Avoiding CBD Product Pitfalls In 2021 – Cannabis & Hemp – United States

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Over the last two years, store shelves across America have been
increasingly showcasing a brand-new line of products: CBD products.
From lotions to drinks to pet food, it seems that now pretty much
anything can be infused with CBD. There are thousands of CBD
products on the market right now, but while the industry is rapidly
growing, it remains to be seen how many CBD companies will stick
around. That is because many CBD products on the market do not
comply with regulatory restrictions on its use.

It is anticipated that in 2021, the United States Food and Drug
Administration (“FDA”) will finally issue formal
regulations that will further define the parameters of selling CBD
products, and many companies will need to scramble to make sure
their products are in compliance once these regulations are issued
by the FDA. Until then, however, in order to mitigate risk and
avoid having to completely course correct, CBD companies must do
their best to navigate and comply with the applicable federal
guidance and state regulations on what is permitted to be sold to
consumers.

What is CBD?

CBD is the abbreviation for cannabidiol, one of the many
cannabinoids, or chemical compounds, found in hemp. Hemp became
legal in December 2018, when Congress passed the Agriculture
Improvement Act of 2018 (2018 Farm Bill, PL 115-334), which removed
hemp from the definition of marijuana in the Controlled Substances
Act. The Farm Bill specifically defined “industrial hemp”
as cannabis with less than 0.3 percent of the psychoactive compound
delta-9-tetrahydrocannabinol (“THC”) on a dry weight
basis. Any CBD product that is being sold in the market today
therefore must contain less than this extremely low concentration
of THC, which, unlike its marijuana counterpart, will not cause any
psychoactive effect when used by consumers.

There is very limited medical research on CBD, but there are
theories that it works with the endocannabinoid system in the human
body by binding to cannabinoid receptors. When perusing CBD
products on any grocery store or pharmacy shelf, you will glean
that CBD products are being marketed to help with everything from
pain to sleeplessness to chronic illness.

What Does the FDA Say About Hemp & CBD Products?

The Farm Bill explicitly preserved the FDA’s authority over
hemp products. Therefore, hemp and CBD products must meet any
applicable FDA requirements and standards, just like any other
FDA-regulated product. For example, the FDA’s existing
authority over foods, dietary supplements, human and veterinary
drugs, and cosmetics equally applies to hemp products to the extent
such hemp products fall within those categories. These safeguards
help ensure that consumers have access to safe and accurately
labeled hemp products, and, in the case of drugs, that patients can
depend on the effectiveness of these products.

To date, the FDA has only approved one pharmaceutical drug
containing CBD – Epidiolex – which has mainly been used
to treat seizures. This is significant for CBD companies because
this approval transformed CBD into an “active ingredient in a
drug product” that has been approved by the FDA. In turn, this
classification limits other uses for CBD in non-drug products.

As to using industrial hemp generally, the FDA has deemed only
three hemp seed-derived food ingredients as “generally
recognized as safe” for human consumption, or
“GRAS”: hulled hemp seed (GRN765), hemp seed protein
powder (GRN771), and hemp seed oil (GRN778). Hemp seeds are the
seeds of the hemp plant, but they do not naturally contain THC, the
main psychoactive ingredient in cannabis. The hemp seed-derived
ingredients that are the subject of these GRAS notices contain only
trace amounts of THC and CBD, which the seeds may pick up during
harvesting and processing when they are in contact with other parts
of the plant. Some of the intended and permissible uses for these
ingredients include adding them as a source of protein,
carbohydrates, oil, and other nutrients to beverages (juices,
smoothies, protein drinks, plant-based alternatives to dairy
products), soups, dips, spreads, sauces, dressings, plant-based
alternatives to meat products, desserts, baked goods, cereals,
snacks and nutrition bars. Products that contain any of these hemp
seed-derived ingredients must declare them by name on the
ingredient list.

What Should Companies Know Before Marketing CBD Products?

When it comes to selling a new CBD product, companies must be
aware of the complex and unsettled state of FDA regulations
regarding CBD products. Other than Epidiolex, the FDA has not
approved any cannabis product for the treatment of any disease or
condition and, thus, has not determined that cannabis is safe and
effective for use with any particular disease or condition.
Therefore, companies must avoid marketing or labeling their CBD
products as being a potential cure or treatment for any health
condition or disease and should even stay away from suggesting
their products assist generally with things like “pain
relief,” “anxiety relief,” or “sleep aid.”
Over the past two years, the FDA has issued dozens of warning
letters to companies making outlandish claims that CBD will cure
serious diseases such as cancer and more recently, COVID-19. Beyond
avoiding those claims, CBD companies also must provide an express
warning on its labels notifying consumers that the products have
not been approved by the FDA.

The next area of regulatory scrutiny has been marketing CBD
products as “dietary supplements,” a term defined by the
FDA. While the FDA has given little guidance to companies on how
they can market CBD, the FDA has expressly stated that due to
CBD’s use as an active ingredient in at least one
pharmaceutical drug, it cannot be marketed as a dietary supplement
or be added to human or pet food. Therefore, companies should avoid
marketing or labeling any CBD products in a way that could suggest
to consumers that it is a dietary supplement or a conventional food
for humans or pets.

The only other expressly approved use of CBD by the FDA is in
cosmetics, such as topical lotions, creams, or soaps. If a company
is selling a CBD-infused cosmetic, then it must still comply with
all FDA regulations regarding cosmetic labelling, which range from
font size to warning language to label placement. It is also
important to note that there are over fifteen states which also
have issued specific regulations on labeling CBD products. Many
states require that a scannable QR code be prominently displayed on
the outer product label, for example, or that certain language be
on the label. In order to ensure that you are fully compliant,
companies must check all state law where they sell products.

The main takeaway for CBD companies is that it is a complex and
highly regulated industry. When looking to manufacture, launch, and
market a new CBD product, it is highly recommended that a company
consult with legal counsel who is familiar with the federal and
state labeling laws and specifically, about product marketing
requirements in the cannabis industry.

Originally Published by Montgomery McCracken Walker &
Rhoads, December 2020

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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