The federal government’s 2018 legalization of hemp and its derivatives opened the floodgates for CBD products made from the low THC plant to emerge onto the market. New brands are popping up every day, and business is booming.
While this is excellent news for consumers looking to support their wellness naturally, farmers looking for new crops to supplement their income, and the best CBD products companies looking to profit while helping people, there is a dark side to the celebration.
Lack of CBD Regulation
With the passage of the Farm Bill, the FDA took CBD off its list of controlled substances, transferring responsibility to the Food, Drug, and Cosmetics division. The FD&C then issued a statement asserting that CBD is not approved for food, supplements, or therapeutic treatments. Since the FDA does not recognize CBD as a drug, and the FD&C does not recognize CBD as a food or supplement, the only agency left to impose any sort of oversight is the Department of Agriculture.
The USDA does closely monitor and regulate the farming practices of hemp, but since it is not intended for human consumption (save for hemp oil, which is different from CBD oil), it is largely not regulated as a crop that people ingest.
This total lack of oversight or regulation leads to disreputable CBD companies skirting safe and ethical business practices, of which consumers are increasingly aware. The FDA has issued warnings about products on the market that are mislabeled in a variety of ways, including CBD content, THC content, and the presence of contaminants, heavy metals, and dangerous pathogens. Consumers have responded by either avoiding CBD products or being more diligent about verifying their products are in fact safe.
Will the FDA Cease Its Enforcement Actions Against Hemp CBD Companies?
The enactment of the 2018 Agricultural Improvement Act (the “2018 Farm Bill”) and the legalization of hemp and hemp derivatives, including hemp CBD, in some states has led to a massive hemp CBD health craze in the United States. The highly coveted cannabinoid is currently infused into everything from bath bombs to dog treats and even workout clothes. According to a 2019 survey conducted by Cowen, the sales of these products are expected to reach $16 billion by 2025.
Despite this strong consumer interest, the Food and Drug Administration consistently takes the position that the sale and marketing of these hemp CBD products are unlawful and that the use of hemp CBD is dangerous.
That was until the newly appointed FDA Commissioner, Stephen Hahn, M.D., publicly announced on February 26 to a roomful of representatives from state Departments of Agriculture that the FDA’s current approach to hemp CBD is not sustainable:
“We’re not going to be able to say you can’t use these products. It’s a fool’s errand to even approach that. We have to be open to the fact that there might be some value to these products and certainly, Americans think that’s the case.”
The FDA’s new stance on the regulation of the sale and marketing of hemp CBD products raises the question in the minds of many of whether the agency will cease its enforcement actions against hemp CBD companies, which to date have been limited to sending warning letters to those companies that make egregious, unfounded health claims about the therapeutic value of hemp CBD.
Although Commissioner Hahn’s statements are promising, they did not ultimately do away with the FDA’s current moral position on hemp CBD, which is one of extreme consumer caution. Indeed, in his February 26 speech, the FDA Commissioner reiterated the agency’s goal of providing consumers with sound information about the effects of these products so they can make educated decisions about their purchases.
As the head of the FDA, Commissioner Hahn has the ability to regulate hemp CBD, so his recent statements certainly suggest he may eventually act on that conferred power.
But what exactly gets the FDA’s hackles up around Hemp CBD?
According to the FDA, hemp CBD foods and dietary supplements can neither be lawfully sold nor marketed. The FDA takes issue with these products because of the Drug Exclusion Rule.
The Drug Exclusion Rule provides that an article that has been approved or investigated as a drug cannot be a dietary supplement or be added to food unless the article was marketed as a supplement or food before it was investigated.
Hemp CBD has been approved as a drug ingredient in the treatment of epilepsy (i.e., Epidiolex) and the FDA does not believe that hemp CBD was marketed as a food or dietary supplement prior to that investigation. Nevertheless, the Food, Drug, and Cosmetic Act (“FDCA“) gives the FDA Commissioner the authority to override the Drug Exclusion Rule by issuing “a regulation, after notice and comment, finding that the article would be lawful under the FDCA.”.
Despite its position on food and dietary supplements, the FDA indicated that hemp CBD can be added to topicals, which fall under the FDCA definition of “cosmetics,” so long as these products (1) do not contain marijuana, (2) are not adulterated (i.e., unsafe) or misbranded or intended to be used as drugs, and (3) if no claims are made about these products regarding diseases or bodily structure/function on their packaging, labeling, or in their marketing materials. Not making health claims on a product label or other marketing materials will significantly reduce the risk of an FDA enforcement action because any claim made about the therapeutic value of hemp CBD will lead the FDA to conclude that the product is a “drug.” And because no hemp CBD products have been approved by the FDA for the diagnosis, cure, mitigation, treatment, or prevention of any disease (other than Epidiolex), those products will be deemed unlawful by the FDA if such claims are made.
