Canada: Legalization 2.0: IP And Regulatory Considerations For Edibles, Extracts And Topicals

Although recreational cannabis was legalized in Canada in October 2018, legalization was restricted to specific products such as dried cannabis, oils and seeds. Recently, Health Canada published its amended Cannabis Regulations, which permit the legal production and sale of edibles, extracts and topicals. The amended regulations are scheduled came into force on October 17, 2019, and the earliest date the new products will be available to purchase is December 16, 2019.

The legalization of cannabis edibles, extracts and topicals will expand the cannabis market and create new opportunities for producers, innovators and investors. According to a recent report from Deloitte, the Canadian market for these new cannabis products is expected to be worth $2.7 billion annually, with edibles accounting for more than half ($1.6 billion).

As the regulatory landscape evolves, the cannabis industry continues to innovate. Opportunities exist for protecting intellectual property related to cannabis such as trademarks, industrial designs, plant breeders’ rights and patents. Companies must carefully review their business activities to ensure that they comply with the Cannabis Act and Regulations. Companies should also consider filing applications directed towards any innovative intellectual property that they develop to gain a competitive advantage in what is an increasingly competitive field.

The New Landscape

Edibles are products containing cannabis that are intended to be consumed in the same manner as food. These can include gummies, chocolates and baked goods such as brownies and cookies as well as drinks. As it stands, they are already a popular way of consuming cannabis south of the border.

Extracts are substances produced by subjecting any part of a cannabis plant to extraction processing, such as by using a solvent (e.g. butane or CO2) in order to concentrate phytocannabinoids such as tetrahydrocannabinol (“THC”) and/or cannabidiol (“CBD”). Extracts include products such as shatter, oil, rosin, wax and crumble and may be intended for inhalation (e.g. smoking or vaping) or oral ingestion (e.g. capsules or liquid extracts). Under the Cannabis Regulations, a cannabis extract may also be produced by synthesizing a phytocannabinoid that is otherwise produced by a cannabis plant.  Topicals are products intended for use externally on skin, hair and nails such as emulsions or ointments, creams, shampoos and conditioners.

The regulations limit the amount of THC for each cannabis product, and also the types and amount of other ingredients that can be included in a composition. For example, edibles are restricted to 10mg of THC per serving and package. It is prohibited to add vitamins, minerals or nicotine. The combination of cannabis with caffeine is permitted, but is limited to specified amounts. Similarly, the caffeine must come from naturally-occurring ingredients such as chocolate, tea or coffee and cannot be used as a food additive. The regulations will allow for a small concentration of ethyl alcohol in edible cannabis products (that does not exceed 0.5% w/w), given that ethyl alcohol is often present as a by-product in fermented ingredients or products (e.g. vinegars). Edibles must also have a durable life of 90 days or less and must be shelf-stable.

Cannabis topicals have a limit of 1000mg of THC per package and cannot contain alcohol or nicotine. Topicals cannot contain anything that may cause injury to the consumer when the product is used as intended. Organizations are encouraged to consult the Cosmetic Ingredient Hotlist, which is a list of substances that are prohibited in cosmetics.

Cannabis extracts cannot contain nicotine, caffeine, sugars, sweeteners or sweetening agents. Ethyl alcohol may be used in products that are intended to be ingested, but cannot be used in products that are inhaled.

The packaging for these cannabis products has to be plain and child resistant. The package and label cannot include elements that would associate the product with alcoholic beverages, tobacco products or vaping products. It is also prohibited to make health claims or cosmetic claims. With respect to cannabis edibles, dietary claims are also prohibited.

Health Canada will assess, on a case by case basis, all proposed products for flavour, colour, shape, smell and branding to determine if they will be appealing or enticing to children.

Innovation and Patent Protection

The sizable market for edibles, extracts and topicals is driving research and development into technologies related to these cannabis products as well.  Innovative products and methods are being developed for growing and processing cannabis, extracting cannabinoids and terpenes, and formulating phytochemicals into products with desirable biological activities, improved stability, and/or organoleptic properties such as smell, taste or feel.  The proprietary technology underlying these innovations can be very valuable and may also qualify for patent protection.

In Canada, an invention must meet a number of statutory requirements in order to be patentable including that it be new, useful, non-obvious and directed to patentable subject matter (e.g. not a pure scientific principle, abstract theorem or work of art).  Patent protection allows the patent owner to stop others from making, using or selling the claimed invention for 20 years from the patent filing date. This effectively provides market exclusivity for products or methods covered by the claims.  Patent protection is also generally available in other jurisdictions such as the United States and Europe for innovative technologies related to cannabis.

With respect to edibles, patent protection may be available for a food product that contains cannabis if the product is novel, not an obvious variant of other known products, and it meets the remaining statutory requirements for patentability.

Recipes that merely combine known food ingredients and cannabis using common cooking techniques are likely to be considered obvious and therefore not patentable even if the product itself appears novel. However, innovative food products or associated methods may be patentable. A number of patents have been granted with claims directed to cannabis-containing food and beverage compositions or methods of making such compositions. For example, patents that relate to cannabis have been granted for alcoholic drinks (US Patent No. 10,085,965), milk (US Patent No. 10,028,987) and coffee (US Patent No. 10,103,225).

Patent protection may also be available for new and non-obvious extracts or topicals or for methods related to the production or use of these products. Novel and inventive dosage forms may also be patented, such as formulations designed for use sublingually or for liquid spray formulations. In addition, innovative packaging or delivery systems designed specifically for cannabis or related products may be patentable.

A patent agent or lawyer can review a particular innovation and help determine whether it may qualify for patent protection and how best to proceed. Until then, it is critical to keep the details of your invention confidential as any public disclosure (such as a presentation, printed publication or website) can jeopardize or even eliminate your chances of obtaining a patent.

Keep in mind that whether or not an invention qualifies as patentable is a separate and distinct legal question from whether or not it is legal to practice the invention. Put another way, it is possible to obtain patent protection in Canada for products that are not yet legal to sell under the current Cannabis Act and Regulations.  The exclusive rights granted by patent can last for up to 20 years from the filing date of a patent application.  As the regulatory landscape continues to evolve, there may be significant value in developing patented products and technologies with an eye to the future and possible further changes to the legal regime governing cannabis.

Proceed with Caution

As the rush to patent cannabis innovations continues, producers and sellers of cannabis-related products should be aware of any patent rights that could potentially interfere with or prevent the production or sale of those products.

Cannabis patent litigation is already underway in the United States for a patent related to a cannabinoid-based medical product formula (see United Cannabis Corp v. Pure Hemp Collective Inc). Consider having a patent agent or lawyer perform a “freedom-to-operate” (FTO) analysis to identify patent applications or granted patents that are relevant to your cannabis products or commercial activities. An FTO analysis can help minimize the risk of patent infringement and may also provide important information on the R&D activities of your competitors.

This article was first published in the Cannabis Prospect Magazine. Please go to www.cannabisproonline.com.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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