The Changing Food Regulatory Landscape
You have probably heard the term “ultra-processed food.” What does that mean? Unprocessed food probably requires little explanation. For example, a whole raw apple that has not been cut, cooked or otherwise prepared would be unprocessed. From there, a range of processing might be done – the apple could be cut in slices and packaged for snacking – that would be some degree of processing. It could be mixed with sugar and lemon juice and cooked down to make apple butter. That would be more processing. It could also be mixed with numerous other ingredients, including artificial colors, sweeteners, hydrogenated oils, starches, enriched flours, and preservatives to make shelf-stable snack cakes. That would be an ultra-processed food. Ultra-processed foods provide convenience and help reduce the cost of foods by providing longer shelf life. Many of the current staples of American life are ultra-processed foods – think about chips, crackers, frozen meals, soft drinks, many breakfast cereals, processed meats (like hot dogs), candies, ice cream, and some common fast foods.
Certain ingredients used in ultra-processed foods have been associated with health problems such as cancer, cardiovascular disease, diabetes, mental / behavioral conditions, and obesity. The FDA has authorized the use of ingredients found in ultra-processed foods available in the United States. However, certain countries, including those within the European Union, have prohibited the inclusion of these ingredients in their food supplies.
On January 15, 2025, the FDA banned Red Dye number 3 from food after research linked the dye to higher rates of thyroid cancer in animals, but not humans. While the FDA has not banned many ingredients prohibited in other countries, states have been taking independent action. California leads the nation in regulating food ingredients. In 2023, California passed legislation banning Red Dye number 3, propylparaben (a preservative to prevent the growth of mold and bacteria), potassium bromate (used to make bread rise better and to improve the texture), and brominated vegetable oil (used to stabilize citrus flavorings in drinks).
Other states have also begun to take action. Below is a chart outlining recent and pending state legislation aimed at food regulation.
State
Legislation
Status
Arizona
Banned from public schools food containing:Potassium bromatePropylparabenTitanium dioxideBrominated vegetable oilYellow dye 5Yellow dye 6Blue dye 1Blue dye 2Green dye 3Red dye 3Red dye 40
Passed by the Senate
Arkansas
Prohibited from foods:Potassium bromate Propylparaben
Referred to Senate Public Health Welfare And Labor
If passed, effective 1/1/2028
Connecticut
Prohibits from foods:Red dye number two Red dye number four Green dye number one Green dye number two Violet dye number one Butter yellow dye Orange dye number one Orange dye number two Red dye number forty Yellow dye number fiveYellow dye number six Blue dye number one Blue dye number two Carmoisine Erythrosine
Pending before the Joint General Law Committee
California
Banned from foods:Brominated vegetable oil Potassium bromatePropylparabenRed dye 3
Enacted on 10/7/23, effective on 1/1/2027
Delaware
Prohibits from food:Red dye number 3Red dye number 40
Pending before the Senate Health & Social Services Committee
If passed, effective 1/15/2027
Florida
Prohibits from food:Brominated vegetable oilPotassium bromatePropylparabenRed dye 3Blue dye 1Yellow dye 5BenzidineButylated hydroxyanisoleButylated hydroxytoluene.
Pending in the Appropriations Committee on Agriculture, Environment, and General Government
Effective 1/1/2028 if passed
Hawaii
Prohibits from foods in public schools:Blue dye number 1 Blue dye number 2 Green dye number 3 Red dye number 40 Yellow dye number 5 Yellow dye number 6
Pending before the Senate Education Committee
Effective 7/1/2025 if passed
Illinois
Prohibits from food:Brominated vegetable oil Potassium bromate Propylparaben Red dye number 3
Pending before the Senate
If passed, effective 1/1/2027
Indiana
Prohibits in food:Blue dye number 1Blue dye number 2 Green dye number 3 Brominated vegetable oil Propylparaben Potassium bromate Red dye number 3Red dye number 40Yellow dye number 5 Yellow dye number 6
Referred to Public Health Committee
If passed, effective 7/1/2025
Iowa
Prohibits in foods in public schools:Red dye number 40Yellow dye number 7Margarine
Referred to Education Committee
Kentucky
Prohibits in foods in public schools:Brominated vegetable oil Potassium bromatePropylparabenTitanium dioxideRed dye number 3 Red dye number 40Yellow dye number 5 Yellow dye number 6 Blue dye number 1 Blue dye number 2 Green dye number 3
Referred to Primary and Secondary Education Committee
Louisiana
Prohibits from food in public schools:Blue dye number 1Blue dye number 2 Green dye number 3Red dye number 3 Red dye number 40 Yellow dye number 5 Yellow dye number 6 AzodicarbonamideButylated hydroxyanisole (BHA)Butylated hydroxytoluene (BHT)Potassium bromate PropylparabenTitanium dioxide
Requires warnings on foods containing:Acesulfame potassium.Acetylated esters of mono- and diglycerides (acetic acid ester)Activated charcoalAnisoleAtrazineAzodicarbonamide (ADA)Butylated hydroxyanisole (BHA)Butylated hydroxytoluene (BHT)Bleached flour.Blue dye number 1Blue dye number 2Bromated flourCalcium bromateCanthaxanthinCarrageenanCertified food colors FDACitrus red dye 2 DiacetylDiacetyl tartaric and fatty acid esters of mono- and diglycerides (DATEM)Dimethylamylamine (DMAA).Dioctyl sodium sulfosuccinate (DSS)FicinGreen dye number 3Interesterified palm oilInteresterified soybean oilLactylated fatty acid esters of glycerol and propylene glycolLyeMelatoninMorpholineOlestraPartially hydrogenated oil (PHO)Potassium aluminum sulfatePotassium bromatePotassium iodatePotassium sorbatePropylene oxidePropylparabenRed dye number 3Red dye number 4Red dye number 40Sodium aluminum sulfateSodium lauryl sulfateSodium stearyl fumarateStearyl tartrateSynthetic or artificial vanillinSynthetic trans fatty acidThiodipropionic acidTitanium dioxideToluene.Yellow dye 5 Yellow dye number 6
Restaurants using must disclose to customers the use of the following seed oils:Canola or rapeseed oilCorn oilCottonseed oilFlaxseed oilGrapeseed oilRice bran oilSafflower oilSoybean oilSunflower oil
Pending before the Senate Health & Welfare Committee
If passed, effective for the 2026-2027 school year
If passed, effective 1/1/2027
If passed, effective 1/1/2027
Maryland
Prohibits in foods:Brominated vegetable oil (BVO)Potassium bromate Propylparaben
If passed, effective 10/1/2028
Massachusetts
Prohibits in schools and school events food and beverages containing:Blue dye number 1Blue dye number 2Green dye number 3Red dye number 3Red dye number 40Yellow dye number 5Yellow dye number 6
Referred to Public Health CommitteeIf passed, effective 12/31/2028
Missouri
Requires warning labels for foods containing:AcrylamideArsenicBisphenol A (BPA)Blue dye number 1CadmiumDi(2-ethylhexyl)phthalate (DEHP)LeadMercuryRed dye number 40Yellow dye number 5Yellow dye number 6
Prohibits in foods in public schools:Potassium bromate PropylparabenTitanium dioxide Brominated vegetable oil Yellow dye number 5 Yellow dye number 6Blue dye number 1 Blue dye number 2Green dye number 3Red dye number 3Red dye number 40
Pending before the House
If passed, effective 2026-2027 school year
New Jersey
Prohibits foods with:Brominated vegetable oil Potassium bromate Propylparaben Red dye number 3
If passed, effective the first day of the 13th month following enactment
New York
Banned from foods:Red dye number 3Potassium bromate Propylparaben
Banned from foods sold in public schools:Red dye number 3Red dye number 40Blue dye number 1Blue dye number 2Green dye number 3Yellow dye number 5Yellow dye number 6
Pending before the NY Senate
Effective 1 year after passage (with an up to 3 year exception based upon a product’s best by date)
North Carolina
Prohibiting from foods:Brominated vegetable oil Potassium bromate Propylparaben Red dye number 40 Yellow dye number 5 Yellow dye number 6 Blue dye number 1Blue dye number 2Green dye number 3
If passed, effective 1/1/2027
Oklahoma
Banned from foods and drugsBlue dye number 1Blue dye number 2Green dye number 3Red dye number 3Red dye number 40Yellow dye number 5Yellow dye number 6.
