“If we get to a point where we think we can agree, I certainly will reach out … I’m not sure that I’ll have the power to change minority leadership’s mind on this, but I’ll advocate for it.”
Vermont Governor Phil Scott, who vetoed a historic legislative effort to legalize adult use of cannabis (the first state to do so without a voter referendum); however, Scott is looking forward to the passage of the bill in the summer session if the legislature addresses public safety concerns and provides greater detail into the special regulatory commission.
Source: Vermont Public Radio
“We need a system that will grow and flex with Washington’s maturing marijuana system.”
Rick Garza, director of the Washington State Liquor and Cannabis Board (WSLCB), commenting on the WSLCB’s decision to replace the state’s seed-to-sale tracking software with MJ Freeway. After the WSLCB announced the departure from its previous traceability system, BioTrackTHC, earlier this year, seven companies applied to be BioTrack’s replacement. To read more, check out “A Seed-to-Sale Shakeup” from CBT’s June issue: bit.ly/seed-sale-shakeup
“What they were hoping for was that the state was going to create a monopoly for them.”
Tim Conder, CEO of Blackbird, a logistics company in Nevada, speaking against efforts by alcohol distributors in the state to obtain exclusive rights to transport cannabis once recreational sales became legal. While the ballot measure did provide language suggesting exclusivity, the Department of Taxation claimed there was “insufficient interest” by alcohol distributors for licensing. The early start program is slated to debut July 1, but there are concerns of a delay due to the conflict.
Source: Reno Gazette-Journal
“While recent comments by the Trump administration did have an initial dampening effect on the market, we have seen continued growth … whereby cannabis stocks are still outperforming other sectors.”
Giadha Aguirre De Carcer of New Frontier Data, commenting on the 236-percent growth cannabis stocks had received nationwide in 2016, according to recent evaluations.
Source: Washington Times
Patents are the legal protection for a non-obvious invention, method, design, plant and, in many cases, formulation. Patents allow the holder to exclude any other entity from the practice or use of her invention for a term of 20 years. Patents grant their holders the exclusive rights to use, produce, sell and license their respective inventions or varieties of marijuana to another party.
As in every new industry, the opportunities presented by the respective industry, on which investors can capitalize, are extensive. In the marijuana industry, patentable subject matter may include the development of hybrid cannabis cultivars, unique growing and manufacturing equipment suited to the specific problems of industrial manufacturing of cannabis products, new molecules, compounds and product formulations, distinctive methods of extracting oils, and laboratory and manufacturing software systems, to name a few.
Patent protection is much more readily available than trademark protection. A 2017 report from Envision IP titled “Medical Marijuana Companies Are Rushing to File Patents” indicates that more than 266 marijuana-related patents have been issued to date and another 255 are pending. These patents range from protection related to compounds, formulations and various delivery mechanisms for therapy and treatment to manufacturing processes. Importantly, many of the applications have been filed by emerging pharmaceutical companies that are often specializing in cannabis-related inventions, and a number of large pharmaceutical companies also have patents in the marijuana space, such as AbbVie, Inc. Bristol-Myers Squibb, Sanofi-Aventis and Merck & Co., Inc.
Patenting in the marijuana industry is just at its very beginnings. An estimated 500 patents issuances and applications during the previous few years is very small when put beside the hundreds of thousands of patents that are filed every year in the United States. Yet, these developments, largely taking place since 2009 with the increased legalization of medical marijuana, should be of competitive concern to all marijuana-industry business owners.
Considerations for a Valuable Patent
For those companies that have patentable subject matter, obtaining legal protection or licensing rights from legitimate holders may need to become a high priority. It is so important at the beginning of an industry to stake your claim early to make sure you get it, and to recognize that many inventors may be discovering some of the same things at the same time. In regard to multiple inventors, it was once the case that whoever discovers an invention first was entitled to the rights to it; however, under recent modifications in U.S. Patent Law, we now have a “first-to-file” system, so it is important to file at least a Provisional Patent Application to gain a priority date and be first in the queue.
