The Federal Cigarette Labeling and Advertising Act(FCLAA), as amended by Section 201 of the Family Smoking Prevention and Tobacco Control Act (TCA; signed into law on June 22, 2009) directs the U.S. Food and Drug Administration (FDA) to develop graphic warnings for cigarette packages and promulgate regulations requiring the warnings within 24 months of enactment of the TCA. Accordingly, FDA issued a final rule requiring graphic warnings on June 22, 2011. However, the original graphic warning images did not survive a First Amendment challenge by the tobacco industry (seeR.J. Reynolds Tobacco Co. v. FDA), and FDA withdrew the rule.
In response to a lawsuit filed against FDA by a coalition of public health groups lead by The Campaign for Tobacco-Free Kids, the American Academy of Pediatrics, the American Heart Association and others, the U.S. District Court for the District of Massachusetts ruled that FDA “unlawfully withheld” or “unreasonably delayed” a revised graphic warning rule because nearly a decade had passed since the TCA was enacted. In March 2019, the Court ordered FDA to publish the new proposed rule by August 2019 and issue a final rule in March 2020. FDA promulgated a notice of proposed rulemaking on the new cigarette health warnings on August 15, 2019 (available here).
The proposed rule would require advertising and packages of cigarettes sold in the United States to include one of thirteen warnings:
WARNING: Tobacco smoke can harm your children.
WARNING: Tobacco smoke causes fatal lung disease in nonsmokers.
WARNING: Smoking causes head and neck cancer.
WARNING: Smoking causes bladder cancer, which can lead to bloody urine.
WARNING: Smoking during pregnancy stunts fetal growth.
WARNING: Smoking can cause heart disease and strokes by clogging arteries.
WARNING: Smoking causes COPD, a lung disease that can be fatal. (This statement is paired with two different images.)
WARNING: Smoking reduces blood flow, which can cause erectile dysfunction.
WARNING: Smoking reduces blood flow to the limbs, which can require amputation.
WARNING: Smoking causes type 2 diabetes, which raises blood sugar.
WARNING: Smoking causes age-related macular degeneration, which can lead to blindness.
WARNING: Smoking causes cataracts, which can lead to blindness.
Under the proposal, each statement is paired with a graphic image, except the COPD statement which is paired with two different images. The proposed labels, with the accompanying graphic images, can be found here. Among other requirements, the top fifty percent (50%) of the front and rear panels of the package and 20% of the top of the advertisement would need to provide a graphic warning.
Stores like Aldi are increasingly popular with UK consumers as a result of offering “copycat” products of well-known brands at drastically lower prices. However, with this rise in popularity, brand owners and creatives are being increasingly frustrated by finding their products and ideas at the mercy of imitation products.
One such aggrieved party was well-known makeup brand Charlotte Tilbury (Tilbury), who found their “Starburst” lid design and the “Powder Design” of their “Filmstar Bronze and Glow” set had provided the ‘inspiration’ for Aldi’s own “Broadway Shape and Glow” set. Tilbury filled a UK High Court claim for copyright infringement over the products shown below, with Aldi adamantly rejecting that any copyright had been infringed in their ‘inspired’ makeup set.
The main difficulty Tilbury faced was the fact that it is notoriously hard to claim copyright in mass produced 3D products as English Courts have historically been reticent to consider them “sculptures” or “works of artistic craftsmanship”.
However, Tilbury was successful in arguing that the “Starburst” lid design and the “Powder Design” on their product were original artistic works and as such the product was protected by copyright. Tilbury were able to establish their artistic copyright as “a work need only be ‘original’ in the limited sense that the author originated it by his efforts rather than slavishly copying it from the work produced by the efforts of another person.” Once establishing the existence of copyright in the artistic work the Court had little difficulty in finding that it had been substantially copied by Aldi for its “Broadway Shape and Glow” set and summary judgement was granted in Tilbury’s favour.
This case not only marks a success for the aggrieved brands and creatives who feel short changed by “Like brand inspiration” products but also provides some interesting learning opportunities for brand owners in the quest to protect their designs. Tilbury was successful in arguing copyright infringement due to the original artistic “starburst” element in its product design, the elements where the copyright lay. Brand owners may consider incorporating similar artistic elements into their products to act as a form of protection against imitators or at least provide ammunition for a copyright infringement claim should they need it.
The cannabis industry is rapidly expanding in the United States, with multiple jurisdictions and corporations seeking to accommodate the evolving cannabis market. Carlton Fields attorneys Kevin McCoy and Jennifer Tschetter discuss the emergence of cannabis as a billion-dollar, mainstream industry; explore its impact on corporate clients; and analyze the ever-evolving legal landscape in this space.
Transcript:
Kevin: It’s an exciting day here at Carlton Fields. My name is Kevin McCoy. I am a trial lawyer here in the Tampa office of Carlton Fields with a background in commercial litigation, and today I’m going to be speaking with Jennifer Tschetter out of our Tallahassee office, who is the co-chair of our Cannabis taskforce, which is a very exciting area of the law and one that we are happy to be working in and learning about and helping clients with. So without further ado, welcome, Jennifer.
Jennifer: Thanks, Kevin.
Kevin: Thanks for making the time today. First of all, why don’t you give us a little background about you?
Jennifer: Sure. I’ve been practicing law about 18 years and during that time I spent 10 of them in public service, primarily at the Department of Health here in Florida.
Kevin: Wonderful. In the Department of Health, what were some of the areas that you touched upon in particular with respect to health issues, or have you been involved in the medical marijuana and the marijuana push here in Florida?
