As anyone who plans to be involved in business related to cannabis or cannabis-related goods may know, the 2018 Farm Bill amended federal law concerning the legality of certain cannabis-related products derived from hemp. Prior to passage, under the Controlled Substances Act (CSA), marijuana and its parts, including cannabidiol (CBD), are classified as illegal narcotics. However, with changes to the 2018 Farm Bill, goods containing or derived from industrial hemp, which is considered a unique and distinct crop from cannabis, are excluded from the narcotic classification. This has resulted in a legal market for production of products derived from hemp. While THC containing products are derived from cannabis, both cannabis and hemp contain CBDs, leading to thousands of products being sold that include this active ingredient.
Since businesses now can lawfully produce and market hemp products, this has triggered a variety of legal implications. This post focuses on two of those issues: trademark and tax.
Hemp Legalization Permits USPTO Protection
The United States Patent and Trademark Office will not register marks for businesses engaged in activity that violates federal law. This is true even if state law permits the activity.
Although some states that have made medical marijuana or recreational marijuana legal, the businesses engaged in producing and marketing marijuana produces lawfully under state law cannot obtain a registered mark from the USPTO.
Until the Farm Bill amendment, products from hemp businesses were classified as narcotics and were unable to register their trademark. Now, applications to register trademarks for goods derived from hemp may be approved if the application was filed on or after December 20, 2018. However, in the application, the goods also must be identified clearly as hemp and must specify that they contain less than 0.3 percent THC.
Hemp Legalization and Tax Implications
In a similar sense, the Internal Revenue Code and Securities and Exchange Commission have also explicitly prohibited certain tax benefits for illegal products such as products classified as narcotics under Federal law. With the passage of the Farm Bill amendment in 2018, the declassification of hemp products have resulted in business flexibility, allowing businesses engaged in sale or production of such products to obtain financing previously unavailable to them. Furthermore, such products can utilize business tax benefits under the Internal Revenue Code such as deductions associated with business expenses.
Contact a Cannabis Law Attorney in New Jersey
If you are thinking about forming a business related to medical marijuana or a company that will produce or market certain hemp products, do not hesitate to reach out to one of Hoagland Longo’s Cannabis Law Attorneys about your options for licensure and a registered mark.
As the USPTO guide clarifies, any hemp business applying for a registered mark after the 2018 Farm Bill took effect may be eligible to obtain a registered mark for that business. An advocate at our firm can help. Contact Ryan Jones at firstname.lastname@example.org or call 732-545-4717 today.