suing you

The hemp-derived CBD market is a tough one right now. From uncertainty in when and how the FDA may begin regulating products, to the downturn in the stock markets as result of the coronavirus affecting the hemp industry, the problematic interim rules concerning hemp production and increasing state regulation, CBD companies face a plethora of issues in trying to turn a profit. Add increasing consumer class action litigation to the list – something we predicted several months ago.

Recently, Charlotte’s Web Holdings, Inc. (“CWB”) was served with a second consumer class action lawsuit alleging “multiple and prominent mislabeling” of certain products that “form a pattern of unlawful and unfair business practices that harm the public.” Benson v. Charlotte’s Web Holdings, Inc., No. 1:20-cv-00418 (N.D. Ill.) (You can read about the first consumer class action lawsuit against Charlotte’s Web here). This new lawsuit, filed in the Northern District of Illinois, focuses on two products, “Soothing Scent Hemp Infused Cream” and “Unscented Hemp Infused Cream” (the “Products”).

The gravamen of the complaint is that CWB markets the Products online and on the product packaging as containing a certain amount of hemp extract, but the Products actually contain an amount of hemp extract significantly less than the amounts claimed by CWB in its marketing and labeling. In particular, the Complaint alleges CWB represents that the Products contain “750 MG Hemp Extract,” but several tests of the Products—done by a third-party laboratory most likely at the behest of the Plaintiffs—reveal that amount of hemp extract in the products ranged from 177.5 MG to 347.9 MG.

The Plaintiffs allege claims for breach of express warranty, breach of the implied warranty of merchantability, unjust enrichment, and violation of several state consumer fraud acts. The Complaint claims that class damages exceed $5 million and seeks to recover monetary damages in an amount proven at trial and attorneys’ fees. (Feel free to email me for a copy of the complaint.)

If your company sells CBD products these lawsuits should concern you. Increasingly we work with clients who contract with one or more third parties for the manufacture, labeling and shipping and of CBD products. But if your company’s name is on the label or the product purchased through your website, you are at risk. Now is the time to revisit your contracts to ensure that the risk of the manufacturer failing to ensure the product contains the amount of CBD on your label falls on the manufacturer, not on you. Start with the defense and indemnity provisions in each of your contracts, and go from there!

girl scout cookies cannabis

As usual, we’ve been monitoring both brewing and active trademark disputes in the cannabis space, and the most recent example involves the institution that is the Girl Scouts. For background, here are some of the other disputes we’ve covered in the past:

According to a recent article in Forbes, California cannabis-edibles company Kaneh Co. was promoting its cannabis-infused cookies as similar to several of the Girl Scouts’ cookie brands. According to the article, Kaneh was comparing its “Toasted Coconut Caramels (‘flecked with vanilla and sea salt’) to the Scouts’ Samoas; its Lemon Sugar Cookies to the Scouts’ Lemonades; and its Salted Toffee Blondies (‘a brown sugar blondie swirled with toffee chips and a generous dose of sea salt’) to the Scouts’ Toffee-tastic cookies.” All of these descriptions were included in an emailed advertisement for Kaneh’s goods, and a representative from Kaneh stated that the Girl Scouts comparison would not appear in any print or online advertisements.

The Girl Scouts, however, were not amused by Kaneh’s likening of its products to the Girls Scouts’ cookies, particularly given the connection to cannabis. A statement from the Girl Scouts said, “We consider … such use of our [cookie names] trademarks to be misappropriation, which we take seriously and, when applicable, [we] will send a cease and desist request.”

This is not the first time the Girl Scouts have gone to bat against a cannabis company, previously having clamped down on the use of the strain name “Girl Scout Cookies.” See: How an LA Weed Dispensary Pissed Off the Girl Scouts.

Quite frankly, it’s understandable that a youth organization would object to the use of its intellectual property in conjunction with a Schedule I controlled substance. But what is interesting about the Girl Scouts’ current beef with Kaneh’s use of its intellectual property (IP) is that the Girl Scouts representative didn’t argue that Kaneh was infringing the Girl Scouts’ trademarks (as was the case in the disputes we’ve covered in the past and linked to above). The representative instead asserted that such use of the Girl Scouts’ cookie names was “misappropriation,” and this is an important distinction.

