The deals in Oregon cannabis are getting very big and much of what we do these days involves mergers, acquisitions and cross border work. It’s amazing this happened so fast. Less than four years ago, as the OLCC began writing rules for the adult use marijuana industry, there was a distinct small business tenor to everything. At that time, our Portland office began forming the first of what eventually became a few hundred local cannabis companies. It was an exciting time, and a typical set-up looked something like this: two founders with limited capital, medical market bona fides and maybe credit card debt, would join forces with an investor and her few hundred grand. This crew would then form an LLC or corporation to grow weed on somebody’s property. Today, many of those businesses have disappeared for one reason or another, others are humming along, and a few have really crushed it. Despite all of the consolidation in the OLCC world, though, the small deals and simple structures are making comeback. The only difference is that this time it’s on the hemp side. Oregon has seen a staggering increase in registered growers and acreage this planting season, owing to the new Farm Bill and the CBD craze. So here we’ve been forming small LLCs and corporations again, alongside the seven figure deals– and just in time for planting season. Who would have thought? One commonality among most of these transactions, large and small, is something called “securities.” Simply defined, a security is a negotiable financial instrument (company stock, certain debt instruments, investment contracts, etc.) offered or sold to an investor who lacks real authority to manage the investment. Many of those early Oregon marijuana companies and the new hemp companies have been trading in securities from the outset, even if unaware of this fact. Noncompliant companies have sometimes skated by, but given the liability exposure here–including lawyer liability for bad deals–it’s crucial to get the securities issuance right. Federal and state securities laws are very complex, but they apply even to small businesses (including cannabis businesses) offering or selling a security to even just one person. Federal law requires that the issuer either: 1) register the offering and sale with the SEC (“go public”), or 2) conduct that offering and sale within a registration exemption. Fortunately, there are quite a few exemptions available, but you’ve got to hit the target square. And even when you don’t have to register, it’s a really bad idea not to make extensive disclosures to offerees and investors in conjunction with any solicitation. Finally, in addition to federal securities laws, an Oregon cannabis business issuing securities must comply with Oregon blue sky laws and also the blue sky law of each state in which a purchaser is located. For this reason, our cannabis company clients often end up paying registration fees in other states. Those can add up pretty fast and there may be circumstances where it’s just not worthwhile. All of that said, below are the Oregon small offering exemptions typically used for a new cannabis business, which do not require registration when done correctly. Sales to Accredited Investors An “accredited investor” is an investor with special status under financial regulation laws, generally due to high net worth. ORS 59.035(5) exempts transactions between start-ups and accredited investors from registration, so long as there is no public advertising or general solicitation in connection with the transaction. This is a self-executing exemption, which means that no state filing is necessary to take advantage of the exemption. The “10 in 12” Exemption ORS 59.035(12) exempts from Oregon registration requirements transactions that result in not more than 10 purchasers within Oregon during any consecutive 12 months. Note that accredited investors do not count as “purchasers” here. Repeat transactions with the same purchaser during a 12-month period also do not increase the number of purchasers (in other words, each purchaser is counted as one purchaser for the 12-month period). To use this exemption, no commission or other remuneration can be paid, and no public advertising or general solicitation can be used. Federal Rule 506 (Regulation D) Offerings If you’ve made it this far, I’m not going to thrill you with an outline of SEC Rule 506; instead, there is a good overview of allowed offerings here. Suffice it to say that in Oregon, for any Rule 506 offering, ORS 59.049(3) provides that the local start-up must, within 15 days after the first sale in the state, file a completed Form D (including the state signature page) with the Oregon Securities Division. There is also a $250 filing fee requirement. The bottom line is that very often, new Oregon cannabis businesses raising money are subject to securities laws. That is true even if the business intends to break federal laws by trading in marijuana, and even if the business is taking on investment (equity, loan, whatever) from just one person. With a new wave of cannabis businesses coming online, it’s important to get it right. The alternative may be getting sued for securities violations–or even cannabis investment fraud–and that’s no fun at all. from https://www.cannalawblog.com/oregon-cannabis-securities-raising-money-right/