If the FDA revokes is authorization of use, the following would also be banned:Aspartame; Azodicarbonamide (ADA) Brominated vegetable oil Butylated hydroxyanisole (BHA)Butylated hydroxytoluene (BHT) Ethylene dichlorideMethylene chloride Potassium bromate; Propyl gallate; Propylparaben;Sodium benzoate; Sodium nitrate;
If signed by the governor, ban in foods effective on 1/15/2027 and in drugs on 1/18/2028
Warnings would also be required for the enumerated ingredients.
Oregon
Prohibits from foods in schools:Red dye number 3Potassium bromatePropylparaben
Also limits fats, sugars, calories and caffeine in some snacks and drinks available for students
If passed, effective 7/1/2017
Rhode Island
Prohibits from foods in schools:Blue dye number 1 Blue dye number 2Green dye number 3Red dye number 40Yellow dye number 5Yellow dye number 6
If passed, effective 1/1/2027
Texas
Prohibits in foods in schools:Blue dye number 1Blue dye number 2 Green dye number 3Red dye number 40Yellow dye number 5Yellow dye number 6 And any additive that is substantially similar to any of the above
Also prohibits in foods in schools:Red dye number 3 Red dye number 40 Yellow dye number 5 Yellow dye number 6 Blue dye number 1 Blue dye number 2 Green dye number 3 caramel
Prohibits from food in schools and foods available through supplemental nutrition programs:Red dye number 3 Red dye number 40 Yellow dye number 5 Yellow dye number 6 Blue dye number 1 Blue dye number 2 Green dye number 3 Citrus red dye number 2 Orange B dye
Prohibits in foods:aspartameartificial flavoringpropylparabenazodicarbonamide (ADAbutylated hydroxyanisole (BHA) Butylated hydroxytoluene (BHT)color additivedimethylpolysiloxane (PDMS)monosodium glutamate (MSG)Tert-butylhydroquinone (TBHQ)Partially hydrogenated oilsSodium benzoateSodium nitrateSodium nitritemethylparaben
Prohibits is foods available under SNAP programs:brominated vegetable oil (BVO)potassium bromate propylparabenazodicarbonamideButylated hydroxyanisole (BHA)Red dye number 3Titanium dioxide.
Prohibits from foods in schools:brominated vegetable oil (BVOpotassium bromatepropylparabenazodicarbonamidebutylated hydroxyanisole (BHAtitanium dioxidered dye 3 blue 1 blue 2 green 3 red 40 yellow 5 yellow 6
Effective immediately upon passage if it receives a 2/3 vote. If passed with less than a 2/3 vote, effective 9/1/2025
Effective immediately upon passage if it receives a 2/3 vote. If passed with less than a 2/3 vote, effective 9/1/2025
If passed, effective 9/1/2025
Effective immediately upon passage if it receives a 2/3 vote. If passed with less than a 2/3 vote, effective 9/1/2025
Effective immediately upon passage if it receives a 2/3 vote. If passed with less than a 2/3 vote, effective 9/1/2025
Utah
Prohibits from foods in public schools:Potassium bromate;Propylparaben;Blue dye number 1Blue dye number 2Green dye number 3Red dye number 3Red dye number 40Yellow dye number 5 Yellow dye number 6
If passed, effective 5/7/2025
Vermont
Prohibits in foods:brominated vegetable oil potassium bromate propylparaben red dye no. 3
If passed, effective 1/1/2027
Virginia
Prohibited in food available in public and secondary schoolsBlue dye number 1Blue dye number 2 Green dye number 3Red dye number 3 Red dye number 40 Yellow dye number 5 Yellow dye number 6
Signed by the governor on 3/27/2025 with an effective date of 7/1/2027
West Virginia
Banned from foods:butylated hydroxyanisole propylparabenBlue dye number 1Blue dye number 37 Green dye number 3Red dye number 3Red dye number 40 Yellow dye number 5Yellow dye number 6
Approved by the governor on 3/24/2025:Effective 1/1/2028.Dyes prohibited in school foods effective 8/1/2025
Stay tuned for more regulatory changes. With nationwide distribution common among food manufacturers, an ingredient ban in one state can effectively function as a nationwide ban. Plus, with the new administration in Washington, D.C., it is anticipated that the FDA will impose additional regulations on food ingredients. Bottom line, regulations at the state and federal levels may lead manufacturers to reformulate or discontinue some foods.
Comments on Minnesota’s Proposed Rule for Reporting Products Containing Intentionally Added PFAS Are Due May 21, 2025
With the January 1, 2026, reporting deadline fast approaching for reporting on products containing intentionally added per- and polyfluoroalkyl substances (PFAS), on April 21, 2025, the Minnesota Pollution Control Agency (MPCA) published a proposed rule intended to clarify the reporting requirements, specify how and what to report, and establish fees. Written comments on the proposed rule are due May 21, 2025, at 4:30 p.m. (CDT). On May 22, 2025, at 2:00 p.m. (CDT), MPCA will hold a public hearing during which it will accept oral comments on the proposed rule. The hearing will end at 5:00 p.m. (CDT), but additional days of hearings may be scheduled if necessary. The procedural rulemaking documents available include:
Proposed Permanent Rules Relating to PFAS in Products; Reporting and Fees (c-pfas-rule1-06) (proposed rule);
Statement of Need and Reasonableness for PFAS in products reporting and fees rulemaking (c-pfas-rule1-07) (SONAR); and
Notice of intent to adopt rules with a hearing (c-pfas-rule1-05).
Definitions
The proposed rule includes definitions not included in Minnesota’s statute, including:
Component: A distinct and identifiable element or constituent of a product. Component includes packaging only when the packaging is inseparable or integral to the final product’s containment, dispensing, or preservation.
Distribute for sale: To ship or otherwise transport a product with the intent or understanding that the product will be sold or offered for sale by a receiving party after the product is delivered.
Function: The explicit purpose or role served by PFAS when intentionally incorporated at any stage in the process of preparing a product or its constituent components for sale, offer for sale, or distribution for sale.
Homogenous material: One material of uniform composition throughout or a material, consisting of a combination of materials, that cannot be disjointed or separated into different materials by mechanical actions.
Packaging: The meaning given under Minnesota Statutes, Section 115A.03 — “‘Packaging’ means a container and any appurtenant material that provide a means of transporting, marketing, protecting, or handling a product. ‘Packaging’ includes pallets and packing such as blocking, bracing, cushioning, weatherproofing, strapping, coatings, closures, inks, dyes, pigments, and labels.”
Significant change: A change in the composition of a product that results in the addition of a specific PFAS not previously reported in a product or component or a measurable change in the amount of a specific PFAS from the initial amount reported that would move the product into a different concentration range.