As we’ve covered before, a trademark is a word, phrase, symbol, and/or design that identifies and distinguishes the source of the goods of one party from those of others. And trademark infringement is the “unauthorized use of a trademark or service mark on or in connection with goods and/or services in a manner that is likely to cause confusion, deception, or mistake about the source of the goods and/or services.” In the case at hand, the Girl Scouts would be hard pressed to show that Kaneh’s use of the names of its cookies (which are protected by trademark registrations), was likely to cause consumer confusion or mistake about the source of the goods, since Kaneh was only referencing the cookies in a comparative manner, to explain to customers what its cookies tasted like. In fact, this comparative manner of use would make it very clear to customers that Kaneh’s cookies were not Girl Scout cookies.

But are companies allowed to make these kinds of comparative statements? And what is “misappropriation” in the context of trademarks? The theory of misappropriation in a trademark context is tenuous, but there are three basic elements (J. THOMAS MCCARTHY, 2 MCCARTHY ON TRADEMARKS AND UNFAIR COMPETITION § 10.72 (4th ed. 2006)):

  1. Plaintiff has made a substantial investment of time, effort and money into creating the thing misappropriated such that the court can characterize that “thing” as a kind of property right [the creation element].
  2. Defendant had appropriated the “thing” at little or no cost, such that the court can characterize defendant’s action as “reaping where it has not sown” [the appropriation element].
  3. Defendant has injured plaintiff by the misappropriation [the injury element].

The idea here would be that Kaneh was free-riding on the goodwill that the Girl Scouts have worked to establish over the years. But there are also “fair use” exceptions to trademark infringement, including for comparative advertising. It is unclear whether such comparative advertising principles would apply in this case, since traditional girl scout cookies fall within a completely different product category from cannabis-infused cookies. Still, this is something that all cannabis business owners should be mindful of. Use of another company’s trademark in comparative advertising may be allowed under certain circumstances, but businesses must be very careful to avoid advertisements that could be deemed false and misleading.

Even if you think that your use of another’s trademark does not constitute trademark infringement, or that your use falls within a fair use exception like comparative advertising, it is important to consider claims that could be made against you like misappropriation, or false and misleading advertising, and it is important to run these types of advertisements by your IP lawyer.

pennsylvania cannabis hemp

The Agriculture Improvement Act of 2018 (2018 Farm Bill) legalized hemp by removing the crop and its derivatives from the definition of marijuana under the Controlled Substances Act (CSA) and by providing a detailed framework for the cultivation of hemp. The 2018 Farm Bill gives the US Department of Agriculture (USDA) regulatory authority over hemp cultivation at the federal level. In turn, states have the option to maintain primary regulatory authority over the crop cultivated within their borders by submitting a plan to the USDA.

This federal and state interplay has resulted in many legislative and regulatory changes at the state level. Indeed, most states have introduced (and adopted) bills that would authorize the commercial production of hemp within their borders. A smaller but growing number of states also regulate the sale of products derived from hemp.

In light of these legislative changes, we are presenting a 50-state series analyzing how each jurisdiction treats hemp-derived cannabidiol (Hemp CBD). Today we turn to Pennsylvania.

The Pennsylvania Department of Agriculture (PDA) regulates hemp cultivation in Pennsylvania. PDA has an industrial hemp program that requires participants to submit applications and obtain permits to cultivate hemp in the state. There are fairly robust requirements to get a permit unlike in some other states: owners must undergo federal background checks and submit detailed information about their business in order to get permitted. PDA also imposes detailed reporting requirements and requires that cultivators follow strict guidelines when growing hemp.

Notably, Pennsylvania’s hemp production plan was approved by the USDA but has not yet taken effect. When it does take effect, it will impose much more robust rules on hemp cultivators, and will also require processors to obtain licenses. Expect big changes in the future.

When it comes to Hemp CBD products, PDA generally follows the FDA’s position when it comes to Hemp CBD products, and does not allow Hemp CBD to be added to foods. PDA also states, for what it’s worth, that products and product labels must comply with any applicable law, including FDA laws. While PDA has not directly addressed most other Hemp CBD products (such as cosmetics), we can assume that the agency would follow in the FDA’s footsteps given its incorporation of FDA policy relative to foods. Therefore, sellers of products that contain Hemp CBD that do not make medical claims and are not on the FDA’s target list for any other reason might be safer in Pennsylvania.

For additional updates on changes to Pennsylvania hemp laws and Hemp CBD laws, please stay tuned to the Canna Law Blog.  For previous coverage in this series, check out the links below:

sephora cbd

While the U.S. Food and Drug Administration (“FDA”) continues to drag its feet in forging a clear path for the sale and marketing of hemp-derived cannabidiol (“Hemp CBD”) products, foreign agencies and industry players are leading the way by adopting their own sets of regulations.

