Friday 11 October 2019

Darren Olivier

Cannabis, IP and Africa – 10 things to know

  The cultivation and use of the cannabis plant is ancient. Apart from the market for hemp, dealing in cannabis is still largely an illicit activity. It is only over the last decade that the cannabis market is becoming accessible.

·         A number of countries are now in various stages of decriminalising it with Canada leading the trend, after Uruguay started it. Possession of cannabis is still punishable by death in some countries and is highly regulated in all countries that have legalised it.

·         The size of the African market for cannabis is significant. According to recent data from New Frontier Data, there are 263 million consumers of cannabis products globally of which 83 million are in Africa, or a whopping 32%.

·         Ethiopia, Nigeria and Morocco are the 3 largest markets in Africa. Only South Africa and Lesotho have taken active steps to de-criminalising the cultivation, possession, ownership and use of Cannabis related products. In South Africa, for example, revenue streams from cannabis were a specific feature of the national budget speech in 2019.

·         Hemp is obtained from a strain of the cannabis plant. Hemp contains no or very little THC and is therefore a recognised raw material and has an established market. For example, over 20kg of hemp is contained in a Mercedes Benz C class motor vehicle. The changes in the cannabis market mainly do not include or refer to the established hemp market.

·         The cannabis “market” in South Africa consists of the following broad categories:

o    The established market for hemp that is generally lawful
o    The private possession and use market by adults in private, that is lawful following the constitutional court ruling
o    The regulated prescription market of products by practitioners containing cannabis with material levels of THC and/or CBD content for medical reasons
o    The licensed market:
§  for cultivating and producing cannabis and cannabis resin
§  extracting and testing cannabis, cannabis resin and cannabinoids
§  manufacture of cannabis or cannabinoid containing medicine
§  importation, export and distribution of cannabis containing medicine
o    The market for products bearing a low THP and/or CBD content that have been sanctioned for 12 months since May 2019.
o    The remaining “market” which is illegal.

·         Intellectual property (IP) has a considerable part to play in the cannabis market. Conceptually, IP is a legal mechanism to stimulate innovation by balancing effort with reward in the form of exclusivity or a monopoly. For example, the reward for a new pharmaceutical product containing cannabis is 20 years provided that the owner explain how it works so that other can benefit from either improving it or using it after the patent has expired.  

·         Relevant forms of IP or related considerations include:

o    Registered trade marks – used for protecting all distinctive features such as names, logos, packaging and vital protection for that first to market advantage. Registered for 10 years, renewed indefinitely.
o    Designs – used for all those visual attractive features and functional forms, as well as two dimensional logos applied to packaging. Not a bad option for immediate protection as they can often be obtained quicker then registered trade marks. Can give on 10-15 years protection.
o    Plant Breeder rights – if you are cultivar looking to protect innovation or new varieties then these rights can give you a significant advantage, up to 20 or 25 years depending.
o    Patents – although plants themselves are not protected, infused products could be or methods of extraction or production. A great form of protection for all things new and inventive, including any pharma products, for 20 years.
o    Copyright – a lengthy free form of protection for all drawings, databases, logos, formulations, recipes, training manuals and anything creative reduced to material form.  
o    Trade Secrets and knowhow – keep your methodologies and the secret sauce, secret and it could well last forever as knowhow protection. These are kept that way through agreement obligations and through practical measures.
o    Geographical indications – are relevant for state or regional protection of methods of production or notoriety of regions in relation to cannabis. They work like “champagne” does for sparkling wine or “gorgonzola” for cheese or “rooibos” for tea.
o    Internet names – such as domain names, Twitter handles and Facebook profiles will be relevant but please be aware that online advertising for drugs and cannabis is largely not allowed by most mainline social media channels.
o    Licenses – in many instances, permission for cultivation and the like of cannabis is regulated by the state. Those good enough to secure licenses enjoy a natural scope of exclusivity relative to those that are unable to obtain a license, for the period of the license

·         The use of intellectual property can not only protect market share and entrance but raise the value of the company. These intangible rights require proper management to be effective. They may also need to be enforced.

·         Enforcement of IP rights can take place through the courts, advertising authorities, customs (especially for counterfeit goods) and through strategic use of watching services and, of course, your friendly lawyer.

Darren Olivier

Darren Olivier

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