Global Patent Prosecution - June 2019: Hemp Legalization and the International CBD Boom

Sterne, Kessler, Goldstein & Fox P.L.L.C.

Products containing cannabidiol (“CBD”), a compound derived from cannabis plants, are part of a growing market segment that is on a fast-track to becoming global within the next five years. CBD-containing products, from gummy bears and pet products to cosmetics and shoe polish, are cropping up everywhere and industries, from biopharma to beer, are paying attention. Some analysts have projected that, by 2022, the worldwide CBD market will reach $22 billion.

Unlike its cannabis-derived cousin tetrahydrocannabinol (“THC”), CBD raises fewer red flags for regulators and, as a result, has made inroads towards legalization in countries seeking to promote hemp agriculture and industrialization. CBD can be derived from hemp, thus opening the door for legal CBD. The list of countries where CBD can be legally cultivated now includes the United States, which removed hemp from the Controlled Substances Act (“CSA”) in 2018. In the United States, “hemp” is now defined by statute as cannabis containing less than 0.3% THC.

The proliferation of CBD-containing consumer products recently prompted the U.S. Food & Drug Administration (“FDA”) to hold its first public hearing on cannabis in May. The hearing took place before a panel of 12 FDA officials, lasted almost 10 hours, and included roughly 100 speakers ranging from business owners, lab operators, manufacturers, and drug-makers to state officials, agricultural stakeholders, patients, and anti-marijuana groups. At least one important theme emerged: there is a need for more regulation of CBD-containing products in the consumer marketplace given (i) the prevalence of serious consumer fraud and (ii) the pharmacologic profile of CBD as biologically-active with the potential for drug interactions and hepatotoxicity.

In many ways the FDA hearing raised more questions than it answered; nevertheless, it has framed the policy debate and highlighted the need for regulatory-approval pathways to be defined. What we know today is that the FDA approved the first cannabis-derived drug in 2018 (Epidiolex), paving the way for cannabis therapeutics that meet the agency’s standards for safety and efficacy. And while the contours of what other types of CBD-related products are now legal continue to evolve, the arms race for cannabis intellectual property is well underway and is likely to intensify as the regulatory landscape matures and regulatory-approval pathways are defined.[1]

[1] Pelletier, Sterling, and Talley, IP’s Developing Role In Cannabis Business Strategy, Law 360 (June 11, 2019) (link), available at https://www.law360.com/articles/1167936.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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