Last week, giant beauty retailer Sephora announced it was now enforcing standards specifically tailored for all Hemp CBD products found on its shelves to ensure these products meet the company’s high-quality standards.

To comply with these CBD standards, all Hemp CBD products sold at Sephora must:

  1. Exclusively contain full-spectrum or broad-spectrum Hemp CBD extracts, no isolate.
  2. Be derived from hemp grown in the U.S.
  3. Be accompanied by a certificate of analysis that could be made available for customers upon request.
  4. Be tested three times for quality and purity, including CBD concentration levels as well as microbial and chemical contaminants.
  5. Comply with the “Clean At Sephora” standards imposed on all products carried by the company, which ban the use of over 50 ingredients, including sulfates, parabens, phthalates, mineral oils and other potential toxins.

As the first national retailer to adopt CBD guidelines, Sephora is raising the need to assist consumers in navigating this complex regulatory landscape.

Hemp CBD topicals represent a significant percentage of the booming CBD market. According to an August 2019 report released by Grand View Research, Inc., the global CBD skincare market is expected to reach $1.7 billion by 2025, with North America leading the way. Yet, back in 2017, 60% of online CBD products reviewed in a study published in the Journal of American Medical Association, were found to be mislabeled. Mislabeled often meant false potency claims, with 26% of these products containing lower concentrations of CBD than listed on their labels.

Add to that the issue of adulteration and the sad reality that many CBD topicals–and CBD products, generally –contain dangerous substances. The issues are obviously hugely problematic and stress the need for standards like those adopted by Sephora to protect consumers from public health crises.

We applaud Sephora for leading the way in regulating the industry and hope that the company’s initiative will further pressure the FDA to fulfill its responsibility to ensure the safety of our nation’s cosmetics (among other things) by adopting its own regulations for the sale and marketing of these products.

We’ll continue to update you on any other regulatory development via this blog.

california cannabis litigation

We’ve written a good amount on how ugly litigation will be. There’s federal illegality and the possibility that a court refuse to rule on a contract dispute because cannabis is federally illegal. Companies can be sued for false advertising and have all of their profits attributable to the false advertising disgorged by competitors. Allegedly false claims can also be the subject of class-action shareholder suits. If a company is engaged in ongoing wrongs, courts can literally order them to stop via injunctions, and if they do not, people could be held in contempt and go to jail. Courts can award punitive damages just to punish companies who do very wrong things like engage in fraud. The list goes on.

One thing that many cannabis companies may not even have on their radars is the damage that can arise through pleadings and during the discovery process in court litigation. Pleadings are the complaint and answers in any case. Plaintiffs file complaints and make allegations about defendants, and defendants answer those complaints and admit or deny the allegations. All of this is public unless companies are in arbitration or a court has ordered that it not be public (and good luck getting that order).

When it comes to the discovery process, during litigation, parties can make requests for the other parties to produce documents or information and can even force certain people to sit for hours under oath and testify (this is often videotaped and almost always transcribed for later use). Discovery is not necessarily public, but outside of arbitration and without “protective orders” signed off on from the court, the information learned in discovery often winds up in the public domain.

Cannabis companies should not overlook the importance of pleadings and discovery and their potential public nature. By now, everyone is familiar with this fact pattern: allegations are made against a public cannabis company, and overnight, its stock value plummets significantly. Even for non-public companies, having allegations of things like fraud, false advertisement, breach of contract, etc. out in the ether can be problematic when trying to raise funds and get licenses. Moreover, even if a cannabis company gets a case dismissed, the complaint is still public record without a court order sealing it, and again, that’s probably not going to happen.

What makes the risk of publicity all the more problematic is the potential for rule violations to come to light. Given the fact that all state-level cannabis regulations are murky and complicated, it is understandable that some companies may not have strictly complied with the rules. That may come out in discovery. What also may come out in discovery are the internal conversations about those rule violations. Imagine an email chain where the owners of a company talked about, acknowledged, and agreed to sweep under the rug a severe rule violation. That could be part of the record in litigation.

Also problematically, cannabis regulations require licensees to keep records of just about everything, and to keep them for years. Parties to litigation will have a hard time saying that records don’t exist, and if they truly don’t exist…. well, that’s another potential rule violation that could come out.

