The FAQs of CBD

Food and Drug Administration lays down roadblocks

The 2018 Farm Bill transformed the hemp industry by making it legal to produce and sell hemp, as well as legalizing the production and sale of cannabidiol (CBD) derived from hemp. However, the U.S. Food and Drug Administration (FDA) was quick to jump in and say “not so fast” for food, beverages and dietary supplements. The upshot of all of this is that the legality of hemp on the federal and state levels is complex and evolving. The market potential for industrial hemp, including consumer products containing hemp-based CBD, could be large, but there is still extensive confusion over the legality of these products in their many forms.
Take, for example, this hypothetical scenario: Murray is an entrepreneur who wants to open a CBD retailer selling knishes and sodas infused with CBD, as well as CBD lotions for skin conditions. But what must he know to do this successfully? The following will attempt to sort through the current state of the law pertaining to hemp-based CBD in the United States.

What is CBD?
CBD is a chemical compound found in the resinous flower of cannabis, alongside tetrahydrocannabinol (THC) and other cannabinoids. Although THC has psychoactive properties, the CBD compound itself is non-psychoactive and is believed by many to have therapeutic properties. CBD is extracted from cannabis through an industrial process and the resulting oil typically contains no or very low levels of THC (if the resulting CBD oil contains less than 0.3% THC, then it is legal under federal law; if the CBD oil exceeds that limit, then it is considered a Schedule 1 controlled substance).

May Murray just use any kind of CBD?
No. Although CBD can be extracted from any strain of cannabis, including strains that contain THC, the 2018 Farm Bill only legalized industrial hemp, a specific strain of cannabis that contains less than 0.3% THC. All other forms of cannabis (often referred to as marijuana) and their byproducts are still listed as Schedule I controlled substances under federal law. So if Murray wants to infuse products with CBD, he may only use CBD extracted from industrial hemp and must be certain that the resulting product contains less than 0.3% THC.

May Murray legally start his own farm to grow industrial hemp and then make his own hemp-based CBD?
It depends. The 2018 Farm Bill requires that, for industrial hemp cultivation and production to be legal in a state, the state needs to submit “hemp production plans” to the U.S. Department of Agriculture for its approval. States are only beginning to put plans into place for approval, so hemp production and sale remain illegal in many states.

If Murray lives in a state that does not have an approved hemp production plan, may Murray buy hemp-based CBD products from another state and sell them in his own state?
A number of states continue to treat industrial hemp and its byproducts like every other form of cannabis — as a controlled substance. So possession or sale of hemp-based CBD products is likely a crime under a state’s law, even though it is legal under federal law, assuming it meets the federal guidelines discussed previously (note that this column is not considering the question of federal preemption of state law).

If Murray’s state allows for the cultivation of industrial hemp, what is Murray allowed to sell in his store?
Unless the state law says otherwise, Murray may sell topical products and he must ensure that these topical products do not make any health claims on their labels. Doing so would likely cause them to be considered dietary supplements, which are still illegal under FDA regulations. Under current law, however, Murray would not be allowed to sell his CBD-infused knishes and drinks.
Shortly after the 2018 Farm Bill passed, the FDA made it clear that it treats hemp-based CBD as a pharmaceutical substance, since the agency had previously approved CBD as an active ingredient in an FDA-approved drug, Epidiolex (a drug primarily used to treat epileptic seizures). As such, hemp-based CBD may not be added to food, beverages or dietary supplements until the FDA has issued regulations. Adding CBD to these substances would violate the federal Food, Drug and Cosmetic Act.

But I have seen people already selling CBD-infused food. How can they do that?
They do so at their own risk of federal, state and local enforcement actions.

When will Murray be able to legally sell CBD-infused food and drinks?
The FDA just announced a public hearing on May 31 and a comment period, as well as the formation of an FDA working group; however, the timing of final regulations is unknown. We will actively monitor the changes in rulemaking and guidance during this transition period.

This report was co-authored by Reed Smith’s Cannabis Law Team, which Philadelphia-based partner Claudia Springer chairs, and for which San Francisco-based counsel Marc Hauser serves as co-vice chair. Cori Annapolen Goldberg is a New York-based partner on the team from the global law firm’s Life Sciences and Health Industry Group.


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