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We have been closely following California’s commercial hemp cultivation licensing law since it was proposed last year as Senate Bill 1409 (see here, here, and here). In March, I wrote about some of the roadblocks to implementing SB-1409’s commercial hemp cultivation programs, and the lengthy review process of the California Department of Food and Agriculture (“CDFA”) regulation which would allow hemp cultivators to register with their county agricultural commissioners. The CDFA’s regulation was recently approved, and as of April 30, 2019, the CDFA posted applications for registration for commercial hemp cultivation and hemp seed breeders (see here and here respectively). It looks like these respective apps will not be submitted to the CDFA directly, but will instead be provided to county agricultural commissioners in the county in which a cultivator or seed breeder wishes to cultivate hemp. Applicants for commercial cultivation must provide basic information about themselves, as well information about the cultivation site, the purpose of the site (cultivation v. storage), GPS coordinates and other information regarding the site, a boundary map, and certain information about seed cultivars. The seed breeder application is relatively similar. Despite the fact that these applications are now live, it’s not completely clear how they will be implemented. There are a number of counties in California that restrict or prohibit hemp cultivation. The memo attached to the application itself identifies a number of counties with restrictions: Amador, Calaveras, Glenn, Humboldt, Lassen, Marin, Mariposa, Mendocino, Merced, Modoc, Mono, Monterey, Napa, Nevada, Orange, Placer, Sacramento, San Bernardino, San Joaquin, Santa Barbare, Shasta, Sierra, Siskiyou, Sonoma, Tehama, Trinity, Tulare, Tuolumne, Yolo, and Yuba. Since the application is so new, we haven’t evaluated which of these counties fully prohibit cultivation, but it’s a safe bet that if any of them do fully prohibit it, their agricultural commissioners are probably not going to accept these applications. But what about counties that don’t say anything or only have some minor restrictions? It’s not clear yet whether counties will try to delay implementing hemp cultivation by claiming that they need to establish local protocol for registration. Ultimately, each county may do something different, and it will take time before we know what the full effect of the law is. It’s also not clear how this will be impacted by the federal Agricultural Improvement Act of 2018 (or “2018 Farm Bill”). I summarized parts that law in my previous post linked above, but notably for this post, hemp produced per the former 2014 Farm Bill will be permissible. The 2014 Farm Bill doesn’t explicitly allow commercial cultivation, and so it’s not clear how this will play out. What is clear is that once the U.S. Department of Agriculture begins accepting state hemp-production plans for review per the 2018 Farm Bill, California will need to send its plan for review by the USDA. This could affect registered hemp cultivators, but as per usual, it’s not clear how that will happen just yet. Stay tuned to the Canna Law Blog for more details on California hemp laws. from https://www.cannalawblog.com/breaking-news-california-opens-up-for-commercial-hemp-cultivation/ Cannabis and Immigration: Marijuana Activity a Conditional Bar to Obtaining U.S. Citizenship5/1/2019 On April 19, the U.S. Citizenship and Immigration Services (USCIS) announced that it would formally update its Policy Manual regarding how cannabis-related activity–even when it took place in states that have legalized the medical and recreational use of marijuana–would impact naturalization. The Policy Manual is self-defined by the USCIS as its centralized online repository for immigration policies. It serves as a guide for immigration officers to follow when adjudicating applications and petitions. Prohibited cannabis-related activity, as we explained previously, includes possession, prior use, as well as employment or investment in cannabis industry, each of which is deemed a violation of the federal Controlled Substances Act (CSA). In all, it’s a very broad array of exclusionary activity. Lifetime bans on Canadians have increased public awareness that foreign nationals can be deemed inadmissible and refused entry into the U.S. based on their involvement in cannabis-related activity. It is not well-known, however, that such prohibitions may also affect lawful permanent residents of the U.S. (i.e. green card holders). The USCIS’s announcement on Friday, clarifying that cannabis-related activity (including activity that is legal under state law) creates a conditional bar on one’s eligibility to naturalize, is aimed at clarifying this misconception. Naturalization is the process by which a green card holder can become a U.S. citizen upon meeting five core requirements: (1) be a green card holder for the statutory period (at least five years at the time of filing the naturalization application, or at least three years if the green card holder has been married to the same U.S. citizen spouse during that entire time); (2) be physically present in the U.S. for at least half of the applicable statutory period; (3) be continuously domiciled in the U.S. during the applicable statutory period; (4) possess “good moral character” (GMC); and, (5) demonstrate a willingness to actively support the Constitution of the U.S. Of those