Substantially equivalent information: Information that the MPCA commissioner can identify as conveying the same information required under Part 7026.0030 and Minnesota Statutes, Section 116.943, Subdivision 2. Substantially equivalent information includes an existing notification by a person who manufactures a product or component when the same product or component is offered for sale under multiple brands.
For some definitions, the proposed rule expands on definitions that are included in the statute. The statute defines manufacturer, but MPCA proposes additional language to clarify the definition (new language is italicized):
Manufacturer: The person that creates or produces a product, that has a product created or produced, or whose brand name is legally affixed to the product. In the case of a product that is imported into the United States when the person that created or produced the product or whose brand name is affixed to the product does not have a presence in the United States, manufacturer means either the importer or the first domestic distributor of the product, whichever is first to sell, offer for sale, or distribute for sale the product in the state.
According to the SONAR, MPCA inserted the phrase “has a product created or produced” to clarify the parties responsible for reporting. MPCA states that “[s]imilarly, the definition encompasses parties that either import or are the first domestic distributor of the product, whichever is first to sell, offer for sale, or distribute the product for sale in the state.” MPCA intends the revisions to clarify that companies that do not manufacture their own products are subject to the reporting and fee requirements.
Parties Responsible for Reporting
Under the proposed rule, a manufacturer or a group of manufacturers must submit a report for each product or component that contains intentionally added PFAS. Manufacturers in the same supply chain may enter into an agreement to establish their reporting responsibilities. The proposed rule allows a manufacturer to submit information on behalf of another manufacturer if the following requirements are met:
The reporting manufacturer must notify any other manufacturer that is a party to the agreement that the reporting manufacturer has fulfilled the reporting requirements;
All manufacturers must maintain documentation of a reporting responsibility agreement and must provide the documentation to MPCA upon request;
All manufacturers must verify that the data submitted on their behalf are accurate and complete; and
For the verification to be considered complete, all manufacturers must submit the required fee, as applicable.
MPCA states in the SONAR that “[i]t is reasonable to allow a manufacturer to submit the reporting requirements for another manufacturer because of the large overlap in common components used throughout the manufacturing of complex products.” According to MPCA, it will provide detailed guidance on how reporting entities can submit on behalf of multiple manufacturers in the reporting system instructions or in supplemental guidance.
Information Required
Under the statute, the following information must be reported:
(1) A brief description of the product, including a universal product code (UPC), stock keeping unit (SKU), or other numeric code assigned to the product;
(2) The purpose for which PFAS are used in the product, including in any product components;
(3) The amount of each PFAS, identified by its Chemical Abstracts Service Registry Number® (CAS RN®), in the product, reported as an exact quantity determined using commercially available analytical methods or as falling within a range approved for reporting purposes;
(4) The name and address of the manufacturer and the name, address, and phone number of a contact person for the manufacturer; and
(5) Any additional information requested by the commissioner as necessary to implement the requirements of this section.
Rather than requiring information regarding the purpose for which PFAS are used in the product, the proposed rule would require that manufacturers provide “the function that each PFAS chemical provides to the product or its components.” Under the proposed rule’s definition of function (“the explicit purpose or role served by PFAS when intentionally incorporated at any stage in the process of preparing a product or its constituent components for sale, offer for sale, or distribution for sale”), manufacturers would be required to report not only any PFAS intentionally added to the product, but PFAS used during the manufacturing process even if the PFAS are not present in the final product.
A manufacturer would be allowed to group similar products compromised of homogenous materials if the following criteria are met:
The PFAS chemical composition is the same;
The PFAS chemicals fall into the same reporting concentration ranges;
The PFAS chemicals provide the same function; and
The products have the same basic form and function and only differ in size, color, or other superficial qualities that do not impact the composition of the intentionally added PFAS.
If the product consists of multiple PFAS-containing components, the manufacturer would be required to report each component under the product name provided in the brief description of the product. Similar components listed within a product could be grouped together if the components meet the criteria listed above.
The proposed rule will allow manufacturers to report the concentration of PFAS using the following ranges:
Practical detection limit to less than (
Court Voids Alabama Medical Cannabis Awards: What’s Next on This Far Too Long, Too Strange Trip?
“If we couldn’t laugh, we’d all go insane,” we were told by the late, ever so great Jimmy Buffett. So before I go into details about the Montgomery County Circuit Court order that threatens to derail Alabama’s medical cannabis program before the train leaves the station, I’m reminded of the scene from the wonderful Farrelly Brothers film Dumb and Dumber when an exasperated Lloyd Christmas (played seemingly effortlessly by then rising superstar Jim Carrey) exclaims, “We got no food, no jobs… our pets’ heads are falling off!”
Short of a quick reversal by the Court of Civil Appeals or some action by the Alabama Medical Cannabis Commission, I’m afraid we’ve reached pets’ heads falling off status for medical cannabis in Alabama. But I still believe in a path forward. Follow along, if you have the stomach for it.
Whitt, You Seem a Little Unhinged. Did Something Happen?
Yes, glad you asked. I mean, yes something happened. I’m reserving a response to the first part.
On Monday — the day after the holiest of days on the cannabis calendar and just days after a hearing during which the Montgomery County Circuit Court heard arguments about whether an emergency rule promulgated by the AMCC in late 2023 and relied upon by the AMCC to conduct public hearings with applicants and award licenses was lawfully enacted — the Montgomery County Circuit Court declared the emergency rule was void and permanently enjoined the AMCC from taking any actions based on the awarding and denial of licenses in December 2023.
The AMCC adopted the emergency rule in 2023 because – as it stated at the time – denying patients access to medical cannabis created a public health emergency and there was not sufficient time to allow for the typical notice and comment period that applies to traditional rules due to the myriad delays in the licensing process to date (which was then more than two years in the making). Notably, at the same time the AMCC issued the emergency rule, the AMCC also entered a non-emergency rule with the same language and, following a notice and comment period, that rule became law in February 2024. It remains on the books.
The AMCC held public hearings and awarded licenses in December 2023. Winning cultivators and processors were actually issued licenses, while dispensary and integrated facility awardees were stopped from being issued licenses when the trial court entered injunctions prohibiting their issuance in the closing days of 2023.
Those injunctions remained in place until yesterday – nearly a year and a half after the licenses were initially awarded – when the trial court concluded that there was no emergency at the time of the emergency rule and, as a result, integrated facility awards were invalid. As a result, the trial court permanently enjoined the AMCC from issuing licenses in the integrated facility category based on the events of December 2023. Although the ruling is limited by its terms to integrated facility licenses, it stands to reason that it will similarly be applied to all categories because the December proceedings for all license categories were conducted pursuant to the now-invalid emergency rule.
So Now What?
I don’t think it’s a stretch that disappointed awardees in the integrated facility category are drafting appeals just as I am pulling links off YouTube for Dumb and Dumber. There is reason to believe the appellate court may, just as it did last month, overrule the trial court or at least put a hold on the effect of the ruling such that the AMCC can begin the investigative hearing process (which is the final substantive step before the issuing of licenses) while the appeal is pending.
Avid readers of Budding Trends will recall that, following a three-hour oral argument, the Court of Appeals issued a unanimous order overturning the trial court with language that suggested the appellate court may be tiring of the continued delay in the litigation. While that court may be inclined to show some deference to the trial court’s conclusion that no emergency existed when the emergency rule was promulgated, I have a sense the Court of Appeals may be more inclined to get this process back on track. Challengers to the trial court’s order have a number of arguments, and I will keep my promise to not bore you with Latin phrases and legalese and minutiae. I do think, however, that the Court of Appeals may view this recent ruling by the trial court with a keen and skeptical eye and with a broader view of what these delays mean to Alabamians seeking access to medicine.