Litigation is almost always ugly and unpleasant for the parties. But in this industry, parties will have a lot of leverage over each other given the nature of cannabis regulations and the industry as a whole. In the first quarter of 2020, our cannabis attorneys have already seen a huge uptick in disputes, and we don’t expect it to relent anytime soon. Stay tuned to the Canna Law Blog for more on the wave of disputes that are about to hit.

mso cannabis

Multi-state operators (MSOs) are becoming more prevalent in the domestic and global cannabis trade. As industry consolidates, state and local governments have rolled out competitive licensing systems that demand large amounts of capital, general business acumen and specific experience in regulated industries. The cannabis MSO game is not for the faint of heart, but the upside is tremendous.

MSOs face a unique host of issues in the state-to-state cannabis market that can only be navigated by an intimate and comprehensive knowledge of local regulations, regulators, cultures and markets. Oftentimes, MSOs are also large organizations with numerous principals, management staff and executives, and hundreds of employees. Additionally, MSOs may tend to have complicated corporate structures to ensure the separation and preservation of various assets, including real estate, intellectual property, and equipment. And each state (and even city or county) will treat cannabis MSOs differently. All in all, regulatory oversight will change drastically from state to state– especially in the areas of disclosure and changes of ownership.

To gain market share, MSOs often will look to the secondary cannabis market to buy up existing operators in various jurisdictions. Depending on the structure of the MSO, disclosure requirements for owners, financially interested parties, and/or true parties of interest can be extremely nettlesome. Depending on the jurisdiction, acquisitions may or may not even be legally possible and/or realistic within a reasonable amount of time– especially if the MSO is publicly traded.

This webinar is dedicated to highlighting the most important issues for MSOs in the U.S. for state-to-state expansion. MSOs must be aware of the various pitfalls they face as they expand across the country, including various corporate structures, tax impacts, employment issues, and licensing and disclosure quirks from state to state. Vince Sliwoski (Portland), Hilary Bricken (Los Angeles), and Alison Malsbury (San Francisco) will present on and discuss these issues on Thursday, April 2, 2020 from 12-1:00 p.m. PT. This webinar will focus on education applicable to MSO executives and general counsel.

We sincerely hope you can join us to discuss these cutting-edge issues for this innovative and evolving industry group.

You can purchase tickets through Eventbrite. Early bird tickets will be available until Tuesday, March 17th  for only $40, after which time the price will be $60.

For questions please email events@harrisbricken.com. We look forward to seeing you next month!

ketamine clinic legal

In recent years, the United States has seen a proliferation of ketamine clinics. From 2015 to 2018, the number of clinics increased from 60 to 300; that number is undoubtedly higher today. People are increasingly using ketamine for ailments that resist treatment through traditional pharmaceutical drugs.

In an even larger trend, the health care provider community seems to be exploring various alternative therapies and emerging medicines to improve quality of care. Recently, the decriminalization of psilocybin (by various cities) has been in the news as an emerging medicine. Similar to ketamine, psilocybin has shown great promise in clinical trials for helping to effectively treat depression and PTSD (and we’ve written about psilocybin several times on this blog, including here and here).

With respect to ketamine infusion therapy (which is the prime time attraction of ketamine clinics), the medical research based promise is for treatment of chronic neuropathic pain, chronic pain (instead of opioids), and various medication-resistant mental health disorders, including depression, bi-polar disorder, and PTSD (among others). According to the American Psychiatric Nurses Association:

Ketamine infusion therapy involves the administration of a single infusion or a series of infusions for the management of psychiatric disorders (e.g., major depressive disorder, post-traumatic stress disorder, acute suicidality). Ketamine is a noncompetitive N-methyl-D-aspartate (NMDA) receptor antagonist that has traditionally been used for the induction and maintenance of anesthesia.

Still, for all its promise, would-be clinic owners, practitioners, and consumers may be confused about the legality of such clinics. There are questions about the logistics of opening and running one of these types of businesses, given the complex interplay of laws and regulations promulgated by bodies from the U.S. Food and Drug Administration (FDA) to cities and counties. This post is dedicated to clearing up some of the confusion behind ketamine clinic set-up and operation.

What are the exact legalities behind ketamine?

Sine 1970, ketamine has only been approved by the FDA for the induction and maintenance of anesthesia. However,  it is also being used for off-label infusions for the management of psychiatric disorders and chronic pain management (enter the clinics). The FDA doesn’t have any regulations on point for the control and oversight of ketamine clinics when it comes to infusion therapy and the states don’t really either.

