Book:Past, Present, and Future of Cannabis Laboratory Testing and Regulation in the United States/Future of cannabis regulation, testing, and market trends/Big Marijuana

5.4 Big Marijuana

Both U.S. states and the federal government have a long, sometimes torturous history with regulating and controlling the production and sale of drug-containing products such as pharmaceuticals, tobacco, beer, wine, and spirits. As such, it seems intuitive to examine the successes and failures of those past efforts when considering what to do with cannabis. One aspect of that examination that raises concern among some is the likelihood of a narrow group of commercial interests taking over all aspects of cannabis production, testing, distribution, and sales. Taking from "Big Pharma," "Big Tobacco," and "Big Alcohol," some fear a similar "Big Marijuana" industry will develop. These fears can be found among small private growers at the hyper-local level, all the way up to the state government level.

In fact, in a 2015 Pathways Report, the state of California—including its Lt. Governor Gavin Newsom—expressed this very concern in regards to how best to regulate marijuana in the state. When considering the marijuana industry structure, they found that controls should be put in place to better incentivize smaller industry players, stating "[t]he goal should be to prevent the growth of a large, corporate marijuana industry dominated by a small number of players, as we see with Big Tobacco or the alcohol industry." Despite that advice, major California-based industry players such as Steve DeAngelo—who owns one of the largest medical marijuana dispensaries in the world and co-founded Steep Hill Labs—remain concerned that mandates for distribution, which mirror alcohol regulations, will only undermine small cannabis businesses in the state.

Anti-marijuana alliances such as Smart Approaches to Marijuana (SAM) and corporation-friendly pro-cannabis Marijuana Policy Project (MPP) act as opposing special interest groups, one fighting against Big Marijuana, the other borrowing from a libertarian approach proposing regulation of marijuana in a way similar to alcohol. These and other special interest groups inevitably bring about the perception that, as the Brookings Institution puts it, "the marijuana industry is as self-serving as any other commercial lobby," further propelling worries of Big Marijuana.

If worries of large corporations taking over significant portions of cannabis production, testing, distribution, and sales markets actually come to fruition, how will they potentially manifest? The previously mentioned concern of increased consolidation of testing labs is arguably one sign, as is DeAngelo's concern of forced distribution contracts taking away from smaller businesses. Brookings also points out concerns of large firms gaining hold over the evolving regulatory status as well as upward trends in antisocial marketing, though they also argue against undue alarmism of commercialization at the same time. David Boaz of the Cato Institute also speaks of regulatory status, though from the standpoint of regulations being "more burdensome on newer and smaller companies than on large, established companies," furthering the idea of Big Marijuana being able to weather the storm better than small, independent operations.

5.4.1 Patenting

Another manifestation of how Big Marijuana may be taking hold is through the patenting of cannabis strains and methods. PBS' Nova reported in October 2016 that a group of California growers were granted a patent for "compositions and methods for the breeding, production, processing and use of specialty cannabis," raising concerns about how Big Pharma could capitalize. Mowgli Holmes—founder of Phylos Biosciences, a genetics testing laboratory for cannabis—says as much: "Everyone is terrified of some big corporation with deep pockets coming in and taking over ... and they should be." To fight against the misappropriation of patents for "public domain" cannabis strains, he and others have developed Phylos Galaxy to better track relations between existing cannabis strains and the creation of new strains. From a lab testing perspective, a small but increasing number of qualified labs could test not only for potency, terpenes, and pesticides but also genetically verify in a standardized format that a unique strain is actually what it is claimed to be, providing slight competitive advantage. Similar efforts were being spearheaded by the Open Cannabis Project, which had been encouraging others to store genetic data for natural and previously available varieties in efforts to make them unpatentable. However, the Open Cannabis Project dissolved in May 2019 due to controversy surrounding its association with Phylos Bioscience and Phylos' perceived abuse of the provided open data.

Despite the protests against patenting cannabis strains, overall cannabis patenting continues to trend upwards in the U.S. According to Reuters, approved patents containing the word "cannabis" numbered 14 in 2016, 29 in 2017, and 39 as of late November 2018. Of course, many more applied, with 767 U.S. patent filings occurring between 2016 and 2018 (reportedly 1.5 times more than files from 2013 to 2015). In 2019, this showed no signs of stopping. In particular, approved patent filings for cannabis extraction technologies alone numbered 30 by early December, with "many others related to distillation of cannabinoid components and techniques for obtaining active compounds from marijuana and hemp."

Also notable is the first real patent infringement case related to cannabis, a case that could have particularly negative ramifications for the future of the cannabis industry. United Cannabis Corporation v. Pure Hemp Collective, Inc. was filed in 2018 as a patent infringement case on United Cannabis' liquid cannabinoid formulations. A new wrinkle arose in early 2019, when Pure Hemp Collective filed a counterclaim for prior art, a claim that attorney Jihee Ahn finds interesting:

Of course, it remains to be seen exactly what Pure Hemp plans to offer in support of its prior art argument. Typically, defendants in patent litigation produce years, sometimes decades, of scientific articles and other writings to demonstrate a given industry’s preexisting research and knowledge. It’s clear this wealth of evidence likely doesn’t exist for Pure Hemp given the general illegality of marijuana to date. This means the prior art could definitely be out there, but hard to definitively prove given that it was driven underground.

Yet some legal experts question the validity of United Cannabis' initial patent, with IP watchdog Steve Brachmann going so far as to say "I don’t understand how that could be considered patentable." Brachmann also spoke about the issues of prior art, noting "you don't really find prior art outside of High Times magazine," painting a similar veneer of doubt on Pure Hemp's counterclaim. With others such as Molson Coors Brewing and Coca-Cola stepping foot into or considering attempting to get into CBD formulations, this case deserves further watching as it may very well have a dampening affect on further cannabis-based patenting. As this and other intellectual property wars over strains, methods, and formulas get more heated, it remains to be seen how the laboratory testing, research and development, and production environments in the cannabis industry will further take shape.