Jennifer: Yes, in fact, I was general counsel at the department when medical marijuana first came to this state. So, since the inception of the regulatory structure, I’ve either been intimately involved as a regulator, or since my move to private practice just a couple of years ago became more involved on the private side.
Kevin: Wow, so you’ve been in the front lines?
Jennifer: Yes.
Kevin: You’ve been in the front lines as the government has wrangled with this, I won’t say with the forbidden fruit anymore, because I don’t know that we’re in that land, but you’ve been fighting the fight for a while on both sides of the isle, I suppose?
Jennifer: Yes.
Kevin: So, you know, I use that term, the forbidden fruit, and it’s amazing to me, literally, that we are sitting here at a firm like Carlton Fields and we’re talking about Cannabis law, which, when I started here, I couldn’t have contemplated that that would be an area that we are growing and we are developing experience in and counseling clients on. But, it’s here. And, why don’t you talk to us a little bit about how here it is? I mean, in reality that this is no longer, you know, we don’t think of this anymore like this is two guys doing a drug deal in a parking lot, this is billion dollar industry. Is that fair to say?
Jennifer: Fair to say. So some of the things that I think are most interesting is to watch the evolution of this industry. If you’ve seen, I’m sure everybody has seen those maps, you know, that have varying colors of green based on, you know, are you a recreational state or a medical marijuana state, a low THC state and if you think about that 20 years ago there was one green state on that map and that was California and now you look at the states and there are only 3 that don’t have any color anymore. At least, in some form, 47 states have said you can use this on some level. Might be low THC. Might be full spectrum. Could be recreational. But, those types of statistics are interesting to me. The other ones that come to mind are 1 in 4 Americans right now live somewhere where purchasing recreational cannabis is legal. The farm bill’s delisting of hemp has opened another huge industry and they’re all derivatives of the cannabis plant which used to be forbidden.
Kevin: Let’s talk for a minute for those who are maybe new to this space, new to this industry, about that real distinction. Because that’s one that maybe I didn’t appreciate until recently. When we talk about cannabis, it’s easy to confuse some of the aspects of cannabis as it, as between marijuana or between CBD, which is all the rage of late. Can you just briefly give us an overview of the differences that happen between cannabis, between marijuana, between CBD? How does all that break down for somebody who’s really not deep in this space?
Jennifer: I’ll try. So, our definition in the United States of what constitutes the difference between hemp and marijuana, and they are both species of the same plant, cannabis. So they’re both cannabis, but what distinguishes them is their THC level and THC is the thing that most people think about as creating the euphoria typically associated with marijuana. In hemp, the THC level is .3% or less. If the cannabis plant, as it’s growing, has a THC level higher than .3%, it’s marijuana. So, that’s the distinction is the THC level in each.
Kevin: So, we’ve talked a little bit about some of the aspects that are happening and you talk about the delisting of hemp from the Controlled Substances Act. What has that or what have you observed the impact of that having as impacting some of the clients that we deal with in terms of, you know, these are corporate clients. These are big. They’re pharmaceutical. They are manufacturers. They are real businesses who are now looking at this. Can you just talk about what you’ve seen in industry as, for example, you mentioned CBD, as that has been delisted, or hemp I should say, has been delisted from a controlled substance.
Jennifer: So, CBD, I think there’s a place to start. So, hemp has opened the opportunity, not only for industrial uses for hemp, but it has created another potentially billion dollar industry in this country with the passage of the farm bill in 2018. So, those billion dollar industries don’t come around very often and one aspect of it is the CBD industry. Because hemp is low in THC, one of the other cannabinoids that’s very popular is CBD, which has been documented to relieve stress, anxiety, improve depression and can also alleviate some joint aches when applied topically. So, CBD is in high demand around the country and when it is extracted from the hemp plant, it can be infused in a variety of products: shampoos, lotions, gummy bears, drops. So, that created an enormous industry, but for every business in this country, the potential to at least contemplate whether a CBD additive would be helpful for their product and understanding how to navigate this new regulatory structure that’s kind of emerging, if you do chose to that, has been challenging.
Kevin: You mentioned the word challenging. What are some of the challenges that you are seeing as clients are coming to you for guidance as they’re entering, let’s just call it, the broad umbrella of cannabis without getting into whether it’s marijuana or CBD based on the .3% that you just described. But, what are some of the top, if you had to give us the top five challenges that people are coming to you, businesses, I mean we’re not talking little players here, we’re talking about real corporate clients, they need help, what are the areas that are the hottest right now that you are seeing?
Jennifer: So, compliance is one and the unfortunate part about that, and the challenge that goes with that, is the shifting sand that is the regulatory structure. When hemp was, when cannabis, I’m sorry, was put on the controlled substance act in the 70’s, it stopped all research, it stopped all production of both hemp and marijuana in this country. Because of that, everyone is just now putting brand new regulatory structures in place and research is ongoing and that continued compliance, I think that that is the number one challenge for a business trying to get in this market right now is that you can get a snapshot from a law firm as to whether your business is in compliance today, but the law in North Carolina can change tomorrow. The law in California can change next week and it’s that ongoing uneasiness and being willing to move in that space aggressively despite the potential for the bottom dropping out at any given moment.
Kevin: It sounds like on the compliance piece then, what folks are facing in this industry is right now, it’s you know, technology as I’ve seen it on, in any number of areas, whether it’s a plant, whether it’s a new gadget, a widget, whatever it may be, technology always moves faster than the law and the law is slow to catch up and that’s not necessarily a bad thing because we rely on law. But right now, what we’re dealing with is a regulatory patchwork, if you will, where step over the line from state X to state Y, you could be facing very different types of regulations, whether it’s labeling, whether it’s requirements and sourcing. Can you just talk about some of the things you’re seeing in that regard? I mean, for example, you know I think to the bill that we just passed here in Florida, the hemp bill, and some of the things that, for example, you would see here in terms of a Florida based hemp business that stick out to you that maybe could differ from other states around the country.