While patents are being issued, some commentators conclude that issued patents are worthless because they cannot be asserted in federal court—or, in the extreme, may be foolish, as they can be deemed as evidence of illegal activity in the hands of a federal prosecutor. These complications, coupled with the risks to an attorney defending a client in federal court, go well beyond the scope of this article. These are risks that warrant careful consideration.
While trademarks under the Lanham Act (also known as the Trademark Act of 1946), which governs the protections of intellectual property, present marijuana businesses with many highly specific legal obstacles to issuance, patents—with their differing law—are becoming easy to obtain from the federal government.
Nevertheless, cannabis operations have their strategic intellectual property hurdles that must be scaled in the drafting, prosecution and defense of the inventions that many consider to be no less onerous than the difficulties encountered in obtaining a trademark. Patents with broad, defensible rights don’t just fly off the desk of every patent writer, and the strategic thinking that goes into developing a bulletproof patent portfolio is an important part of every truly valuable patent.
It is notable, too, that the inability to sue in a federal court may pertain more to a plant patent than to manufacturing machinery or growing technologies. Federal patents also may be quite valuable, for example, in unfair competition law suits at the state level.
In some cases, trade secret protection—a deliberate formalization and secrecy marking of an invention or method—combined with the status of a nondisclosure agreement (which is very enforceable) may offer better legal protection than that found under patent law. If the legal exposure is disclosed by patenting, or the 20-year term of a patent isn’t long enough, or if others aren’t likely to make the same discovery or creation, and it isn’t likely to be able to be reverse-engineered from a product in the marketplace, and it can be kept secret, it may be wise to consider formal trade secret protection.
Coca-Cola is famous for having protected its unique soda formulation since the end of the 19th century as a trade secret—something that would have never been possible if it had sought patent protection. In addition, most states have trade secret laws that can provide some measure of non-federal protection for inventions.
Irrespective of these emerging patent complexities, many predict a gold rush of patenting during the coming years of this new industry until the scope of opportunity has been pieced out across the industry, with each company holding rights for certain portions of the possible world of intellectual property rights. When and if federal laws change, litigation between patent owners might become commonplace, especially at the level of plant cultivars, molecules and deep chemistry.
Still looking into the future, even more concerning is what corporate America may do. It may just, if the law allows, acquire existing cannabis companies the way food companies acquired natural and organic product companies to gain their revenue streams and their intellectual property, and ride the billions of dollars to trillions of dollars. Owning intellectual property would make the existing cannabis companies more valuable, and if they didn’t wish to be taken over, put them in a place to litigate in their favor.
The know-how to navigate the challenges of IP law to create valuable brands and strategic utility portfolios is essential to the early-stage growth of the cannabis industry and the preservation of its ethos. As in every industry, the spoils go to the most valuable brands and innovative companies.
Dr. Lindsay Moore is the CEO of KLM Inc., a strategic planning and branding consultancy in Colorado that also specializes in the management of intellectual property assets for companies. Dr. Moore is a former Adjunct Professor of Law at George Washington University Law School in Washington, D.C. She is also the co-author of “Intellectual Capital in Enterprise Success-Strategy Revisited,” published by John Wiley & Sons, 2008.
It’s hard to know where you’re going if you don’t know where you’ve been. The ability to compare and reflect on data from your worst crop to your best crop is paramount. You must record every aspect of your cultivation facility, whether indoor, outdoor, greenhouse, all organic or anything in between. Having the ability to compare data from past harvests is priceless. It allows you to analyze the nuances and differences between varying results and attempt to explain any disparity. Record every possible aspect of the facility, even if it’s just hand-written on paper.
Many times, when I ask facility owners if they have an explanation for a given situation, my question is met with a blank stare. When this happens, it’s because a head grower made changes to his crop-production processes without tracking them. Had the data been recorded, the owner would have been able to review all incremental adjustments to determine the cause of a given problem. Most changes in a cultivation environment have cause and effect, both of which could be measured in one form or another by data comparison.
Here is a basic explanation of some of the collectible data you should record and why it’s important.
1. Installation Date of All Light Bulbs: You must determine the point of diminishing returns for all lightbulbs, which have a given life expectancy (number of light hours).
