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An NIH-Owned Cannabinoid Patent Is Circumventing the DEA

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Marijuana-based products gain traction even as federal law lags.

After a car accident, Lauren Smith was in constant pain from two herniated disks, tendonitis in both shoulders and spinal arthritis. Initially, she was prescribed pain medication, but with the help of a holistic physician, the 39-year-old mother eventually replaced the pills with cannabinoid products.

While tetrahydrocannabinol (THC) is the primary psychoactive compound in marijuana, the plant carries other nonpsychoactive compounds such as cannabinol, cannabidiol (CBD), cannabichromene and cannabigerol. The human body has an inner cannabinoid system through which receptors can affect appetite, pain, mood and memory.

“Cannabinoids produce very different outcomes, depending on how they bind to the CB1 receptor,” said NIDA Director Nora D. Volkow, M.D. “Understanding how these chemicals bind to the CB1 receptor will help guide the design of new medications and provide insight into the therapeutic promise of the body’s cannabinoid system.”

CBDs are so promising that the National Institutes of Health (NIH), an agency of the U.S. Department of Health and Human Services, acquired U.S. Patent 6,630,507, which covers the use of cannabinoids as antioxidants and neuroprotectants, in 2003.

“The government may wish to monetize the patent through licensing,” said Kevin H. Fortin, a patent attorney with the Hoban Law Group in Denver. “The patent can also be held by the government for defensive purposes. If a branch of the government wishes to treat diseases covered by the patent, they could do so royalty-free.”

The irony lies in the fact that although marijuana has been legalized for recreational and medicinal use in Colorado and other states, the consumption of the plant is still illegal on a federal level.

“Patent law treats inventions on a mousetrap or can opener the same as it would ammunition, birth control or marijuana, or other types of societally controversial issues,” said Craig Nard, an attorney and professor of law at the Spangenberg Center for Law, Technology & the Arts at Case Western Reserve University.

Unlike European patent law or even U.S. trademark law, U.S. patent law does not contain a morality provision, which can restrain or proscribe certain behavior among the parties within a contract.

The marijuana plant was classified as a Schedule 1 drug after the passage of the Controlled Substances Act of 1970 (CSA).

“Innovation continues, not withstanding the fact that the DEA regards marijuana as a schedule I substance,” Mr. Fortin told PacerMonitor News. “Patents don’t grant the right to sell, use or handle a product. They grant the right to exclude others. This exclusive right is a critical component to monetizing a product because it enables licensing.”

The Hoban Law Group filed a lawsuit on behalf of the Hemp Industries Association in San Francisco’s 9th Circuit Court of Appeals on Jan. 18, 2017, charging that the U.S. Drug Enforcement Administration (DEA) overstepped its authority last year when it decided to codify all cannabinoids derived from marijuana or hemp as Schedule I controlled substances.

Hemp is relevant because a number of cannabis manufacturers have deciphered how to make CBD from the hemp plant and and if it’s codified under Schedule 1, CBD products could be more difficult to bring to market.

In its Final Rule, the “Establishment of New Drug Code for Marihuana Extract,” issued Dec. 14, the DEA states: “The DEA has previously established separate code numbers for marihuana and for tetrahydrocannabinols, but not for marihuana extract. To better track these materials and comply with treaty provisions, DEA is creating a separate code number for marihuana extract with the following definition: Meaning an extract containing one or more cannabinoids that has been derived from any plant of the genus Cannabis, other than the separated resin (whether crude or purified) obtained from the plant. Extracts of marihuana will continue to be treated as Schedule I controlled substances.”

According to a statement posted online by the Hoban Law Group, the reclassification contradicts the DEA’s acknowledgement in the past that certain cannabinoids exhibit different effects. THC is known for psychoactive properties, whereas CBD, CBG and other cannabinoids are not commonly associated with psychoactive properties.

