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7. Opinion: The Texas Legislature Should Legalize the Production and Sale of Hemp Flower

The Texas Legislature should legalize the production and sale of hemp flower within the State. The passage of the 2018 Farm Bill officially legalized hemp on the federal level. More specifically, the Bill removed hemp from the list of Schedule I substances, allowing for individual states to create state-specific regulations regarding the production and sale of hemp and hemp-derived products, as reported by KXAN.

In June, Texas Governor Greg Abbot signed a bill legalizing the production of industrial hemp in the Lone Star state. The Dallas Morning News reported that Texas joined 42 other states who removed hemp from its list of controlled substances and opted for industrial hemp production. While the Texas Department of Agriculture (TDA) is tasked with developing rules that relate to licensing, manufacturing, testing, seed certification and oversight of hemp production in Texas, the Texas Department of State Health Services (DSHS) is the state agency with oversight of CBD consumables. Industry advocates like Heather Fazio–Director of Texans for Responsible Marijuana Policy–initially praised the State’s actions. Fazio told the Dallas Morning News that “the Texas Legislature got at least one thing right this session when they legalized hemp. Finally, Texas farmers are no longer cut out of this lucrative agricultural market. Plus, Texans are now free to use CBD without fear of arrest.” However, the Bill as passed contains one major loophole: it does not legalize the production, processing, and sale of hemp flower for consumption within the State.

The Bill authorizes the production, manufacture, retail sale, and inspection of industrial hemp crops and products in Texas. Additionally, the Bill also allows for consumable hemp products which contain cannabidiol (CBD), as well as other edible parts of the hemp plant. The State defines consumable hemp products as “a food, drug, device, or cosmetic that contains industrial hemp or hemp-derived cannabinoids, including CBD (containing up to .03 percent concentration of tetrahydrocannabinol (THC).” However, The Bill does not authorize a person to process or manufacture a hemp product intended for smoking, defined in the Bill as burning or igniting a substance and inhaling the smoke.

Supporters of the Bill stated that while the prohibition against hemp products for smoking would include products intended to be burned and inhaled (such as cigarettes)–other products that do not function in that manner would not be subject to the prohibition. By contrast, opponents of the Bill desired greater clarity in defining hemp products intended to be smoked to allow for a better determination between marijuana- and hemp-derived products.

While possessing and consuming hemp flower is legal in Texas, growers (as it currently stands under the proposed regulations) will not be able to grow, process, and sell hemp flower for consumption within the State. So what will the farmers be growing? Well, they will be producing the entire plant, which includes the flower or “buds,” but the flower is to be used in the production of other products, not for consumption-alone. The paradox is, Texans can order hemp flower online, so long as it comes from another state where the production and sale are legal. Likewise, even retailers operating in the State are currently able to sell consumable hemp products (including hemp flower) so long as they are licensed and the products being sold are safe for consumption.

The Texas legislature made the right decision in allowing for the production of hemp and hemp-related products in the State. However, by not allowing growers to produce hemp flower for Texas consumers (namely, smoking), the Legislature is denying Texas farmers the opportunity to reacher a more extensive base of customers. To avoid losing business to out-of-state companies, the Texas Legislature should legalize the production and sale of hemp flower within the Lone Star State.

5. United States Cannabis Companies Are Heading Overseas

United States-based cannabis businesses are increasingly heading to foreign countries to conduct cannabis research, as United States regulations continue to deter industry growth.

Over the course of the last twenty-five years, cannabis laws in the United States have dramatically changed. Thirty-three states have some form of medical cannabis programs and numerous states have moved to adult-use legalization, but one aspect of cannabis regulation has remained stagnant: research.

Marijuana research in the United States is a convoluted web of bureaucracy that has resulted in companies moving their operations to more cannabis-friendly countries. The issues facing marijuana researchers start with the federal illegality of marijuana. The Drug Enforcement Agency (“DEA”) has continued to designate marijuana as a “Schedule One Substance” which subjects potential researchers to significant hurdles. As highlighted in a 2017 National Academies of Sciences, Engineering and Medicine journal articlein order to obtain proper licensure prospective cannabis researchers can be subject to review by multiple government agencies such as the DEA, Food and Drug Administration, and National Institute on Drug Abuse. After obtaining federal licensure, many states require a state license in order to operate.