prerequisites, the focus of this post is the GMC requirement. In order to demonstrate GMC, the applicant must demonstrate a lack of involvement in a series of unlawful activities ranging from felonies to a failure to register for Selective Service. Murder and other felonies result in a permanent bar to naturalization, meaning that the applicant will forever fail the GMC requirement regardless of how far back in the past the criminal conduct took place. Apart from felonies, the Policy Manual, in Part F, Chapter 5, includes a laundry list of criminal activities that result in a conditional bar to citizenship, meaning that such conduct within the statutory period will prevent an applicant from naturalizing. Cannabis-related activity is among those crimes. It is important to note that the Policy Manual specifies that an applicant may be conditionally-barred from establishing GMC not just because of “a conviction” for a cannabis-related offense, but also for:
Somewhere, Jeff Sessions is smiling. Failure to establish GMC for any of the above could not only result in a denial of the naturalization application, but also jeopardize the applicant’s ability to preserve the green card, and result in removal from the U.S. The recent update to the Policy Manual also spells out the conditional bar to GMC applies even where the offense may have taken place in a state that has laws permitting “medical” or “recreational” use of marijuana because of its classification as a ‘Schedule I’ drug under the CSA. The updated Policy Manual language is crystal clear:
A conditional bar is difficult to overcome because it requires the applicant to show “extenuating circumstance” about why a particular unlawful act was committed. Such extenuating circumstances must have occurred before or at the time the unlawful act was committed. The Policy Manual explicitly instructs officers to disregard any evidence of an applicant’s subsequent reform, or to evaluate any positive factors about the applicant’s character when making a decision on a naturalization application. With its April 19, 2019 Policy Manual update, the USCIS has shown its zealous commitment to interpreting marijuana use under the 1971 federal CSA in spite of the tide of marijuana legalization that has swept nearly half the states in our union. It’s unfortunate, but green card holders and other affected parties should be warned. from https://www.cannalawblog.com/cannabis-and-immigration-marijuana-activity-a-conditional-bar-to-obtaining-u-s-citizenship/ On April 24, 2019, the United States Department of Agriculture (USDA) announced that the Plant Variety Protection Office (PVPO) would begin accepting applications of seed-propagated hemp for plant variety protection. In the United States, there are three different ways to go about protecting intellectual property associated with plant varieties:
The PVPO is responsible for implementing the Plant Variety Protection Act (PVPA) and will analyze an application to determine whether the variety specified is new, distinct, uniform and stable. Anyone who is the breeder of a unique variety of a sexually reproduced or tuber-propagated plant can apply for plant variety protection. The PVPO grants certificates to protect plant varieties for 20 years (25 years for vines and trees). According to the PVPO, “[c]ertificate owners have rights to exclude others from marketing and selling their varieties, manage the use of their varieties by other breeders, and enjoy legal protection of their work.” The basic requirements for submitting an application under the PVPO program are as follows:
Seed samples are important because they serve as a voucher specimen for PVPO’s use should a question arise about the validity of the subscription. According to PVPO, the samples are sent to the National Center for Genetic Resources Preservation (NCGRP) in Colorado. After analysis, seed samples are placed in long-term storage. In addition to legalizing industrial hemp, the 2018 Farm Bill amended the U.S. Plant Variety Protection Act to add asexually propagated plants, previously not available under the Act. A revision of the U.S. PVPA will be needed and proposed rules are currently under development. It is also important to note that there are penalties, including fines, for claiming that a variety is plant-variety protected when it is not. While we are still waiting for the USDA to develop a regulatory framework for hemp under the 2018 Farm Bill, this update from the PVPO is an indication that we will be seeing regulatory changes of many kinds in the months to come. from https://www.cannalawblog.com/usda-now-offers-plant-variety-protection-for-seed-propagated-hemp/ 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:
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:
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. from https://www.cannalawblog.com/oregon-cannabis-delivery-how-to-enter-the-market/ 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:
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:
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:
