What Does The Ninth Circuit’s Ruling On The Legality Of Delta-8 THC Mean For The Industry?
Whether Delta-8 THC infused products intended for human consumption are legal under federal law and whether marks used in associations with these goods qualify for federal trademark protection remain unresolved issues.
Last week, the Ninth Circuit Court of Appeals opined that the Agriculture Improvement Act of 2018 (the 2018 Farm Bill) legalized delta-8 tetrahydrocannabinol (Delta-8 THC) derived from hemp.
The case at issue pertained to an intellectual property controversy. AK Futures LLC, a manufacturer of e-cigarette and vaping products, brought a copyright and trademark infringement action in which it alleged that Boyd Street Distro, LLC, a downtown Los Angeles storefront and smoke products wholesaler, had been selling counterfeit versions of AK Futures’ “Cake”-branded e-cigarette and vaping products containing Delta-8 THC.
In its defense, Boyd Street argued that AK Futures did not hold “protectable trademarks” for its Delta-8 THC infused e-cigarettes “because delta-8 THC remains illegal under federal law.” To support its claim, Boyd Street relied on the DEA’s Interim Final Rule and congressional intent.
Happy Lawyers, Better Results The Key To Thriving In Tough Times
First, Boyd Street argued that pursuant to its Interim Final Rule, the DEA treats Delta-8 THC as “synthetically derived,” and thus as illegal, because Delta-8 THC must be extracted from the cannabis plant and refined through a manufacturing process.
The Court rejected Boyd Street’s argument explaining that the federal definition of hemp “does not limit its application according to the manner by which ‘derivatives, extracts, [and] cannabinoids’ are produced … as long as they do not cross the 0.3 percent Delta-9 THC threshold”; and that the DEA has made it clear that the source of the product (i.e., whether it is derived from the cannabis plant) — not the method of manufacture — is the dispositive factor for ascertaining whether a product is synthetic.”
So, given AK Futures’ Delta-8 THC is derived from hemp and meets the THC threshold, the court held that the substance found in AK Futures e-cigarettes is lawful under federal law.
Second, Boyd Street argued Congress intended the 2018 Farm Bill to legalize only hemp, not a potentially psychoactive substance like delta-8 THC. Here again, the Court rejected Boyd Street’s argument, explaining that “[r]egardless of the wisdom of legalizing delta-8 THC products, this Court will not substitute its own policy judgment for that of Congress. If Boyd Street is correct, and Congress inadvertently created a loophole legalizing vaping products containing delta-8 THC, then it is for Congress to fix its mistake.”
Sponsored
AI Presents Both Opportunities And Risks For Lawyers. Are You Prepared?
Happy Lawyers, Better Results The Key To Thriving In Tough Times
Law Firm Business Development Is More Than Relationship Building
AI Presents Both Opportunities And Risks For Lawyers. Are You Prepared?
Convinced that AK Futures’ Delta-8 THC products are lawful under the 2018 Farm Bill, the court concluded that AK Futures “may receive trademark protection” for its products, thus affirming the district court’s grant of a preliminary injunction in favor of the plaintiff.
Now, while this ruling is favorable to the Delta-8 THC industry, it is worth noting that the Ninth Circuit only ruled on the federal legality of hemp-derived Delta-8 THC — specifically, that of the Delta-8 THC found in AK Futures products. The court did not determine whether finished products intended for human consumption that contain hemp-derived Delta-8 THC are legal under federal law nor did the court conclude AK Futures would successfully secure trademark protection with the U.S. Patent and Trademark Office (the USPTO). While AK Futures filed six trademark applications, the USPTO has yet to rule on the marks eligibility for trademark protection.
As I previously explained in this column, a mark is eligible for federal trademark protection if it is lawfully used in commerce (the lawful use requirement is a product of the USPTO, not one imposed under the Latham Act, and which validity has recently been questioned by scholars like Robert A. Mikos). Indeed, as of date, the USPTO has conditioned registration upon compliance with other, no-trademark statutes, such as the CSA and the Food, Drug and Cosmetic Act (FDCA). Accordingly, the federal agency has refused to grant trademark protection to marks used in association with certain hemp-infused products, including CBD food products and dietary supplements, in accordance with the FDA’s policy.
Therefore, while this Nine Circuit ruling on the federal legality of hemp-derived Delta-8 THC carries authoritative weight, it does not extend beyond this very limited question of law. Whether Delta-8 THC infused products intended for human consumption are legal under federal law and whether marks used in associations with these goods qualify for federal trademark protection remain unresolved issues. Accordingly, Delta-8 THC companies should understand that federal enforcement actions are likely to continue against their products and that federal trademark protection may not yet be available to them.
Sponsored
Curbing Client And Talent Loss With Productivity Tech
How The New Lexis+ AI App Empowers Lawyers On The Go
Nathalie Bougenies focuses her practice on health and wellness, in addition to corporate transactions and regulatory compliance. For the past three years, Nathalie has helped clients navigate the complex regulatory landscape of hemp products intended for human consumption and advises domestic and international clients on the sale, distribution, marketing, labeling, and importation of these products. Nathalie frequently speaks on these issues and has made national media appearances, including on NPR’s “Marketplace.” She also authors a weekly column for “Above the Law” that features content on cannabis policy and regulation. For three consecutive years, Nathalie has been named Rising Star by Super Lawyers.