2. Light Intensity: Light intensity levels (which you can check using a light meter) must also be recorded as part of your work schedule. By recording light intensity, you can decide exactly when to replace lightbulbs to ensure maximum intensity and minimize potential yield losses.
3. Periodic Water Analysis: At least two times a year, have your water source analyzed. Both municipal and well-water supplies can slightly deviate from season to season (winter/summer). Record all changes to your water supply.4. Write A To-Do List: Make goals and plan to achieve them. If you plan to expand, ask yourself how you will achieve the goal realistically, and plan your strategy accordingly. By writing the plan with a target date to accomplish it, you can better see where you want to position yourself and get an overall perspective on what you are trying to conceptualize and achieve.
5. Cost of Goods: Record every possible cost of cultivation and business. This allows you to see exactly where you are spending money. You can then make decisions that are more conducive to minimizing unnecessary expenditure and/or waste.
6. Inventory and Tracking Materials Lists: It’s much more efficient to know exactly how much of a given item is on hand and to order more before it’s needed, rather than be forced at the last minute to source whatever is necessary for day-to-day operations. Have all department managers record inventory, and make the purchasing department aware when inventory of any item is close to depletion.
7. Workstation Lists: Department managers should have lists of all materials required to properly maintain their department and to fulfill their given responsibilities. They should be required to submit their list weekly to the purchasing department to ensure seamless workflow.
8. Power Usage—Peak Versus Off-Peak: By determining exactly when you are utilizing the most expensive rates, you may be able to slightly alter some operations or aspects that could ultimately save capital. Preferably, you may choose to use a battery storage system that allows you to offset energy costs by charging during off-peak hours so you can use stored energy during peak-demand (higher-cost) hours.
9. Water Temperature: Record temperature of water given to any plant. Neither too cold nor too hot is best, in that both excesses hold less oxygen. At 62°F, water holds maximum oxygen, but 62°F is slightly cooler than plants prefer. Yet, very hot temperatures are not preferred either. In addition to holding less oxygen, water that is too warm promotes bacterial, fungal and viral growth. Therefore, a water temperature between 65°F and 70°F is preferred. Recording water temperatures simply gives you another piece to the cultivation puzzle.
10. Potential of Hydrogen (pH): Keep accurate records of water before and after any nutrient or amendment is applied, as well as any adjustment of pH up or down to reach the desired level. As a water source changes, the adjustments require change as well.
11. Water Parts Per Million (ppm): Record ppm of water before and after any nutrient or amendment application for all stages of growth.
12. Nutrient Log: Document every aspect of nutrient application. How much, of what, the day it was applied, etc. This goes for every stage of growth for every amendment, whether it be organic or salt-based, indoor, outdoor, greenhouse or even compost teas and foliar feeds. Record/log every possible variable.
13. Daily Activity Log: Record daily activities of every aspect of each of your departments and growth environments, from work performed, to the number of hours it took to accomplish each task. Within such accumulated data, you can see exactly where the most time is being spent and all associated costs of performing a specific task. Often, this can lead to streamlining certain aspects of your production.
14. Air Temperatures: Record the highs and lows of outside ambient temperatures, as well as the highs and lows in any given 24 hours for all cultivation environments. Monitoring and recording the nighttime environment is just as important as monitoring the daytime environment. You must always understand what is taking place at night so you can adjust accordingly.
15. Humidity: Log the humidity highs and lows of the outside environment as well as the highs and lows of any given 24 hours for all cultivation environments. Record both daytime and nighttime highs and lows. Again, monitoring the nighttime environment is just as important as monitoring daytime levels. Plants transpire and release moisture at night, as well as during the day, so humidity levels may become elevated and promote conditions conducive to fungal or mildew growth and proliferation.
16. Air Content: Record and log all possible air-quality levels. CO2 and oxygen levels must be constantly monitored and recorded. Ethylene gas can build up, and be detrimental and counterproductive in many stages of plant growth. You must have proper airflow and accurately monitor air quality. Proper airflow will also aid in air-moisture-buildup prevention.