While that is all playing out in the courts, I believe the AMCC may be able to take certain action to keep the process moving forward. First, for example, there is no injunction in place as of this writing that would prevent the AMCC from initiating investigative hearings for any other license categories. The AMCC should move forward with appropriate speed to conduct those hearings unless and until they are ordered otherwise by a court of competent jurisdiction.
Secondly, I believe the AMCC is within its rights to simply have another vote on the integrated facility applications without relying on the results of the December 2023 proceedings. In relevant part, the injunction simply prevents the AMCC “from taking any action in furtherance of the December 12, 2023 awards and denials of medical cannabis licenses in the integrated facility category.” The AMCC should announce that it is going to have a meeting in a month or two. This should allow for AMCC commissioners to review the materials that were presented to it in December 2023 and then vote to award licenses pursuant to the non-emergency rule that took effect in February 2024 and not be subject to the defect the trial court found with the emergency rule. The AMCC has all of the materials it needs in its possession to conduct this new review and issue awards consistent with yesterday’s order.
Onward. Forward.
Randy Pausch was a professor of computer science, human-computer interaction, and design at Carnegie Mellon University in Pittsburgh. In 2007, his doctors informed him that he had pancreatic cancer and had only three to six months left to live. His first task was saying goodbye to the job he loved by participating in Carnegie Mellon’s last lecture circuit – a hypothetical “final talk” – i.e., “What wisdom would you try to impart to the world if you knew it was your last chance?”
The entire lecture is wonderful – heartbreaking and sad but also incredibly powerful and hopeful. I encourage you to give it a view when you have a chance. But one part in particular came to mind as I tried to wrap my head around what the court did yesterday and what it means going forward. He shared a vignette that ended in a professional setback and offered advice for how to deal with a situation when you’ve hit a brick wall:
[R]emember, the brick walls are there for a reason. The brick walls are not there to keep us out. The brick walls are there to give us a chance to show how badly we want something. Because the brick walls are there to stop the people who don’t want it badly enough. They’re there to stop the other people.
We’ve come to yet another brick wall in this tortured litigation, and I wouldn’t blame anyone who was beginning to lose hope that we’ll ever see that light at the end of this winding tunnel. But I remember why the wall is there and how badly we want to launch a medical cannabis program in Alabama. Let’s show how much we want it. Let the brick walls keep the other people out.
Thanks for stopping by.
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Seventh Circuit Decision Clarifies Distinction Between Face-to-Face Sales and Advertising Under the Anti-Kickback Statute
Overview
In a significant decision, United States v. Sorensen, — F.4th —-, 2025 WL 1099080 (7th Cir. Apr. 14, 2025), the United States Court of Appeals for the Seventh Circuit reversed the conviction of Mark Sorensen, who was previously found guilty of conspiracy and kickbacks under the Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)). This ruling aligns with recent Fifth Circuit cases that draw a clear distinction between illegal kickbacks for face-to-face sales and lawful payments for advertising and marketing services.
Case Background
Mark Sorensen, owner of SyMed Inc., a Medicare-registered distributor of durable medical equipment, was convicted of conspiracy and offering kickbacks for payments made to advertising and marketing companies. These companies were involved in promoting orthopedic braces to Medicare patients. The government argued that these payments constituted illegal referrals under the Anti-Kickback Statute.
Business Model for Orthopedic Product Sales
The business model for selling orthopedic braces involved several steps:
Advertising Campaigns: Byte Success Marketing (“Byte”) and KPN, the marketing firms involved, published advertisements for orthopedic braces. These ads targeted potential patients who might benefit from the braces.
Patient Engagement: Interested patients responded to the advertisements by filling out electronic forms with their personal information, including names, addresses, and doctors’ contact details.
Sales Agent Interaction: The collected information was forwarded to call centers where sales agents from Byte or KPN contacted the patients to discuss ordering a brace. These agents also generated prescription forms for the braces.
Physician Approval: The sales agents, with the patients’ consent, faxed the prefilled but unsigned prescription forms to the patients’ physicians. These forms included SyMed’s name and corporate logo and listed the devices to be ordered. Physicians had the discretion to sign and return the forms or ignore them. Notably, physicians declined 80 percent of the orders sent by KPN and regularly ignored forms sent by Byte.
Order Fulfillment: If a physician signed and approved a prescription, SyMed directed PakMed, the manufacturer, to ship the braces to the patients. Dynamic Medical Management, a billing agency, then billed Medicare on behalf of SyMed.
Revenue Sharing: SyMed paid PakMed 79 percent of the funds collected from Medicare or other insurance, keeping 21 percent as a service fee. Out of its 79 percent share, PakMed paid the advertising firms, KPN and Byte, based on the number of leads generated.
Seventh Circuit’s Analysis
The Seventh Circuit found insufficient evidence to support the conviction, emphasizing that the payments made by Sorensen were for advertising services and not for referrals. The Court highlighted that the physicians retained ultimate control over patient prescriptions and decisions, which is a critical factor in determining whether a payment constitutes an illegal referral.
Key Points from the Decision
Advertising vs. Face-to-Face Sales: The Court distinguished between payments made for advertising services and those made to induce referrals through face-to-face sales interactions. Payments to advertising companies that promote medical products do not fall under the Anti-Kickback Statute if the physicians retain independent decision-making authority. In contrast, face-to-face sales interactions, where sales representatives may exert influence over healthcare decisions, are more likely to be scrutinized under the statute.
Physician Control: The Court noted that the physicians who received the prescription forms from the marketing companies had the discretion to approve or reject the prescriptions. This autonomy is crucial in differentiating lawful advertising from illegal kickbacks. In face-to-face sales scenarios, the potential for undue influence is higher, making it essential to ensure that physicians’ decisions remain independent.
Legal Precedents: The decision aligns with the Fifth Circuit’s rulings in cases such as United States v. Miles and United States v. Marchetti. In these cases, the Fifth Circuit also overturned convictions where payments were made for marketing and advertising services rather than for referrals. The courts emphasized the importance of distinguishing between general advertising activities and direct sales efforts that could influence healthcare decisions.
Implications for Healthcare Providers
This decision provides clarity for healthcare providers and marketers regarding the boundaries of the Anti-Kickback Statute. It underscores the legality of compensating advertising and marketing firms for their services, provided that the ultimate decision-making authority remains with the physicians. However, it also highlights the need for caution in face-to-face sales interactions, where the risk of violating the statute is higher.
Conclusion
The Seventh Circuit’s decision in United States v. Mark Sorensen reinforces the distinction between lawful marketing activities and illegal kickbacks, particularly differentiating between general advertising and face-to-face sales efforts. Healthcare providers should ensure that their marketing practices comply with this legal framework, maintaining clear boundaries to avoid potential violations of the Anti-Kickback Statute.
Prescription Drugs: Executive Order Aims to Lower Prices
On April 15, 2025, President Trump signed an executive order (EO) with the aim of reducing the cost of prescription drugs. Although the EO is wide-ranging, its main provisions include:
Directing the Secretary of the U.S. Department of Health and Human Services (the Secretary) to seek comments on guidance for improving transparency and drug selection in the Medicare Drug Price Negotiation Program provisions of the Inflation Reduction Act (the Program) while minimizing negative impacts on drug development and pharmaceutical innovation.