Jennifer: So, I think every state is going to have, and this will be a challenging piece of it, different rules on how you can bring that product into the state. And so, the USDA has issued some guidance that said everybody get ready, the farm bill said you can move this from state to state. It’s now a legal agricultural commodity. That’s great, except it does have an impact on agriculture and so, every agriculture department around the country right now is trying to figure out how to protect its farmers. And so the rules on how you bring product into this state, I think, will be one of the first challenges. That’s a patchwork where if you don’t know the law, you might not know that you need to be escorted into the state by our department of agriculture after you have an inspection, and when you get here, your truck needs to be a closed truck…
Kevin: Mm-hmm.
Jennifer: …in order to move about the state of Florida. Those are the proposed regulations.
Kevin: Sure.
Jennifer: We’ll see where they end up. Those will vary by state and part of it is that, I know here in Florida, it’s a perfect example. We’re so sensitive to invasive species. When you look at the cannabis plant, what the plant researchers have told you is that it’s a more invasive species, hemp, cannabis that would include hemp. It’s a more invasive species on their scale from 1 to 25, then Kudzu.
Kevin: Mm-hmm.
Jennifer: So, that should give us all pause as to whether we should be too quick to move so quickly in a space and eager, because it can have lasting implications.
Kevin: You know, it’s funny that you bring up this patchwork and states putting in place these kind of regulations to, maybe, protect their own, if you will. I think the last time I had ever thought about the commerce clause of the constitution was about a week ago when you and I were comparing notes on, I’m not so sure if this particular regulation doesn’t cut too close on protecting, you know, interfering with that. So, what are some of the legal issues that businesses are looking at as cannabis the plant impacts them? I mean, I would have to imagine, you’re dealing now, not only as a business dealing in cannabis, but, I mean, it’s gotta impact employment policies. It’s gotta be impacting, I mean, it’s actually, not to overstate it, but it’s almost like, what is this not going to impact, you know, in terms of policies, in terms of industry? Talk to us about some of the things that businesses have to be looking out for in terms of regulatory patchwork and you can interpret that or answer that in whatever way you want, because it’s a very broad question. But, based on what you’re seeing and what people are coming to you with, what are some of those top items outside of, maybe, compliance or regulatory?
Jennifer: There isn’t an item.
Kevin: Yeah.
Jennifer: This industry will touch almost all practice groups in law firms. When you think about it, because it’s both medicine and something that people want to use for recreational pleasure, it’s different than other things. That’ll make its impact on schools and Girl Scout troops. I mean, they’re gonna have to deal with issues related to cannabis and figure out what they can and can’t do for people that either have a prescription to take this medication, or CBD products limited, they’re not high in THC, so those are, there’s not an industry that I can think of that won’t be impacted by this.
Kevin: I tell you what, I have to agree and I am not anywhere near as versed in this space as you are. Admittedly, I’m a newcomer to understanding this as an industry. But, in the short time that I’ve been working with clients in this space, I mean, I have seen this touch land use. I have seen it touch rewriting employee handbooks which we’ve had to do, you’ve got tax issues. You’ve got money transmitter issues. You’ve got, how, where’s… great your business is doing well, but where are you going to put all that money? You know, US banks are slowly coming around. I think, part of that is because they’re pushing Congress to give them the clearance that they want to be able to touch some of this money.
You mentioned the USDA. You’ve got ongoing issues with the FDA and what are they going to do? And I think they, you know, they have been studying this and rightly so, which is, which is their task to do but, industry is crying out for them to make a move, to take a stand or at least a position and I think that will help industry in terms of knowing the rules of the road because right now, tell me if you disagree but, it’s almost like we are in the wild West in some regard because people are trying to predict what the regulatory framework will be and they’re not going to stop business while they’re waiting on government. So, they’re trying to do the best they can. Is that consistent with what you’re seeing?
Jennifer: Yes, and also a lot of innovation. So, the sky is the limit. You know, I was telling someone the other day, think about how different this industry is than some other highly regulated industries. And I think part of that is the federal prohibition on it, which makes it confusing to talk about. There’s not that federal overlay that you see in some other industries which is why, for example, we maybe don’t see nicotine gummy bears and we don’t see other products that are innovative. I think that they can be helpful, enjoyable. Those are all good things and they’re all possible in this cannabis space.
Kevin: What other areas, you know, we talk, we think about this in terms of somebody who’s directly in this space in terms of you’re cultivating, in terms of you’re manufacturing or you’re distributing whatever that product may be, whether it’s biomass, whatever you’re doing, maybe textile, but, it seems like they’re, this is going to touch a lot of ancillary businesses too. So, for example, you know, you look at the Florida farm bill, you have to have an approved third party independent lab testing your batches of product. So, talk about some of the ancillary industries that you’ve been working with in that regard, and just, setting aside not actually being in directly in the space but maybe a secondary player and areas where you’ve been giving counsel and people have been coming to you for your knowledge.
Jennifer: Sure. The ancillary businesses that we work with most often are those that are directly related. I mean, they’re driven by the cannabis space. And you’re right; the independent testing labs are one of them. And so we work with them and, you know, try to set high standards for those labs whether it be through accreditation and then work with the regulators to put appropriate regulations in place. And I think that’s where when clients can be introduced as an asset, a subject matter expert. Who knows better how to test and what’s possible to test for in a parts per million or parts per billion than the lab folks? And that’s why it’s been a pleasure to represent them and learn a lot about that space.
