Intellectual property (IP), patents, and trademarks were controversial among many OG players and trailblazers in the cannabis industry. Talk of patenting genetics and manufacturing flew in the face of what much of the advocacy stood for — better medicine and better access.
But, the cannabis industry is a much different beast than it was only a decade ago. With legalization quickly spreading and a market maturing, cannabis companies are getting competitive — which means refocusing on protecting inventions, innovations, and brand IP.
Protecting Proprietary Genetics to Protecting the Entire Supply Chain
In 2021, authors Joseph Wyse & Gilad Luria published the timely “Trends in intellectual property rights protection for medical cannabis and related products” in the Journal of Cannabis Research. In this article, Wyse and Luria argue that “innovation in [medical cannabis] encompasses multiple activities in the journey from plant-to-drug.”
Their analysis uncovered a booming patent library covering a broad swath of activity in the cannabis landscape. For example, upstream technologies getting patented include harvesting, post-harvest processing, biomass assessment, and other cultivation technologies.
In the midstream category, a growing number of patents cover analytics, extractions, purification, and separation technologies. Meanwhile, the authors found patents related to medical devices, compositions, formulations, and dosage forms at the downstream end.
Using a broad keyword research approach, this analysis discovered a six-fold increase in cannabis-related patents between 2013 to 2020, with the most growth in the downstream category of patents, covering delivery, dose and devices.
They note that there must be a wave of developments within the upstream and midstream spaces before more downstream therapeutic channels can really take off. This is because cultivation and processing “provide characterization and consistency of the downstream product or drug.”
IP Increasingly Valuable During Mergers and Acquisitions
As mergers and acquisitions signal the slow evolution of the cannabis industry toward greater stability and market maturity, intellectual property becomes one of the key differentiators.
Over the last few years, many of the largest mergers and acquisitions within the cannabis space have been driven by a company's IP and patent portfolio. Jazz Pharmaceuticals' purchase of GW Pharmaceuticals in February 2021 for $7.2 billion is notable.
Included in the acquisition was Epidiolex, GW Pharmaceuticals cannabinoid-based and Food and Drug Administration approved pharmaceutical for the treatment of epilepsy. On top of this, Jazz will obtain ownership of GW's “deep innovative pipeline of cannabinoid product candidates,” one of which is the expected approval of nabiximols following Phase III trials in the US.
In the press release, Bruce Cozadd, chairman and CEO of Jazz Pharmaceuticals, explained how crucial GW's expansive intellectual property was for the acquisition.
He stated, “We are excited to add GW's industry-leading cannabinoid platform, innovative pipeline and products, which will strengthen and broaden our neuroscience portfolio, further diversify our revenue and drive sustainable, long-term value creation opportunities.”
Epidiolex alone has been valued at $510 million in annual sales since its approval in 2018. Jazz Pharmaceuticals is banking on this value, as well as the potential of other cannabinoid-based pharmaceuticals in the GW product pipeline.
Jazz Pharmaceuticals isn't the only player sniffing out strong IP portfolios among cannabis companies. BevCanna, a health & wellness beverage and natural products company, has rapidly expanded its patent, product, and IP holdings. They also recently acquired Naturally Pure Therapy Products Corp, Naturo Group Investments Inc., and Acquire Embark Health Inc.
Each deal offered BevCanna a new set of skills, assets, and products. Together, from an IP perspective, these acquisitions allow BevCanna to secure a stack in a broader consumer market through established brands and innovative manufacturing processes.
Competitive Edge and Market Valuation Changing the Cannabis IP Landscape
Talk about IP and patents may have earned the ire of cannabis advocates' in days gone by. But as the industry evolves, so too do the innovations in cultivation and delivery. Meaning, the new wave of IP and patent protections in cannabis are focused on ag tech and medical tech.
What's more, all forms of IP are becoming increasingly crucial for company market value. As explained by patent attorney Pauline Pelletier in an interview for MJBiz Daily, “In general, many companies in the cannabis industry are investing in patent protection with the expectation that this will enhance company value, whether for purposes of competition or valuation (or both).”
“Like in any other industry, patents and R&D (research and development) efforts are generally accretive – cannabis is no exception.”