Canopy Growth Corporation recently launched a lawsuit against GW Pharmaceuticals over control of a commonplace CBD extraction technology.
Canopy Growth, based in Canada, launched their lawsuit on December 22, 2020. That’s the same day the massive cannabis corporation received an expansion on a key patent, according to Marijuana Moment.
The Canopy Growth lawsuit “will impact the industry for the next 100 years.”
Troy Ivan, CEO of ExtractCraft
The Canopy Growth lawsuit could have lasting consequences for the hemp and cannabis industry. At issue is a patent, currently owned by Canopy Growth, which covers CO2 extraction. Nearly every brand in the hemp and cannabis industry uses some form of CO2 extraction. This key technology has decades of use by chemists, cannabis researchers and scientists.
If they win their lawsuit, Canopy Growth wants GW Pharma to pay for the use of CO2 extraction in the creation of a prescription CBD drug. In theory, they could then demand fees from dozens or hundreds of other hemp companies. Some limitations apply to how long Canopy Growth could use the patent to demand licensing fees from other brands. However, the impact of the lawsuit could be long lasting, setting the tone for a growing industry.
A battle of cannabis-industry behemoths
UK-based GW Pharmaceuticals is the creator of Epidiolex, a CBD-based treatment for severe epilepsy. Epidiolex is the first U.S. Food & Drug Administration-approved medication based on a cannabis plant extract.
While multiple methods of extracting CBD and THC from hemp or cannabis exist, CO2 based extraction is the current gold standard. Consumers and researchers alike prize these extracts, which are pure and free of solvents and other toxins. Though the patent covers CBD or THC extracts, the best extracts usually feature other cannabinoids and terpenes to create the desirable “entourage effect.”
GW Pharma and Canopy Growth represent two of the most powerful companies in the industry. The core issue: whether basic cannabis extraction technologies can be patented, could reverberate for years.
Troy Ivan, CEO of ExtractCraft, told Ministry of Hemp that the legal battle between these two behemoths would be “incredibly fun to watch.”
However, he said that the results of the Canopy Growth lawsuit “will have a very powerful impact on the industry for the next 100 years, one way or another.”
Purchased patent leads to Canopy Growth lawsuit
At the heart of the Canopy Growth lawsuit is Patent 10,870,632, “a method for producing an extract from cannabis plant matter.”
In the lawsuit, Canopy Growth claims ownership over “pioneering processes for extracting cannabidiol (CBD).”
The patent specifically covers the extraction of THC and CBD, along with the related acidic forms (THC-A and CBD-A) of these major cannabinoids. Researchers at Bionorica originally obtained the patent. But Bionorica sold their cannabis research business to Canopy Growth in May 2019.
Ivan told us he believed Canopy Growth purchased Bionorica’s cannabis business, including the patent, “specifically for this agenda.” In other words, they intended all along to try to profit off of other brands’ use of this key technology.
In response to inquiries about the lawsuit, Canopy Growth sent us a brief prepared statement from Phil Shaer, their chief legal officer. The statement claims that the patent represents “pioneering processes for extracting cannabidiol (CBD).”
However, though the patent was first filed in 2001, it’s likely that cannabis enthusiasts and researchers have been using CO2 extraction since at least the 1990s.
Canopy Growth lawsuit could be ‘terrible for consumers and the industry’
“We have no interest in restricting access to Epidiolex®,” Shaer wrote in the Canopy Growth lawsuit statement, “but the Company should be fairly compensated for GW’s use of our intellectual property.”
Neither Shaer nor any other representative of Canopy would answer further questions from us.
If Canopy Growth wins, it seems unlikely that they will stop with demanding licensing fees from just GW Pharma. Why should they, when virtually every major CBD and THC extract producer uses CO2 extraction?
While stressing that he isn’t a patent lawyer, Eric Steenstra, president of Vote Hemp, expressed grave concern over the lawsuit.
“If Canopy prevails, it will be terrible for consumers and the industry.”
Could Canopy Growth become ‘patent trolls’?
It seems to us at Ministry of Hemp that Canopy is becoming what’s often known as a “patent troll.”
The Electronic Frontier Foundation wrote that the patent system “is “supposed to represent a bargain between inventors and the public.”
By protecting a unique invention for a period of time, inventors are encouraged to innovate, with that technology eventually becoming accessible to all after the exclusivity period ends.
“If Canopy prevails, it will be terrible for consumers and the industry.”
Eric Steenstra, President of Vote Hemp
In the hands of a patent troll, intellectual property doesn’t protect innovation. It stifles it. A patent becomes a weapon instead of protection.
While we’re not patent lawyers either, it appears that Canopy Growth wants to control a technology with widespread use. It could become prohibitively expensive for smaller companies to bring their products to market, even if they represented a new or unique use for a CO2 extract.
These added expenses and legal threats could be disastrous for the hemp industry, which is struggling to find its footing amid a pandemic, just 2 years after federal legalization.
We’ll continue to closely monitor the Canopy Growth vs. GW Pharmaceuticals lawsuit, and update this article accordingly.
Conflict of interest disclaimer: The author owned 4 shares of Canopy Growth stock, which he sold just before writing this article. As of this writing, he owns a single share of GW Pharmaceuticals stock in a very small portfolio of cannabis industry stocks.