Other ancillary businesses are the seed to sale tracker. So what some people might not know is that virtually every state that has put in place a medical marijuana program puts in a seed to sale tracking system, and that literally tags plants from the time that they are growing in a cultivation room and you track them with bar codes all the way through the production process so that when you’re all done you know exactly what product was made with that plant. And those type of tracking mechanisms are essential to prevent against diversion in states that don’t want to have a legal recreational adult use market yet. So, that’s another ancillary business that is all unto itself but, the technology and information technology that goes into that is highly complicated and sophisticated. I think you will see that on the hemp side as well. In that most, one of the greatest concerns in the hemp industry is, where are we growing this? And part of that is to understand just how far the reach will be. Can you cross pollinate an orange field 10 miles away or is it 5 miles away? We’re gonna just all learn together. I think it’s an orange grove, candidly. But, those are the things that I think will be interesting and those ancillary businesses are creatively looking for solutions.
There are also drone manufacturers that will be essential in the GIS mapping of hemp cultivation plots all over this country that will help us understand the impact on other crops and also be a tool for law enforcement because I think what can be confusing for people – we were talking about it before in interstate shipments – is that if you were to cut up, you know, grind up a batch of hemp and a batch of marijuana or you drive by a field of hemp the terpenes are the same and it will smell a lot like that smell that we all associate with adult use or recreational marijuana. And so, when you see a load of it coming over state lines, that’s confusing to law enforcement, and rightfully so. Rightfully so. I think that there’s a lot of entrepreneurs looking for innovative solutions to help regulators to help the industry do it better, do it faster. And this is an industry that seems receptive to all those things.
Kevin: You know, you touch on a really interesting point. I went to one of the recent rule-making sessions here in Tampa that the Department of Agriculture put on. And there was a lot of discussion over the disposal requirement and the rule. And it actually surprisingly got a lot of pushback from the audience and a lot of questions about why would you impose these costs. And I actually thought the response from the folks from the Department of Agriculture sitting on the panels was encouraging because their response was, “Listen, there’s two paths here. If you get a crop of hemp that, we come out and we test it and it’s above .3% because of whatever factor happened, inadvertently it was too hot, who knows, you got bad seed. We can make that a law enforcement issue and now you have an entire acre or acreage of plant that is technically now illegal because of something that was out of your control. Or, what we have done is come up with this disposal plan that we’re still trying to flesh out but we can have a plan where we go, ‘This is no good. We’re going to give you the opportunity to dispose of it in the appropriate way.’ And then we don’t need to call law enforcement.” But, your comments trigger to me, what are you seeing in terms of the give and take of what’s happening or the receptiveness of regulators whether it’s federal or state to take input and be receptive to the idea that we’re going to work together on this. It’s not us versus you. It’s imperative to have relationships there and to be part of that discussion and sitting at that table having those conversations.
Jennifer: Both the Department of Health and the Department of Agriculture and Consumer Services are very partner oriented. They’re looking for solutions. I think you find that the law enforcement community as well, and everyone is trying their best to disseminate information. So State Attorney Dave Aronberg this week released some guidance that things that smell like marijuana anymore aren’t necessary probable cause for a search of a vehicle.
Kevin: Sure, yeah.
Jennifer: It might not be, because there is smokeable hemp on the streets in Florida. So, you can’t just smell a car and think you can search it. That was distributed widely. Generous of the law enforcement community to not limit it to one particular jurisdiction but instead to share it more broadly. They’re also looking for solutions that work for everyone. Everybody wants the bad actors out of the space, but everybody knows that most of the actors that are coming here are looking for an opportunity and mean to do it the right way. And I think the state of Florida has had a position for a long time – and I have not seen it change – that the goal is always compliance. It’s not punishment, but instead compliance is our goal.
So, that didn’t surprise me. I, too, was very pleased to hear that Ag had taken the position that even though it’s .5% THC, it’s still hemp. You’re just going to destroy it in accordance with your waste management plan.
Kevin: Right.
Jennifer: And that is a very generous interpretation and one that is very farmer-friendly.
Kevin: Well, you touch on an interesting topic. And I don’t think us sitting here talking about this topic in Florida we could get through this first podcast without talking about the situation of the grandmother over at Disney. But, to me what was encouraging out of that entire issue was somebody made a law enforcement decision on the street, but after, maybe there was some talking and some education back in the State Attorney’s office, about the direction. We were on the verge at that time of the hemp bill passing, which would, that same instance right now, assuming that bottle was oil that was .3% or less, that would have been a no probable cause. That would have been a no arrest. And, so it was encouraging, while probably maybe the lady who was arrested could disagree about the experience there, it was encouraging to see that law enforcement with, given a little more time, was already thinking about this. And I think that’s maybe part of the education component that’s gonna come across the board. It’s not just industry, but it’s law enforcement, it’s government, and it’s, let’s, let’s not consume resources here unnecessarily, unless, as you say, we’re focusing on some of the bad actors who may be ruining it for the rest of us, so to speak.
So, the next thing I want to talk about today, Jennifer, is where do you think the opportunity is? We’ve talked about some of the regulatory headwinds and we’ve talked about how businesses might be facing some of those, which can be bad or good depending on what side you’re on. As lawyers, we love, that’s where we make our money, navigating that for folks. But, talk about the opportunities that are there, the opportunities for those who want to get in the space and are new to the space or contemplating getting in the space, whether they’re investors, they’re business, they’re start-ups. What are you seeing based upon the practice that you’ve built around cannabis?
