Florida inching closer to medical marijuana regulations

Medical marijuana has been a reality in Florida for several years via the “Charlotte’s Web” low-THC path, or, via the path for patients who are terminally ill.  However, as of January 3, 2017, a new path has been created for a much more inclusive class of medical marijuana patients.  The new protocol will not be limited to low-THC or to terminally-ill patients. Rather, it will be available to those with specifically-listed conditions such as cancer, glaucoma, PTSD, HIV, and, a “chronic nonmalignant pain” catch-all condition.  On June 23, 2017, Governor Scott approved Senate Bill 8-A, currently found at Chapter 2017-232 of the Laws of Florida.

While the laws provide a specific framework for the new medical marijuana system, many details are yet to be drafted, which is the current task of the Department of Health’s Office of Medical Marijuana Use.  “But wait, this is an intellectual property blog, why are we writing about this?”  And, “I’ve heard that Florida uses the ‘vertical integration’ model, which limits participants in the industry.”  True.  But, as more patients are added to the medical marijuana registry, more licenses will be added for cultivators and treatment centers (yes, they must be the same entity).  And, we expect that each year there will be adjustments to the regulations and laws as the market takes shape.

So, why is this important from an intellectual property perspective?  For a number of reasons.  For example, as long as marijuana is a Class 1-scheduled substance under the Controlled Substances Act, any cultivation, possession, sale, transport, etc. of cannabis is illegal at the federal level.  It does not matter that Florida is legalizing certain aspects.  Thus, your brand for a medical marijuana product is likely unregistrable via the United States Patent and Trademark Office.  (There are registrations for marijuana-related goods and services, but if the federal application reveals goods or services that in any way might violate the CSA, then the application will likely be rejected.  See my prior blog post HERE.)

Despite the federal obstacles, your brand may be registered under Florida’s state trademark registration system.  For example, there are already state registrations for businesses such as a nursery/dispensing organization and an independent cannabis testing lab.  It therefore appears as if Florida will issue registrations for trademarks which would otherwise not be allowed registration at the federal level.

But, before you start filing your state trademark applications, there are numerous issues you need to discuss with your attorney, such as the requirement that you are actually using the mark in commerce at the time of filing the application.  Florida does not offer an “intent-to-use” application as is available at the federal level. Thus, you cannot “reserve” a brand by filing an intent-to-use application.  More importantly, if you are a licensed dispensing organization or seek to become one, you will be bound by the new law, and the new law contains restrictions on your advertising practices, including requiring Department of Health approval of your trade name!  Here’s an example from Chapter 2017-232:

A medical marijuana treatment center may not engage in advertising that is visible to members of the public from any street, sidewalk, park, or other public place, except:

1. The dispensing location of a medical marijuana treatment center may have a sign that is affixed to the outside or hanging in the window of the premises which identifies the dispensary by the licensee’s business name, a department-approved trade name, or a department-approved logo. A medical marijuana treatment center’s trade name and logo may not contain wording or images commonly associated with marketing targeted toward children or which promote recreational use of marijuana.

2. A medical marijuana treatment center may engage in Internet advertising and marketing under the following conditions:

a. All advertisements must be approved by the department.

b. An advertisement may not have any content that specifically targets individuals under the age of 18, including cartoon characters or similar images.

c. An advertisement may not be an unsolicited pop-up advertisement.

d. Opt-in marketing must include an easy and permanent opt out feature.

Another example comes from the section of the law which states what must be included on the packaging for the medical marijuana product:

The product name, if applicable, and dosage form, including concentration of tetrahydrocannabinol and cannabidiol.  The product name may not contain wording commonly associated with products marketed by or to children.

As you can see, the Department of Health must approve your trade name and logo.  Further, your Internet-based advertising must be approved by the Department of Health.  Oddly, there is a specific ban on “unsolicited pop-up advertisements,” and there is an “opt-out” requirement for marketing (which is likely already a requirement via the federal CAN-SPAM law).  As for the packaging requirement, while the law does not say that the Department must approve brand names, the current guidance is simply that the brand name of the product “may not contain wording commonly associated with products marketed by or to children.”  One wonders what the drafters had in mind when banning names associated with products marketed “by” children.  I understand not using terms associated with products marketed “to” children, but “by” children?  As in, lemonade and Girl Scout Cookies?  Aha!  Girl Scout Cookies happens to be the name of a very popular strain of cannabis, so perhaps that was the reason for including “by” children.  This provision would certainly prohibit selling a “Girl Scout Cookie” strain of cannabis concentrate oil.

