As of this writing, the United States Food and Drug Administration (FDA) has approved GW Pharma’s CBD drug Epidiolex for treating profound refractory pediatric epilepsy syndromes (Dravet syndrome and Lennox Gastaut syndrome) as well as for treating seizures associated with tuberous sclerosis complex (TSC) in patients one year of age or older. The product is a very simple, orally-administered formulation comprised of 100mg/ml cannabidiol (CBD), dehydrated alcohol, sesame seed oil, strawberry flavor and sucralose – basically, an alcohol-based solution with sesame seed oil to help solubilize the CBD oil, flavoring and sweetener.
On April 6th, 2020 GW Pharma performed a regulatory miracle when they succeeded in convincing the Drug Enforcement Administration (DEA) to deschedule Epidiolex (i.e., remove it from the Schedule 1 and Schedule 5 lists of substances that the agency regulates due to concerns regarding safety, potential for abuse or both) for all indications – including indications for which it has not yet been approved by the FDA.1 The benefit to GW of having their product descheduled is incalculable. This status change removed potential barriers to insurance reimbursement and made the need to set up and administer an expensive REMS2 drug safety program less likely. In part because of this regulatory coup d’état, the drug recently posted yearly earnings of nearly $300 million.
It is important to note that the DEA descheduled the Epidiolex formulation and not cannabis-derived CBD itself. Thus, GW Pharma is now in the enviable position of being the only company that can legally sell cannabis-derived CBD. More importantly, because the DEA descheduled the formulation and not the active ingredient, other companies who wish to market cannabis-derived CBD pharmaceutical formulations will have to repeat whatever it is that GW did to get Epidiolex descheduled.3 The DEA effectively gave the company a huge head start with respect to competitors who are developing other cannabis-derived CBD formulations that would compete with Epidiolex. That advantage will remain in place unless and until cannabis-derived CBD itself is descheduled or cannabis is legalized at the federal level.
GW Pharma’s attorneys demonstrated considerable virtuosity in devising this approach. However, there is another aspect of the GW Pharma story – one that could have profound implications for the exploding CBD consumer packaged goods (CPG) industry. The Federal Food, Drug, and Cosmetics Act4 (FFDCA) prohibits the introduction into interstate commerce of any food to which has been added an approved drug or a drug for which substantial clinical investigations have been instituted and made public.5 Because CBD was and is still the subject of clinical trials run by GW Pharma and others, even hemp-derived CBD is currently illegal to use as a food additive or dietary supplement under the FDCA
The FDA has recently re-started the public commentary stage of a long process that will hopefully result in the creation of a regulatory pathway for CBD to be used as a food additive – something that would seemingly be a straightforward matter given the copious amounts of safety data being generated from all of GW Pharma’s clinical trials. However, as long as the FDA continues to drag its feet in providing a regulatory pathway for CBD CPG products, CBD, regardless of its source, will remain illegal to use as a food additive or supplement under either the CSA or the FFDCA despite the existence of safety data obtained through the Epidiolex clinical trials. If, as many people in the industry anticipate, the agency decides to begin enforcement action, this could have a hugely negative impact on the industry.
In addition to the potentially disastrous effect that federal law could have on an important new industry, the federal regulatory scheme introduces unnecessary regulatory complexity and cost by imposing two different regulatory schemes depending on the source of the CBD. CBD derived from hemp is chemically identical to CBD derived from cannabis. Despite that identity, the 2018 Farm Bill nonsensically exempts only hemp-derived CBD from the Controlled Substances Act. If a regulatory pathway is created for hemp-derived CBD, but the DEA insists on maintaining cannabis-derived CBD as a schedule 1 substance, then the same molecule will be subject to two different regulatory schemes. This scenario would require tracking and certifying CBD sources and thereby impose regulatory and economic burdens that are entirely unnecessary from a public health point of view.
An alternative, economically disastrous scenario: given the pharmaceutical industry’s formidable lobbying power, it is entirely possible that the FDA could decide to limit the use of CBD exclusively in prescription drug formulations. This could kill the entire US hemp CBD CPG industry, currently estimated to reach $22 billion by 2022.6
Overall, the current state of affairs is unfair, expensive, uncertain and entirely unworkable over the long term. The CSA must be amended, ideally to deschedule both hemp and cannabis entirely, but at least in the short term, to deschedule CBD and preferably all non-THC cannabinoids regardless of their source. Further, the FDA must provide a regulatory pathway to allow the use of low doses of cannabinoids shown to be safe, either by existing clinical trial data or future testing pursuant to the NDIN submission process.
