Helping Cannabis Breeders Establish Good Business Relationships Through IP Protection: Q&A with Breeder’s Best Founder and CEO Dale Hunt
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Helping Cannabis Breeders Establish Good Business Relationships Through IP Protection: Q&A with Breeder’s Best Founder and CEO Dale Hunt

Hunt shares insight into the new cannabis IP-licensing company and its goals, as well as common issues that breeders face in patenting their genetics and drafting licensing agreements.

July 22, 2020

After several years of operating Plant & Planet Law Firm, working with plant breeders, ag companies and research institutions to protect genetics and cultivation technologies, Dale Hunt realized there was a limit to the services his firm could provide, and cannabis breeders needed more help to commercialize their genetics and work with other areas of the cannabis supply chain.

This led him to partner with cannabis industry pioneers Ethan Russo and Robert C. Clarke to create Breeder’s Best, a cannabis IP-licensing company that focuses on intellectual property protection for independent plant breeders looking to license their IP to global markets.

Here, Hunt, now the founder and CEO of Breeder’s Best, shares insight into the new company and its goals, as well as common issues that cannabis breeders face in patenting their genetics and drafting licensing agreements with other areas of the industry.

Melissa Schiller: What inspired the launch of Breeder’s Best? What is the company’s focus, and what issues in the industry does it aim to address?

Dale Hunt: As I started having conversations with plant breeders, it became really clear that they knew they needed protection for what they had created, but just getting a patent on something doesn’t make it rain money—you still have to have a way to get people to want access to the plant and pay royalties on the patent. Most of these breeders didn’t have any protection on what they produced. Most cannabis breeders didn’t really have good intellectual property protection. The independent breeders that didn’t have tons of money and didn’t have a big network in business needed somebody to help them not just protect their varieties, but bring them out to the market.

I kept finding that there was this limit to what my law firm could do, and that there was more that these breeders needed. I asked one breeder if he’d be interested in working with a sponsor if I could find someone who could help him commercialize his varieties, and he was absolutely intrigued. I thought about that for a while and I talked to a few people in the industry, and the model that’s analogous is to provide a service to breeders that’s somewhat like a record label or a music label for an artist. The independent artist is a creative person who is good at creating things, but they’re not necessarily interested in marketing, production, scheduling and all the legal work. They just want to be able to create. In a very similar way, I think the best plant breeders I know are so focused on that and so passionate that they don’t also want to be running a business. They just want to create great new cannabis varieties.

So, I realized that there would be a lot of benefit to people if somebody created this business. After some conversations about who we could get to lead the business, somebody explained to me that when you have a startup company, it’s important to have the person who has the vision and the passion for it to be the CEO. Ever since then, I’ve been trying to make this go. I had an early conversation with Ethan Russo, and he was very excited for the opportunity to basically crowdsource all this creativity. All these different breeders had all these different things, and [we could] provide an opportunity to them to find the right alignment between what they created and what medical needs are out there or what other market needs are out there.

Last December, we officially launched the company, had a booth at Emerald Cup, met some breeders and put up our website. We’ve built an amazing team. Rob Clarke is on the team and he’s the authority on cannabis ethnobotany and cannabis evolution. There are lots of other members of the team, as well, and I could brag about all of them. We have the capabilities to do some really amazing things to benefit breeders and patients, and to get great cannabis all over the world.

MS: What has reception been like since the company launched in December?

DH: I think a lot of the breeders already knew me through my work as a patent attorney. Everybody knows Ethan. Everybody knows Rob. Their reputation and their involvement in the industry speaks for itself. I think breeders have been happy to see that this is happening. We’ve certainly started as any start-up has to—slow and small. We’ve had a lot of different cultivars submitted to us for review, and we are figuring out which ones we can work with and do a great job with, [and] then we’ll create the intellectual property protection.

