the priority date.
4. Generally, within 30 months (longer in some jurisdictions) from your priority date, you will “nationalize” the application in the countries you desire. Note that there are sometimes substantial costs for translation preparation and application filings in each of your selected jurisdictions.
5. Each of your nationalized patent applications will then follow their own country-specific procedures for prosecution to grant. Your PCT Application itself will expire, and it alone cannot issue as an “international patent” (those don’t exist).

There are various benefits to filing a PCT Application instead of starting off with separate patent applications in each country, including deferral of costs and time constraints and the prior art that necessarily gets created when a PCT Application gets published. Circling back to Yield Growth, this was an effective and efficient way for it to ensure its eleven provisional patent applications in the United States are primed for globalization.  We’ll be monitoring its path through the nationalization process and report back on any cannabis-specific issues that may arise.

For more on cannabis patents, check out the following posts:

• Cannabis Patents: The 101
• How to Read a Cannabis Patent
• Do Cannabis Patents Create Monopolies?
• Mystery Cannabis Litigation Theatre 2017: Future Enforcement of Pot Patents
• Open Cannabis Project: The Fight to Get Marijuana Patents Right
• Breaking News: First Cannabis Patent Lawsuit Filed
• Cannabis Patents are Approaching the Patent Trial and Appeal Board
• Cannabis Patent Litigation Update: Is Extraction and Preparation Prior Art?

source https://www.cannalawblog.com/cannabis-patents-the-potential-power-of-the-pct-application/