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April 10, 2019
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By Lois B. Duquette

The passage of the 2018 Farm Bill on December 20^th has sparked much interest in the marketing of products containing hemp, and in particular, cannabidiol, commonly referred to as CBD.  Despite statements from the U.S. Food and Drug Administration (“FDA”) that distributing food and beverages to which CBD has been added is unlawful, food and beverage products containing CBD have been proliferating in the marketplace, leaving many wondering how these products are able to be marketed under the current state of the law.  A recent statement from FDA Commissioner Scott Gottlieb and FDA enforcement activity are providing some insight into this conundrum.

2018 Farm Bill Legalizes Hemp
The 2018 Farm Bill legalized hemp.  This was a major change because hemp, as a form of cannabis, had long been illegal under the Controlled Substances Act (“CSA”).  The 2018 Farm Bill carved out hemp from the definition of marijuana in the CSA, and defined hemp as any part or derivative of the Cannabis sativa L. plant with less than .3% delta-9 tetrahydrocannabinol (“THC”) by weight.  This means that it is now legal to raise hemp and transport hemp in interstate commerce, although its growing is subject to regulation by state departments of agriculture.  Consequently, many products made with hemp, such as textiles, are now legal under federal law.  However, this new lawful status does not extend to food, beverage and drug products.

FDA Comments on 2018 Farm Bill
The FDA’s authority with regard to products regulated by the FDA was specifically preserved by the 2018 Farm Bill.  On the same day that the Farm Bill was passed, Commissioner Gottlieb issued a statement emphasizing that the Farm Bill had preserved the FDA’s authority over food and drugs and that the FDA deemed it unlawful to introduce food with CBD into commerce or to market CBD supplements, even if the CBD is derived from hemp.  Commissioner Gottlieb emphasized that the FDA’s greatest concerns were with the drug-like claims made for these products.  Commissioner Gottlieb warned that the FDA would continue to monitor for products and claims that pose a risk to public health, such as claims that a product containing CBD can cure Alzheimer’s disease or cancer.

Providing some positive news for the food industry, Commissioner Gottlieb also announced that the FDA had no objection to three Generally Recognized As Safe (“GRAS”) notices which had been filed for hulled hemp seeds, hemp seed protein and hemp seed oil since these parts of the hemp plant were shown to contain no THC or CBD.  Accordingly, it is now lawful to distribute these products or foods or supplements containing these ingredients with the caveat that they must be processed as set forth in the GRAS notices.

2019 Developments
Early 2019 saw a flurry of enforcement activity and warning notices as some state and municipal agencies cracked down on the growing proliferation of CBD products either by seizing products or warning that future enforcement action would be taken. No new enforcement activity was seen coming from the FDA.

Confirming what many have concluded from the proliferation of products containing CBD in the marketplace and lack of FDA enforcement activity, on March 28, 2019, Commissioner Gottlieb told a subcommittee of the U.S. Senate Committee on Appropriations that the FDA is exercising “enforcement discretion” when it comes to products containing CBD.  Gottlieb stated, “I will take enforcement action against CBD products that are on the market if manufacturers are making what I consider ‘over-the-line’ claims.”  Gottlieb acknowledged that many CBD-containing products are on the market, noting FDA “enforcement priorities and our limited resources.” Gottlieb added “[t]hat’s not an invitation for people to continue marketing these products.”

Commissioner Gottlieb further noted that the FDA is concerned about the multitude of products on the marketplace, but noted that it has heard “loud and clear” that Congress wants a pathway for these products to be marketed.  The FDA is looking into potential rule making that would allow CBD to be sold in conventional food and drugs.  Commissioner Gottlieb has indicated that a faster approach may be for Congress to legislate the amount of CBD that would be considered safe to add to food versus the amount of CBD that would constitute a drug.  The FDA has scheduled a public hearing for May 31^st.

Consistent with Commissioner Gottlieb’s signaling that the FDA is most concerned about disease-curing claims, on April 4^th the FDA and Federal Trade Commission (“FTC”) announced that they had sent warning letters to three companies making claims that their CBD products, which included both topical and ingestible products, were “drugs” by virtue of disease-curing claims and that the companies lacked substantiation for such claims.  These letters mark the first time that the FDA and the FTC have issued joint letters and may signal a coordination of resources in order to better address issues.  Significantly, the letters did not object to numerous other CBD food products offered by one of the recipients, PotNetwork Holdings, Inc., on its website at www.diamondcbd.com.

Lessons for the Food Industry
This latest activity provides some key insights for those in the food and beverage industry wanting to participate in the CBD boom:

1. While the FDA has indicated that it is likely to use its resources to take enforcement action against companies making disease-curing claims, distributing food and beverage to which CBD has been added remains unlawful under federal law.
2. Food and beverage products containing CBD also are subject to enforcement by state and local agencies.  Whether such products would be considered unlawful and the likelihood of enforcement action under state and local law would need to be examined on a state by state basis.
3. While change in federal law may come eventually, it may be years before such change is enacted.
4. It is lawful to include hulled hemp seeds, hemp protein and hemp seed oil in food.

Given the popularity of CBD and the inevitable increase in the supply of hemp with hemp’s new status as a legal crop under federal law, the lawfulness of CBD in food, beverages and supplements will undoubtedly remain a hot and developing topic.

© 2019 McNees Wallace & Nurick LLC
McNees Food & Beverage Client Alert is presented with the understanding that the publisher does not render specific legal, accounting or other professional service to the reader. Due to the rapidly changing nature of the law, information contained in this publication may become outdated. Anyone using this material must always research original sources of authority and update this information to ensure accuracy and applicability to specific legal matters. In no event will the authors, the reviewers or the publisher be liable for any damage, whether direct, indirect or consequential, claimed to result from the use of this material.