Renowned cannabis breeder James Loud plans to spend the next several years developing cultivars specifically designed for pre-rolls and joints.
Cannabis with enhanced shelf life better-suited for prepackaged products should be ideal for the market. The trick is ensuring nobody steals his ideas. And until cannabis is federally legal in the United States, operators have to get creative.
Loud, the founder and CEO of California-based James Loud Genetics, uses advanced breeding and tissue culture techniques to create unique and cutting-edge cannabis strains.
He has several options for protecting his intellectual property in spite of federal prohibition.
These include:
- Plant variety protection through the U.S. Department of Agriculture
- A plant patent through the U.S. Patent and Trademark Office
- A utility patent through the USPTO
But Loud typically protects his IP through licensing agreements with his partners. The contracts, also known as material transfer agreements (MTAs), limit Loud’s licensed partners to cultivation.
“They cannot propagate or replicate – only cultivate,” he said. “It prevents them from replicating without paying you.”
A material transfer contract, drawn up by an attorney, may be cheaper than a patent, but it doesn’t offer the same protection, said Dale Hunt, founder and senior attorney at San Diego-based Hunt IP Law.
“The biggest weakness is that it assumes your material is never going to leak out to someone who didn’t sign a contract with you,” Hunt said. “If I didn’t sign an MTA, and someone obtained a variety and sells it to me, and I don’t know it’s stolen, he can’t sue me for violating the MTA.”
Will legacy breeders face an uphill battle against big cannabis?
As the cannabis industry evolves, legal and IP protections for cannabis plant genetics will become the norm – much like they have for any other commercially available agricultural product, said Dan Michaels, vice president of product at Jaunty.
“Think about the apples lining your supermarket aisles or the new hops in your favorite beer – all these different varieties are backed by years, if not decades, of science, technology and legal processes intended to protect the time and investment required to create unique, commercially viable, consistent, and most importantly, desirable cultivars,” Michaels said.
What’s unique and challenging about cannabis is that breeders are building on the work of those who came before legal markets, he said. The question is whether legacy breeders will be able to protect what they achieved before a legal market existed.
“Will they have the means or even the due process to challenge global publicly traded companies to ensure new varieties are not simply phenotypes of their own pre-existing strains?” he asked.
“I believe we’re just scratching the surface of this chicken-and-egg scenario, but I’m hopeful that the rigorous scientific standards Aurora has set will translate to opportunities for all the trailblazers involved in making cannabis what it is today.”
A European wake-up call for US breeders
Canadian multinational Aurora Cannabis recently secured plant variety rights in the EU for its high-potency Farm Gas and Sourdough cultivars, a move that international cannabis consultant Jamie Pearson said should be a wake-up call for the U.S. cannabis industry.
“I worry that America’s legacy breeders will never enjoy the financial benefits of their work because European companies will protect those genetics before we can do it in the U.S.,” said Pearson, president of Montana-based global cannabis consulting firm New Holland Group.
“The most important genetics in the world have been developed without IP protection. Aurora’s move to protect two strains in the EU demonstrates cannabis genetics are moving into that IP system.”
Aurora’s EU-protected cultivars allow the operator to grow about 40% more flower with the same space and resources it takes to grow other cultivars, Lana Culley, the company’s vice president of innovation and international operations, told MJBizDaily.
“We believe this combination of attributes make them very attractive options for cultivators globally,” she said.
It likely won’t be the last time Aurora applies for plant variety rights. Culley said the company is committed to advancing its medical marijuana breeding program and will continue to advance genetics that set new standards in cannabis cultivation.
“Aurora is pursuing a number of paths for growth internationally, including outlicensing our proprietary genetics to third parties,” she said. “We’ll continue to seek opportunities that validate our scientific leadership.”
Aurora recently exited the adult-use cannabis market to focus on global opportunities in medical marijuana. It’s expanding its German production facility and introducing its proprietary genetics there.
Plant variety protection in the US
While the USDA’s Plant Variety Protection program is similar to the EU’s plant variety protection, it can only be used for hemp.
“We protect hemp varieties that meet the legal limit of no more than 0.3% delta-9 THC,” a spokesperson for the USDA said in an email to MJBizDaily.
Plant variety protection is a form of intellectual property that gives breeders exclusive rights over a new plant variety they have developed.
Similar to a patent, the protection allows the creator to control the production and sale of the seeds or propagating material to ensure they can benefit from their innovation.
The USDA is not involved in cannabis legalization or rescheduling discussions, so it can’t comment on policy changes that may result from those events, the spokesperson said.
Securing plant variety rights is no small feat.
It requires extensive testing to demonstrate distinctness, uniformity and stability – an effort that takes time and resources, attorney Jabari Shaw, an attorney in the Vorys Cincinnati office who focuses on intellectual property development, protection and enforcement.
For smaller breeders and companies, this process can be daunting. However, as the industry matures, more players may follow Aurora’s lead as they recognize the value of protecting their genetics.
“But because of federal illegality and hemp bans, some people are starting to say wait and see how it plays out, while the other half is saying let’s do what Aurora is doing,” Shaw said.
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Weighing the costs and benefits of cannabis patents
Breeders also can protect cannabis varieties through either a plant patent or a utility patent issued by the U.S. Patent and Trademark Office.
While both offer legal protection, the primary difference is in their scope and specific requirements.
A utility patent protects “a new or improved and useful process, machine, article of manufacture, or composition of matter,” according to the USPTO website.
Plant patents are granted “for inventing or discovering and asexually reproducing any distinct and new variety of plant,” according to the USPTO website.
Because patents are expensive to obtain – up to $35,000 for a utility patent – it’s important for a breeder to make sure they really need it, Hunt said.
To do that, breeders should ascertain the value of the cultivar, determine how worried they are about it being misappropriated and figuring out how much they need the recourse offered by defending a patent.
“Because of the cost, and breeders can be very prolific, it’s rare that a breeder is going to want to spend the money on dozens of patents,” Hunt said.
Margaret Jackson can be reached at margaret.jackson@mjbizdaily.com.
