No longer solely the provenance of hippie or outlaw types, the U.S. cannabis industry has become more sophisticated and tech-enabled as it has come out of the shadows over the past decade. Michigan voters pushed the state to joined the ranks of nine others last fall in approving adult use of recreational marijuana.
But with corporations and mom-and-pop players alike wanting to get in on that “green rush”—valued at $146.4 billion globally by 2025 and $25 billion in the U.S. alone—how does an innovator protect intellectual property in a quasi-legal industry? How do research and development teams create new products and technology around a substance the federal government still considers to be as harmful as heroin? The short answer: it’s complicated, but not impossible.
In September, the federal Drug Enforcement Agency reclassified some hemp-derived products, such as cannabidiol, known as CBD, that do not contain psychoactive ingredients. That makes commerce and R&D easier for those products, but marijuana remains a Schedule 1 drug, meaning there is no federal patent process to pursue for most cannabis industry innovations.
“Innovation happens in the context of licensed entities,” says Nancy Whiteman, founder and CEO of Wana Brands, a Colorado company that is one of the nation’s largest sellers of marijuana-infused edibles. Wana launched in Michigan this month with local partner High Life Farms. “It’s been fascinating to watch. Lots of scientists from other industries are interested in cannabis and doing sophisticated cannabinoid extracts and isolates, and then recombining them in different ways to solve health issues or create specific effects.”
Whiteman started her 80-person company in 2010, and she says it will operate in roughly 10 states by the end of the year. Michigan, which is second only to California in terms of the size of its cannabis market, was an attractive place for Wana to set up shop. According to Josh Hovey, communications director for the Michigan Cannabis Industry Association, the state’s combined medical and recreational sales are expected to reach $1.5 billion annually by the time the market is projected to be fully mature in 2023.
Whiteman and Hovey both say a common approach to protecting cannabis IP involves developing products first for legal industries, such as tobacco or pharma, and then adapting them for marijuana.
“Quick-onset technology [for marijuana-infused edibles] was leveraged from other industries” and involves nanotechnology, Whiteman notes. The tech trends she sees taking hold in the cannabis industry involve extractions and isolates, in which marijuana’s components are concentrated, separated, or engineered to achieve a desired effect. “We’re trying to understand the role of cannabinoids and terpenes and what they do in the body.”
Israel, which does not prohibit cannabis research, is a global leader in marijuana innovation, Whiteman says, and Canada, which legalized adult recreational use last year, is also at the forefront of cannabis R&D and IP. Some American companies buy access to R&D happening outside the country and bet on integrating new technology into their products later, she says.
The cannabis industry is also leveraging user experience technology from conventional … Next Page »