Directing the Secretary to work with Congress to modify the Program to align the treatment of small molecule drugs with that of biologics. Biologics currently must be on market for 13 years prior to becoming eligible for price negotiation, as compared to the nine-year eligibility time period for small molecule drugs.
Aligning Medicare payments for outpatient drugs with hospital acquisition costs of such outpatient drugs.
Conditioning grants to community health centers on the health center’s establishment of practices to make insulin and injectable epinephrine available at or below the discounted price paid by the health center under the 340B Prescription Drug Program (plus a minimal administration fee) to certain low-income individuals.
Directing the Secretary, through the Commissioner of Food and Drugs, to improve the U.S. Food and Drug Administration Importation Program, which allows states to obtain approval to import drugs from foreign countries.
Directing the Secretary to evaluate and, if appropriate, propose site neutral regulations to ensure Medicare is not encouraging a shift in drug administration volume away from less costly doctor’s offices to more costly hospital settings.
The directives set forth in the EO are slated for implementation within the next year. Many of the directives, particularly those relating to drug prices and price negotiations, require legislative action by Congress. Bipartisan legislation has already been introduced in the House that would align the timeline for eligibility and price negotiation for small molecule drugs with biologics as set forth in the EO. However, many other provisions in the EO, such as the Importation Program, have historically not received broad bipartisan support.
Despite the hope of some pharmaceutical manufacturers to the contrary, the Trump administration has continued the Biden-era regulations relating to the Program and asserts that doing so could lead to greater savings than originally projected.
Interested parties should continue tracking legislative developments to discern which of these provisions will materialize.
Cannabis Day: Top 10 Weed Roundup of Budding Trends’ Trendiest Blog Posts of the Year 2025
As the hallowed cannabis holiday for stoners-turned-business-entrepreneurs falls upon us, we find ourselves in the shifting sands of change in the cannabis industry as usual. Not surprisingly, many states have seen legislation brought to the table, decisions made at the courts, and commentary presented by politicians that will directly impact cannabis businesses, medical marijuana dispensaries, hemp cultivators, and more. In our 2025 “Weed Roundup” of the top 10 most read Budding Trends blog posts, we visit North Carolina, California, Georgia, Alabama, Michigan, and federal marketplaces for updates (search our posts for updates from Mississippi, Tennessee, Colorado, Ohio, Arizona, Texas, South Carolina, Missouri, Kentucky, Virginia, among others). As we delve into each state’s unique legal journey in adapting or resisting new cannabis norms, trust our expert editors to provide you with the most comprehensive and timely analyses in the cannabis industry.
Don’t believe us? First, check out the editors’ Top Trends in 2024 and 2025 Predictions blog posts.
Now, to the countdown:
Does Kamala Harris Support Marijuana Legalization? Squaring Words with Actions in an Evolving Political Environment
As she did just prior to becoming the Democratic Party nominee for president, Vice President Kamala Harris has announced her support for legalizing adult-use marijuana use at the federal level. Just to remind you of the interesting times we are living in, the veep did so during a guest appearance on the sports podcast “All the Smoke.”
“I just think we have come to a point where we have to understand that we need to legalize it and stop criminalizing this behavior,” Harris said. Harris made a point to argue that her support of legalization was not new, saying that “I have felt for a long time we need to legalize it.”…read more.
Joint Effort: Why a New Crop of House Members, a New Speaker, and Continued Bipartisan Support Could Finally Light the Way for Medical Marijuana in N.C.
In November 2023, we pondered whether 2024 might be “the year” for medical marijuana legalization in North Carolina. Well, it wasn’t.
Why, you ask? How can a state whose population has expressed overwhelming bipartisan support for medical marijuana legalization still have nothing to show for it? How can a state whose Senate has shown overwhelming bipartisan support for medical marijuana legalization still have nothing to show for it? …read more.
California Bans Most Hemp Products and Illuminates Battle Between Hemp and Marijuana Businesses
What if I told you that California of all places – where virtually any adult can purchase marijuana on demand – was trying to harsh the mellow of citizens trying to access certain hemp-derived products? On the next 30 for 30, “California Schemin’.”
Welcome to the next front of the battle between marijuana and hemp.
California Gov. Gavin Newsom recently announced “emergency” regulations that would ban products derived from industrial hemp that contain any intoxicating cannabinoids and set an minimum age of 21 years old to purchase hemp products… read more.
Georgia Legislature Considering Substantial Overhaul to Medical Marijuana, Hemp Laws
I’ve had Georgia on my mind these days. I needed to get that out immediately because otherwise I would have been hearing that song in my head the entire time I was writing.
As is the case in many capitals around the country during legislative sessions, there’s cannabis reform afoot in Georgia. Before we dig into it, perhaps a brief vocabulary lesson is in order. “Cannabis” is essentially a scientific term that refers to the cannabis plant. “Marijuana” and “hemp” are legal terms distinguishing between strains of the cannabis plant. At the federal level, for example, “hemp” has been defined as a strain of the cannabis plant containing less than 0.3% delta-9 THC on a dry weight basis… read more.
Trump Expresses Support for Marijuana Reform, Coy on Psychedelics
Cannabis consumers can be forgiven for feeling the need for a more liberal cannabis policy as they weather this seemingly unending campaign cycle.
Republican presidential candidate Donald Trump recently made clear how he would be voting personally on the legalization of the recreational use of marijuana. Posting on Truth Social, Trump stated:
As a Floridian, I will be voting YES on Amendment 3 this November… read more.
Alabama Legislature Weighs Substantial Cannabis Reforms: Let’s All Take a Deep Breath
Well, it’s officially crazy season. An annual tradition in the Alabama statehouse since the inception of Alabama’s medical cannabis program, last week we saw a flurry of cannabis-related bills introduced with great fanfare and the accompanying panic amongst cannabis stakeholders in Alabama. I was inundated with a high volume of calls, texts, and emails unseen since the last Alabama legislative session.
And there was a little something for everyone involved in cannabis, both on the hemp and medical cannabis side. The good news? Things may be trending in the right direction… read more.
DEA Reschedules Rescheduling, and I’m Feeling a Little Like Charlie Brown Trying to Kick the Football
No, it’s not (just) a cruel play on words. Last week, the Drug Enforcement Administration announced that a much-anticipated public hearing on the proposal to reschedule marijuana would be moved from early December until the first quarter of 2025. I’m not sure I specifically predicted this, but it’s just about the most predictable thing ever. And it has a number of people thinking (wrongly in my opinion) that rescheduling may not even happen given the results of the recent elections… read more.
Michigan Court Prohibits Sale of Illegal Marijuana in a Ruling Straight Out of “Duh” Magazine
Believe it or not, I actually spend a lot of time deciding whether something is worth taking the time to write about. Cannabis news is developing as rapidly as any area of the law, and there are only so many hours in a day. I’ll admit up front that this was a close call.
There could be some angle that I’m not quite getting that would allow for unlicensed marijuana sales in states that have adopted marijuana licensing regimes, but I’m leaning towards thinking this may be one of the silliest, most obvious cases I’ve seen in years (and I see some wild cases in this line of work)… read more.
Federal Appeals Court: Pay That Man His Money, Unless That Money Is Illegal Marijuana Money
Good news, bad news if you’re a cannabis operator that owes money to a creditor. But probably bad news for the rule of law.
A federal appellate court has ruled that a cannabis operator is obligated to repay his debts to an ex-business partner, but it raised questions about whether the money used to repay the debt could violate federal marijuana laws.
