Concerns and Limitations for Multistate Producers Looking to Market CBD

By Ashley Simpson, Esq., Hoban Law Group

Passage of the 2018 Farm Bill has undoubtedly provided comfort to large-scale retailers looking to bring hemp-derived products to retail shelves across the country. The language in the new law clarifies and affirms that hemp is not to be treated as a controlled substance as scheduled under the Controlled Substances Act of 1970 (CSA), which effectively reduces or removes many hurdles once facing the industry (e.g., obstacles involving banking, payment processors, insurers, DEA involvement, etc.). Perhaps the law’s greatest impact is that it resolves any question as to the Drug Enforcement Administration’s lack of authority with respect to hemp.

However, the Farm Bill does not affect the Federal Food, Drug and Cosmetic Act (FD&C Act), which provides the U.S. Food and Drug Administration (FDA) with authority to regulate permissible ingredients in ingestible products. Previously, the FDA opined that it is unlawful under the FD&C Act to introduce food containing added cannabidiol (CBD) or tetrahydrocannabinol (THC) into interstate commerce, or to market CBD or THC products as, or in, dietary supplements, regardless of whether the substances are hemp-derived. The FDA explained that position as being due to both CBD and THC being active ingredients in FDA-approved drugs, and the subject of substantial clinical investigations before they were marketed as foods or dietary supplements (i.e., GW Pharma’s drugs, Epidiolex and Sativex were subjects of clinical investigations arguably before any similar products were marketed as foods or dietary supplements). However, many in the industry disagree with the claim that such drugs were, in fact, subjects of clinical investigations prior to  the other products being marketed as foods or dietary supplements.

Essentially, FDA contends that because CBD is an active drug ingredient, CBD cannot be similarly sold as (or in) a dietary supplement. Industry stakeholders would likely disagree about that point, but assuming that CBD cannot legally be marketed as (or in) dietary supplements, products containing full spectrum hemp extract — as opposed to CBD isolate — are arguably distinguishable from the active ingredients in the FDA-approved drugs containing CBD and/or THC. Thus, products marketed as containing CBD  and products marketed as “full spectrum hemp extract” are perhaps mutually distinct. Products marketed as containing CBD generally suggest to consumers that the product is an isolated CBD substance (i.e., the product is roughly 98%+ pure CBD, similar to the approved drug Epidiolex), whereas marketing a “full spectrum” hemp extract product suggests that the product likely contains a wide range of cannabinoids (roughly 100+), as well as various terpenes, flavonoids, etc. Thus, products containing full spectrum hemp extracts are likely better positioned without any references to any specific cannabinoid, particularly naturally occurring CBD, as CBD is, arguably, an active drug ingredient prohibited from use in dietary supplements or foods.

Additionally, though interference with interstate commerce of hemp and hemp products is now expressly prohibited by the 2018 Farm Bill, the industry still faces issues on both the state and local levels. Recent raids and enforcement activities have occurred in various states across the country, despite passage of the law, often due to varying state laws related to hemp and/or CBD. FDA’s contention that CBD and THC added to food is unlawful only adds to the confusion as state health agencies often defer to the FDA, and may not recognize the difference between products containing CBD and “full spectrum hemp extract” (with naturally occurring CBD). Thus, while the passage of the Farm Bill is encouraging , there remain numerous factors to consider in product marketing/labeling to ensure compliance with federal regulations, as well as state-level restrictions to contemplate before bringing products to market.

Ashley Simpson is Of Counsel to Hoban Law Group. She can be reached at ashley@hoban.law.