A 2019 Gallup poll found that 14% of Americans – 1 in 7 – use CBD products.7 The demand is there, the industry is thriving, and adequate safety data exists to justify a regulatory system that allows low-dose over the counter CBD products provided those products are produced using Current Good Manufacturing Practices (CGMPs) for food and dietary supplement manufacturing prescribed by the FDA and that such products undergo regular testing that demonstrates they are safe, unadulterated and accurately labeled. It is time for the industry to collectively fund a New Dietary Ingredient Notification (NDIN) submission that would provide safety data sufficiently compelling to force the FDA to either recognize CBD and other non-THC cannabinoids as being GRAS substances regardless of their source, or in the alternative create a regulatory path for CPG products containing low-doses of CBD and other non-THC cannabinoids.
Editor’s Note: The opinions expressed in this publication are those of its author. They do not purport to reflect the opinions or views of the Cannabis Industry Journal, its editorial staff or its employees.
Clincialtrials.gov lists 256 different clinical trials in which Epidiolex has been, is being or will be tested for a wide variety of other indications, including but not limited to opioid use disorder, several types of prostate cancer, alcohol use disorder, musculoskeletal pain, and a host of others.
REMS – risk evaluation and mitigation strategy – are drug safety programs that the FDA requires in cases where mediations pose serious safety concerns with respect to potential abuse and other adverse effects.
Exactly what they did isn’t clear, and won’t be for a long while given the snail’s pace at which FOIA requests are filled.
Title 21 United States Code Chapter 9
Title 21 United States Cod Chapter 9, Sections 331(ll), 342(a)(1) and Section 342(d)(f)(1)
“Exclusive: New Report Predicts CBD Market Will Hit $22 Billion by 2022” Rolling Stone Magazine, September 11, 2018, citing cannabis industry analysis from the Brightfield Group.
Private labelling, or white labelling, is a popular option for brands looking to enter the CBD space. This practice is where a product is manufactured by one company but branded, marketed and sold by another.
There are several companies that specialize in manufacturing end-to-end finished CBD products. They commonly provide third-party test results, certificates and data to verify the purity and potency of products created. Technically, all new brands need to do is place their label on the package and start selling! However with any new venture, establishing a successful private label CBD brand will inevitably mean various challenges need to be overcome.
Securing Quality Sources of CBD
Finding the right partners to work with is a must. The best way to source credible and trustworthy suppliers and manufacturers is to look for certifications and audits from third-party agencies. These include the Global Food Safety Initiative (GFSI), the Safe Quality Food (SQF), the United States Department of Agriculture’s (USDA) organic certification program and others.
The USDA organic certification program is a rigorous multi-step audit process to increase supply chain sustainability. Organic certification is a form of elective, self-regulation for manufacturers which consumers have eagerly welcomed into the marketplace. Look for the USDA organic seal to help identify which manufacturers are trustworthy and can produce a range of organic products.
From a consumer perspective, certifying your products as organic is an additional way to provide both supply chain transparency and increase confidence when trying new CBD products. It also provides a form of quality assurance to skeptical consumers, especially those who avidly read product labels prior to making a purchasing decision. Members of this “label reader” demographic will consistently choose organic products for the quality and transparency they provide with pure and natural ingredients.
Creating a Unique Product
Innovation and creativity will continue to be important differentiators due to the highly competitive nature of the CBD marketplace. New ingredient innovations such as water dispersible materials are big game-changers. From chewing gum to energy drinks, the opportunities for new and unique CBD products under your own private label are limitless.
There are only a handful of CBD brands who are willing, or even able, to be certified organic today. USDA certification is an opportunity for brands looking to adapt to changing consumer preferences, diversify their product offerings and invest in supply chain transparency.
In the past, product differentiators involved third-party lab testing or providing COAs — today that’s just industry standard. The USDA organic seal is becoming one of the hemp industry’s most coveted certifications because it is a product differentiator.
Trustworthiness, transparency and traceability are important factors for consumers to consider when shopping for products. These factors should also be considered when producing products and while vetting vendors, partners, stakeholders and supply chain suppliers.
Credible certifications allow consumers to make informed decisions while feeling confident that they are purchasing products from reputable sources. Research has shown that today’s CBD market lacks credibility while consumers are desperately seeking comfort and are eager to purchase from trustworthy brands.
