On Oct. 27, 2018, the New York Times ran an article with the headline Why is CBD Everywhere?, noting that products infused with cannabidiol, a compound found in cannabis plants commonly referred to as “CBD,” had gone from being obscure to omnipresent almost overnight.
Seemingly within the blink of an eye, consumers could purchase CBD infused donuts, lattes, dog treats, cookies and the list goes on. Forbes even reported that Coca-Cola was considering developing a CBD infused beverage. While CBD is non-psychoactive – meaning it won’t get you high – it has been touted as having certain therapeutic benefits for dealing with pain, inflammation and general anxiety.
Despite the commercial availability of food products containing CBD, whether such products can be manufactured legally has been (and continues to be) uncertain. Although many manufacturers will sell food and dietary supplements containing CBD across the country (the marijuana delivery service Eaze through its “Eaze Wellness” platform, for instance, will ship CBD products to 41 states and the District of Columbia), major retailers generally do not sell products containing CBD, nor are they available on major consumer platforms such as Amazon.
In addition, sellers using payment platforms such as Shopify can only process payments using “high risk” gateways, and have generally been unsuccessful using large, commercial banks to process wire transfers for raw materials. Adding to the uncertainty, authorities in recent weeks have started cracking down on CBD products, with enforcement actions taken in Michigan, Florida, Maine, Nebraska, Ohio, New York and possibly elsewhere.
For some background, CBD can be extracted from both “marijuana” and “hemp.” Hemp is defined in the Agriculture Improvements Act of 2018, also known as the 2018 Farm Bill, as the Cannabis sativa L. plant with a THC concentration of not more than 0.3 percent on a dry weight basis. While the 2018 Farm Bill paved the way for large-scale agricultural production of hemp, until state and federal regulations are finalized to implement the new law, hemp may only be grown under a 2014 pilot program for agricultural or academic research.
The 2018 Farm Bill, importantly, removed hemp – including any of its “derivatives, extracts [and] cannabinoids” – from the definition of “marijuana” under the Controlled Substances Act of 1970. As a result, at first glance it appeared as though CBD extracted from hemp would be legal under federal law. Importantly, however, the 2018 Farm Bill explicitly states that the new law does not affect or modify the authority of the FDA from issuing regulations and guidelines that relate to the use of hemp in foods.
Frustrating some lawmakers, on the day that the 2018 Farm Bill was signed into law, FDA Commissioner Scott Gottlieb issued a sweeping statement that, although certain hemp products – such as hemp seeds, hemp seed protein and hemp seed oil – are generally recognized as safe food additives, it is unlawful “to introduce food containing added CBD…into interstate commerce, or to market CBD…products as, or in, dietary supplements, regardless of whether the substances are hemp-derived.”
While Gottlieb’s statement mentions that there are “pathways available for those who seek to lawfully introduce these products into interstate commerce” and that the “FDA will continue to take steps to make the pathways for the lawful marketing of these products more efficient,” aside from undergoing clinical studies it remained unclear what these “pathways” are.
Although Commissioner Gottlieb said in late February that the FDA will hold hearings in April on how best to regulate CBD derived from hemp, Gottlieb abruptly announced his resignation only a few days later putting the regulatory process in limbo (and sending cannabis stocks tumbling as a result).
In light of the uncertainty at the federal level, states have begun attempting to take matters into their own hands. For instance, in California Assembly Bill 228 was introduced in January to clarify that existing state law may not prohibit restrictions on the sale of food, beverages or cosmetics that include hemp-derived CBD. While the state law would not interfere with the FDA’s jurisdiction to regulate products in interstate commerce, it would prevent the state’s department of Public Health from taking enforcement actions against manufacturers of products containing CBD.
About the Author: Jeffrey Hamilton is a senior associate in Farella Braun+Martel’s (www.fbm.com) San Francisco office, where he counsels companies from startups to publicly traded corporations, in a broad range of transactional matters.