In 1999, the Drug Enforcement Administration (DEA) listed ketamine as a Schedule III controlled substance (a depressant) pursuant to the Controlled Substances Act, which means it has a moderate to low abuse potential (lower than Schedules I and II), a currently accepted medical use, and a low to moderate potential for physical or psychological dependence. Ketamine makes its home on Schedule III alongside anabolic steroids and testosterone. According to the Feds, ketamine is safer than cannabis (which is a Schedule I controlled substance).

So, how does one lawfully open and operate a ketamine clinic for infusion therapy given the foregoing?

First, ketamine infusion therapy is an off-label use for ketamine in the U.S. “Off-label use” (which is extremely common) is:

the use of pharmaceutical drugs for an unapproved indication or in an unapproved age group, dosage, or route of administration. Both prescription drugs and over-the-counter drugs (OTCs) can be used in off-label ways, although most studies of off-label use focus on prescription drugs.

According to the FDA, “once the FDA approves a drug, healthcare providers generally may prescribe the drug for an unapproved use when they judge that it is medically appropriate for their patient.” Oftentimes, a healthcare provider may prescribe a drug off-label because there might not be an approved drug out there yet to treat the subject medical condition or because no other medication has worked yet for the patient.

Ketamine infusion therapy fits squarely into legitimate off-label use for those mental health conditions not effectively treated by what’s on the pharmaceutical market today (and there are definitely more treatment possibilities out there as medical research continues). And as long as the healthcare provider in charge judges the infusion therapy to be ethical and not violative of safety standards, they may prescribe it accordingly.

Second, ketamine is still a controlled substance even if it’s being used for off-label administration, so you still have to follow all federal and state laws around Schedule III registration, storage, inventory management, security, record keeping, and prescription protocols (which is not insignificant). Whomever on site is administering, manufacturing, storing, or distributing the drug, from the doctor to the nurse practitioner to the on-site pharmacist, must register with the DEA in accordance with Part 1301 of Title 21 of the Code of Federal Regulations on and after August 12, 1999.  Failure to follow these very specific legal directives can lead to immediate criminal liability under federal law.

Third, multiple existing and state laws and regulations will apply to a ketamine clinic. Specifically, clinics should analyze state (and federal) medical, drug and facility statutes and regulations to identify various regulatory barriers to entry. Local laws will also likely come into play regarding the licensing and permitting of the clinic within certain zones of a city’s or county’s borders.

Fourth, because there is no FDA regulation on point for the control and oversight of ketamine clinics, it’s “dealer’s choice” on how the business is operated– including patient safety protocols. Because of this, multiple medical community interest groups have established recommended business and patient protocols to ensure that these clinics are abiding by a variety of ethical and corporate standards for ultimate patient care. See, for example, this comprehensive ketamine infusion therapy checklist developed by the American Association of Nurse Anesthetists.

Fifth, given that ketamine infusion therapy is still an off-label use, the liabilities for ketamine clinics is fairly far-reaching. The consequences of medical malpractice may be greater because of the off-label use of the drug; dosing and frequency of treatments, marketing and promotions, medical claims and statements of efficacy, patient screening and determination of appropriateness of administration, and coordination with mental health care providers (to name just a few) are going to be areas of vulnerability as a result.

Despite the growing body of research behind ketamine as an effective treatment for certain mental health issues and mood disorders, in 2017, an American Psychiatric Association (APA) task force related to ketamine cautioned medical practitioners (in a consensus statement) around the expanding use of the drug as an off-label treatment.

Ketamine is also widely known as a popular party drug (“Special K“). If a clinic is not scrupulous regarding its patient population and intake procedures (using minimal screening and untrained providers), or is looking to make a buck over a growing medical fad, anyone could get access to ketamine infusions. That access would be available under the auspices of having a chronic, untreatable mood disorder. As such, legitimate concerns also exist that legitimate patients won’t get enough of the treatment or they’ll get too much of the drug to their detriment.

Finally, esketamine nasal spray (a derivative of ketamine) was separately approved by the FDA for treatment-resistant depression last year. The new drug’s name is Spravato and its maker is Janssen, a division of Johnson & Johnson. On the back of this FDA approval, I can only imagine that more and more clinics will open across the nation, utilizing Spravato and continuing to explore off-label uses and applications of ketamine (especially since neither the FDA or DEA have really cracked down on these clinics).

Be sure to stay tuned as this exciting area of emerging medicine evolves.

international cannabis

Best practices for navigating the international cannabis trade has been an in-demand topic for our business and international trade attorneys over the past year. The industry is rapidly expanding and many are eager to get in on the action early. However, being first to the table means being first to traverse the landscape of elaborate, ever-changing regulations and standards. This is where we thrive!

