Week in Review: CBD trademark suit, Vermont’s fifth MMJ licensee & DEA chief quitting

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By Kristen Nichols, Bart Schaneman and John Schroyer 

Actress Jessica Alba files a trademark infringement lawsuit against a CBD supplements company, Vermont awards its fifth medical marijuana business license, and DEA chief Chuck Rosenberg is leaving his post.

Here’s a closer look at some notable developments in the marijuana industry over the past week.

Pretty face on an ugly problem

A lawsuit filed by actress Jessica Alba brought some celebrity glitz to a nagging problem for the cannabis industry: Patents, trademarks and intellectual property remain legal gray areas.

Alba’s beauty and wellness business, The Honest Co., sued a Colorado hemp producer who sells CBD skin creams and supplements as Honest Herbal.

Kristy Redmon’s products could confuse consumers, Alba argues in her lawsuit.

Redmon’s lawyer, Aaron Bradford, insists the actress won’t succeed because Honest Herbal isn’t likely to be confused with Alba’s product lines.

No matter the result, the case underscores trademark and patent confusion that will only grow as the cannabis industry does.

The federal government grants patents for genetic material such as genetically modified varieties of corn or soybeans.

But the U.S. Patent and Trademark Office hasn’t awarded a patent to cannabis genetic material, even though hundreds of strain and marijuana-product patents are collecting dust in Washington DC.

Federal trademarks are off the table, too. The agency has ruled that owners of state-licensed marijuana retailers can’t receive U.S. trademark protection because cannabis is federally illegal.

So marijuana operators are cobbling together state-level patents or relying on a so-called “common law” trademark where a company with a distinctive name can seek protection against competitors that come along later.

Cannabis companies can’t even count on trademark protection from each other.

A lawsuit filed by a California marijuana oil company against a cannabis cultivator in Washington state for allegedly using the same name on an MJ product hasn’t been resolved.

The outcome of the two California lawsuits could give industry operators confidence their brands have some legal protection.

Or they could show that intellectual property protection for the cannabis industry is as elusive as accessing banking or financial services.

Vermont on the move

The issuance of MMJ business license No. 5 in Vermont was among several signs pointing to gathering momentum for expansion – possibly all the way to recreational legalization – in the state’s marijuana program.

The immediate changes:

  • The state licensed its fifth company, PhytoScience Institute, which – along with the existing four licensees – will be allowed to open two dispensaries, effectively doubling the number of outlets.
  • Parkinson’s, PTSD and Crohn’s disease were added to the list of MMJ-treatable ailments.
  • Businesses can operate as for-profits, rather than nonprofits.

Once the patient count – currently at 4,609 – reaches 7,000, another business can be licensed to dispense medical marijuana, and that’s expected to happen sooner than later.

“We’re seeing the numbers rise significantly,” said Timothy Fair, an attorney and owner of Vermont Cannabis Solutions in Burlington.

He also was heartened that the newly formed Marijuana Advisory Committee held its first meeting.

“It’s a good sign that Gov. Phil Scott has taken the time to put this together rather than just push it down the road,” Fair said.

He’s confident the adult-use legalization bill and its effective date of July 2018 will pass in January. The measure was vetoed in May and stalled in special session.

If the bill passes, the initial rollout in 2018 would allow adult-use possession and home growing, similar to the Washington DC’s program. Once Vermont regulators develop rules, the next phase would be establishing a fully operational, taxed and regulated recreational program sometime in 2019.

Fair said other factors adding to the momentum toward recreational legalization include adult-use legalization in bordering states Maine and Massachusetts as well as Canada’s impending rec program.

“You’re going to see a very strong push to get this done by 2019,” he added.

New DEA chief on the way

Although outgoing Drug Enforcement Administration chief Chuck Rosenberg was no great friend to cannabis businesses, at least he wasn’t hellbent on crushing the legal MJ industry.

In fact, Rosenberg’s DEA even pledged last year to increase the number of marijuana research permits, despite taking no action to reschedule cannabis.

According to various news reports, Rosenberg is leaving his post because of policy conflicts with others in the Trump administration – perhaps most notably, U.S. Attorney General Jeff Sessions.

Col. Joseph Fuentes – the head of the New Jersey State Police – is being mentioned as a possible successor.

Which begs the question: Should marijuana business executives be worried about Rosenberg’s replacement?

“I would not be real concerned about this, because other than Jeff Sessions himself being a muffinhead, he’s just a guy on a horse and there’s no army behind him in terms of support to go after (the MJ industry),” said Howard Wooldridge, co-founder of Law Enforcement Against Prohibition.

“So if I were a businessman looking at this, I wouldn’t be concerned.”

Wooldridge said that according to his sources – including current law enforcement officers and politicians – the political appetite for targeting state-legal MJ businesses has waned significantly, and that extends to both the DEA and the Department of Justice.

“Everyone, without exception, is saying all signs point to Sessions being reined in,” Wooldridge said of his sources. “He’s not going to be allowed to gallop into Colorado like some cowboy and shoot up Dodge City.”

Wooldridge isn’t familiar with Fuentes but said that doesn’t affect his assessment of the DEA leadership change.

Kristen Nichols can be reached at kristenn@mjbizdaily.com

Bart Schaneman can be reached at barts@mjbizdaily.com

John Schroyer can be reached at johns@mjbizdaily.com