Attorney Stops Trademarks From Going to Pot

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Protecting a marijuana brownie brand isn’t as simple as patenting a pair of gym shoes.

“It’s just a matter of complexity,” said downtown L.A. attorney David Welch, who has been practicing in the medical marijuana industry for six years and does a lot of work with trademarks. “Anyone can go on LegalZoom and do a trademark. The problem with medical marijuana is part of the law with trademarking doesn’t allow immorality, and marijuana is illegal under federal law. … In essence, promoting a product that’s illegal under federal law, that’s considered immoral.”

Welch said he helps clients register trademarks on the state level through the Secretary of State’s Office and that there are different ways to work around U.S. Patent and Trademark Office regulations.

One client Welch works with is G Farmalabs, an Anaheim maker of marijuana-laced edibles that seems like a Willie Wonka factory of weed. Known for products including chocolate bars and chocolate-covered pretzels, a video on G Farmalabs’ website shows a chocolatier mixing and pouring the firm’s LiquidGold Mint Meltaway Truffles in a commercial kitchen.

The truffles have won awards at industry events such as the High Times Cannabis Cup in Los Angeles last year. While such recognition is great, increased attention creates a pressing need to protect the company’s intellectual property.

G Farmalabs founder Ata Gonzalez first realized he should protect his LiquidGold line of chocolates while at a cannabis event in Seattle a couple of years ago. The federal government had adopted a more laissez-faire approach as states enacted medical marijuana laws and suddenly millionaires and billionaires were showing up at big events.

“The cannabis industry just has evolved, and we also have,” said Gonzalez, who’s been in the industry for six years. “There are more brands coming into play.”

From Welch’s perspective, there’s a bit of David and Goliath in the mix.

“I don’t want to sound too idealistic, but it would be sad if all the people that pioneered this industry were wiped away because they failed to protect their intellectual property and big companies come in and buy up the property,” he said.

Unlucky No. 3

Medbox Inc.’s largest shareholder, founder Vincent Mehdizadeh, appears to have gone on a selling spree last month. Regulatory filings show that while Mehdizadeh owned more than 26 million shares at the beginning of the year, including convertible stock, he sold more than 1.2 million shares in the first couple of weeks of February.

Mehdizadeh had already been on a program of selling about 500 shares a day under an agreement he made with the West Hollywood firm in the fall, so the spike seemed a little strange.

It turned out to be an involuntary move. Mehdizadeh had used the shares as collateral when taking out a line of credit. Some of that money was lent to Medbox.

When Medbox’s stock price fell below $3 early in February, the securities became “unmarginable” – that is, worth too little to backstop the loan – and Mehdizadeh’s brokerage institution forced the sale.

“The reality was the company sometimes needed bridge capital while expanding,” Mehdizadeh explained in an interview. He didn’t want Medbox in a situation where it had to sell a lot of shares at a discount or put up its assets, including patents, for a loan to raise the cash.

“That could be a slippery slope,” he said. “It sends a weird message out to the market.”

Though he was happy to lend the firm cash, the margin call put Mehdizadeh in a difficult situation.

“I didn’t want the shares to be sold,” he said. “I’m trying to seek out options to liquidate other assets to buy back into the company.”

New Biohub

The local life-sciences community is getting a booster shot in the form of a new accelerator and incubator at ROC Santa Monica’s co-working space.

The program will be managed by LABioHub, a new organization led by Leonhardt Ventures Executive Chairman Howard Leonhardt and Greenwings Biomedical Chief Executive Richard Koffler.

Life-sciences startups can apply for a spot in LABioHub’s accelerator, modeled on Leonhardt’s Cal-Xelerator. That program offers 15 cardiovascular biomed companies up to $18,000 each and a roughly 15-week program to launch a startup. LABioHub partners will provide support such as help with financial statements, taxes, permits and slide decks. Leonhardt and Koffler are negotiations with investors who would support other life-sciences business in other disciplines.

Startups will pay ROC $800 a month for desk space, access to a wet lab that will be built in one of ROC’s kitchens, extra wet lab bench access at UCLA as well as other amenities such as conference rooms and a receptionist.

Applicants that don’t qualify for the accelerator can still pay ROC $800 a month, participate in the incubator and use the facilities.

“We’re taking people with just a napkin concept,” said Leonhardt. “We expect lots of applicants to be professors and students out of USC and UCLA.”

This will be the second accelerator in ROC Santa Monica’s 44,602-square-foot building at 604 Arizona Ave., and the first one that’s not purely tech, said Walter Grieves, the co-working space’s managing director.

“We feel like the life-sciences connection to the developing tech sector in Los Angeles is critical to helping it expand here and get more of a foothold,” Grieves said.

Staff reporter Marni Usheroff can be reached at [email protected] or (323) 549-5225, ext. 229.

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