What does this mean for a cannabis operator and potential investors? …read more.
How Will the Cannabis World Look When Marijuana Is Rescheduled?
A few weeks ago, someone at a holiday party asked “Whitt, why doesn’t Budding Trends take on the weighty legal issues of the day and instead resort to cheap pop culture references and puns?” I thought about responding with a quote from “Run Like an Antelope” but then it hit me: Maybe we should give some thought to a more high-minded discussion about the practical implications of marijuana rescheduling. (Editor’s note: This exchange did not actually happen.) So, I guess set the gear shift for the high gear of your soul, and let’s dive in… read more.
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Bigelow Jury Verdict Could Increase Challenges To “Made In USA” Labels
The jury in the Banks v. R.C. Bigelow, Inc. litigation has returned its verdict, awarding consumers $2.3 million – short of the $3.26 million that plaintiffs’ counsel had requested. The Banks litigation challenged Bigelow’s “Manufactured in the USA 100%” claim used on some of its tea packaging. Plaintiffs argued that the claim was false because the company imported its tea; however, the company’s position in the litigation was that the claim referred to the US-based facilities where the teas were blended and packaged. Notably, due to an earlier-issued summary judgment order from the judge (finding that the challenged claim was literally false), the only questions before the jury were the amount of damages and whether there was intentional conduct by the company supporting an award of punitive damages. While the jury awarded compensatory damages, it did not find that there was proof sufficient to support a punitive damages award by clear and convincing evidence.
Manufacturers and retailers who wish to affix qualified or unqualified “Made in USA” statements on any products advertised or sold in the United States must comply with the FTC’s Labeling Rule at 16 C.F.R. 323 or Made in USA Policy Statement, respectively, on using these claims. To use an unqualified “Made in USA” claim, the product’s significant parts and processing must be of U.S. origin, containing no or negligible foreign content, and the final assembly should occur in the USA. Even if a product is not “all or virtually all” made in the USA per FTC guidance, advertisers may still be able to make qualified U.S. origin claims. Examples of qualified U.S. origin claims include, “Made in USA from imported parts,” or “60% U.S. content.” A retailer may make any qualified claim about U.S. content that is truthful and substantiated. These qualifications or disclosures should be sufficiently clear and conspicuous to consumers viewing the U.S. origin claim.
The FTC’s U.S. origin regulations are applicable not only to express U.S. origin claims, but also to implied U.S. origin claims. An implied U.S. origin claim may be inferred from the product’s packaging as a whole, including the use of specific phrases, images, and the broader context of the transaction. While references to the USA or American imagery alone might not constitute a U.S. origin claim, these images in combination with explicit language or other elements on the label could run afoul of FTC guidance and may require qualification.
The plaintiffs’ bar has pursued Made in the USA (and other national origin) labeling challenges either by sending demand letters or by filing lawsuits with some consistency over the past 5 years, with a peak 14 pieces of litigation filed in 2021. Due to the outcome in the Banks trial, there is some concern that the bar will refocus its attention on companies that are using “Made In USA” statements or references in their marketing. Companies using such labeling statements should confirm that their labels meet the FTC’s guidance.
Alliance for Natural Health Calls for Reform to Self-GRAS
The Alliance for Natural Health (ANH) has published a white paper calling for the “balanced reform” of the GRAS system.
The ANH announcement comes shortly after HHS Secretary Robert F. Kennedy, Jr.’s directive for FDA to explore potential rulemaking to eliminate the pathway for companies to self-affirm food ingredients as GRAS, a move which Secretary Kennedy stated would “provide transparency to consumers.”
While the ANH white paper does not support the complete elimination of self-GRAS, it does propose several key reforms:
Prioritization of removal for specific unsafe ingredients such as potassium bromate, propylparaben, and brominated vegetable oil;
Creation of a comprehensive online database of all GRAS determinations;
Implementation of a four-tier system that calibrates evidence requirements based on an ingredient’s history and safety profile;
Creation of a pathway for ingredients with a documented history of safe use to be officially recognized by FDA as “historically safe;”
Use of warnings, rather than outright bans, for ingredients that are generally safe but may be harmful to specific populations.
Study Projects Steep Price Increases if Seed Oils Were to be Banned
Secretary of Health and Human Services Robert F. Kennedy Jr. has been critical of seed oils, alleging that they are harmful to human health and that consumers have been “unknowingly poisoned.” (See Twitter Post). This view is not shared by most of the scientific community. Indeed, FDA has approved qualified health claims for canola, corn, and soybean oils (all types of seed oils) and reduction in the risk of coronary heart disease. See Qualified Health Claims: Letters of Enforcement Discretion | FDA. However, this has not stopped Sweetgreen from announcing a seed-oil free menu earlier this year.
Although no seed oils bans have been proposed, a recent study conducted by the World Agricultural Economic and Environmental Association found that any such ban would significantly increase consumer vegetable oil prices and would have deleterious effects on the U.S. farm industry (non-seed oils like olive, palm, and peanut oil are largely imported).
Specifically, the study found that per capita spending on vegetable oils and fats would be 42.8% higher per year if overall vegetable oil consumption remained the same (non-seed vegetable oils substituted completely for seed oils). A second scenario assumed that the oils are not fully substitutable, resulting in a 21.1 pound per capita drop in vegetable oil consumption and an 8% greater per capita spending on vegetable oils per year.
The study characterizes the simulated effects as having an unprecedented shock on the oilseed market.
Trending in Telehealth: March 2025
Trending in Telehealth highlights monthly state legislative and regulatory developments that impact the healthcare providers, telehealth and digital health companies, pharmacists, and technology companies that deliver and facilitate the delivery of virtual care.
Trending in March:
Youth counseling and mental health services
Insurance coverage
Interstate compacts
A CLOSER LOOK
Proposed Regulations and Legislation:
In Hawaii, the House proposed House Bill (HB) 951 to allow a patient seen in person by another health care provider in the same medical group as the prescribing physician to be prescribed opiates for a three-day supply or less via telehealth.
Tennessee proposed Senate Bill (SB) 231 to require health benefit plan coverage of speech therapy, both in person and via telehealth.
Oklahoma proposed amendments revising the office location requirements for tele-dentistry. While dentists were previously required to maintain office locations in Oklahoma, the amendment increases flexibility by allowing dentists to maintain office locations in Oklahoma or in states adjacent to Oklahoma, so long as the offices are located within 50 miles of an Oklahoma border of a state with an interstate dental and dental hygienist compact.
Both chambers of the Tennessee legislature passed SB 1122 to create a youth mental health service program, which includes the use of telehealth.
Both chambers of the Maryland legislature passed SB 94, an amendment that would require Medicaid to cover maternal health self-measured blood pressure monitoring for all eligible recipients. Specifically, the program must cover the provision of validated home blood pressure monitors and reimbursement of health care providers and other staff time used for patient training, remote patient monitoring, transmission of blood pressure data, interpretation of readings, and the delivery of co-interventions.
Also in Maryland, the House proposed an amendment that would allow certain out-of-state providers to deliver clinical professional counseling services via telehealth to students. Among other changes, the amendment removes limitations that previously capped counseling services at five days per month and 15 days per calendar year.
West Virginia’s SB 299 would require legislative telehealth rules to include a prohibition on prescribing or dispensing gender-altering medication.
In Colorado, the Department of Regulatory Agencies and the Medical Board proposed a rule imposing requirements for physicians and physician groups entering into collaborating agreements. Physicians must actively practice medicine in Colorado and, for purposes of the rule, practicing medicine based primarily on telehealth technologies does not constitute as “actively practicing medicine.”
