Legalization of cannabis has been a controversial topic for years with heated debates arguing for and against. Even though on a federal level, the marijuana is still illegal, most of the states are slowly moving towards legalization.

Just last Tuesday, June 20th, Canada became only the second country in the world to legalize marijuana, Uruguay did so in 2013. In doing so Canada became the first G7 member to do so, which will undoubtedly lead to ramifications here in the US.

Trouble in paradise?

Not surprisingly, the young cannabis industry (the legal part of it is young at least) is experiencing some growing pains. It is plagued with copyright lawsuits and a patent race which is viewed by some as a power grab by specific companies to eventually push out smaller, local growers.

Who could allege a copyright issue with a cannabis company you might ask. What copyright can a weed dispensary possibly infringe upon?

Hershey’s Co has found a few offenders. Yes, we are in fact referring to the famous chocolate candy maker of the beloved Hershey Bars and Jolly Ranchers.

It seems Jolly Ranchers were the ones at the heart of the problem.

Recently Hershey’s sent cease and desist orders to two California based cannabis-related companies, a dispensary (Harborside) and en edibles company (Good Girl Cannabis) for copyright infringement.  The chocolate candy giant claimed that the branding of these two companies looked too similar to their own products.

For example, in their notice to Harborside, they alleged that Harborside sold edibles made by a company cold “Jolly Meds” and these edibles looked a little too similar to Hershey’s well-loved  Jolly Ranchers. Even though Harborside fought back, it’s clear that this won’t be the last time these types of claims are brought forward as the companies find their stride in a market flooded with edible (non-cannabis related) goodies.

A patent race is another issue the industry is facing.

As the industry grows, we are just beginning to learn all the medicinal properties the cannabis plant has to offer. It’s no wonder that various pharmaceutical companies are racing to secure their ideas for possible medical applications in a patent form. In May of 2018 alone, five companies filed for patents and secured intellectual agreements while their patents are pending.

The patent race can spell trouble to the local, smaller growers as different strains of pot are being patented. One might argue, that a living plant that has been known to civilization for 5000 years and grows naturally in the wild cannot be patented. And, indeed how can it be? In a Diamond vs. Chakrabarty court case, U.S. Supreme Court Chief Justice Warren Burger issued a landmark opinion that in a patent situation what matters is whether or not the applicant was able to alter the plant strain enough, so it became a non naturally occurring strain.

Insurance and marijuana

As with any legitimate business, whether you are a dispensary, a manufacturer of edibles or a grower you need insurance protection. Aside from the usual insurance policies such as liability, property and workers compensation, it is essential to consider intellectual property insurance. This type of insurance will protect you from lawsuits alleging you are infringing on someone’s patent or protect your patented products from others replicating them.  Even though IP policies can get expensive, fighting an IP lawsuit can get even costlier.

Your general liability policy will typically exclude any patent-related claims, so without appropriate insurance, you could be looking at thousands of dollars to defend yourself in court. Moreover, with companies securing patents left and right for anything cannabis-related, it’s not a stretch to assume that eventually you might get hit with a lawsuit.

Aside from an IP policy, your cannabis business will need the typical insurance policies other businesses have, with unique sets of coverages.

Depending on your situation you might need the following policies:

General liability

Property Insurance including the plants, tools, etc

Workers Compensation which is a mandatory policy if you have any employees

– If you hire employees, Employment Practices Liability will protect you from discrimination, sexual harassment and wrongful termination type of lawsuits

Errors & Omissions to cover your professional services to another party

Who is Alpharoot?

Alpharoot is your one-stop shop for all your cannabis insurance needs. Working with a broker that specializes in your industry is vital to getting the coverages you need that are uniquely tailor-made for your business.

Let us ask you this:  If you have a skin concern, you turn to a dermatologist instead of a general physician, right? The same logic applies here. An expert in cannabis industry knows all the latest happenings and trends, all the insurance requirements and has working partnerships with carriers that specialize in this industry.

Alpharoot is that expert.

The cannabis industry is young and will grow and change rapidly. Correct insurance coverage and an expert in your corner will help protect you and your business’s financial stability.

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