Selling CBD-Infused Products Might Be Riskier Than You Think – JD Supra

Posted: August 28, 2021 at 11:45 am

The global cannabidiol (CBD) market size is expected to reach USD 13.4 billion by 2028.1 And yet a large part of that marketCBD-infused food, beverages, and dietary supplementsconsists of unlawful sales. This article discusses why this is the case, how these companies can mitigate enforcement risk, and whether the law is likely to change anytime soon.

The Cannabis sativa L. plant refers broadly to marijuana, which is a Schedule I drug and therefore illegal to sell or possess under the Controlled Substances Act (CSA).2 In 2018, however, Congress exempted hemp from marijuana. Hemp is any part of the cannabis plant with a tetrahydrocannabinol (THC) concentration of no more than 0.3 percent on a dry weight basis.3

Despite common misconceptions about the 2018 Farm Bill, CBD products are not automatically federally legal to sell. CBD derives from the Cannabis sativa L. plant, including its flowers, leaves, and stems.4 CBD oil with a THC concentration of more than 0.3 percent on a dry weight basis is considered marijuana and is illegal to sell, and CBD oil with 0.3 percent THC or less on a dry weight basis is considered hemp and is generally legal to sell.5 To be sure, most CBD oil is derived from hemp (i.e., cannabis with less than 0.3 percent THC on a dry weight basis), so there is generally no issue with respect to the CSA. Nevertheless, counsel for CBD manufacturers (and consumer product companies that infuse their products with CBD oil) should ensure that their clients have substantiation to prove that the CBD oil (or product with CBD oil) is derived from hemp, not marijuana.

Attorneys must also recognize that even though hemp (and CBD oil derived from hemp) is no longer a controlled substance under the CSA, it remains subject to regulation. For instance, the United States Department of Agriculture and the United States Drug Enforcement Administration regulate hemp production, and the Food and Drug Administration (FDA) regulates hemp-derived consumer products that contain CBD. Hemp also remains subject to state regulation, which is yet another complicating factor.

This article focuses on FDAs authority. The 2018 Farm Bill explicitly preserved FDAs authority to regulate products containing cannabis or cannabis-derived compounds including CBD. Generally, FDA treats products containing cannabis or cannabis-derived compounds as it does any other FDA-regulated products, meaning that they are subject to the same authorities and requirements as FDA-regulated products containing any other substance. This is true regardless of whether the cannabis or cannabis-derived compounds are classified as hemp under the 2018 Farm Bill.6

Notably, FDA takes the position that cannabis and hemp-derived CBD generally cannot be used as an ingredient in a food, drug, or dietary supplement, but hemp-derived CBD may be included as an ingredient in cosmetics.7

Dietary Supplements Containing CBD

As it stands now, FDA has concluded that CBD products cannot be used in dietary supplements.8 Generally, the definition of dietary supplements does not include any substance that (1) is an active ingredient in an FDA-approved drug product or (2) has been authorized for investigation as a new drug (i.e., is the subject of an investigative new drug application). CBD is an active ingredient in at least one approved drug product (Epidiolex), and substantial clinical investigations regarding CBD have been made public.9 While there is an exception if the substance was marketed as a dietary supplement or as a conventional food before the drug was approved or before the new drug investigations were authorized, FDA has concluded that this is not the case for CBD. Since CBD has been excluded from the dietary supplement definition, companies violate the federal Food, Drug, and Cosmetic Act if they market dietary supplements containing these substances.10

Other cannabinoids (such as Delta-8 tetrahydrocannabinol) might fall outside the scope of this exclusion and therefore might be able to be marketed as dietary supplements. However, all products marketed as dietary supplements must comply with all applicable laws and regulations governing dietary supplement products.11 Manufacturers and distributors that wish to market dietary supplements that contain new dietary ingredients generally must notify FDA about these ingredients.12 That notification must include information demonstrating that a dietary supplement containing the new dietary ingredient will reasonably be expected to be safe under the conditions of use recommended or suggested in the labeling.13 Several other legal requirements apply to dietary supplement products, including requirements relating to Current Good Manufacturing Practices and labeling.14

CBD-Infused Food and Beverages

As it stands now, FDA has also concluded that CBD cannot be added to food or beverages (including to animal food or feed). Generally, like the definition of dietary supplements, the definition of food and beverages does not include substances that (1) is an active ingredient in an FDA-approved drug product or (2) has been authorized for investigation as a new drug. As is the case with dietary supplements, there are exceptions, but FDA has concluded that they dont apply with respect to CBD. FDA has therefore concluded that it is a prohibited act to introduce or deliver for introduction into interstate commerce any food (including any animal food or feed) or beverage to which THC or CBD has been added.15 In other words, CBD-infused dog treats and candy are illegal to sell.