Finalized Regulatory and Legislative Activity:
Virginia passed HB 1945, requiring that each school board consider developing and implementing policies that allow public school students to schedule and participate in telehealth services and mental health teletherapy services during regular school hours with parental consent. The bill mandates that any such policies developed by a school board must (i) require each school to designate a location for student use for such telehealth appointments, (ii) implement measures to ensure the safety and privacy of any student participating in a telehealth appointment, and (iii) prohibit any student from being subject to disciplinary measures for participating in an appointment during regular school hours.
The Mississippi governor signed SB 2415 into law, mandating that health insurance plans cover telemedicine services to the same extent as in-person consultations. Similarly, the bill requires that all health insurance and employee benefit plans in Mississippi reimburse out-of-network providers for telemedicine services under the same reimbursement policies applicable to other out-of-network providers.
North Dakota adopted an amendment revising telehealth licensure requirements for optometrists. Notably, the bill removes previous certification requirements, permits licensed optometrists to use telemedicine to provide care, and imposes new informed consent obligations.
Utah finalized three telehealth bills:
HB 39 requires the US Department of Health and Human Services to contract with a telehealth psychiatric consultation provider to offer consultation services to staff responsible for inmates’ psychiatric care.
SB 64 allows medical providers to electronically renew a recommendation to a medical cannabis patient cardholder or guardian cardholder using telehealth services.
HB 281 clarifies that only licensed psychologists, social workers, and counselors can provide mental health services in school settings, except as provided in a student’s individualized education plan or Section 504 accommodation plan, and other students may not be present when services are provided. Additionally, the school or provider must obtain written parental consent before providing or facilitating telehealth or another health care service to a student within a public school.
Virginia passed SB 1041, enabling healthcare providers to conduct telehealth sexual assault forensic examinations for victims of sexual assault if a forensic examiner is not readily available.
Colorado enacted HB 1132. The bill creates the military family behavioral health grant program to provide grants to local nonprofit organizations for the establishment and expansion of community behavioral health programs that provide behavioral health services to service members, veterans, and family members of service members and veterans. The bill requires the program to reimburse providers for telehealth visits at the same rate as in-person visits.
In Ohio, the Department of Mental Health and Addiction Services finalized a rule regarding mobile response and stabilization services (MRSS), structured intervention and support services designed for people under the age of 21 who are experiencing emotional symptoms, behaviors, or traumatic circumstances. The rule delineates the circumstances in which MRSS can be delivered using a telehealth modality, including, but not limited to, when the young person or family requests telehealth services or there is a contagious medical condition present in the home.
Compact Activity:
Several states have advanced licensure compacts. These compacts enable certain healthcare professionals to practice across state lines, whether in person or via telemedicine. The following states have introduced bills to enact these compacts:
Dietitian Licensure Compact: South Carolina, North Dakota, Iowa, and Oklahoma
Counseling Compact: New Mexico
Social Work Licensure Compact: North Dakota
Why it matters:
As youth mental health concerns rise, states increasingly turn to telehealth. Virginia, Tennessee, Utah, Maryland, and Ohio all advanced legislation or regulations to expand youth access to telehealth services, particularly for virtual counseling services in schools. Telehealth providers may be well-positioned to collaborate with teachers, caregivers, and school counselors to bridge gaps in youth healthcare.
States are increasingly adopting coverage parity legislation. Tennessee proposed a bill requiring health benefit plan coverage of speech therapy services provided via telehealth while Mississippi enacted broader legislation mandating health insurance coverage of telehealth services to the same extent as in-person services. These coverage parity initiatives improve telehealth access by ensuring that providers are equally incentivized to provide virtual and in-person services.
States continue to expand practitioners’ ability to provide telehealth services across state lines. Expanding interstate licensure compacts improves access to qualified practitioners, particularly in underserved and rural areas. These compacts also enhance career opportunities and reduce the burdens associated with obtaining multiple state licenses.
Telehealth is an important development in care delivery, but the regulatory patchwork is complicated. The McDermott digital health team works alongside the industry’s leading providers, payors, and technology innovators to help them enter new markets, break down barriers to delivering accessible care, and mitigate enforcement risk through proactive compliance.
Supreme Court Ends Circuit Split with Ruling That Plaintiffs Can Seek RICO Damages for Certain Personal Injury Claims
Resolving a deep split among federal circuit courts, the U.S. Supreme Court has broadened plaintiffs’ ability to sue under the Racketeer Influenced and Corrupt Organizations Act (RICO) for economic loss stemming from personal injury. The decision stands to permit plaintiffs to bring federal claims — particularly against generic drug and medical device manufacturers — utilizing an avenue many courts previously believed was foreclosed.
In a 5-4 ruling, Justice Amy Coney Barrett wrote for the court in Medical Marijuana, Inc. v. Horn that RICO’s Section 1964(c), while “implicitly denying” plaintiffs from suing to recover for personal injuries, permits plaintiffs to recover for “business and property loss that derives from a personal injury.” (emphasis added).
Barrett wrote on behalf of Justices Sonia Sotomayor, Elena Kagan, Neil Gorsuch, and Ketanji Brown Jackson. Justice Brett Kavanaugh was joined in dissent by Chief Justice John Roberts and Justice Samual Alito. Justice Clarence Thomas, who also dissented, wrote separately.
The case centered on a truck driver, Douglas Horn, who had injured his back and shoulder. When traditional therapies were unsuccessful in alleviating Horn’s chronic pain, he resorted to a CBD product sold by Medical Marijuana, Inc. Concerned about any positive drug test that might cost him his job, Horn was attracted to the company’s product, which Medical Marijuana, Inc. described as “0% THC” and “legal to consume both here in the U.S. and in many countries abroad.” A customer service representative reinforced the company’s statements. When Horn later tested positive for THC and was fired, he sued, alleging that the company was a RICO enterprise, with its “false or misleading advertising” constituting mail and wire fraud and a “pattern of racketeering activity.” See 18 U.S.C. §§1961(1), (5); 18 U.S.C. §§ 1341, 1343.
The district court had ruled for the company, reasoning that because Horn’s firing was “derivative of” a personal injury — ingesting THC — and because a plaintiff cannot sue under RICO for a personal injury, Horn was also unable to recover for business or property harm that flowed from a THC-related injury. The U.S. Court of Appeals for the Second Circuit later reversed that ruling, holding that Section 1964(c)’s use of “business” includes an individual’s employment and that nothing in the RICO statute excludes recovery for economic loss caused by personal injury.
Analyzing the statute’s text and surveying civil RICO precedent, the Supreme Court ultimately sided with the Second Circuit’s view, closing the book on what had become a 3-2 circuit split. The Sixth, Seventh, and Eleventh Circuits had interpreted Section 1964(c) to bar the sort of claims at issue. The Ninth and Second Circuits had gone the other way.
The principal dissent expressed concern that the Supreme Court’s decision will enable plaintiffs to “circumvent RICO’s categorical exclusion of personal-injury suits simply by alleging that a personal injury resulted in losses of business or property,” effectively federalizing traditional state tort suits. The dissent continued: “When enacting civil RICO in 1970, Congress did not purport to usher in such a massive change to the American tort system.”
The majority opinion left a variety of questions unanswered, including (1) whether the Second Circuit correctly interpreted “business” to include a person’s employment, (2) whether Section 1964(c)’s “injured in his . . . property” covers all economic loss, and (3) whether Horn’s THC consumption, which led to termination, actually constituted an “antecedent personal injury.” (After all, Horn argued in the lower courts that Medical Marijuana, Inc. had harmed his ability to earn a living rather than injured his body.)