Jennifer: The farm bill definitely changed the field in that when clients call now and they want to get into this space, they want to do something because these are two new burgeoning billion dollar industries that don’t come along very often. How do I get in is usually the question. And what I’ve been telling everyone since passage of the farm bill, and in Florida specifically the passage of our state hemp bill, is hemp is the way to go. It’s an unlimited number of licenses as opposed to marijuana which is a very limited number of licenses. We started with five total in the entire state of Florida. Five licenses would be given out for 20 million people. That’s slowly growing, but still there’s only 22 companies that get to participate in that space. Contrast that with hemp where you can pick just a part of it and as many people as want to participate can. So, I think if there’s opportunities right now, it’s in the hemp space.
And there are corollaries between the two industries that if ever, if marijuana ever turns out to be a space where there are more opportunities – they either remove the vertical integration requirement from the license so that you could have one person licensed to grow and one person licensed to sell and another person licensed to process. That may happen in this state and that would create more opportunities. But until it does, there’s only a few licenses out there and you have to do everything in that chain.
The nice part about these two industries is that those overlaps both require processing to get finished product that patients want to use. Both require retail sales and how to market that product in compliance with FDA regulations on, you know, making sure that you don’t claim they have significant health effects. So there are a lot of overlaps that I think for someone that wants to get involved in the industry right now, what I’m counseling them is that start in the hemp space. That’s the place to be. There are no opportunities in Florida right now in the medical marijuana space unless you want to buy one of those licenses for a significant amount of money. And, that’s the only way to get in that space right now and probably the only way to be there for the foreseeable future. With the state of litigation on the medical marijuana side of the industry, I don’t anticipate that we’ll see any new licensees. Certainly not in 2019 and it will be a long way into 2020 before we get to that place. So, for folks that want to get in right now and do something, they should look at hemp as that opportunity.
On the investment side, that can vary. I think that depends upon the quality of the company.
And, I think, one of the things we haven’t touched on today but I think will root itself out eventually in these industries are things like pretenders and frauds and burgeoning industries can attract those kinds of people. So, I think that’s where due diligence is really important on the investment side: understanding the regulatory structures, understanding whether they are scaled up. They can tell you they want to put 100 dispensaries in a state, but if they have a 100,000 square foot cultivation facility, that’s probably not even possible. You could never stock the shelves. So, those are the things that I think due diligence will help investors, and that’s why they’re consulting people like you and me to talk through those issues. But, for investment, I think both spaces are good. For people that want to work, make money, and be a part of something new, I’d take a good look at hemp.
Kevin: That’s a fantastic insight. You know, and from what I’ve seen and just some of the market research and then in some of the other things that you can just find on the Internet, you know, you go back to where we started in the medical marijuana versus the hemp side, and then in terms of CBD, that whole dichotomy that’s happening there in terms of people who hear the word “cannabis” have always associated it with marijuana. And it’s, you know, I may or may not be interested in that, but the whole concept of the CBD space now is coming out where essentially, at least from the marketing standpoint, you can have the benefits of marijuana without the THC and without the high. And the market that I’m seeing in terms of opportunity – I think this is what you’re talking about, too, with hemp – is that this market’s gonna explode. I mean, because more people who would never even contemplate for whatever reason that they would ever touch a cannabis product are now saying, “What’s so bad about this one?” You know, “I can still function, I’m not gonna be a pothead, if you will. I’m just gonna take the benefits from this plant that have been forbidden maybe for no good reason, we’re coming to find out, for such a long time.” So, I’m glad to hear you talk about that as an opportunity because even beyond, you know, the CBD and the ingestible space or the topicals, you get into textiles, you get into manufacturing of ropes, and everything else that goes with it. And so…
Jennifer: Drywall, concrete, I mean, all those hemp-based products. I heard Ag say the other day there are 25,000 known hemp-based products ready to go as soon as we have enough hemp in this country. And when you talk about drywall that is mold and fire resistant and I think about that in beach houses, that’d be perfect, right? So, I’m really excited about the opportunities that this space presents. And hemp, I think, is the future.
Kevin: I tell you what. This entire industry, to me, is just so exciting because it’s new, it’s fresh, it’s one of those opportunities that in the law, to have something that is just so untamed come along, you don’t see that very often. And I don’t know about you, I had a great time today. I hope you would join me again because next time I would really like to get into some of the Florida-specific stuff we’re seeing, including you’ve talked about some of the appellate issues maybe that the Florida Supreme Court will be asked to weigh in on some stuff. So, will you join me again? Maybe we can try a next session?
Jennifer: Absolutely. And if it’s after August 8th, we should know more answers. So.
Kevin: Fantastic. And thank you, again. You are definitely very, very deep in this industry and I’ve learned a lot today, so thank you so much for joining us.
Jennifer: It was a pleasure. Thanks, Kevin.
Kevin: I also want to thank our audience for joining us today. We had a great time. We hope you did, too. We hope you will check out more about our practice at carltonfields.com. There you can find the landing page for the cannabis taskforce that Jennifer is the co-chair of and you can learn more about what we are doing in this space as it impacts businesses that are running throughout this industry.
After four years of policy debate, rulemaking, testing, and approval, medical marijuana became available for purchase at nine Louisiana pharmacies yesterday.
Passed in 2015, the Therapeutic Use of Marijuana Act allows specially licensed Louisiana physicians to recommend medicinal marijuana for therapeutic use to Louisiana residents suffering from debilitating medical conditions. The Louisiana Legislature, the Louisiana State Board of Medical Examiners, the Louisiana Board of Pharmacy, and the Department of Agriculture have worked together over the past four years to clearly define the parameters in which the alternative medical treatment can be manufactured, prescribed, sold, and used.