By Brett Schuman, Jennifer Fisher, Brendan Radke, Gina Faldetta No Comments
Since the December 20, 2018 enactment of the Agricultural Improvement Act of 2018, better known as the Farm Bill, we have seen a number of new state laws addressing both the legality of hemp and products derived therefrom, most noticeably cannabidiol, better known as CBD. This piece provides a brief overview of some of the more interesting state laws concerning hemp and CBD, as well as recent developments.
Legality of Hemp
Since the passage of the Farm Bill, the vast majority of states have legalized the cultivation and sale of hemp and hemp products. However, certain states maintain laws barring some or even most forms of hemp.
The most stringent of those states is Idaho, where hemp remains illegal. In March 2020, Senate Bill 1345 – legislation that would have allowed for the production and processing of industrial hemp – died in the House State Affairs Committee, due to concerns that legalizing hemp would be the first step toward legalizing “marijuana”; that the bill contained too much regulation and that it was otherwise unworkable. As a result, Idaho is currently the only state without a legal hemp industry. Hemp with any THC, even at or below the 0.3 percent threshold under the Farm Bill, is considered equivalent to “marijuana” in Idaho and is illegal (see below for a discussion of CBD in Idaho).
Indiana, Iowa, Louisiana, and Texas have enacted bans on smokable hemp. Indiana law prohibits hemp products “in a form that allows THC to be introduced into the human body by inhalation of smoke.” Iowa has amended its Hemp Act to ban products introduced to the body “by any method of inhalation.” Louisiana prohibits “any part of hemp for inhalation” except hemp rolling papers, and Texas law prohibits “consumable hemp products for smoking.”
Some of these bans have been challenged in court. In Indiana, a group of hemp sellers requested an injunction against the smokable hemp ban in federal court, on the grounds that the federal Farm Bill likely preempted the Indiana law. In September of 2019, the district court issued the requested injunction, but the U.S. Court of Appeals for the Seventh Circuit overturned that decision in July 2020, stating that the order “swept too broadly.” The Seventh Circuit noted that the 2018 Farm Bill “expressly provides that the states retain the authority to regulate the production of hemp” and remanded the case for further proceedings.
Similarly, in Texas, hemp producers have sued in state court over the smokable hemp ban, questioning its constitutionality and arguing that it would result in a loss of jobs and tax revenue for the state. According to those producers, smokable hemp comprises up to 50 percent of revenue from hemp products. On September 17, 2020, Travis County Judge Lora Livingston issued a temporary injunction blocking enforcement of the law until trial, which currently is set to commence on February 1, 2021. Judge Livingston had previously issued a temporary restraining order to that same effect.
State Laws Regulating CBD
State laws and regulation on hemp-derived CBD are varied, and the legality of a CBD product often comes down to its form and marketing.
As an initial matter, it must be noted that notwithstanding the Farm Bill the FDA currently prohibits hemp-derived CBD from being be sold as dietary supplements, and food (including animal food or feed) to which CBD has been added cannot be introduced into interstate commerce. As discussed below, a substantial minority of states, including California, follow the FDA’s current position on the permissibility of putting hemp-derived CBD in food or dietary supplements.
Certain states include strict limitations on CBD, none more so than (once again) Idaho. Lacking any legal hemp industry, Idaho restricts CBD products to those having no THC whatsoever, rejecting the generally accepted threshold of not more than 0.3 percent THC. Idaho law also requires that hemp CBD be derived only from “(a) mature stalks of the plant, (b) fiber produced from the stalks, (c) oil or cake made from the seeds or the achene of such plant, (d) any other compound, manufacture, salt, derivative, mixture, or preparation of the mature stalks, or (e) the sterilized seed of such plant which is incapable of germination.”
Kansas similarly prohibits CBD with any amount of THC, though the law is murkier than Idaho’s. While Senate Bill 282 allowed possession and retail sale of CBD effective May 24, 2018 by removing CBD oil from the definition of “marijuana,” this was broadly interpreted to apply to THC-free CBD only. Later legislation, Senate Substitute for HC 2167, effective July 2019, allowed the farming of hemp with THC levels aligned with the Farm Bill definition (i.e., 0.3 percent THC or lower), but expressly prohibited the use of industrial hemp in: cigars, cigarettes, chew, dip, or other smokeless forms of consumption; teas; liquids for use in vaporizing devices; or “[a] ny other hemp product intended for human or animal consumption containing any ingredient derived from industrial hemp that is prohibited pursuant to the Kansas Food, Drug and Cosmetic Act or the Kansas Commercial Feeding Stuffs Act,” though this final section provides that “[t] his does not otherwise prohibit the use of any such ingredient, including cannabidiol oil, in hemp products,” the law’s only reference to CBD. The Kansas Bureau of Investigation has reportedly made statements indicating that CBD with any level of THC remains illegal.
