2018 was a busy year for the cannabis industry in the Northeast. Vermont legalized recreational marijuana, while Massachusetts saw the opening of its first recreational marijuana stores. Plus, Congress passed the Agriculture Improvement Act of 2018, known as the Farm Bill, intending to make it easier for retailers to sell products containing CBD. However, despite products containing CBD finding their way to retail shelves, several questions about the legality of CBD remain.
CBD stands for cannabidiol, which is one of more than 100 naturally occurring compounds found in cannabis. CBD is derived from the same plant as tetrahydrocannabinol, or THC, the compound in cannabis that causes users to feel “high.” Physicians and scientists have been promoting the beneficial properties of CBD, suggesting it helps with many common health issues, such as anxiety, depression, pain relief and cancer-related symptoms. Claims have also been made that CBD may be beneficial for heart health and those dealing with neurological disorders.
Cannabis has remained illegal under federal law, despite medical marijuana being legal in 33 states and the District of Columbia and adult recreational use being legal in 10 states and the District of Columbia. Hemp, which is a strain of cannabis, has low concentrations of THC and is commonly produced in order to extract CBD. Prior to the Farm Bill, hemp was a Schedule I controlled substance under the federal Controlled Substances Act. However, the Farm Bill removed industrial hemp from the CSA, making its production, distribution and transport through interstate commerce legal in the United States so long as it contains less than 0.3% THC.
Physicians and scientists have been promoting the [benefits] of CBD.
Market analysts predict the market for CBD and products containing CBD is on the verge of significant growth. The Brightfield Group, a cannabis-industry analytics and marketing company, has predicted global CBD sales to grow at a compound annual rate of 147% until 2022, with CBD ultimately becoming a $22 billion industry.
Despite the Farm Bill, CBD currently occupies a legal “gray area.” Immediately after Congress passed the Farm Bill, the Food and Drug Administration issued a statement regarding inclusion of hemp-derived substances, including CBD, in foods, beverages and nutritional supplements. In its statement, the FDA provided notice that, absent FDA approval, it remains illegal to “introduce food containing added CBD or THC into interstate commerce.”
The FDA argues that CBD and THC are active ingredients in FDA-approved drugs, such as Epidiolex, an epilepsy medication derived from CBD. As an active ingredient in an approved drug, CBD cannot legally be used as a food additive or nutritional supplement. Thus, Congress legalized industrial hemp, but the FDA has pronounced that CBD derived from now-legal industrial hemp cannot be used in food or beverages. To chart a clear path forward, the FDA has formed an internal working group to explore pathways for CBD to be used as a food additive or nutritional supplement.
One of the proposed solutions would be for the FDA to designate hemp extracts, including CBD, as “generally recognized as safe,” or “GRAS.” Under this FDA designation, CBD and other hemp-derived extracts would be permitted to be used as food additives, provided they meet certain safety standards. Another potential solution would involve a regime in which high concentrations of CBD would be treated and regulated as a pharmaceutical drug, while low concentrations of CBD would be permitted in food and beverage products.
Until the FDA provides clear guidance on the legality of using hemp-derived CBD in food and beverage products, the production, distribution and sale of such products will remain in a legal “gray area.” Companies producing, distributing or selling such products should be aware that doing so does not come without risk.
David S. Hirsch is a partner in Hinckley Allen & Snyder LLP’s Corporate & Business group and represents clients in the cannabis industry. He can be reached through www.hinckleyallen.com.