Welcome to our weekly roundup of CBD and hemp-related legal and regulatory news:
A cannabidiol extract company is asking an LA county court to throw out claims from a business partner alleging the extract company breached its contract to draw a type of THC from raw materials, saying it doesn’t have significant enough ties to Calif. for the state’s courts to hear the case. In a reply brief, Old Belt Extracts urged the court to dismiss the suit from Delta Technologies, saying N.C. is a more fitting venue for the dispute, as the bulk of witnesses and evidence is located there. Old Belt said Delta conceded that, as it is an N.C.-based company, the Calif. courts don’t have jurisdiction over Old Belt, and argued its ties to the Golden State are too minimal to support specific jurisdiction. In particular, Old Belt said it didn’t voluntarily avail itself of the laws of Calif., as it was Delta that initiated contact by first reaching out to Old Belt to make a deal, rather than Old Belt going to Calif. to solicit Delta.
– Law 360 (sub. req.)
A congressional panel held a hearing that touched on a wide range of hemp issues, with lawmakers and witnesses – including two state agriculture commissioners and industry representatives – highlighting reforms they would like to see as part of the 2023 Farm Bill. The House Agriculture Subcommittee on Biotechnology, Horticulture, and Research has jurisdiction over areas of specific, limited hemp policy matters, but members took the opportunity to discuss broader issues such as proposals to allow marketing of products containing derivatives like CBD, increase the THC limit for legal crops and eliminate DEA lab testing requirements. Jim Baird (R-IN) said “while we are certain to hear about successes in the hemp industry, it’s important to note that we have many challenges.†He also said it would have been useful to have representatives of USDA and FDA present and expressed hope that federal officials would appear before the panel in the future. Rep. Glenn Thompson (R-PA) also expressed frustration that USDA and FDA were “missing in action†at the hearing despite the central role they play in hemp regulatory matters.
– Marijuana Moment
A Canadian engineering firm can’t countersue an Ohio-based agricultural device manufacturer for sending cease-and-desist letters that accused it of trade secret theft related to designs for a cannabis trimmer, a federal judge has ruled, citing the First Amendment. U.S. District Judge J. Philip Calabrese said he understood Keirton’s “frustration” with Aerodyne Environmental, which sent the cease-and-desist letters in March. But the U.S. Constitution gives Aerodyne the right to warn these companies they could find themselves a defendant in a trade secret lawsuit, just like the one lodged against Keirton. Litigation between the companies began in Jan., when Aerodyne filed suit against Keirton and its U.S. subsidiary accusing it of breaking a nondisclosure agreement, unjust enrichment and violating the Ohio Uniform Trade Secrets Act.
Law 360 (sub. req.)
U.S. District Judge John W. Holcomb okayed a deal between Wm. Wrigley Jr. Co. and Steven Mata, who runs OC 420 Collection, an online cannabis edibles retailer. Wrigley alleged that Mata and a number of other companies and their owners had infringed its trademarks for the Skittles and Starburst brands with products such as “Medicated Skittles” and “Medicated Cannaburst Gummies,” which mimic the logos of the candies as well as other trade dress, such as the coloring and overall design of the packaging. As part of the consent decree, Mata cease using any trademarks associated with Wrigley’s brands. Furthermore, Mata must immediately pull all the infringing products off shelves and deliver them to Wrigley’s attorneys for destruction. The consent decree also requires Mata to disgorge all profits he obtained as a result of infringing Wrigley’s trademarks, and pay damages of $2 million per counterfeit mark, per type of goods sold, as well as other unspecified damages.
– Law 360 (sub. req.)
