The proposed amendment to remove hemp from the federal government’s list of Schedule 1 drugs is likely to trigger a wave of federal trademark registrations.

On December 11, the U.S. Senate approved the $867 billion 2018 Farm Bill by a vote of 87-13; and on December 12, the House approved the bill 369-47. President Trump is expected to sign the bill shortly. Tucked within the 800+ page bill is an amendment put forth by Senator Mitch McConnell of Kentucky that will have far-reaching impacts on the hemp and CBD industry, as well as on the ability to procure federal trademark registrations for hemp and CBD products.

The bill creates a critical shift in how the federal government views hemp: namely, that hemp is no longer a controlled substance and thus its sale will be a lawful use in commerce. The 2018 Farm Bill also delegates the ability to regulate hemp production to the states. For the past few years, New York state has taken measures to encourage hemp production and economic development: establishing the Industrial Hemp Agricultural Research Pilot Program, expanding the program to farmers and businesses, and eliminating a cap on the number of sites authorized to grow and research hemp. The state is now allowing applications for CBD processors, but the application and $500 fee must be submitted by December 28, 2018. New York state has also introduced increased restrictions for approved processors and growers, including making or selling CBD in vaping form or for child consumption.

Marijuana and Hemp Part Ways

Before the passage of the 2018 Farm Bill, the Controlled Substances Act (21 U.S.C. § 812) classified marijuana as a Schedule I controlled substance: the highest rating, reserved for drugs with a high potential for abuse, no currently accepted medical use in treatment in the United States, and a lack of accepted safety for use under medical supervision. The Controlled Substances Act  defined marijuana (or “marihuana,” as it’s spelled in the Act) in a way that covered both marijuana and hemp: “all parts of the plant Cannabis sativa L. . . . and every compound, . . . derivative, mixture, or preparation of such plant, its seeds or resin.” This broad definition thus encompassed hemp (regardless of THC%) as well as CBDs and other hemp extracts. To note, this definition of marijuana did not include the seeds and mature stalks of Cannabis sativa L.

Section 12619 of the Farm Bill amends the Controlled Substances Act to state that “the term marihuana does not include . . . hemp as defined in Section 297A of the Agricultural Marketing Act of 1946.” Likewise, the definition of fellow Schedule I drug tetrahydrocannabinol (THC) was amended to exclude the THC found in hemp as defined in Section 297A.

How is “hemp” defined in Section 297A? The 2018 Farm Bill defines “hemp” as the “plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of less than 0.3% on a dry weight basis.” In other words, hemp is the Cannabis sativa L. plant with less than 0.3% concentration of THC.

Floodgates Open for Hemp and CBD Trademarks

This leaves us with a critical shift in how the federal government views hemp: namely, that it is no longer a controlled substance and thus its sale will be a lawful use in commerce. This is important because the United States Patent & Trademark Office (“USPTO”) will only issue trademarks for goods and services that are in lawful use in commerce. Previously, a federal application that claimed goods comprising or containing hemp or CBD would likely be rejected as not pertaining to a “lawful use in commerce.”

For example, a company filed U.S. Serial No. 87/619,584 for the mark CB DREAM in connection with various creams, beverages, and oils, all containing CBD derived from hemp. The USPTO rejected the application, noting that the applicant’s proposed goods were prohibited by the Controlled Substances Act outlawing marijuana, which included hemp; and marijuana-based preparations, which included CBD derived from hemp.

For another example, see the rejection received by U.S. Application Serial No. 87/618,637 for the mark RX CANNA CHEMIST. This application was rejected despite the fact that the goods did not explicitly reference hemp or CDB, but rather things like “nutritional supplements in lotion form sold as a component of nutritional skin care products.” The USPTO rejected this application as not pertaining to a lawful use in commerce, citing both the Controlled Substances Act and the DEA Drug Code 7350, which explicitly included CBD extracted from the Cannabis sativa L. plant under the definition of marijuana in the Controlled Substances Act.

Once the 2018 Farm Bill is signed into law, hemp and CBD derived from hemp will no longer fall under the definition of marijuana. Accordingly, trademarks filed for goods and services related to or containing hemp, CBD derived from hemp, and terpenes/terpenoids derive from hemp should no longer be rejected by the USPTO as not pertaining to a lawful use in commerce. Of course, a trademark application for marijuana or CBD or other cannabinoids derived from marijuana would still be rejected as a non-lawful use in commerce.

Due to complications caused by the Food, Drug and Cosmetic Act, however, it is not yet evident whether the path to hemp and hemp-derived CBD trademark registrations is totally clear with regard to food and dietary supplement products.

In sum, the 2018 Farm Bill not only legalizes hemp, it opens up entire new worlds of federal trademark protection for hemp and hemp-derived CBD products. However, given the uncertainty inherent in this nascent field as well as the potentially negative impact of the Food, Drug and Cosmetic Act, we suggest consulting with a cannabis trademark attorney at Harris Beach before filing an application.

Harris Beach’s developing Cannabis industry team is closely tracking issues related to hemp production, marijuana for medical use and marijuana for recreational use.