It is no secret that cannabidiol (CBD) is having a moment right now. Unlike its cousin tetrahydrocannabinol (THC), which is another cannabinoid found in the cannabis plant, CBD is not psychoactive. It has been growing in popularity for years for medical and other applications, but has really taken off lately.
Though CBD has become increasingly popular, it is still important to proceed with caution for any businesses operating in this space. Below are five important questions to keep in mind when dealing with CBD.
1. What is the source of the CBD?
It’s not an accident that this question is first on this list. The source is key. If you are selling CBD at a licensed dispensary in a state that permits the sale of marijuana, then you need to verify that the product comes from a licensed source. Some states like Washington and Oregon may allow CBD additives from other sources, while other states are silent on the topic. You should act cautiously either way.
If you are selling across state lines or in stores that are not licensed to sell marijuana, then you must ensure that your product is either derived from industrial hemp or from portions of the cannabis plant exempt from the Controlled Substances Act’s (CSA) definition of “marijuana.” If using industrial hemp, you need to make sure that the cultivator has a license from a state that has implemented an agricultural pilot program in compliance with Section 7606 of the 2014 Farm Bill. If you are using exempt plant material, you need to verify that the product was derived from mature stalks or seeds incapable of germination as those sections are specifically exempted from the CSA.
If you a buying from a cultivator or processor, you should carefully draft your purchase and sales agreements to include representations and warranties from the supplier. It’s also important to learn about who you are doing business as the question of source can determine whether or not something is legal.
2. What do the lab tests say?
If your first thought in reading this is, “should I be testing CBD products?” the answer is “yes!” It’s important to test for items that could pose a risk to public health including pesticides, heavy metals, and microbials. States may require such testing, but the risk will ultimately fall on any company in the line of production. If a consumer is harmed, the cultivator, processor, and distributor may all be sued for product liability.
CBD is not independently listed as a controlled substance in the CSA. However, THC is. This means you need to test to make sure you CBD product does not contain THC, unless you are selling it in states that have legal marijuana programs. This is important whether your are dealing with Farm Bill hemp as it is defined as containing less than .3% THC on a dry weight basis, or if you are dealing with exempt plant material as THC alone is a Schedule I controlled substance.
3. Where is the CBD going to be sold?
I recently wrote about how state law impacts the distribution of hemp-derived CBD products. If you are distributing products in a state that restricts the sale of CBD, like Michigan, you products could be seized and your company and its stakeholders could face criminal sanctions. It’s important to track where your products are being distributed and to inform your potential customers that they too must monitor state law.
4. What claims are you making about CBD?
We’ve written before that the FDA will treat products as drugs if their own labeling or marketing suggests they are “intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease.” Phrases like “combats tumor cells” and “[has] anti-proliferative properties that inhibit cell division and growth in certain types of cancer” clearly suggest that the CDB product can cure, mitigate, treat or prevent cancer, and is thus a drug.
Any suggestion that a product might have a role in treating or diagnosing disease, or that it is intended to affect the structure or any function of the human body of humans or other animals, is a health claim that subjects the product to drug regulations (unless it falls within the narrow confines of the Dietary Supplement Health & Education Act, which the FDA has ruled that CBD does not.)
It’s important to remember that only the FDA can determine whether a drug can be labelled as safe and effective for a particular disease. Preventing health claims based on anecdotal evidence is one of the FDA’s core functions and the agency will not hesitate to issue warning letters based on CBD health claims.
Long story short, don’t make health claims about your CBD products or allow others to post testimonials on your website.
5. Has the law changed?
Finally, it’s important to keep up with the ever changing legal landscape. Tom Angell of Marijuana Moment recently reported that Mitch McConnell announced that his proposed hemp bill will be included in the broad ranging agricultural act of 2018. This comes shortly after Congress approved a non-binding resolution acknowledging the vast potential of hemp.
In addition to federal law, stakeholders need to stay informed as to how the DEA feels about CBD that week. The DEA is often changing its policy on this subject, whether that comes through a post on its website or an internal directive. It’s important to stay up-to-date on the DEA’s latest position on CBD.
Finally, monitor state law. This is probably the hardest to accomplish since there are 50 states who each may treat CBD differently. Still, if you are doing business in a state, it’s on you to know the rules.
CBD law is incredibly complex and this list only scratches the surface as to what you need to look out for. If you have additional questions, give our firm a call to see how we can help your CBD business thrive.
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Author: Daniel Shortt