A temporary restraining order issued by LA County Judge James C. Chalfant prohibits LAHC and its CEO from replacing any Dr. Greenthumb products from their cannabis dispensary on Pasadena Ave. with its own merchandise. A hearing to determine if a preliminary injunction is warranted is scheduled for Aug. 16. LAHC and the CEO signed the licensing agreement last year, requiring the dispensary to operate under the Dr. Greenthumb brand and set aside at least 15% of the showroom for the company’s products, according to the lawsuit. This deal is set to expire in 2024. On July 15, 2022, LAHC threatened to terminate the deal unless Dr. Greenthumb ended a licensing agreement with a dispensary in the Sylmar neighborhood due to an unrelated dispute. Dr. Greenthumb is seeking a permanent injunction requiring LAHC to stay in the agreement.
– Law 360 (sub. req.)
In the TM suit filed by BBK Tobacco & Foods, the tobacco company alleged CCA’s “Raw Garden” brand infringed on its “RAW” brand. However, U.S. District Judge Michael T. Liburdi found while the products might be sold in some of the same shops, the trademarks and logos were different enough that consumers wouldn’t mistake one for the other, and BBK showed no evidence that anyone had in fact been confused.
– Law 360 (sub. req.)
Investors Tom and Jerry Reed are suing the former owners of a Mont.-based marijuana grow and dispensary business, accusing them of overinflating its value and embezzling from it. Upon taking control of MBM, the Reeds expected roughly $1 million worth of inventory and a crop yield of 250 pounds from the previous year’s grow season. However, the actual yield was 16 pounds. The suit, which also seeks punitive damages, doesn’t disclose an exact dollar amount to what the Reeds are owed in compensatory damages. They spent roughly $5 million buying shares and securing ownership.
– Law 360 (sub. req.)
The Hartford Cannabis Company, which was denied access to grow cannabis, claims in a Hartford Superior Court lawsuit that the state and the Social Equity Council changed the rules part way through the application process and refused to allow it to amend its application. According to the lawsuit, there was no discussion of the rule change at a meeting in April and what was shared was illegible and only on the screen for a short time. The change allows applicants to obtain financial backing from other entities however, they must demonstrate that 65% of the ownership of the day-to-day operations were controlled by the social equity applicant.
– CT News Junkie
Cannabis investor Robert Bruno voluntarily dismissed with prejudice his claims against the Illinois Department of Financial and Professional Regulation and its acting secretary, Mario Treto Jr. as the state issued 185 licenses. He was one of two people who asked a federal court to stop the agency from granting licenses until the rules were revised. The two-page notice doesn’t say why Bruno, who was an investor in Calif.’s recreational cannabis programs, dropped his claims. The other plaintiff, Gareld Eaton, an Ariz.-based consultant, designer and builder of cannabis facilities, remains in the lawsuit. Bruno sued claiming he applied multiple times as a social equity applicant but was blocked because he was a resident of the state for less than five years. But Ill. claimed his applications fell short for “reasons unrelated to his residence.” Both men claimed the process, which worked on a point system, gave extra credit to applicants who had in-state residency, violating the dormant commerce clause of the Constitution, which bars state laws that discriminate against citizens of other states. The regulators claimed the duo “waited until the last possible moment” to file a lawsuit for a process that took nearly three years. It also argued they can’t rely on the district court to help them enter into a business deemed criminal on the federal level.
– Law360 (sub. req.)
True Social Equity in Cannabis, a Chicago-based group critical of the state’s licensing policies and execution, voluntarily dismissed its federal lawsuit accusing large cannabis companies of colluding to monopolize the Ill. market. The group’s complaint alleged that Verano Holdings, Green Thumb Industries, Surterra Holdings and Akerna were pretending to be competitors while colluding as part of a so-called “Chicago Cartel,” hoping to control cannabis prices in the state. U.S. District Judge Mary M. Rowland signed off on the dismissal request. The notice doesn’t say why the organization ended the suit, but the filing suggests the group wants to leave the door open to refile the same or similar claims later, noting that federal rule of civil procedure 41 allows a plaintiff to voluntarily dismiss without prejudice provided the defendants make no bid to toss the suit.
– Law 360 (sub. req.)
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