Welcome to our weekly roundup of CBD and hemp-related legal and regulatory news:
Texas Judge Gary D. Harger denied a request from Sky Marketing (d/b/a Hometown Hero) for a temporary restraining order on the state’s ban on delta-8 THC, finding the CBD company didn’t meet the requirements for a TRO. Although he didn’t elaborate on his reasoning, his decision leaves the ban in place as a lawsuit moves forward against the Texas Department of State Health Services over how it purportedly rescheduled delta-8 onto the controlled substances list. In a recent petition, Hometown Hero alleged the state’s health department failed to abide by state rules concerning hearings and providing time for objections in making such modifications. The agency also buried new definitions for THC and marijuana extract in a non-searchable image in the Texas Register, Hometown Hero claimed. A hearing for Hometown Hero’s application for a temporary injunction has been scheduled for Nov. 5. Law 360 (sub. req.)
Related:
La. to regulate, not ban, sale of delta-8 THC in food – Law 360 (sub. req.)
Calif. cannabis company Promontory Holdings, which sells various cannabis-related goods and services under the “Breez” brand, sued Calif.-based CBD company The Breeze Brand for allegedly infringing on its trademark by distributing and selling cannabis products and services under a “breeze” branding. The plaintiff contends the defendant’s branding is “confusingly similar to the Breez mark, as it uses a similar word, ‘breeze,’ in connection with the same types of products.” Promontory claims The Breeze Brand’s activities “have caused and will cause irreparable harm.” It’s seeking an order permanently enjoining the defendant from using the mark, as well as punitive and exemplary damages and reimbursement of attorney fees and litigation costs. Law 360 (sub. req.)
U.S. Magistrate Judge William Matthewman let CBD retailer Medterra and manufacturer Rejuvenol Laboratories exit a suit alleging they stole a proprietary formula for CBD topical cream from Healthcare Resources Management Group. Among other things, he said there’s no evidence that the purported trade secret was “conveyed to, or used by” Rejuvenol, which is required to establish a misappropriation claim under the Florida Uniform Trade Secrets Act and the federal Defend Trade Secrets Act. The Fla. federal judge also found Healthcare Resources was unable to prove that Medterra used, acquired or disclosed any of its confidential or proprietary information. However, Judge Matthewman said there are questions of fact that a jury should decide regarding three claims brought against EcoNatura All Healthy World by Healthcare Resources. Law 360 (sub. req.)
In a complaint filed in N.Y. federal court, Friends NYC alleges PayPal violated the federal Farm Bill by locking its accounts and putting a hold on funds because its new line of CBD oil products violated a company policy against the sale of drugs and other consumer risks. Although the retailer tried to resolve the matter with the digital payment company while an investigation into a potential breach of its user agreement was ongoing, it didn’t receive an explanation or an opportunity to review or dispute the findings for nearly six months. Friends NYC also alleges breach of contract and is seeking more than $100,000 in damages and costs. Law 360 (sub. req.)
Commercial hemp operation Apothio is breaking new ground in a number of ways by asking individual investors to invest as little as $100 in an “initial litigation offering” (ILO) on crowdfunding site Republic. The company is hoping investors want to acquire a stake in the outcome of its civil lawsuit accusing Calif. officials of improperly destroying its $1-billion hemp crop in 2019. Since it was registered under the SEC’s Regulation CF, the $5-million public offering isn’t limited to accredited investors. Investors will be issued Avalanche ILO tokens and will receive their share of any payout obtained by Apothio, if it wins the case, through their tokens. Reuters (sub. req.)
Cannabis
In a lawsuit filed in Ill., Ferrara Candy accused Higharchy, Reroot Chicago and their principal of selling THC-infused “Bud Bites” and “Bud Clusters” that imitate trademarks related to its Nerds candies. In a separate lawsuit filed in Calif., the candy-maker accused Yauheniya Lis (d/b/a GasBuds) of infringing trademarks related to its Nerds, Trolli and SweeTarts candies. In addition to asking the courts to block the cannabis companies from continuing their alleged infringement and to destroy all the purportedly infringing products, Ferrara Candy is seeking the profits they made from the products. In the Calif. suit, the company is also asking for $2 million in statutory damages “per counterfeit mark per type of good sold, offered for sale or distributed.” Law 360 (sub. req.)
U.S. District Judge Nancy Torresen granted a motion to stay her own injunction that barred Maine officials from enforcing a state residency requirement for owners of medical cannabis businesses while an appeal over the rule is pending, saying she didn’t want to upset the status quo. She determined that even a brief window when regulators had to process the sale of cannabis licenses to out-of-state residents could have long-term consequences. Conversely, the stay wouldn’t harm the plaintiffs, which are contemplating a sale, Judge Torresen said. She added that a brief delay in the deal “appears slight in comparison to the irreparable harm faced by the Defendants.” The order comes weeks before the parties are slated to brief the matter before the First Circuit, which could render a precedential decision on whether the dormant Commerce Clause of the U.S. Constitution applies to the federally illegal marijuana industry. Law 360 (sub. req.)
Fla. Administrative Law Judge Suzanne Van Wyk ruled that the state’s Department of Health must immediately stop relying on a policy that prevents medical marijuana companies from using Leafly and other sites for online orders, finding it constitutes an unadopted rule. In letters to medical marijuana treatment centers, the department said contracting with a third party for online ordering of medical marijuana products violates state law “because it constitutes a service directly related to dispensation of medical marijuana.” Since Leafly proved the statement is an unpromulgated rule, the burden shifted to the department to prove that rulemaking was either infeasible or impracticable. The department argued it didn’t need to institute rulemaking to define “directly related to” because the language is clear from its ordinary meaning in the statute. However, Judge Van Wyk said in a final rule that the department presented no evidence that rulemaking was impractical. She ordered the health department to pay reasonable costs and attorney fees to Leafly. Law 360 (sub. req.)
The Medical Marijuana Research Act, introduced by Rep. Earl Blumenauer (D-Ore.) and Rep. Andy Harris (R-Md.), would remove obstacles that prevent researchers from studying the full range of health benefits offered by cannabis and learning more about the products readily available to consumers. The legislation would streamline the process for researchers to apply and obtain approval to conduct cannabis research. The bill would also require the DEA to license more growers and remove the limit on the number of additional entities that can be registered to cultivate marijuana for research purposes. Within five years of enactment, the HHS would be required to submit a report to overview the results of federal cannabis studies and recommend whether they warrant the rescheduling of marijuana under federal law. An identical version of the legislation was approved by the House late last year and the Senate passed a similar bill days later, but nothing made it to the president’s desk before the end of the last Congress. Marijauna Moment
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