The current status of the regulatory landscape includes another lawsuit filed by the Hemp Industries Association in March 2017, requesting that the 9th Circuit Court in San Francisco hold the DEA in contempt of court for not abiding by a 2004 verdict in which the Court exempted non psychoactive parts of the hemp plant, such as the stalk, the stem, the fiber and seed, from the Controlled Substances Act. Both law suits are presently being litigated.

Regardless of the outcome, Kannalife Sciences is one business that doesn’t have to worry whether the DEA is cracking down on nonpsychoactive cannabinoids because it has an exclusive license from NIH on the government’s ‘507 patent for the treatment of hepatic encephalopathy (HE) and a nonexclusive license for the treatment of chronic traumatic encephalopathy (CTE) for which the company paid some $200,000.

A license on a patent owned by the government has its privileges even though the legality of the substance underlying the product is questionable.

Kannalife Sciences received a waiver from the DEA to import synthetic cannabidiol for use in preclinical and clinical studies in animals and humans, respectively, using Catalent’s gel cap CBD formulation, according to a press release posted online.

“We’re in clinical development right now with one product that presents cannabidiol in a dose-dependent form,” Mr. Petkanas told Pacer Monitor News. “We are planning a feasibility study with a company called Catalent Pharma Solutions to secure a bio-available formulation for cannabidiol to treat this disease. Within the year, we should have something that we can push into clinical trials.”

Kannalife Sciences does not expect a product to hit the marketplace until after the patent expires when the government loses its right to royalties.

The patent expires in 2019 at which time any business can use CBD, THC or cannabinoids across a pantheon of diseases. But until then, Kannalife Sciences’ license is difficult to over step since the firm not only paid licensing fees but also jurisdictional patent prosecution fees.

“Any new licensing application would be subject to sharing those prosecution fees with us, which we’ve prepaid,” said Mr. Petkanas. “We would be duly notified by the U.S. Patent Office of any application filed to license the government’s CBD patent. I don’t believe there are any.”

A portfolio investment company of Medical Marijuana Inc., which trades as a penny stock (OTC Pink: MJNA), Kannalife Sciences was issued a patent in April 2017 on a cluster of CBD-like molecules for use in the treatment of hepatic encephalopathy and other diseases.

The nature and composition of the patented CBD-like molecules would not be considered illegal because they are synthetic and not identical or merely identical to CBD or authentic CBD derivatives of the marijuana plant, according to Petkanas. To strengthen barriers to competition, Kannalife Sciences has applied for orphan drug designation with the FDA.

“Once out of clinical trials, orphan drug designation will give us an additional seven years of exclusivity after the government’s patent expires in three years,” Mr. Petkanas said.

Designation under the Orphan Drug Act (ODA) grants not only special status to drugs that treat a rare disease or condition but also provides tax reductions.

Once the FDA approves pharmaceuticals made with CBD, they can be sold in the U.S. marketplace but marijuana itself is a naturally occurring substance. As a result, it’s unpatentable, according to a ruling in the Supreme Court case Diamond v. Chakrabarty 447 U.S. 303.

Chief Justice Warren Burger wrote in 1980 that “eligibility for patent protection does not depend on whether the substance is living or non-living; rather, the key inquiry is whether the inventor has altered natural handiwork to the extent that the resulting invention can be deemed a non-naturally occurring substance.”

Since marijuana can be reproduced sexually with male and female plants that make pollen and seeds, experts claim that it is possible for a strain of cannabis to be developed that overcomes this prohibition if the patentee can show that the strain had not previously existed.

“Marijuana has medicinal and therapeutic value so if the government allows patents on various strains of marijuana including THC and CBD, then it is plausible there will be greater innovation,” said Mr. Nard. “If we are investing in these drugs that require FDA approval, then one could argue that patent protection will facilitate their introduction to the consumer market.”

The Hemp Business Journal estimates that the CBD market will reach $2.1 billion in consumer sales by 2020 and Headset Research claims that in Washington state alone there are more than 800 CBD products already available to consumers. With people like Ms. Smith buying CBD-based oils, capsules, chewing gum, protein bars, tinctures and salve, it’s no surprise that the popularity of the CBD market is growing by leaps and bounds.

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