One thing I want to mention is even though we’re creating the intellectual property protection for these breeders, unlike a record company that owns the copyright and gets into fights with their artists we are never going to own the patents on what other breeders have created. They will own the patents and we will be their licensee. We will have exclusivity as long as we can do a good job with what they’ve entrusted to us, but we’re not trying to aggregate everybody’s patent rights. We’re just trying to play a vital role in the ecosystem of breeders, farms, nurseries, distributors, product manufacturers, dispensaries, and patients and other users of great flower.

MS: What are some common issues that arise between breeders and other areas of the cannabis supply chain, and how will Breeder’s Best help alleviate these issues?

DH: The breeder needs access to great nurseries and farms. Nurseries and farms are on the lookout for great new genetics that other people don’t have, that already haven’t saturated the market. So, there’s definitely a need to connect those two sides of the equation.

The thing about plants is, you can make a lot of copies of a plant in a relatively short time. If you don’t have some protection around that copying—who has what rights, who owns the rights, who gets paid and how much they get paid—then there are a lot of ways that relationship can go wrong. In addition to connecting those different players in the supply chain, having intellectual property protection defines who has the rights, and then having really good agreements between the parties [ensures that] everybody is very clear about what they have the right to do and what they don’t have the right to do. That just creates lasting relationships.

The other plant breeders I worked with before I got into the cannabis industry had this really well established between themselves, their supply chain and their worldwide licenses. Some people think agreements are a way of lawyering up and getting in the way of doing business, but really, the right kind of agreement helps everybody know what their rights and responsibilities are, and it makes relationships sustainable. We’re really excited about bringing that to the industry with some great new varieties of cannabis.

MS: What should agreements between breeders and the other areas of the supply chain entail? What are some key points that need addressed in those contracts?

DH: One of them is, who has a right to do what? If I’m a nursery, I have a right to propagate this new special variety, and there’s also defined what royalty I will bring back to the breeder for the right to propagate this variety. Then, the nursery sells the plants to farms so they can grow those during that season, and it needs to be very clear that the farms have the right to grow and harvest and that they will pay a fair royalty for access to this really special variety. They also commit that they won’t be doing any breeding with that variety and that they won’t be doing any of their own propagation on the side or anything.

The breeder is pretty far removed from the supply chain in many cases, and in many cases, they just trusted the farms would do the right thing. This is certainly not specific to any particular farm, but it does come up sometimes that a breeder has put his or her work out there, and then they find derivatives of it all over the place—second-generation modifications or crosses, or even the very same thing out there under a different name. That’s something that happens a lot in the industry. It’s not even necessarily a sign of bad faith between the parties, but it’s just that it’s the Wild West. The industry hasn’t accepted the normal way of doing business [and] that these kinds of agreements are in place and govern what each party’s role is and what their rights are.

MS: What is the process for patenting cannabis varieties? Is there anything unique that breeders need to consider since cannabis is federally illegal, or is the process the same as any other industry?

DH: It’s one of the biggest misconceptions in the industry. People think that because it’s federally illegal and the U.S. Patent Office is a federal agency, that they wouldn’t even entertain patent applications for cannabis, but it’s one of the surprises of the way the federal government works. The patent side of the USPTO has always been completely agnostic about the legality of cannabis. They’ve been granting cannabis-related patent applications since the ’40s. They focus on the statute that defines what qualifies someone for a patent, and they let other federal agencies worry about safety or legality.

I could get a new patent on a new drug, as an example, but I wouldn’t be able to go sell the drug because I have a patent on it—I would still have to go through the FDA and prove that it’s safe. The patent office doesn’t try to do the FDA’s job, and it doesn’t try to do the DEA’s job, either. They don’t deal with legality, they just say, ‘This qualifies under the patent statute for protection, so here’s your protection.’ Commercializing is a different thing, but a lot of people don’t even realize that cannabis is patent-eligible subject matter, and indeed it is.

Another misconception in the industry is that all patents are broad and extremely powerful and easy to abuse—if you have some lawyers and some money, you can really dominate the industry with a patent. There are some kinds of patents where that’s absolutely true, but there are a lot more patents that are narrow and focused and just protect one thing. There’s a certain kind of patent called a plant patent that was created just because plant varieties are so different from a lot of other kinds of inventions. It’s most analogous to a copyright on a plant variety. It is infringed if you make direct copies of that variety. If you make cuttings and you clone a variety, that’s an infringement of a plant patent. But having a similar variety that wasn’t cloned from the one that’s protected, that’s not an infringement. It’s as narrow but [as] useful as a copyright. The easiest and the most modest form of plant protection available is a plant patent.

