Cannabis Wine? Not so fast, says Oregon Liquor Control Commission

With the legalization of marijuana spreading across major wine producing states, including Washington, Oregon and (most recently) California, many believed that it was only a matter of time before licensed cannabis retailers would stock their shelves with marijuana-infused wines.

But earlier this month, the Oregon agency in charge of regulating the sale of alcohol and recreational marijuana in the state, the Oregon Liquor Control (OLCC), issued guidance that prohibits the sale of marijuana-infused alcohol beverage products.  Under Oregon Rev. Statute 471.446(2), OLCC may “prohibit any licensee from selling, any brand of alcoholic liquor which in its judgment …contains injurious or adulterated ingredients.”   OLCC concluded that any alcohol beverage that contains “marijuana or marijuana items” (including extracts) should be deemed adulterated and, therefore, prohibited the sale of such products.  OLCC, however, created an exception for alcoholic beverages produced using industrial hemp (as that term is defined under ORS 571.300) so long as the U.S Alcohol and Tobacco Tax and Trade Bureau has issued a formula for that product and the product’s label complies with TTB requirements.

California may adopt a similar view of the sale of marijuana-infused alcohol beverage products.  Under California law adopted pursuant to Prop 64, a licensed marijuana retailer will be the only entity that could sell products infused with marijuana for recreational use (such as marijuana-infused wine).  However, in order to do so, that retailer would also have to hold an alcohol beverage  retail license issued by the Department of Alcoholic Beverage Control, and laws adopted under Prop 64 specifically prohibit a party from holding both licenses.   Thus, unless new rules are enacted that allow either an alcohol beverage retailer or a licensed marijuana retailer to sell marijuana infused alcoholic beverages, there is no legal sales outlet for such products in California.

There is also a serious question as to whether such products could be legally produced by a state licensed and federally bonded winery.  Those concerns are entirely separate from, and in addition to, concerns as to whether the current administration will impede state-sponsored efforts to legalize adult-use marijuana.

In short, cannabis wine entrepreneurs should proceed cautiously.



The Golden State Goes Green; New Law of the Land

20 years after pioneering the medical marijuana movement Californians have again spoken out for their right to use marijuana. With the passage of proposition 64, marijuana is now treated very similar to alcohol in the State of California.  Essentially anyone in the state over the age of 21 may grow, purchase, possess and use marijuana without the risk of criminal prosecution.* However the Adult Use of Marijuana Act (AUMA) does not provide an unqualified right to use marijuana recreationally.  Before firing up that joint in celebration, you should be aware of the following key features and limitations of the AUMA which are now in effect:

–Those over the age of 21 (adults) may purchase, possess, transport or give away up to one ounce of marijuana.

–Adults may cultivate up to 6 plants and possess the marijuana produced from these plants for personal use.

–Plants and marijuana in excess of one ounce must be kept at the Adult’s private residence, in a locked space, and out of sight of any public place.

–Adults may not smoke or ingest marijuana in any public place (except for permitted dispensaries) or within 1,000 feet of a school or youth center where children are present (unless on residential property).

–Adults may transport one ounce of marijuana for personal use, but consumption or possession of an “open container” of marijuana or marijuana products is prohibited while driving or riding as a passenger in a motor vehicle.

–Employers have the right to discriminate against marijuana users, both on and off the job.

–The AUMA does not alter the protections of the Compassionate Use Act of 1996 (Prop 215) allowing medical use of marijuana.

— All marijuana and marijuana products packaging must provide specific label warnings

— Advertisements for marijuana may not make misleading claims or be directed at minors

— Local governments may restrict or completely prohibit any type of activities licensed under the AUMA

— Local governments may permit on-site consumption at licensed retailers and microbusinesses

— All retail marijuana sales are subject to a 15% excise tax in addition to the regular state sales tax

— The current penalties related to marijuana are entirely changed. Among other things minors (those under 18) are not subject to criminal punishment, rather drug education and community service. Further most current felonies are reduced to misdemeanors and or monetary fines.

–Persons previously convicted of offenses that would not be a crime or would be a lesser offense under AUMA may petition the court for a recall or dismissal of their sentence.

*Marijuana remains a schedule I controlled substance under federal law and activities such as possession and use of marijuana are illegal.

USPTO Makes Cannabis Trademark Go Up In Smoke

This past week the Trademark Trial and Appeals Board of the U.S. Patent and Trademark Office issued a blow to cannabis businesses attempting to protect their brands. In a precedential decision, In re Morgan Brown (click here for full decision), the Board affirmed the refusal to register the mark HERBAL ACCESS for “retail store services featuring herbs.”  The HERBAL ACCESS trademark application was submitted by a Washington State cannabis dispensary operating a lawful business under Washington State law. Although the application was not for goods or services which explicitly identified “cannabis” or “marijuana,” the Trademark Office examining attorney determined that the “herbs” being offered for sale by the applicant were in fact marijuana. Thus, the examining attorney rejected the HERBAL ACCESS application on the basis that the use of the mark in commerce was not “lawful,” due to the fact that the retail sale of marijuana remains illegal under federal law, regardless of Washington State law which permits it.  The Board affirmed this analysis, stating that the lawfulness of certain services or goods identified in a federal trademark application is determined under federal law.

The Board made two important points in its decision which potential applicants for cannabis-related brands should note.  First, the Board made clear that while an application may broadly describe goods or services in a way which does not explicitly identify “marijuana” or “cannabis” the Trademark Office is not precluded from using external evidence (in this case the applicant’s website) from concluding that the identified goods or services encompass cannabis.  Second, the fact that an applicant’s goods or services are lawful pursuant to a particular state’s law is irrelevant to the Trademark Office’s determination of whether those goods are lawfully being used in commerce.  Unfortunately for cannabis businesses, that determination is to be made under Federal law, and nearly all state law compliant cannabis businesses remain illegal under the federal Controlled Substance Act.

While it appears that cannabis businesses remain precluded from obtaining an above-board federal trademark registration for cannabis goods and services, some of the states in which cannabis is legal do allow a state trademark registration for cannabis and a federal trademark registration will issue for goods and services under a cannabis brand which are not directly illegal (e.g. clothing).  But for now, cannabis businesses clearly have an uphill battle in protecting their brand at the federal level.