More broadly, the decision stands to open a pathway for plaintiffs to bring federal claims against generic drug and medical device manufacturers where other doors have been tightly shut. The Supreme Court has already held that federal law preempts — and thus bars — state law failure-to-warn claims against generic drug manufacturers, see PLIVA, Inc. v. Mensing, 564 U.S. 604, 609 (2011), as well as design-defect claims under state law against the same, see Mut. Pharm. Co., Inc. v. Bartlett, 570 U.S. 472, 476 (2013).
Seeking the prospect of treble damages under RICO, Foley anticipates that plaintiffs will attempt to use the Court’s most recent decision to expand the scope of claims in the pharmaceutical and consumer product manufacturing space, where federal preemption has kept most of the plaintiffs’ bar’s liability theories at bay. Foley will continue to monitor the state of affairs and provide updated guidance accordingly.
2025 USPTO Fee Changes Disproportionately Impact Hemp Businesses
Effective January 18, 2025, the United States Patent and Trademark Office (USPTO) enacted a new trademark fee structure that affects fast-paced industries more than others, most notably, the hemp and cannabidiol (“CBD”) industries.
The new fee structure is presented as a neutral pricing adjustment to replace the current TEAS Plus and TEAS Standard application filing options with a single base application option that changes based on the “complexity and completeness of the application.” The USPTO released a guide on the fees, here: Trademark Examination Guide 1-25. Yet, the reality is that this change penalizes businesses working with federally legal hemp and cannabidiol products, making it more expensive for them to access brand protection through the federal trademark system.
New Fee Structure: More Than Meets the Eye
Here’s a breakdown of the USPTO’s updated fee framework for federal trademark applicants:
Base Application Fee: $350.00 per Class
Custom Identifications of Goods and Services (i.e., not using Trademark ID Manual): +$200.00 per Class
Long Identifications: +$200.00 for each additional 1,000 characters
Insufficient Information: +$100.00 per Class for missing new content requirements
Applicants who use the USPTO’s Trademark ID Manual—a list of pre-approved goods and services—can avoid the $200.00 custom language fee. But for businesses in the hemp and CBD industries, this lower-cost path appears unavailable to them.
ID Manual Fails to Reflect Legal Hemp Products
The USPTO understandably scrutinizes applications in these industries to ensure compliance with federal law. Through its Exam Guide 1-19.pdf, the USPTO suggests applicants, in part, request amendment of the identification of [goods or] services to specify that the involved cannabis contains “a delta-9 tetrahydrocannabinol [THC] concentration of not more than 0.3 percent on a dry weight basis.”
However, despite the legalization of hemp-derived goods under the 2018 Farm Bill, the Trademark ID Manual fails to include acceptable entries for lawful hemp products, such as those containing “0.3% delta-9 THC or less by dry weight,” the federal threshold under current law. The ID Manual includes hemp fibers and other Class 24 goods. The ID Manual also includes “smokers’ articles in the nature of hemp wicks for lighting” in Class 34. However, the legally sufficient language – “not more than 0.3% delta-9 THC by dry weight” does not appear in the ID Manual. Further, there are no entries containing the terms “hemp oil,” “hemp flower,” “cannabis,” “CBD,” or “cannabidiol,” for example.
Applicants who identify their goods or services with the language “not more than 0.3% delta-9 THC” must draft custom language, thereby triggering the $200.00 custom language penalty per Class. If the applicant identifies products and services in three Classes, for example, that’s an additional $600.00 in filing fees.
The best option to avoid the $200.00 fee may be to identify their products or services without specifying hemp or CBD as an ingredient or feature of them. Yet, that option will likely invite further scrutiny during examination. The risk they take with this approach may be having to pay the $200.00 fee during examination rather than at the time of filing the application. The USPTO examining attorney assigned to the application could likely determine that the applicant owes the additional fees during the examination process, but since applications filed after January 18, 2025, have not been examined yet, we have yet to see this approach.
This issue –requiring language but excluding that language from the pre-approved list – was raised directly with the USPTO via [email protected] on January 24, 2025; (the email address offered by the USPTO to suggest an identification of goods or services for possible inclusion in the ID Manual). The USPTO confirmed in its response that it has not included any such entries in the ID Manual and cited the legal complexity surrounding hemp-related products. The USPTO noted that items in the ID Manual must not require further inquiry, and that hemp products often invite review under the Controlled Substances Act, the Federal Food Drug and Cosmetic Act, and other regulations—even when the products are fully compliant. Essentially, the USPTO confirmed – if you want to identify products and services in this industry, expect heightened examination and additional fees as a result.
The Legal Catch-22
The USPTO’s stance creates a legal paradox: businesses that follow the USPTO’s suggestions and include federally compliant hemp language in their applications are punished with higher fees and, often, prolonged scrutiny. The USPTO’s own Exam Guide 1-19 (PDF link) outlines these standards and confirms that hemp-related trademarks will only be approved if the goods comply with federal law. Yet, it fails to offer any streamlined way for such businesses to access cost-effective filings through the standard $350 per Class option.
Opting Out—or Taking a Stand
Faced with this uphill battle, many hemp and cannabis businesses are making a calculated decision: to opt out of federal trademark registration for the core goods and services or even opt out altogether. Some are finding ways to identify ancillary products – clothing items, keychains, educational or entertainment services – and seeking federal trademark registration, there. Others are avoiding the USPTO process in order to sidestep a public record of unlawful use refusals, which can damage credibility, attract regulatory attention, or affect partnerships and financing.
Instead, some are relying on common law trademark rights or state-level registrations, which offer limited protection but avoid the federal red tape.
Many, however, are choosing a different path—opting to challenge the USPTO head-on. As our law firm’s prior article on hemp brand protection notes, brand protection strategies should not be abandoned in the face of generalized resistance from the USPTO. With a clear understanding that hemp-derived products are lawful under federal law (as long as they meet the THC threshold), many brand owners are fighting to secure equal protection and recognition for their trademarks. These business owners argue that their brands deserve the same treatment as any other lawful product in the marketplace, and some are prepared to endure USPTO refusals, Office Actions, increased costs, and appeal processes in the pursuit of such protection.
What Needs to Change
Possible solutions include:
Update the Trademark ID Manual to include goods and services with language that is certain to be accepted by the USPTO in this industry such as: “Cosmetics containing hemp-derived cannabinoids with less than 0.3% delta-9 THC on a dry weight basis” or by adding, “any CBD in the goods being solely derived from hemp with a delta-9 tetrahydrocannabinol (THC) concentration of not more than 0.3 percent on a dry weight basis.”
Waive the $200.00 custom identification fee when the USPTO requires further specificity on examination for industries that were excluded from the ID Manual at the time of filing the application due to federal compliance complexities.
Create an updated and clarified pathway for hemp-derived products to be registered under trademarks, using the USPTO’s own Exam Guide 1-19 as a foundation, but with greater transparency and clearer guidance.
A Matter of Fair Access
Hemp and cannabis brands represent a fast-growing sector in the economy. Yet under the current USPTO examination guidelines, fee structures, and rules, they are paying more, waiting longer, and being scrutinized harder, despite those working to stay within the bounds of federal law.
Until the ID Manual is updated, the USPTO’s fee system will continue to disadvantage one industry under the guise of regulatory caution. Lawful businesses deserve a trademark system that recognizes and reflects their legitimacy, not one that punishes them for legal compliance.