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. from https://www.cannalawblog.com/are-cbd-topicals-allowed-in-california/ Some pretty cool news: on Thursday, Vireo Health International, Inc. (“Vireo”) announced that the United States Patent and Trademark Office (“USPTO”) finally issued a Notice of Allowance for its patent application filed back in March 2017 – ““Tobacco Products with Cannabinoid Additives and Methods for Reducing the Harm Associated with Tobacco Use.” Receiving a Notice of Allowance is the final step in the long patent application process (in this case, two years, which seems to be a little above the average). It’s issued when the assigned patent examiner has finished reviewing all the information about the invention (including the description, design, drawings, etc.), and is 100% satisfied that the application is entitled to the patent under the law. Once the Notice of Allowance is issued, all the applicant usually has left to take care of is paying the issue and publication fees (within three months from the date of mailing of the notice of Allowance). In some cases, the applicant might also have to submit revised or final drawings of the invention. Once all that’s taken care of, the applicant will be mailed an Issue Notification that includes the patent number and anticipated issue date. Circling back to Vireo – its website describes the corporation as a “physician-founded, patient-focused company dedicated to providing best-in-class cannabis-based products and unrivaled care.” The subject patent application covers “cannabis-based additives” that can be incorporated into tobacco products to reduce the overall harmful effects that come with tobacco use. This novel application of cannabis covers the use of one or more carefully formulated cannabinoids as harm reducing agents in tobacco products such as cigarettes, cigars, pipe tobacco and smokeless tobacco products. As Vireo’s CEO, Kyle Kingsley, commented:
Not only is this exciting cannabis patent news, it’s also exciting for the general health and wellness space that seems to be gaining more traction every year. Vireo has reported that the potential benefits of this patent, which allows incorporation of cannabinoid additives in tobacco products, includes reduction in irritation, inflammation, and carcinogenicity. Now that the issuance of Vireo’s patent is finally imminent, it’ll be really interesting to see what Vireo achieves through it in the coming years. For more on cannabis patents, check out the following posts:
from https://www.cannalawblog.com/vireo-health-gets-a-patent-win-on-its-tobacco-mitigation-cannabis-product/ 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:
from https://www.cannalawblog.com/top-five-suggested-revisions-to-a-form-lease-for-a-cannabis-tenant/ Last Friday, the U.S. Department of Agriculture (“USDA”) released a statement, in which the agency clarified that the passage of the 2018 Farm Bill rendered the importation of hemp seeds legal. As we previously explained, the 2018 Farm Bill legalized hemp, hemp seeds, and other derivatives by removing them from the Controlled Substance Act. Accordingly, the USDA held that the DEA “no longer has authority to require hemp seed permits for import purposes.” The agency further explained that the statement aimed to provide assistance to U.S. producers and hemp seed exporters who have repeatedly requested assistance from the USDA. Indeed, the USDA received numerous comments pertaining to this issue during its March 13 webinar. Senator Jon Tester (D-Montana) was among some of the commentators who requested assistance with hemp importations. According to the Montana senator, the DEA was blocking Montana farmers from importing hemp seeds. USDA Executive Director, Sonny Perdue, explained that while the USDA was in the process of promulgating rules and regulations, farmers registered under an existing state research pilot program, pursuant to the 2014 Farm Bill, were allowed to import and cultivate hemp. In its statement, the USDA maintained Perdue’s statement and further clarified that the agency now holds authority over hemp seeds and aims “to provide an alternative way for the safe importation of hemp seeds into the United States.” Specifically, the USDA set forth ways in which hemp seeds should be imported from Canada and other foreign countries. Hemp seeds imported from Canada must be accompanied by:
Hemp seeds imported from countries other than Canada, must be accompanied by a phytosanitary certificate from the exporting country’s national plant protection organization to verify the origin of the seed and confirm that no plant pests are detected. The agency further explained that “Hemp seed shipments may be inspected upon arrival at the first port of entry by Customs and Border Protection (CBP) to ensure USDA regulations are met, including certification and freedom from plant pests.” As USDA Commission Purdue has expressed on numerous occasions, the hemp rule making process will take some time given the complex nature of the crop and its close connection with marijuana. However, even if hemp won’t be grown pursuant to the 2018 Farm Bill until regulations are in place, hemp growers who are registered under state pilot programs, and who comply with the newly released importation requirements, are free to import hemp seeds without the risk of DEA enforcement. For additional information on the importation of hemp and hemp seeds, please contact our team. from https://www.cannalawblog.com/usda-expressly-legalizes-the-importation-of-hemp-seed/ 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:
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:
from https://www.cannalawblog.com/cannabis-patents-the-potential-power-of-the-pct-application/ |