Then companies must acquire marijuana to use for their research. Since 1968 there has been one federally licensed research marijuana grower: Mississippi State University (“MSU”). The quality and potency of the marijuana grown at MSU has been heavily scrutinized by researchers. Quality control checks have revealed contaminants such as lead and a variety of molds in the MSU Marijuana. Potency has also been found to fall below what is claimed. One 2016 study requested marijuana containing 13% THC and received product containing only 8%.

Low quality, contaminated marijuana can lead to skewed research results. The DEA has been accepting applications from companies to grow research cannabis since 2016, but no new growers have been given licenses. This lack of research efficacy has led companies to look to other countries for research opportunities, with Israel leading the way.

Israel has begun funding marijuana research, leading to fifteen American companies packing up and heading to the middle east. Not only are business’s leaving the U.S., but those still in the U.S. are looking for alternatives to access to research information. The California Israel Chamber of Commerce has begun promoting partnerships between American practitioners and Israeli researchers to promote access to relevant data.

Marijuana research positions moving overseas costs the United States workforce. In 2018, the median medical research scientist salary was $84,000. With the worldwide medical cannabis industry projected to be worth nearly $56 billion by 2025, the United States is squandering an opportunity to add to the economy and become a leader in a quickly budding industry.

6. Are Cannabis Patents Valid?

As the cannabis industry continues to grow, cannabis patenting will inevitably grow, but how many of any of these patents are valid?

Since the year 2009, there have been thousands of cannabis-related patent applications submitted to the United States Patent and Trademark Office (“USPTO”) with more than 550 of these applications being granted as patents. Due to the federal illegality status of cannabis (other than hemp containing less than 0.3% THC), the validity of these patents is relatively unknown.

Historically, the United States Supreme Court placed a moral standard on patents, holding in the famous 1817 case of Lowell v. Lewis that patents “should not be frivolous or injurious to the well-being, good policy, or sound morals of society.” This moral standard is now obsolete and unused, but what the morality standard tells lies outside of its historical applications. The application of this doctrine was confined to items that were not wholly illegal. It was only applied to inventions that could potentially be used for illegal purposes, and this precedent was abandoned in 1999. Essentially, the Supreme Court has never faced a situation where a completely illegal invention patent was at issue.

Although the Supreme Court has not spoken on wholly illegal patents, inventors and patent attorney’s are careful in the wording of many of their patents in case the patents face a validity challenge in court. Many cannabis patents are carefully worded to cover processes and devices that could be applied to cannabis but do not wholly involve cannabis. For example, an inventor may disclose a growing process and mention within the patent that this process could also be used for cannabis, thus giving them exclusive patent rights, while insolating them from an illegality challenge. Although this technique could be successful if challenged in court, this option is not available for inventions such as specific marijuana plant types and isolates such as CBD, because such items are wholly illegal.

The patent community may soon have clarity about the Supreme Court’s opinion of cannabis patents as the countries first cannabis patent infringement lawsuit is currently underway in the Northern District of Colorado. The alleged infringement involves CBD extracts. This lawsuit is in the early stages of litigation and its potential impact is unknown at this time, but it has the potential to completely change the scope of cannabis patents.

Another problem facing the field of cannabis patents is the prospect that the USPTO may be granting overly broad cannabis patents, potentially creating invalid cannabis patents. In the world of patents, inventions that are going through to patenting process are compared to items of “prior art” such active and expired patents, patent applications, and other publications to determine if the patent is “nonobvious” and “novel.”

Because of the historic illegality of cannabis, black market inventors typically did not disclose their newly developed technologies out of fear of criminal prosecution. This lack of disclosure gives patent examiners very little to search through when processing a patent application. Although the examiner may not find prior art, a third party may raise a judicial challenge to a patent if they discover prior art that describes all or part of a previously patented invention. As a 2014 Berkley Law Journal article describes, patent invalidation litigation is somewhat common in other industries. If marijuana were to become federally legal, the floodgates of invalidation lawsuits could open.

As it stands, cannabis-related patents are valid, and this is likely to continue until either congress of the Supreme Court speaks on the matter. Given the quick growth of the legal United States cannabis industry, it is likely the industry will have its questions answered soon.