States crack down on CBD following FDA warning

The Farm Bill offers protection, but little guidance

There’s no question that passage of the Agricultural Improvement Act of 2018 (also known as the Farm Bill) in December 2018 was a tremendous victory for the commercialization of hemp and hemp products, including CBD. Among other things, the Farm Bill allows for broad cultivation of hemp, extends protections for hemp research, removes hemp and hemp-derived products from Schedule I of the Controlled Substances Act, enables hemp farmers to obtain crop insurance and removes barriers to interstate commerce. States still have authority over the cultivation and production of hemp and hemp products, upon federal approval of their respective programs.

But Scott Gottlieb, commissioner of the Food and Drug Administration (FDA), made clear that Congress preserved the agency’s power to regulate products containing cannabis and cannabis-derived compounds, including CBD. Citing the “proliferation” of such products, the FDA stated that, where it believed the public was at risk, particularly with regard to health claims, the FDA will warn consumers and take enforcement action. The FDA also reiterated that it remains unlawful to introduce food containing added CBD (or THC) into interstate commerce, or to market and sell CBD products as “dietary supplements.”

States quickly fell in line. Less than a week after the FDA issued this statement, New York, in re-opening applications for CBD research partners under its hemp pilot program, issued a controversial FAQ, providing that “no product for human consumption that has CBD added to it may be marketed as a food.” New York also requires its CBD research partners to sign an agreement that the manufacturing of CBD products will follow FDA guidelines.

In early January, BevNET (the leading beverage media company) reported that the FDA confiscated CBD edibles from an Arizona smoke shop. In early February, the Maine Department of Health and Human Services ordered that edible products containing CBD be removed from retail shelves, at least until its hemp program is federally approved. Days later, the New York Department of Health banned restaurants and bars from selling CBD-infused foods and beverages. That same week, the North Carolina Department of Agriculture and Consumer Services signaled its intent to issue warning letters to businesses selling CBD-infused foods and beverages, making false health claims and/or selling CBD as a nutritional supplement.

Other states remain confused about whether interstate commerce of hemp intended for the production of CBD is legal. In early February, four men were arrested in Oklahoma hauling 18,000 pounds of hemp grown in Kentucky and on its way to Colorado for processing. Several days later, Idaho officials arrested a truck driver on felony charges and seized nearly 7,000 pounds of hemp grown in Oregon and on its way to Colorado for processing. In both states, law enforcement officials claimed that the cargo looked and smelled like illegal marijuana. While the alleged perpetrators will likely be vindicated, the Farm Bill apparently provides little guidance to states on regulating hemp and hemp-derived products.

As of this writing, the FDA has refused to comment as to whether it is behind the various state crackdowns. According to legal experts and some politicians, the FDA’s position on the inclusion of CBD in food or it being marketed as a dietary supplement is, at best, antiquated in view of the 2018 Farm Bill, and at worst, plain wrong, in view of evidence that CBD is properly excepted from the various prohibitions cited by the FDA.

Some risk-averse CBD businesses may want to suspend commercial activity until the FDA pronounces clear guidance on how CBD foods and dietary supplements can be sold in an FDA-compliant manner. Senators Ron Wyden and Jeff Merkley, both Democrats from Oregon, wrote a letter urging Gottlieb to update federal regulations to accommodate hemp-derived ingredients in food and dietary supplements and provide guidance on appropriate labeling.

It is clear that enforcement actions against food, beverage and supplement products have been primarily focused on CBD, as opposed to full-spectrum (or broad-spectrum) hemp extract with naturally occurring cannabinoids (including CBD), or cannabinoid-rich hemp extract.

Marketing a product as containing full-spectrum hemp extract in lieu of “CBD” may not seem as attractive, and the products are markedly different, in actuality and in the eyes of the FDA. CBD is an isolate — a product that has been manipulated and refined, through multiple processes, to create something new and consistent; hemp oil is a natural extract — a product that preserves naturally occurring cannabinoids, terpenes and flavonoids and has countless variations. With low production runs, businesses can still create brand awareness and gain an early market advantage.

Any analysis of hemp laws remains state-specific. Consulting an attorney is necessary to fully understand the FDA’s position on the prohibition of adding CBD to food or marketing CBD as a dietary supplement.

 

Lauren Rudick represents investors and startup organizations in all aspects of business and intellectual property law, specializing in cannabis, media and technology. Her law firm, Hiller, PC (www.hillerpc.com), is a white-shoe boutique firm with a track record for success and handling sophisticated legal matters that include business and corporate law.

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