The problem, however, is that Louisiana’s medical marijuana law fails to address the employment relationship, and thus creates a potential cause of action against employers who discriminate against medical marijuana users. Put simply, we don’t know for sure whether Louisiana law requires employers to accommodate medical marijuana use by employees with qualified disabilities.
While current marijuana users are excluded from federal protections under the Americans with Disabilities Act, some state courts have determined that employers must accommodate medical marijuana users who occupy non-safety sensitive positions. This is a very fact-intensive issue that requires consideration of both the industry and state in which the employer operates, as well as the specific duties of the employee. Eventually, the issue will be addressed by a Louisiana court. Until then, Louisiana employers can take steps to avoid potential liability by contacting counsel, evaluating their current policies, and clearly defining their safety-sensitive positions.
Many, including state regulators, are closely watching the U.S. Food and Drug Administration (FDA) as it works through the challenges associated with regulating cannabidiol (CBD) products. Under the Federal Food, Drug and Cosmetic Act (FD&C Act), CBD cannot lawfully be added to a food or marketed as a dietary supplement; however, industry has been pressuring the Agency to create a pathway for the lawful use of CBD in food and dietary supplements through either an exception by regulation to the FD&C Act or through a nonenforcement policy.
As previously reported on this blog, FDA held a public meeting on May 31, 2019 to obtain scientific data and information about the safety of FDA-regulated products containing cannabis or cannabis-derived compounds. The Agency has made clear that outstanding questions related to the safety of CBD products must first be addressed before a regulatory framework can be established for lawfully marketing foods and dietary supplements containing CBD.
In response to FDA’s request for safety data and information, on July 16, 2019, a coalition of 37 Attorneys Generals submitted a letter to FDA, urging the Agency to cooperate with the states to protect consumer from false advertising and potential harms to their health from products containing cannabis or cannabis-derived compounds, including CBD. The letter also urged the Agency to develop ongoing assessments of potential risk and benefits of these products, including how they interact with other dietary or pharmaceutical products. Ultimately, the letter requests that FDA “ensure that states maintain a role as regulators in this emerging market.”
Overall, 92% of cable/streaming shows showed cigarette/e-cigarette use. Netflix had “nearly triple the number of tobacco instances (866) compared to the prior year (299).” The multi-year study showed Stranger Things alone had “262 tobacco depictions in its second season, up from 182 in the first season.” This is significant because the Surgeon General warns that high levels of exposure to such visuals doubles the risk of smoking initiation. Considering 61% of young adults report online streaming channels as their primary means of program viewing, Netflix’s move away from e-cigarette representations could significantly impact this generation’s vaping epidemic.
Netflix will also limit cigarette depictions to adult usage. According to the CNN report, Netflix will only feature adult portrayals if “it’s essential to the creative vision of the artist or because it’s character-defining (historically or culturally important).”
The study did not specify how many of these depictions were related to the Juul vape device — which recently had a meteoric rise in use and captured over 70% of the e-cigarette market in the last two years. Juul has been accused of designing products and ads that appeal to youth and placing these ads in channels most populated by young adults and teens.
Under the Law, those caught with up to three grams of marijuana will no longer face jail time but will still face a fine of $130. This is the smallest amount of marijuana that any state has decriminalized so far. Currently, possession of any amount of cannabis is punishable by up to 30 days in jail, a criminal record, and a $1,000 fine.
The Law also provides for the expungement “of criminal records pertaining solely to the possession of three grams or less of marijuana.” The state has amended its expungement statute in order to reflect this change, noting that courts must grant an expungement order, provided the individual is not facing any other criminal charges, and provided that the amount of marijuana possessed was three grams or less.
The Law establishes a “Marijuana Evaluation Task Force,” in an effort to examine other states’ laws, penalties and outcomes related to the decriminalization and legalization of marijuana. The task force, which will be active until June 30, 2021, will make recommendations on further changing marijuana laws in Hawaii.
The Law does not provide employment protections for recreational users, nor does it modify Hawaii’s Medical Use of Cannabis Law, which was amended last year in part to form a working group to evaluate potential discrimination against medical cannabis users and the employment protections made available in other states.
Employers and health care professionals should be ready to handle issues that arise with the potential conflict between state and federal law in devising compliance programs, both in terms of reporting and human resources issues, including practices and policies addressing drug use and drug testing. States continue to consider – and pass – legislation to decriminalize and legalize cannabis (both medicinal and recreational), and we are slowly marching toward 50-state legalization. All organizations – and particularly those with multi-state operations – should review and evaluate their current policies with respect to marijuana use by employees and patients.
This post was written with assistance from Radhika Gupta, a 2019 Summer Associate at Epstein Becker Green.
BMJ’s journal, Tobacco Control, just released a study recommending that the FDA do more to control Juul’s e-cigarette advertising in social media. The study included a review of over 15000 posts in a three-month period during 2018. Approximately 30% of reviewed posts were promotional, e.g., leading to Juul purchase locations, and over half the posts included “youth” and “youth lifestyle” themes. Because many of these posts were re-posts or user-generated, rather than ads specifically placed by Juul, the company protested that 99% were third-party content over which Juul had no control. However, the intended goal for social media advertising is to “share” and to inspire creation of third-party user-generated content that is also shared. Juul’s public comments weirdly suggest they don’t understand social media advertising. That is quite unlikely.
Juul first came under fire for its youth-focused advertising back in 2016, but has only recently made changes to restrict it. Not until late 2018, long after being called-out by educational and government agencies for targeting youth, did it begin to materially limit its social media accounts and social media messaging.
