Cannabis Interview – Tom Zuber – Zuber Lawler & Del Duca
The state of the cannabis industry is constantly changing and behind those changes are a multitude of people who have to adjust. Enters Tom Zuber of Zuber Lawler & Del Duca, a leading law firm that specializes in helping cannabis companies navigate legal waters as the industry continues to grow.
In 5 to 10 years, this industry will look a lot like the alcohol industry…
Tom Zuber of Zuber Lawler & Del Duca
Tom, we’re excited to bring more awareness from a legal aspect to the Cannabis Industry. Can you tell us a little bit more about the role your law firm is playing within the industry and what it’s overall mission is?
Tom: Zuber Lawler builds the value of cannabis companies through acquisitions, finance, intellectual property, IPOs, and high-stakes litigation, both domestically and internationally. Its mission is to facilitate the transition of the cannabis industry from illegal to compliant, and to assist its clients in establishing dominant post-prohibition positions in the marketplace
With an ever-changing industry, coupled with ongoing legal changes state to state, federally and globally, what challenges are you finding to be the most sensitive right now?
Tom: In no particular order the challenge of growing cannabis businesses across state and sovereign borders in the context of maintaining quality control standards across such borders.
Second, protecting, obtaining federal and global protection, federal and global trademark protection for cannabis brands, and navigating the increasingly complicated terrain relating to cannabis patent rights. Third, issues relating to going public in the context of federal prohibition.
What were some of the key decisions you and your firm decided to expand into Cannabis over a decade ago?
At first, going back over 12 years, we received cannabis clients as a function of personal friendships. Our friends were starting seminal cannabis companies here in California, and these companies are now industry leading cannabis companies.
These friends had been referring us not only their own matters, but legal matters of their friends who also started seminal cannabis companies, because for a long time we were the only law firm in the cannabis space focused on M&A, finance, intellectual property, and high-stakes litigation. A few years ago, with an already large roster of cannabis clients, we took a look around and recognized that the cannabis industry is bigger than people smoking joints.
Ultimately, the cannabis industry is about pharmaceutical-grade cannabis, and everything in between smoking joints and pharmaceutical cannabis. At that point, we made a decision to fully invest ourselves in arriving early at the future of the cannabis industry.
From your experience, how have legal cannabis companies been able to keep some of their “trade secrets” when it comes to their new techniques?
Tom: The path to protecting trade secrets is not much different for cannabis companies than it is for non-cannabis companies: trade secrets must be protected both physically and by contract.
That means that physical access to trade secrets must be guarded under lock and key, and anyone with access to trade secrets must sign a sufficient NDA.
What are some of the issues when it plaguing federal trademarking and cannabis?
Tom: The issues relating to obtaining meaningful federal trademark protection for cannabis brands include as examples: being completely forthright with the US PTO about the fact that your clients sell cannabis, and from there surgically articulating the difference between protecting cannabis brands and protecting brands in relation so illegal subject matter, as well as the difference between the current status of cannabis and the potential future post-prohibition status of cannabis.
In short, by addressing these issues with the US PTO in a forthright fashion, we’ve been able to obtain meaningful federal trademark protection for the cannabis brands of our cannabis clients.
With legalization of industrial hemp, do you see federal trademarking becoming a bit easier?
Tom: Not really. Again, it’s critical to be completely forthright with the US PTO. Hemp containing CBD, even apart from THC content, raises its own issues from the perspective of the US PTO. These issues include the fact that CBD is currently undergoing trials by the FDA. Regardless of the Farm Bill, these issues must be addressed.
So, the bottom line is that obtaining federal trademark protection still involves navigating complicated regulatory terrain.
Being an early adapter assisting the industry, what are some of the biggest obstacles you’ve faced in representing your clients?
Tom: Most of our clients are very large companies, typically Fortune and other publicly-traded companies, as well as global funds.
These companies usually have experienced in house counsel that are accustomed to working with outside counsel like Zuber Lawler, and they understand the value of legal services and the importance of investing in legal work product to successfully grow the value of iconic global companies.