Plant patents, unfortunately, don’t cover all the ways you might want to use a cannabis variety, so there is a broader and stronger kind of protection called a utility patent. A utility patent is the kind of patent that people think of when they think of a patent on a new engine, a new medicine or a new electronic circuit. [Utility patents] just give you flexibility about how you claim what it is you’ve invented and what kind of protection you can seek. You still have to qualify for that protection under the patent statute.

For example, seeds of a variety would not infringe a plant patent, but they would infringe a utility patent. Using a variety for breeding or making an extract would be things that a utility patent would cover. In some cases, it really is important to have that broader form of protection in the utility patent, but there are lots of different potential scopes of the utility patent. The ones that and everybody worries about are the extremely broad ones that cover more than one plant variety. They’re patents that purport to cover a whole chemotype, so any cannabis that has this much THC in this ratio with this much CBD and this much myrcene is within the scope of these patent claims. Whoever got that patent claims they’re the first ones to ever make a plant like that, and the industry would say, ‘Oh no, you’re not.’ Those are the patents that get people worked up because they are broad enough that somebody filing a patent could start to reach into plants that they never created and that may have even existed before that patent was filed. I’m not a fan of those patents. They give a bad name to a lot of patents that don’t deserve that level of alarm or distrust. The kind of patents we want for our breeders will adequately protect their varieties without reaching into things that they didn’t create.

MS: What are some of the company’s shorter- and longer-term goals?

DH: I think one of the most exciting things is working with experts like Ethan and Rob to identify the varieties or chemotypes that the world needs most. Where is it that the need doesn’t meet the available supply? We’ve had about 60 varieties submitted to us, and it’s just thrilling to have our regular submission review meeting and for Ethan to look at the chemotype and say, ‘Oh, look at these terpenes—this is really special.’ Then Rob can tell us about the parents and grandparents, what this variety traces back to in terms of its origins, and say, ‘Wow, this has some interesting ancestry going back to these landraces and this line.’ He knows all about the history of these things.

As we work together to identify what we want our genetic portfolio to be, it’s extremely exciting to have the strength of our team and to be able to say, ‘These things look amazing, like they’ll be in great demand.’ We have an incredible supply chain team, led by Mojave Richmond, who is a longtime business partner of Rob’s, and led by Colleen Byers, who has a lot of experience in agricultural supply chain. Once we say, ‘This variety is interesting enough that we want to work with it,’ they’re going to supervise very extensive test growing to make sure this doesn’t just look good on paper, that this performs really well under these particular circumstances and these growing practices. As we bring a variety to market, it will not just have a great certificate of analysis in terms of its chemical profile, it will also have an owner’s manual of how it grows, where it grows, the best way to grow it and how productive it is.

One of our long-term goals is to have a portfolio of varieties that are suitable for all kinds of uses, as well as different growing environments. For people who are growing cannabis, we can offer them something suitable for their market and their agricultural practices. I think because we’re crowdsourcing all the work that goes into plant breeding and we’re tapping into dozens or even hundreds of different breeders and in most cases, decades of experience in breeding on the part of most of these breeders, that we really will be able to create a pipeline of special varieties that will have an impact on markets all over the world.

Our short-term goal is to get great varieties in the door, start doing deals with the great breeders and put these things into test grows and production in California as soon as we can. But our longer-term goal is to really service markets all over the world and to help these breeders get the recognition and the revenue they have worked so hard for, as well as the stability of their business opportunities because they’ll have good IP protection and agreements behind it all. We want to make all these connections that are going to help patients, breeders, growers and markets all over the world. I think if we can make those connections and make good business relationships possible, then everybody will win.

Editor’s Note: This interview has been edited for style, length and clarity.