Juul’s chief administrative officer, Ashley Gould, was quoted last year telling CNN that Juul was “completely surprised by the youth usage of the product.” (Source: CNN.) In response, Dr. Robert Jackler, founder of the Stanford Research into the Impact of Tobacco Advertising, said, “I don’t believe that, not for a minute, because they’re also a very digital, very analytical company,” he added. “They know their market. They know what they’re doing.”
Gould’s obfuscation about underage users doesn’t fool people in the know—and it certainly doesn’t generate trust that Juul will voluntarily follow ethical practices. Juul only instituted its recent changes to restrict youth advertising after FDA scrutiny and bad press.
Juul also advertises its products are for smoking cessation. Last week, in response to San Francisco’s imminent ban on e-cigarette sales, Juul raised concerns that people would resort back to traditional cigarettes—implying this would further negatively impact the health of San Franciscans.
Unfortunately for Juul, the internet remembers everything. In a 2015 Verge interview at the beginning of Juul’s meteoric rise, one of Juul’s R&D engineers made it clear that Juul didn’t care about smoking cessation nor had any concerns about creating an addictive product. The engineer (Atkins) was quoted saying, “We don’t think a lot about addiction here because we’re not trying to design a cessation product at all,” he said, “anything about health is not on our mind.”
Juul’s public “feint and parry” strategy tends to mirror the traditional tobacco industry—a group with a sordid history of youth-focused advertising, concealment, lying to officials, and purposely creating highly addictive products in order to boost sales. It took multiple lawsuits and the Master Settlement Agreement of the nineties for big tobacco to materially comply with government regulations.
Unfortunately, despite all of that history, the tobacco industry’s disregard for consumer protection has spread into the e-cigarette industry. As late as 2017, big tobacco-owned e-cigarette, Blu, launched its “Something Better” advertising campaign. The campaign mocked government-mandated package warnings on traditional cigarettes. The ads included variations of the following text and were designed to look like cigarette warning labels:
The parody on government-mandated safety warnings mocks consumer protection efforts by government agencies—a tactic not surprising coming from a tobacco company. Right now, there is very little regulation over e-cigarettes despite the fact that the FDA was granted oversight in 2016. Like Blu, Juul also has heavy ties to big tobacco. Altria, parent company to Phillip Morris, the maker of Marlboro, is heavily invested in Juul.
If Juul truly intends to address social media advertising, consumer protection, and youth e-cigarette use, it must do more than spew rhetoric through the media. It must take incisive, prophylactic action to reduce exposure of its products to underage users. If history is any indication, that won’t happen without strict FDA regulation.
If you or someone you know has become seriously addicted to nicotine in e-cigarettes, has health problems associated with e-cigarettes, or has been injured by a malfunctioning e-cigarette, you should contact an experienced e-cigarette injury attorney to advise you on the ability to seek compensation for your injuries.
The 2018 Farm Bill [1] relaxed restrictions covering hemp-based cannabis products, and it is causing a shift in business strategies in the industry. Instead of a full prohibition of trademark registrations covering cannabis goods or services, a narrow range of filings is now permitted, so long as they conform to the requirements of the Farm Bill and the latest USPTO guidelines. While the regulatory framework is still being developed, cannabis-related business owners who could not previously receive federal trademark protection are now reconsidering their trademark strategies.
The principal change from the 2018 Farm Bill is that while all cannabis products derived from marijuana are still prohibited by federal law under the Controlled Substances Act (CSA), those derived from hemp are now permitted, albeit still tightly regulated. Hemp-based cannabis products are defined as those that contain no more than 0.3 percent THC, the primary active ingredient in marijuana. Accordingly, certain products and services derived from hemp are now legal under federal law, and the USPTO has published guidelines that allow narrow federal trademark registrations covering them.
The USPTO had previously refused any trademark application that covered cannabis products or services. In response, many businesses have filed state-law trademark applications in jurisdictions in which marijuana has been legalized, although this provides only limited protection. Businesses have also tried to circumvent the federal prohibition by filing for goods and services tangentially related to marijuana or cannabis, such as apothecary or pharmacy services for medical marijuana, or services for the provision of information and/or advocacy for cannabis and its uses. The policy at the federal level is still to refuse these applications that cover goods and services that are legal on their face but are in fact related to marijuana. But that policy is now moot for certain hemp-related applications that conform to the new guidelines.
Even for applicants that have succeeded in registering trademarks for cannabis-based products under facially legal goods and services descriptions, attempts to enforce these marks can be hollow. During the course of litigation, it may become clear that the activities of the trademark owner are not permitted under federal law. These registrations are still valuable to block other filers as well as to signal that a business is adopting and is willing to enforce a particular mark, but the new USPTO regulations can provide substantially more protection to businesses that sell qualifying hemp-related products or services.
Under the new USPTO guidelines, marks covering hemp-based cannabis products and services are permitted to be registered as long as they contain no more than 0.3 percent THC and are otherwise legal under federal law. Accordingly, there are certain exceptions and requirements, which include the following:
The 2018 Farm Bill left jurisdictional responsibility for regulating certain products to the FDA. As of now, the FDA does not permit cannabidiol (CBD) to be sold in food or drug products. Accordingly, registrations for marks that cover “foods, beverages, dietary supplements, or pet treats containing CBD” are still prohibited. This restriction applies only to CBD at this point. Other non-CBD hemp-based food or drug products would be permitted registration so long as they conform to the applicable FDA guidelines. Also, CBD products that are not a food or drug may still be permitted registration as long as they do not fall under the FDA’s jurisdiction or are not otherwise prohibited by other federal laws. See USPTO Examination Guide 1-19.
