Cannabis/CBD

While cannabis and its derivative products remain illegal under federal law in the United States, the federal enforcement status quo appears favorable to in-state businesses conducted in those U.S. states that legalized growth, manufacturing and/or sales of cannabis products. The future of cannabis will no doubt have a federal regulatory component under the FDA, and wise businesses prepare for federal developments now.

  • Based on our deep knowledge of regulation, we will support your regulatory assessment at state and federal level.
  • In particular, if you wish to pursue CBD vaping products, as well as a new drug development with a view to submit a new drug application before the FDA Center for Drugs (CDER), we will be thrilled to assist you with your regulatory development plan.
  • For banking analysts and the investment community, we are your partner in evaluating investment and M&A opportunities, regulatory assessments for company valuation, and advising you on the soundness of the compliance programs a given company has deployed.
  • We will advise you in connection with fund formation opportunities and fund contribution agreements.
  • We follow closely CBD/cannabis developments in neighboring countries, such as Canada, which recently legalized cannabis, and overseas and have developed expertise in selected markets, where we partner with the most reputable law firms as needed.
  • We know that other substances, such as kratom, have recently come under increased FDA scrutiny. And we can help build an engagement and communication strategy around those issues as well.
  • Think of us as an external general counsel and chief engagement officer for your industry needs!

 

Learn more about recent developments in U.S. federal legislation, including the Agricultural Improvement Act, and about FDA’s views on cannabis and CBD here.

The Agricultural Improvement Act of 2018 (AIC)

Until the AIC, hemp cultivation was illegal in the United States. AIC allows hemp cultivation under a future scheme that will include regulation and a licensing system. However, the plant cannot be grown without restrictions and oversight.

  • Hemp is defined in the legislation 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.”
  • Cultivation without a license and producing cannabis with more than 0.3% THC will be violations of the law.

AIC removes hemp-derived products, including hemp-derived CBD, from the Schedule I status, if, and only if, CBD  is derived from hemp produced in a manner consistent with the AIC and meets the definition of hemp in the AIC. All other CBD remains Schedule I.

AIC has no effect on state-legal cannabis programs, which remain illegal under federal law. CBD products marketed consistent with state laws are generally still illegal under federal law.

So, after AIC, does FDA have continue to have authority over cannabis and CBD-contaning products?

FDA is a government agency with very broad authority over various products.

  • Foods, including: dietary supplements, bottled water, other drinks, food additives infant formulas, other food products.
  • Drugs, including prescription or over-the counter.
  • Biologics, including: vaccines, blood and blood products cellular and gene therapy products tissue and tissue products, allergenics.
  • Medical Devices
  • Electronic Products that give off radiation
  • Cosmetics, including: color additives found in makeup and other personal care products, skin moisturizers and cleansers nail polish and perfume.
  • Veterinary Products, including: livestock feeds, pet foods, veterinary drugs and devices
  • Tobacco Products – including vaporized products.

Where a product falls within the range of products regulated by the FDA will depend on the definition of the product under the Federal Food, Drug and Cosmetic Act. Manner of delivery of the product to the human body will make a difference. Claims will matter to the FDA to determine if it will treat a product as a drug or food. Just because a product contains CBD (or any other ingredient), such product is not exempt from FDA authority. In fact, quite the contrary: at present, FDA has authority over a range of consumer goods that may also contain CBD or cannabis. If you use a CBD ingredient in a product that is classified as food, drug, cosmetic, veterinary product or tobacco product under the Federal Food, Drug and Cosmetic Act, FDA already has authority over that type of product and does not need any additional Congressional action to enforce the Federal Food, Drug and Cosmetic Act in connection with such CBD-containing product and its manufacturer.

Here is what FDA Commissioner said about the effect of AIC on FDA jurisdiction over cannabis and cannabis-derived products:

“The Agriculture Improvement Act of 2018 changes certain federal authorities relating to the production and marketing of hemp, defined as cannabis (Cannabis sativa L.), and derivatives of cannabis with extremely low (less than 0.3 percent on a dry weight basis) concentrations of the psychoactive compound delta-9-tetrahydrocannabinol (THC). These changes include removing hemp from the Controlled Substances Act, which means that it will no longer be an illegal substance under federal law. However, Congress explicitly preserved the agency’s current authority to regulate products containing cannabis or cannabis-derived compounds under the FD&C Act and section 351 of the Public Health Service Act. “ Please see the FDA’s statement on the signing of the Agriculture Improvement Act of 2018.

To understand FDA’s official position on cannabis and CBD we advise you to read FDA’s other statements, including  FDA’s online document “FDA and Marijuana: Questions and Answers” at https://www.fda.gov/newsevents/publichealthfocus/ucm421168.htm

Also, we strongly recommend reading FDA Commissioner, Scott Gottlieb’s Statement on signing of the Agriculture Improvement Act and the agency’s regulation of product containing cannabis and cannabis-derived compounds here: https://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm628988.htm

Manufacturers of CBD-infused foods or drinks, as well as dietary supplements (which are a subset of foods), often ask whether FDA will scrutinize their manufacturing facilities. The short answer is, yes, FDA does have authority over food and dietary supplements manufacturers, and no, FDA does not believe that CBD or THC containing products can be sold as foods. Here is an excerpt from FDA’s own Q&A:

”Q: 12. Can products that contain THC or cannabidiol (CBD) be sold as dietary supplements?

A: No. Based on available evidence, FDA has concluded that THC and CBD products are excluded from the dietary supplement definition under sections 201(ff)(3)(B)(i) and (ii) of the FD&C Act, respectively. […] FDA is not aware of any evidence that would call into question its current conclusions that THC and CBD products are excluded from the dietary supplement definition under sections 201(ff)(3)(B)(i) and (ii) of the FD&C Act. […]  Our continuing review of information that has been submitted thus far has not called our conclusions into question.”

Also, please note this answer:

“Q 13. Is it legal, in interstate commerce, to sell a food to which THC or CBD has been added?

  1. No. Under section 301(ll) of the FD&C Act, it is prohibited to introduce or deliver for introduction into interstate commerce any food (including any animal food or feed) to which has been added a substance which is an active ingredient in a drug product that has been approved under 21 U.S.C. § 355 (section 505 of the Act) or a drug for which substantial clinical investigations have been instituted and for which the existence of such investigations has been made public.[..]” because “ The existence of substantial clinical investigations regarding CBD has been made public”

However, despite having authority, FDA has refrained from meaningful enforcement and has, to date, tolerated most CBD-containing products, focusing its enforcement on products and manufacturers who made outrageous health claims. Thus, FDA sent warning letters to Stanley Brothers Social Enterprises LLC, Greenroads of Florida LLC, Natural Alchemist (Alurent Inc.) and That’s Natural! Marketing & Consulting.  According to FDA, these companies’ website claims and testimonials provided evidence that the CBD products were intended for use as drugs.

In our view, FDA will prioritize its enforcement, among other, according to the risk of the product and how outrageous the product claims are– such as, for instance, claims that a product mitigates or cures cancer. Thus, FDA’s own Q&A states:

“When a product is in violation of the FD&C Act, FDA considers many factors in deciding whether or not to initiate an enforcement action. Those factors include, among other things, agency resources and the threat to the public health. FDA also may consult with its federal and state partners in making decisions about whether to initiate a federal enforcement action.”