Since the Department of Health is only just now writing the relevant regulations, we don’t know what other implications there may be for marijuana-related-business branding, but we do know that branding will be tightly controlled.

Of course, this is just one small issue related to intellectual property and the cannabis industry.  Other issues such as trademark licensing, the federal/state disconnect on trademark registrations, patenting cannabis-related inventions, trade secrets, copyrightable content (and ownership thereof), and many more remain just as important.  Given the high level of risk and high-cost of entry into this market, it is critical to carefully and cautiously plan your participation.  And, while the majority of the States now have some form of legal marijuana use, it is worth repeating (again, and again, and again) that federal law treats the cultivation, possession, and use of marijuana for any purpose – even a medical one – as a crime, regardless of state law.  Accordingly, the importance of due diligence cannot be overstated.

Medical Marijuana – The Wild, Wild, East(coast)

Entrepreneurs are flooding Florida as the state’s citizens prepare to vote on legalizing marijuana for medicinal purposes this November. The initiative is on the ballot, and signs are pointing toward enough support to pass the amendment to the Florida Constitution.

As with any new industry, the rush to make a buck has been swift and fierce. Medical marijuana schools are being advertised, seminars are being held at hotels, and law firms are ramping up to guide entrepreneurs through the state regulations. Of course, there are no state regulations yet, but the early bird gets the weed, and it makes sense to start consulting with your attorney of choice regarding what may happen in early 2015.

Clearly, medical marijuana is going to be a “Florida IP Trend” if it isn’t already.

But, the majority of intellectual property practice is based on federal law – the Lanham Act, the Copyright Act, and the Patent Act all arise out of either the Article I, Section 8, Clause 8 of the U.S. Constitution (copyrights and patents) or the Commerce Clause of the Constitution (granting the federal government the right to regulate interstate commerce, including interstate trademark use).

As you may have heard, marijuana remains illegal at the federal level, and trademark applications before the United States Patent and Trademark Office are being routinely rejected with essentially the same boilerplate language:

SECTIONS 1 AND 45 REFUSAL – NOT IN LAWFUL USE IN COMMERCE

Registration is refused because the applied-for mark, as used in connection with the goods and/or services identified in the application, is not in lawful use in commerce.  Trademark Act Sections 1 and 45, 15 U.S.C. §§1051, 1127.

To qualify for federal trademark/service mark registration, the use of a mark in commerce must be lawful.  Gray v. Daffy Dan’s Bargaintown, 823 F.2d 522, 526, 3 USPQ2d 1306, 1308 (Fed. Cir. 1987) (stating that “[a] valid application cannot be filed at all for registration of a mark without ‘lawful use in commerce'”); TMEP §907; see In re Stellar Int’l, Inc., 159 USPQ 48, 50-51 (TTAB 1968); CreAgri, Inc. v. USANA Health Scis., Inc., 474 F.3d 626, 630, 81 USPQ2d 1592, 1595 (9th Cir. 2007).  Thus, any goods or services to which the mark is applied must comply with all applicable federal laws.  See In re Midwest Tennis & Track Co., 29 USPQ2d 1386, 1386 n.2 (TTAB 1993) (noting that “[i]t is settled that the Trademark Act’s requirement of ‘”use in commerce,” means a “lawful use in commerce,” and [that the sale or] the shipment of goods in violation of [a] federal statute . . . may not be recognized as the basis for establishing trademark rights'” (quoting Clorox Co. v. Armour-Dial, Inc., 214 USPQ 850, 851 (TTAB 1982))); In re Pepcom Indus., Inc., 192 USPQ 400, 401 (TTAB 1976); TMEP §907.