Tomorrow’s webinar on Wednesday, March 4th at 12pm PST features attorneys Adams Lee (Seattle), Griffen Thorne (Los Angeles), Nathalie Bougenies (Portland), and Vince Sliwoski (Portland) as they examine this growing industry sector. Topics of discussion will include:

  • The treatment of cannabis (both marijuana and hemp) under international law;
  • Import and export of medical marijuana, including customs issues;
  • Import and export of hemp and CBD products, including customs issues;
  • Considerations around foreign direct investment in U.S. cannabis businesses; and
  • Your questions!
Whether you can attend live or not, please register here and submit your questions when you register! Adams, Griffen, Nathalie, and Vince will do their best to field them.  A recording of the webinar will also be made available afterwards on the blog.
Before then, be sure to do your homework and read up on our extensive blog posts about international cannabis trade here.

china hemp

The U.S. hemp market continues to heat up for a variety of reasons, mainly because the general populace is finally starting to understand the difference between cannabis as marijuana and cannabis as hemp (and the benefits of CBD and other cannabinoids derived from cannabis). In this post I’ll discuss why China’s pain can be U.S. hemp producers’ gain.

Basic principles of economics dictate that in the U.S. hemp market where demand stays constant (or increases) and supply decreases due to something like a coronavirus in China, the price of that good increases (sometimes substantially), enriching existing suppliers and drawing more suppliers into the market.

And it is also true that where there is available supply (U.S.) with the same or better good that can make up for the decreased market supply without substantially increasing the cost of that good, those suppliers will fill the void, equalizing supply and demand. China’s export-led hemp industry, with its normally outsized international presence, is no exception.

U.S. hemp producers happen to be 7,000 miles closer to the U.S. market than Chinese hemp producers. And do not forget that China’s hemp industry is only now starting to diversify from its industrial hemp products into consumer hemp products, so many U.S. hemp producers and extractors are ahead of their Chinese competitors.

Virtually all of China’s industries have been hit hard by the effects of the novel coronavirus (COVID-19). China is still basically on lockdown due to COVID-19, which means that most businesses are hobbling at best as they try to comply with government directives to get workers back to the factories and get production back up to capacity, with all of the attendant problems you can imagine in trying to do so under a nationwide epidemic.

But Chinese farms keep producing hemp, which will lead to a glut of raw and finished products in certain industries. These products require an export market; China has no significant domestic market to absorb its hemp production. This export bottleneck is less of an issue in one of China’s hemp centers in northeast Heilongjiang Province, where the average temperature in winter hovers barely above 0 degrees. But it certainly matters in China’s other hemp center of southwest Yunnan Province where its average temperature in winter is comfortably above freezing and has multiple growing seasons.

I recently read a good article in Hemp Industry Daily that said U.S.-based hemp growers will not be the only ones to benefit from China’s current virus-related meltdown and trade friction. It said, “this newest issue underscores the vulnerabilities in the global marketplace that vape and other cannabis and hemp companies rely on for products ranging from LED lighting to packaging supplies.”

Two of my co-authors, Adams Lee and Griffen Thorne, provided insight on that topic almost a year ago (see here). So opportunities also abound for cannabis-related companies to renegotiate contracts with Chinese suppliers, many of whom have already started reneging on current contracts as they point to force majeure clauses in their contracts.

And as I mentioned in a prior blog post, U.S.-based hemp companies need all of the good news they can get as they try to compete with China, but it will probably not come from the Phase One trade deal:

When the trade agreement was made public, some honed in on the appearance of hemp in the trade agreement, the relatively recently de-scheduled industrial crop in the U.S., thanks to the 2018 Farm Bill (Agricultural Improvement Act of 2018). One prominent marijuana publication published an article the day after the trade agreement was made public, on January 16, claiming that, “China Must Import More Hemp From U.S. Under New Trade Deal.” That is an overly generous interpretation of the trade agreement. . . The short gloss is that China may buy more hemp from the U.S. under the new trade deal, but China is definitely not obligated to buy more (or any) U.S. hemp as a result of the trade deal.

As one economics professor described to me recently, “The phase one trade deal is basically dead.” That reality, coupled with the current COVID-19 pain, means that China will be offline for some time to come, and that means U.S. hemp producers prepared for export markets will find less competition in the international marketplace.

If you are interested in keeping up with China-focused legal developments, check us out on our multiple award-winning China Law Blog.