17. Dissolved Oxygen (DO) Levels of Water and Oxygen Content: Record and constantly monitor oxygen levels in all water that will be used on plants. Factors such as water temperature will affect DO levels in water. Companies exist that manufacture and sell equipment that provides perfect oxygen levels on demand.
18. Yield Per Square Foot of Plant Canopy: The only way to know if your facility is improving or not is to record the amount of usable cannabis produced in each area. Each individual room, plot or greenhouse is a separate entity with its own unique nuances. Therefore, all rooms and environments are not exactly the same. A small degree of variation always exists. Each environment is separate and should be recorded and logged as such.
In the end, you will have accumulated a lot of data, and the data’s value is limited only by a grower’s ability to interpret that combined data and to implement any required refinements. Ideally, the data should be automatically recorded on a computer platform that would allow you to compare the best harvest to the worst harvest, which gives a true perspective on why one crop did better than another.
This also can be invaluable when there is a problem or when something goes wrong. When a problem arises, you must have recorded data to reflect upon and hopefully find the cause. The goal is to give the plant exactly what it wants exactly when it wants it. Nothing more, nothing less and precisely on time. Why give the plant an element in the nutrient mix when the plant is not going to utilize it? Applying nutrients the plant won’t use in any given growth stage is a poor use of your resources and, basically, is wasteful. You would be paying for an element that wasn’t utilized. On a large scale, small expenses compound rapidly and contribute to your overall cost of production. For as much as we know about the mineral requirements of a given cultivar of the cannabis plant grown in a given environment, there is much more to be learned when laws allow for the true study of exact requirements.
An anomaly is defined as something that deviates from what is standard. I have seen many anomalies regarding cannabis cultivation in my 35 years of commercial production. I have data tracked consistently for 10 years.
One specific incident I can’t get out of my head is a time before I began my extensive documentation, when a friend had 63 plants that were ready to begin flowering, about 15 years ago. He could not keep the plants, and called to ask if I would take them and finish them. By the time I took possession, they were neglected. They had been in his van for three days with nothing more than a single, 100W incandescent bulb as a light source. The growing media had dried out, and the plants desperately needed water.
When the plants finished flowering approximately eight weeks later in my facility, 15 of them had performed exceptionally well. All the same cultivar, all the same growth conditions—the same everything (as far as I knew without data to support it)—yet these 15 were amazing standouts. Not that there was any perceivable negative to any of the other plants. It’s just that these in particular had twice the bud weight, twice everything. But why?
This is the question I often ask myself. Although that situation took place years and years ago, it is still in the forefront of my mind. The experience taught me that for all that is known regarding cannabis production, there is so much more we can discover if we take the time to carefully analyze our production methods.
Kenneth Morrow has been writing cannabis-related articles and books for more than 20 years. He owns Trichome Technologies, a cannabis R&D company. Morrow also is an award-winning grower and breeder. Has made contributions to many of today’s extraction methodologies and holds multiple patents. He consults on all cannabis-related subjects. Find him on Facebook at: Trichome Technologies or Instagram: TrichomeTechnologies.
Cannabis legalization is not exclusive to North America. So far, 21 countries or territories have legalized cannabis fully or partially for medical and/or adult use. Cannabis Business Times compiled a brief snapshot of the laws in those with established regulations. (Note: Countries that have decriminalized possession for small amounts of cannabis and the U.S. are not included.)
Argentina – Status: CBD legalized/Partially medically legalized/Decriminalized
Medical cannabis has been legal in Chubut and Santa Fe Provinces since late 2016. In March, the Argentinian senate legalized cannabidiol (CBD) oil for treatment of certain conditions, including epilepsy. The national medical authorities are the only group allowed to produce and distribute the medicine.
Australia – Status: Medically legalized/Partially decriminalized
Federally legalized production of MMJ on Feb. 24, 2016, and use of MMJ on Nov. 1, 2016. First federal research license granted Feb. 17, by The Office of Drug Control in the Federal Department of Health.
Canada – Status: Full federal legalization
Canada legalized medical cannabis use and cultivation in 2001. The program, which licenses cannabis producers, is regulated by the Marijuana for Medical Purposes Regulations by Health Canada. The country is preparing to legalize adult-use by July 1, 2018.