The FDA has yet to address the sale and use of hemp CBD smokables. This is likely due to the fact that the FDA has the authority to regulate the sale, manufacture, and marketing of tobacco products, but has repeatedly refused to extend its authority to products free of nicotine or tobacco. Accordingly, it seems unlikely that hemp CBD smokables devoid of tobacco would be considered “tobacco products.” Although the FDA is not likely to regulate most hemp CBD smokables like it does tobacco products, it could potentially regulate them as a drug under the FDCA if any health claims are made about the therapeutic value of the products.
Therefore, until the FDA adopts a formal legal path for the sale and marketing of hemp CBD products, industry players will need, at a minimum, to comply with those loose FDA guidelines and applicable state laws.
The States Have A Grab Bag Of Hemp CBD Regulations
FDA firmly opines that the sale and marketing of most hemp-derived cannabidiol (hemp CBD) products is unlawful in the United States and has gone as far as describing CBD as a “potentially harmful substance.”
Even though hemp CBD is a no-no for the FDA, states have already adopted their own legal approaches to regulating hemp CBD products that are not necessarily consistent with the FDA’s current position and/or that altogether violate that position.
Some states, such as Colorado and Oregon, allow the manufacture and sale of all hemp CBD products, including foods, dietary supplements, smokable products, and cosmetics. Other states, like Idaho, Iowa, and Mississippi, strictly prohibit the production and/or sale of any such products unless hemp CBD is used for “medical treatment.”
A number of states, including California, Michigan, and Nevada, ban hemp CBD foods and dietary supplements but seem to take no issue, at least expressly, with the sale of other nonfood or Nonbeverage products, such as hemp CBD cosmetics. And a handful of states, counting Kentucky and Texas, allow the sale and marketing of hemp CBD foods and dietary supplements but strictly prohibit the sale or restrict the processing and manufacturing of hemp CBD smokables within their borders.
To top it all off, some of the states that legalized the sale of hemp CBD products have their own set of regulations, including but not limited to registration and/or permitting, labeling, and testing requirements.
In Louisiana, for example, hemp CBD cosmetics may only be sold by businesses that have established residence for two years prior to applying for and securing a CBD Dealer Permit from the Department of Revenue, Office of Alcohol and Tobacco Control. In Oregon, any finished hemp CBD product must be free of certain pesticides and contain no more than 0.3 percent total THC before it can be sold to end-use consumers. And in Utah, hemp CBD products must meet very specific labeling and marketing requirements, including but not limited to, labels containing a scannable bar code, QR Code, or web address linked to a document containing information pertaining to the product name, batch identification number, and a downloadable link to a certificate of analysis for the batch identified.
This patchwork of state-by-state regulations forces manufacturers and distributors of hemp CBD products to follow a variety of hemp CBD regulations in each state where these products are sold and must limit sales to jurisdictions in which hemp CBD products are deemed lawful -– all in the face of the FDA’s current enforcement position.
This wide range of often conflicting state regulations, combined with the lack of any formal federal legal pathway for the sale and marketing of hemp CBD products, makes it nearly impossible for hemp CBD stakeholders to meet compliance standards. Yet, the industry is begging to be regulated by the Feds.
So far, the FDA has received over 4,000 comments from shareholders on the safety, manufacturing, product quality, marketing, labeling, and sale of hemp CBD products. Clearly, a uniform federal regulatory framework would better ensure uniform compliance, help legitimize a stigmatized industry, protect and educate consumers, and ultimately, boost the US economy. Of course, the states will likely still be free to set their own hemp CBD regulations, but at least everyone would then be on an even federally lawful playing field. So, here’s to hoping that the FDA starts to serve its role of “coxswain” to help the CBD industry follow its course and succeed.
The Future Of the CBD Market
The future of the CBD market does not lie in the hottest new products. CBD lattes may be in vogue, but the stabilization of the market requires a level of consumer confidence that we currently are not seeing. The issue lies in the lack of oversight by a trusted source.
Developers are working on the technology to make this happen in the very near future. Once CBD is mainstream on the blockchain, another green wave is sure to reach all the consumers who were holding out for a product they could trust.