The biggest obstacle we faced in representing cannabis clients was to achieve a focus on the value of such investments in legal work. Often, cannabis companies don’t fully focus on such value until they are preparing to go public, in which event relevant securities laws require such focus, and at that point the timing is less than ideal.
We’re already seeing blockchain efforts to assist the industry, from a tech standpoint, what role do you see blockchain and its integration with cannabis over the next 3 to 5 years?
Tom: Zuber Lawler does a lot of work in the blockchain space as well as the legalized cannabis space.
Over the next three to five years, we see blockchain facilitating public trust as respects to cannabis companies. As an example, distributed ledger technologies can facilitate the tracking of inventory from seed to sale, and earmarking the components of product from inception to ultimate usage by the customer. This accountability will facilitate trust.
From your perspective, do you foresee the banking industry becoming more solution oriented into working with cannabis companies?
Tom: Absolutely. As an example, I believe it’s likely that President Trump will deschedule cannabis prior to the next presidential election as a play to obtain the cannabis vote.
Whether or not prohibition ends before or after the next presidential election, when it does end, as I believe it will, the banking industry will jump into the cannabis space with great enthusiasm.
Banks won’t need to be talked into entering the cannabis space because there’s a lot of money to be made, and banks will follow the money once prohibition ends.
From a regulatory standpoint, where do you see this industry 5 to 10 years from now globally?
Tom: In 5 to 10 years, this industry will look a lot like the alcohol industry. As an example, here in the United States, legalized cannabis will continue to be regulated state to state as alcohol is. Ditto across sovereign jurisdictions throughout the world. The pharmaceutical industry will also promote increasing FDA oversight relating to medicinal cannabis
What are some of the issues plaguing CBD right now? With the hemp bill passed, do you foresee CBD overtaking the THC side of things in the coming years or will each play their various roles?
Tom: Issues plaguing CBD right now relate to how the FDA will interface with the CBD industry. CBD will not overtake the THC side of things, but it will play an increasingly large role in the global cannabis industry. However, in the end, CBD and THC each have their roles to play in this space, because THC is psychoactive, and CBD is not.
What do you think are the three segments of growth in this industry over the next 3 years? (3 areas you see major business development happening)?
Tom: Three segments of growth in this industry over the next three years include increased growth of the CBD industry, additional movement of the cannabis industry toward pharmaceutical-grade cannabis, and the replacement of pharmaceutical-grade drugs with cannabis products. We’ll also see growth in the area of hemp, including in terms of identifying additional uses for hemp apart from ingestion-related uses.
What are some events you highly recommend people attend? Whether it’s for business purposes or to get acquainted with the industry?
Tom: MJBizCon is a primary event in this industry and one that I recommend. I also like smaller, more selective event, like the IC3 events targeted toward larger companies and investors.
How important do you think the internet will be in the shaping of this industry as it moves forward? What are some of the boundaries now with online services and cannabis?
The internet will be exceedingly important in shaping the cannabis industry as it moves forward. In fact, I believe that online retail will soon displace much of brick and mortar retail.
Post-prohibition, retail shops that celebrate the costumer experience like Starbucks, and retail shops that cater to end-to-end control over the customer experience like Apple, will continue to thrive. However, other retail shops will fade in importance relevant to the future online cannabis retail market. Primary boundaries relating to online cannabis retail currently include restrictions on national advertising and payment processing in the context of federal prohibition
If appropriate, can you share with us some of the clients you have represented throughout the past several years?
Tom: Zuber Lawler has been representing leading cannabis clients for over 12 years. As examples, Zuber Lawler represents the leading luxury flower brand in California: Canndescent, the leading extracts company in California: Central Coast Agriculture, a leading grow operator: LivWell, and a leading edibles company: Venice Cookie Company. Zuber Lawler also represents major domestic and international funds acquiring assets in the cannabis space.
Tom, this has been awesome! Truly appreciate your time and I know our audience will find this information highly valuable!
Tom: Thanks for having me be a part of this!