The Controlled Substances Act (CSA) prohibits, among other things, manufacturing, distributing, dispensing, or possessing certain controlled substances, including marijuana and marijuana-based preparations.  21 U.S.C. §§812, 841(a)(1), 844(a); see also 21 U.S.C. §802(16) (defining “[marijuana]”).  In addition, the CSA makes it unlawful to sell, offer for sale, or use any facility of interstate commerce to transport drug paraphernalia, i.e., “any equipment, product, or material of any kind which is primarily intended or designed for use in manufacturing, compounding, converting, concealing, producing, processing, preparing, injecting, ingesting, inhaling, or otherwise introducing into the human body a controlled substance, possession of which is unlawful under [the CSA].”  21 U.S.C. §863.

In the present case, the application identifies applicant’s goods and/or services as follows: “Providing a web site that features informal instruction on the cultivation of medical marijuana.”

The evidence submitted with applicant’s response to the previous Office action plainly indicates that applicant’s identified services include activities that are prohibited by the CSA, namely, instruction on how to grow, cultivate, harvest and produce marijuana.

Because these goods and/or services are prohibited by the CSA, the applied-for mark, as used in connection with such goods and/or services, is not in lawful use in commerce.

 

There are currently 327 applications and/or registrations in the USPTO’s database which contain the word “marijuana” in the description of goods or services.  Of those 327, only 45 are (or were) actually registered.  While many of those 327 applications were rejected with language similar to that cited above, the few that squeaked by are either anomalies and/or the work of skilled trademark practitioners who know how to carefully craft a description of services.  (To be fair, many of the ones that have not been registered were allowed to be registered, but the applicants did not follow up with certain filing requirements, such as specimens of use.)

As an example of the division between allowable and not allowable, consider that a popular website located at http://www.leafly.com received a registration for LEAFLY for use with, among other things:

“Providing consumer information in the field of medical marijuana dispensary inventories and locations; providing links to web sites of others featuring consumer information on medical marijuana inventories and locations; providing a web site featuring the ratings, reviews and recommendations on products and services for commercial purposes posted by users; providing consumer information regarding medical marijuana dispensaries, inventories and locations”

and

“Providing health information in the field of medical marijuana, and regarding indications and effects of particular cannabis strains, and regarding medical marijuana dispensaries, inventories and locations”

Yet, an application for MARY N’ JANE for use with “Providing a web site that features informal instruction on the cultivation of medical marijuana” was rejected per the above language.  The difference is apparently that using the trademark in connection with marijuana cultivation instruction is not ok, but using the mark for general information about marijuana dispensaries is ok.  This logic is further supported by questions that USPTO Examining Attorneys are routinely asking of applicants with marijuana-based goods or services, namely:

Do the applicant’s classes, seminars, and/or workshops involve the provision of, instruction on how to grow, and/or instruction on how to obtain marijuana, marijuana-based preparations, or marijuana extracts or derivatives?

Are the applicant’s services lawful pursuant to the Controlled Substances Act?

If the answer to the first question is Yes, no registration for you.

So, what is the Florida-based medical marijuana entrepreneur to do?  State trademark registrations are an option, but Florida does not recognize “intent to use” applications like the USPTO does.  This means that even if you are planning to open a dispensary, nursery, or other marijuana-related establishment once the regulations are drafted and licenses are issued, you cannot apply for the state trademark registration now because you cannot yet legally run a medical marijuana facility in Florida.  The flood of state applications that will occur on Day 1 will be astounding, and anyone who has used Florida’s state registration system knows that this impending flood just might break the system.

Another interesting aspect of medical marijuana in Florida is that just last year our lawmakers passed the so-called Bong Ban Bill, making it illegal to sell virtually anything that can be used to smoke marijuana…but only if the seller intended for the item to be used in violation of the drug paraphernalia laws.  So, if you do not intend for people to use your hand-crafted glass pipe to smoke illegal substances, presumably you do not violate the law.  (As with everything on this blog, the preceding is not legal advice.  If you intend to sell pipes, you should consult an attorney.)  Once Amendment 2 passes and medical marijuana is legalized in Florida, I’m guessing that the “Bong Ban” will need some renovation.