Ingredients that are derived from parts of the cannabis plant that do not contain CBD might be able to be added to food or a beverage. However, all ingredients must comply with all applicable laws and regulations. Any substance intentionally added to food or a beverage is an additive and therefore subject to premarket review and approval by FDA, unless the substance is generally recognized as safe (GRAS) by qualified experts under the conditions of its intended use, or the use of the substance is otherwise excepted from the definition of an additive.16 Aside from three hemp seed ingredients (hulled hemp seed, hemp seed protein powder, and hemp seed oil), no cannabis or cannabis-derived ingredients have been the subject of a food additive petition or an evaluated GRAS notification, or have otherwise been approved for use in food or beverages by FDA. Companies that wish to use cannabis or cannabis-derived ingredients in their foods and beverages are subject to the relevant laws and regulations that govern all consumer products, including those that relate to the additive and GRAS processes.17

Enforcement Risks

Despite this illegality, CBD-infused dietary supplements, food, and beverages constitute a highly profitable industry. That is in large part because FDA doesnt aggressively police the industry. FDA has limited resources and broad jurisdiction, and it considers many factors in deciding whether to initiate an enforcement action, including state legality, agency resources, and the threat to the public health.18

But even in those states that permit the sale of CBD-infused products, companies should be careful to avoid making any type of claim that the product can be used to prevent, diagnose, treat, or cure diseases.19 In 2021, FDA issued five warning letters to manufacturers of CBD products.20 Each of the five companies involved marketed at least some products with health claims.21 Notably, some of the marketing appeared in the form of blog postings on the manufacturers websites.22

Whether Congress acts before FDA does is an open question. Under the Trump Administration, FDA considered promulgating a Cannabidiol Enforcement Policy, which the industry had hoped would offer more guidance.23 Unfortunately, that guidance was withdrawn in the dawn of the new Administration. Former FDA Commissioner Stephen Hahn explained that FDA still had a limited understanding of the safety profile of CBD.24

Congress is currently considering two bills that would affect the regulation of CBD-infused products. In February, a group of bipartisan congressmen introduced House Resolution 841the Hemp and Hemp-Derived CBD Consumer Protection and Market Stabilization Act of 2021which, if enacted, would allow the use of hemp-derived CBD in dietary supplements. A bipartisan group of senators also introduced similar legislation in the Senate. If enacted, the Hemp Access and Consumer Safety Act (S.1698) would allow hemp-derived CBD products to be lawfully used in dietary supplements, food, and beverages.

CBD businesses face unique risks. Only by paying close attention to both federal and state laws can attorneys help grow this extremely profitable industry responsibly.

1Global $13.4 Billion Cannabidiol Market to 2028 Increasing Awareness [Of] CBD Health Benefits, Changing Consumer Opinion, and Attitude Toward CBD Products (Mar. 24, 2021), available at: https://www.prnewswire.com/news-releases/global-13-4-billion-cannabidiol-market-to-2028---increasing-awareness-cbd-health-benefits-changing-consumer-opinion-and-attitude-toward-cbd-products-301254807.html.

2See B. Cohen, Cannabis Law: A Primer on Federal and State Law Regarding Marijuana, Hemp, and CBD, Ch. 1, 2 (2021).

37 U.S.C. 1639o(1) (defining hemp as the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.).

4See, infra, n. 2.

5See 21 U.S.C. 802(16)(A) (defining marihuana); see id. 802(16)(B) (exempting hemp as defined in 7 U.S.C. 1639o from the CSAs definition of marihuana); id. 812 Sched. I(c)(17) (placing tetrahydrocannabinolsexcept those in hempon Schedule I of the CSA).

6See,supra, FDA, Cannabis FAQs, A.2.

7See,supra, FDA, Cannabis FAQs, A.8.

8See 21 U.S.C. 321(ff)(3)(B).

9See, supra, FDA, Cannabis FAQs, A.11.

10See, supra, FDA, Cannabis FAQs, A.9.

11See id.

12See 21 U.S.C. 350b(d).

13See, supra, FDA, Cannabis FAQs, A.9.

14See id.

15See, supra, FDA, Cannabis FAQs, A.10.

16See 21 U.S.C. 321(s) and 348.

17See, supra, FDA, Cannabis FAQs, A.10, 12.

18See, supra, FDA, Cannabis FAQs, A.14.

19See id.

20FDA, Warning Letters and Test Results for Cannabidiol-Related Products, available at: https://www.fda.gov/news-events/public-health-focus/warning-letters-and-test-results-cannabidiol-related-products.

21See id.

22See, e.g., Cannafyl Warning Letter, No. 611957 (Mar. 1, 2021), available at: https://www.fda.gov/inspections-compliance-enforcement-and-criminal-investigations/warning-letters/cannafyl-611957-03012021.

23See OIRA, OMB, 09-10-ZA76, available at: https://www.reginfo.gov/public/Forward?SearchTarget=RegReview&textfield=cannabidiol&Image61.x=17&Image61.y=22.

24See FDA, Better Data for a Better Understanding of the Use and Safety Profile of Cannabidiol (CBD) Products (Jan. 8, 2021), available at: https://www.fda.gov/news-events/fda-voices/better-data-better-understanding-use-and-safety-profile-cannabidiol-cbd-products?.

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Selling CBD-Infused Products Might Be Riskier Than You Think - JD Supra

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