For marks covering cultivation and other services related to hemp-based products, applications will be examined not only for compliance with applicable USPTO requirements but also for compliance with the 2018 Farm Bill and applicable state laws. Applicants must show that they have an applicable state license to provide their services, as not all states follow the 2018 Farm Bill’s guidance for hemp products, and in many states, these products are still illegal for commercial purposes or highly restricted.[2]
The new guidelines also allow for applicants to amend pending applications covering cannabis products to conform to the new requirements. To do so, the applicant must limit the list of goods and services to products that contain no more than 0.3 percent THC and submit any required documents showing that the goods and services covered are legal. The application’s filing date would also be amended to coincide with the legalization of hemp-based products, and the USPTO would conduct a new search of the register for prior marks to account for the later filing date.
Under the new regulations, cannabis businesses should consult a trademark attorney to consider their options to protect their trademarks on a federal level. Although the law is in flux and uncertainty abounds, there are several points from a trademark-filing strategy perspective to keep in mind when considering filings under the new guidelines:
The new, narrow USPTO guidelines will not be helpful to every business operating in the cannabis space. Businesses that will be helped either already offer or are considering offering hemp-derived goods and services that contain less than 0.3 percent THC, goods that do not constitute food or drug products that contain CBD, and goods that are not otherwise in conflict with FDA or other federal laws or guidelines.
A large number of trademark applications will likely be filed for hemp-based products soon, regardless of their applicants’ qualifications. Businesses should explore their options and file quickly, and keep in mind that it will be difficult to show prior use to oppose a third-party filer, as any such use was likely illegal under federal law.
Because the USPTO can suspend applications for good cause, it is logical to expect the USPTO to grant suspensions of applications while applicants are in the process of obtaining a license to cultivate hemp-based products.
Creating even more uncertainty, the 2018 Farm Bill has directed the U.S. Department of Agriculture (USDA) to derive regulations for hemp-related activities that fall outside of the FDA’s jurisdiction. The USPTO is expected to quickly adopt new guidelines to conform to the USDA.
Narrowing an existing application to conform to the new requirements will significantly narrow the filing. After such an amendment, the application cannot be amended back to cover the previous broader range of goods and/or services. If an applicant anticipates a change in law and can draw out the application process to wait for such a change, it may be advisable to file a new application that conforms to the new guidelines rather than amending the old one. The applicant can then keep the broader application alive to preserve their options.
In some cases, existing registrations may have made it through the examination process, even if they cover goods and services that were prohibited under federal law at the time of filing. If this is a possibility, businesses should consider their options for re-filing based on the new guidelines which on their face do not apply to amending existing registrations.
The new marijuana legalization framework being put in place state by state, most recently in Illinois, has raised more questions than answers in the state-regulatory sphere. However, until now, the federal guidelines were clear, as all cannabis-related products were prohibited under federal law. After the passage of the 2018 Farm Bill, this is no longer the case. As the law in the cannabis sphere unfolds, businesses should work closely with a trademark attorney to explore options for protecting their valuable brands.
Just like the traditional tobacco industry, Juul has started to issue grants to study the effects of e-cigarettes on users. Back in the bad, old tobacco days, almost all research was funded by tobacco companies through the Council for Tobacco Research (CTR) and the Center for Indoor Air Research (CIAR). Both companies were included in fraud cases against the industry. After a settlement in 1998, the tobacco industry started funding private groups. Much of that funding was undisclosed in study results, suggesting there might be a conflict of interest.
So…is Juul, a company heavily funded by big tobacco, the same? Or is this highly successful, private interest, for-profit company an altruistic anomaly?
Juul’s grant program seems to be part of a new advertising campaign to reverse its bad reputation for targeting youth. Juul is now focused on creating a socially-responsible reputation for health-conscious product marketing, including:
Its unproven claim that the product works for smoking cessation;
An adults-only website landing page and public statement campaign; and, now,
An investment in e-cigarette research.
However, Juul’s concern for its product users only arose after coming under fire for the rising use of Juul products by underage users. By the time Juul launched its new advertising campaigns, it had already completed its big tobacco investment with Altria. According to reports, underage use of e-cigarettes had further increased another 40%. These facts throw shade on the selfless reputation Juul is trying to create with its new grant program. While you might applaud them for listening to their new tobacco investor, you should probably question their motives for the same reason.
If you look at this grant you will see Juul is giving $7.5 million tax-deductible dollars to a school. This is about 0.3% of its estimated annual sales. It’s a pretty meager investment with a high-value publicity gain. That is smart marketing–Juul’s key skill. Smart marketing is how Juul swept up 75% of the e-cigarette market, largely composed of underage users. Juul’s youth-focused advertising (which has decreased as of this date) smacks of historic big tobacco advertising which was eventually and belatedly banned. Juul’s similar approach has generated exponential market growth, and, more recently, FDA and congressional investigations into its operations. Regrettably, the initial investigations only seem to address the prevention of advertising to underage users. Although this satisfies an immediate and important need, it largely ignores the health dangers inherent in e-cigarette use; health dangers that affect the adult population as well.
E-cigarette product development is still unregulated due to former FDA chief, Scott Gottlieb’s, failure to impose immediate FDA oversight of the industry back in 2016 and 2017. There have been many e-cigarette explosions that have caused devastating, permanent, injuries to youth and adults alike. There is also the danger of developing life-altering lung conditions, terminal cancers, and other health risks related to inhaling e-cigarette chemicals into the body. These dangers are exacerbated by a higher rate of nicotine addiction—alleged to be worsened by Juul’s nicotine delivery system—because addicted users vape more often and for extended periods.
To ignore the health risks of vaping and nicotine addiction is to repeat history. The tobacco industry depended on nicotine addiction for recurring sales and to capture new markets. The vaping industry, including Juul, appear to be banking on the same.
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