Cannabis Patenting at an All-Time High Despite Illegal Status

Legal or not, the cannabis industry is booming. Indeed, analysts have projected that in North America alone it will grow from $9.2 billion in 2017 to $47.3 billion in 2027. Despite marijuana’s illegal status in most countries, the patent arms race for cannabis has already begun. The number of cannabis-related patent applications filed under the Patent Cooperation Treaty (“PCT”) has more than doubled in the past decade, with over 10,000 such applications filed since 1978, roughly 6,000 of which were filed after 2008. And the U.S. Patent & Trademark Office has already issued hundreds of patents covering cannabis products, their derivatives, production processes, and methods of use. In fact, the period from 2015 to 2017 saw the greatest increase in cannabis application filings, reaching an all-time high of 118 applications filed in 2017 alone.[1]

Likewise, cannabis-related patents have been issued in other jurisdictions with promising markets, among them Canada (which legalized marijuana in 2018), the European Patent Office, and Israel. Interestingly, seven of Canada’s top ten cannabis-patent holders are multi-national pharmaceutical companies, including Ciba-Geigy, Pfizer, GW Pharmaceuticals, and Merck. Parallel trends can be observed in Israel, which is a recognized center for cannabis biomedical research. Efforts by pharmaceutical firms to obtain patents in Canada preceded legalization and are likely to intensify as approval pathways and programs for conducting clinical trials mature. The same is expected in other jurisdictions.[2] Consistent with these global trends, in February of 2019, the World Health Organization recommended that the United Nations de-schedule hemp and reschedule marijuana to a lower level of control under international treaties.[3] If adopted, these recommendations could significantly reduce the international controls placed on cannabis.

Cannabis innovation touches on a wide range of disciplines, from genetic engineering and biochemistry to agriculture and manufacturing. Intellectual property, particularly patents, have been at the center of acquisitions and mergers in this nascent industry. For example, in 2018, Canopy Growth (the world’s largest cannabis company as of April) acquired a small Colorado-based hemp research company called Ebbu LLC days before Canada legalized cannabis in a stock-and-cash deal worth $425 million.[4] Ebbu had amassed a notable patent portfolio covering, among other things, ways to reduce the cost of CBD production and engineer cannabis-infused beverages. Other marijuana companies, including Aurora Cannabis (Canopy’s main competitor), appear to be in the hunt to acquire intellectual property as well.[5] Smaller marijuana firms are, in turn, attempting to better position themselves for valuation by securing patent protection.[6]

As traditional industries who understand the value of intellectual property (biopharma, tobacco, food/beverage, alcohol, cosmetics) turn their attention to cannabis, patent issues are likely to shape the business landscape. Whether for purposes of competition or valuation (or both), protecting cannabis-related innovation starts with creating an intellectual property strategy centered on strong, diversified protection for core technologies and commercial applications.

This article appeared in the June 2019 issue of Global Patent Prosecution. 

[1] Pelletier and Sterling, What Cannabis Patent Applicants Can Learn From Biopharma, Law 360 (Jan. 19, 2019) (link), available at https://www.sternekessler.com/news-insights/publications/what-cannabis-patent-applicants-can-learn-biopharma.

[2] Flora Southey, Has Big Pharma’s ‘inevitable entrance’ into the cannabis space arrived?, in-Pharma, Technologist.com (Sept. 3, 2018) (link).

[3] Tom Angell, World Health Organization Recommends Reclassifying Marijuana Under International Treaties, Forbes (Feb. 1, 2019) (link).

[4] Kristine Owram, Canopy Bets on U.S. Hemp Market With $330 Million Acquisition, Bloomberg (Oct. 15, 2018) (link); Vanmala Subramaniam, Cannabis companies race to clinch an edge in pot industry’s next phase of growth: Intellectual property, Financial Post (Nov. 9, 2018) (link).

[5] John Selwanes, Buy vs. Build: The Business of Cannabis (Mar. 26, 2019) (link).

[6] Callitas Health Press Release (announcing notice of allowance received for a biphasic oral cannabinoid patent) (April 25, 2019) (link); Cannabis Science Inc. Press Release (announcing independent valuation for cannabinol for negotiation of licensing and marketing deals in Canada and the USA to develop and sell cannabinol products) (Apr. 15, 2019) (link).