Chile – Status: Medically legalized
Chile legalized the cultivation of medical cannabis in 2014. Cultivators must get a license from the Chilean Agriculture Service. Sale of medical cannabis is only allowed through prescription at pharmacies.
Colombia – Status: Medically legalized/DecriminalizedOn Dec. 22, 2015, President Juan Manuel Santos signed a bill into law to regulate the medical cannabis industry. It is now fully legal to grow, process, import and export medical cannabis and cannabis derivatives if you possess a federal license from the National Narcotics Council and/or the health ministry.
Croatia – Status: Medically legalized
Legal for certain conditions such as cancer, multiple sclerosis, AIDS. MMJ is currently imported.
Czech Republic – Status: Medically legalized
Since 2013, MMJ has been legal in the Czech Republic. In the first year of the program, federal authorities imported medical cannabis products to sell at pharmacies. Today, licensed cultivators grow cannabis for the state.
Germany – Status: Medically legalized/Decriminalized
Earlier this year, Germany began importing medical marijuana (MMJ) from Canada as part of a recently expanded program. Potential cultivators are vying for government licenses, and current patients may pick up their prescriptions at pharmacies.
India – Status: Federally illegal, but legal in some states
While cannabis (often called “ganja” in India) remains federally illegal, it is reportedly widely tolerated, and several states have their own laws legalizing cannabis for possession/use or sale.
Israel – Status: Medically legalized
Long a center for cannabis research, Israel legalized medical marijuana in the 1990s. In 2004, it began experimenting with THC as a treatment for PTSD in its military members. There are currently eight licensed producers, and patients can get their prescriptions filled in company stores or medical centers.
Italy – Status: Medically legalized
Italy legalized cannabis for medical use in 2013. Currently, production is limited to a military operation in Florence called the Military Pharmaceutical Plant. The Army sends final medicine to pharmacies across the country, where patients with prescriptions can purchase medicine.
Jamaica – Status: Partially medically legalized/Decriminalized
In February 2015, an amendment to the Dangerous Drugs Act was passed in the House of Representatives, making minor possession a civil penalty and opening the door for a regulated system of permits and licenses, as well as use for medical, therapeutic and religious purposes.
Macedonia – Status: Medically legalized
Legalized in 2016, medical marijuana in Macedonia is already attracting international investors. A U.S.-based group, NYSK Holdings, has invested in a cannabis oil-producing plant in the Balkan country. Production is regulated by the federal authorities who issue licenses to select operators.
Mexico – Status: Medically legalized/Decriminalized
A recent law change saw cannabis legalized for medical purposes in Mexico. In April, the Mexican Chamber of Deputies approved a Senate measure legalizing the plant for medical use. Regulation and policies are being set by the country’s Health Department.
Philippines – Status: Medical cannabis legislation in progress
[Updated March 2019.] The House of Representatives is debating HB 6517, which would legalize cannabis in all forms for medical use.
Poland – Status: Partially medically legalized
While cannabis is still illegal in Poland, health authorities have been issuing reimbursements for the purchase of medical cannabis. Medical cannabis products are imported from other countries. Currently no laws regulate nor legalize the domestic production of cannabis.
Puerto Rico – Status: Medically legalized
An executive order signed by the governor legalized the medical use of cannabis in 2015. Only groups licensed by the U.S. territory may cultivate medical cannabis. Dispensary sales began early this year.
Turkey – Status: Medically legalized
Turkey legalized cannabis for medical uses in October 2016. Cultivation is allowed in select provinces, although any province can host a cultivation facility for scientific purposes if the federal authorities allow it. Licenses are government-controlled and valid for three years.
Uruguay – Status: Legalized
Uruguay legalized cannabis in all forms in 2013. Consumers must be 18 years old or older, and residents of Uruguay and must be registered with federal authorities. Cannabis sold in the country is produced by the federal government.
Cannabis Business Times’ interactive legislative map is another tool to help cultivators quickly navigate state cannabis laws and find news relevant to their markets. View More