On October 29, 2019, the U.S. Department of Agriculture (USDA) released its long-awaited interim final rule establishing a national regulatory framework for domestic hemp production, called the U.S. Domestic Hemp Production Program. For those who have been waiting for the Farm Bill of 2018 to realize its promise of making hemp and its derivatives, including CBD (cannabidiol), legal under federal law, the USDA’s rules mark an important step forward. Indeed, once the rules are finalized, the USDA has promised to begin evaluating hemp production plans submitted by states and tribes, including plans submitted by Arizona, Georgia, Kentucky, Montana, North Dakota, Oregon, Pennsylvania, Tennessee, Texas, and Wyoming.

Some positive results from implementation of this rule for current and would-be hemp producers include: 1) a prohibition against interference with the interstate transport of hemp by states, including in states where production and sales of hemp are illegal; and 2) that the USDA will be allowed to provide hemp producers with crop insurance programs.

What does this mean from a brand protection standpoint? A recent report by Fior Markets estimates that the global CBD market will exceed $17 billion by 2026. CBD itself is a commodity, so profits in this space will likely turn on achieving brand recognition, earning consumer loyalty, and attaining a national reach. In most business sectors, federally registering marks for products or services that have a “legal use” in commerce is relatively straightforward. However, the “legal use” requirement has historically made securing federal protection uniquely challenging for cannabis businesses, even those with famous brands. The federal legalization of hemp stands to change that, beginning with the USDA’s promulgation of these implementing regulations.

In particular, the U.S. Patent and Trademark Office (PTO) has issued new guidelines for the examination of trademarks for cannabis and cannabis-related goods and services. The new guidelines allow for federal registration of marks for federally lawful, hemp-derived CBD goods and services that are in compliance with any applicable regulatory schemes, including those imposed by the USDA and U.S. Food & Drug Administration (FDA). In this regard, the industry is still eagerly awaiting the FDA’s promulgation of a regulatory scheme for the types of CBD-containing products that fall within its jurisdiction (e.g., food, dietary supplements, drugs).

As a practical matter, those who plan to seek federal trademark protection in this space should be prepared to provide the requisite assurances that the product or service involves only hemp that was cultivated pursuant to a federally-approved plan and, for products, that they contain less than 0.3% THC. Assuming that this is the case, there is now an emerging pathway for securing federal trademark protection that extends to hemp production and production-related services. Given the complex interplay between the regulatory landscape and cannabis brand protection, it is important to monitor the actions of the federal government closely. We anticipate that once the rules are finalized, the PTO will issue a new Examination Guide. We look forward to keeping you apprised and if you have any questions, please feel free to contact our practice group leaders.

This article appeared in the November 2019 issue of MarkIt to Market. To view our past issues, as well as other firm newsletters, please click here.