CBD Advocates Embrace Court Decision, Hold Breath Over UN and EC Rulings

By Oliver Bennett, Special Contributor for New Frontier Data

A November decision by the European Union (EU)’s highest court that CBD produced from the entire plant should not be classified as a narcotic – and ergo not banned in France –  has inspired new optimism among marketers.

For the time being, that is.

As of now, the ruling by the Court of Justice of the European Union (CJEU) offers widespread and largely positive implications for the CBD and broader cannabis industry across Europe,  though there remains a substantial possibility that the European Commission (EC) will nevertheless rule against CBD in the near future.

The EC has deemed that all nonmedical hemp extracts should be considered as narcotics, though the EU’s executive body is awaiting a United Nations (UN) decision – expected as soon as this week – before making that change final.

The case has been closely watched by cannabis proponents touting CBD’s health benefits. The cannabinoid is legal in most EU countries; before last summer, it was regulated as a novel food as a supplement or additive to infused edibles, beverages, or other food products. The ruling was made after French prosecution of the CBD e-cigarette KanaVape from Catlab. The court ruled, inter alia, that the ban contravened EU law on the free movement of goods among other EU member states.

The court’s decision has stripped some authority from EU countries hoping to limit the sale of CBD within their national borders, and therefore given Europe’s CBD industry an immediate boost – and a legal clarification  in relation to CBD at large. The benefits to the industry are already being seen: one projection by New Frontier Data suggests that the KanaVape case has saved 5.7% of the entire European CBD market from being banned.

Should the ruling stand with the EC, it could lead to a more coherent market in Europe. As Antonin Cohen of KanaVape said, the lack of regulatory clarity on CBD prevented safe market development, and the industry would now more able to stabilise across the continent. It is a win for the beleaguered CBD industry in France itself, where previously shops have been shut and vendors prosecuted.

Unsurprisingly, French cannabis and hemp industry groups welcomed the news, as the Syndicat du Chanvre’s president said that it could “…serve as an impulse for the evolution of the still unclear national legislations and thus harmonize the CBD market in Europe”, a view shared by the European Industrial Hemp Association (EIHA).

There are also global aspects to consider, as pointed out by Eveline Van Keymeulen of Allen & Overy’s Life Sciences Regulatory and Cannabis practices, who assisted Cohen and KanaVape in the proceedings. As she explained, the “decision will have a significant impact on the CBD industry in Europe, which is losing market share compared to other regions such as the U.S. and Canada, because of the fragmented… legal framework”.

Along with national demands for economic activity to be ramped up post-pandemic, the CBD ruling could also help to release pent-up consumer demand. In July, the EC halted applications for the authorization of CBD products hoping to enter the market, precisely over whether CBD should be regulated as a narcotic.

The process has yet to begin again and has ramifications for other countries. In September, the United Kingdom’s Food Standards Agency (FSA)  said that it did not consider CBD to be a narcotic, and announced that it would consider novel food applications for CBD products and process applications more quickly after the full Brexit in January 2021. That served notice that non-EU member countries in the continent (most notably the UK) could steal a march on the lucrative but repressed CBD market.

Certainly, more obstacles remain. Individual countries could still ban or limit CBD on other grounds apart from a narcotic classification. The EC has offered now clear outline for what the French situation might mean for the wider framework of CBD and the ongoing novel food applications. The EC tends toward caution, and may relegate the technicalities of CBD production to the specific court decision about the KanaVape case.

There, the judges found that CBD was defined as having been “extracted from the cannabis sativa plant in its entirety”, and ruled that EU member states could not stop the marketing of CBD produced elsewhere in the EU when it is extracted from the whole plant (rather than from fibre and seeds alone). Part of the issue was that French public health law had required that only fibre and seeds be used, as those are least psychoactive parts of the plant. That aspect of the ruling leaves plenty of room for interpretation about extraction methods, and sets up the possibility that France (and other CBD resistant countries) could appeal the decision on other grounds such as public health.

Pending any delays in its calendar, the UN Commission on Narcotic Drugs is slated to vote on World Health Organization (WHO) recommendations for changing the scheduling of cannabis, including changes to the Single Convention on Narcotic Drugs (1961) that set a 0.2% limit for THC.

The judgment will also be interpreted in EU law across the whole range of CBD products from edibles to food products and cosmetic goods – indeed, the EU Cosmetic Products Regulation also prohibits the use of narcotics. So while the industry will be happy at its win, which will go some way to bringing continuity across Europe’s CBD industry, companies should be aware that counter arguments may well now move onto the platforms of health and product safety within the various product verticals.

The KanaVape ruling was a step forward for the industry – but obstacles remain before the final destination can come into view.