Mississippi only recently legalized the cultivation of hemp via Senate Bill 2725, the Mississippi Help Cultivation Act, which was signed into law on June 29, 2020. House Bill 1547, passed on April 16, 2019, imposed content requirements upon CBD products within Mississippi: to be legal in Mississippi, a CBD product must contain “a minimum ratio of twenty-to-one cannabidiol to tetrahydrocannabinol (20:1 cannabidiol:tetrahydrocannabinol), and diluted so as to contain at least fifty (50) milligrams of cannabidiol per milliliter, with not more than two and one-half (2.5) milligrams of tetrahydrocannabinol per milliliter.” Moreover, CBD products produced in Mississippi must be tested at the University of Mississippi’s lab. However, subject to these restrictions, Mississippi allows the sale of CBD products, including edibles, contrary to the restrictions of many of states considered friendlier to hemp.
Perhaps more surprising is Hawaii, which restricts the sale and distribution of CBD, aligning with the FDA’s guidance. In Hawaii it is illegal to add CBD to food, beverages, as well as to sell it as a dietary supplement or market it by asserting health claims. It is also illegal to add CBD to cosmetics, an uncommon restriction across the many states with CBD-specific laws and regulations. Unlike Idaho and Mississippi, which have no medical marijuana programs, Hawaii has long legalized marijuana for medical purposes and in January 2020 decriminalized recreational possession. Hawaii very recently enacted legislation allowing the production and sale of cannabis-infused consumable and topical products by medical cannabis licensees effective January 1, 2021, but this legislation did not address CBD. Given the foregoing, Hawaii’s restrictions on CBD stand out.
Beyond broad CBD restrictions, many more states prohibit the use of CBD within food, beverages, or as dietary supplements. For instance, twenty states – including California, Georgia, Illinois, Massachusetts, Michigan, New Jersey, New York, and Washington – prohibit the sale of CBD in food or beverage. In California, a bill to overhaul California’s hemp laws, Assembly Bill 2028, failed when the legislative session concluded on August 31, 2020 without a vote. AB 2028 would have allowed CBD in food, beverages, and dietary supplements (though, interestingly, it would have banned smokable hemp). As a result, California remains a relatively restrictive state when it comes to hemp-derived CBD, notwithstanding the legality of recreational marijuana.
New York allows the manufacture and sale of CBD, but requires CBD products to be labeled as “dietary supplements.” This mandate conflicts directly with the FDA’s position that CBD products are excluded from the definition of a dietary supplement. Further, despite the state’s categorization of CBD products as dietary supplements, New York prohibits the addition of CBD to food and beverages. These regulations have resulted in a confusing landscape for retailers and manufacturers in the Empire State.
Several states also have labeling requirements specific to CBD products. Batch numbers and ingredients are ubiquitous, but an increasingly common requirement is the inclusion of a scannable code that links to specific information about the product. States imposing this requirement include Florida, Indiana, Texas, and Utah. Indiana is viewed as having one of the more comprehensive labeling requirements for CBD products – or, depending upon your perspective, the most onerous.
The rule is a classic example of the federal agency’s resistance to cannabis reform. It states that legal hemp products can be converted to products containing more than 0.3% THC, the threshold established in the 2018 Farm Bill, thus becoming an illegal controlled substance.
Under the Interim Hemp Rule, the DEA could arrest and prosecute legal hemp processors if they are in possession of hemp or CBD oil that contains more than 0.3% THC at any time, even if only for a temporary moment in the extraction process. This creates a lot of criminal risk for hemp companies as it is an almost inevitable step in the extraction process.
Almost every state in the country has an established USDA-compliant hemp program and the NCIA believes the Interim Hemp Rule is in direct conflict with the USDA’s rulemaking authority. According to Aaron Smith, co-founder and chief executive officer of the NCIA, the DEA is overstepping its authority and going outside of its jurisdiction. “Given this agency’s history of doing everything in its power to maintain the criminalization of cannabis in any form, this rule was clearly not proposed to help the thousands of small farmers who are participating in approved hemp programs and could put them in unnecessary danger,” says Smith. “Failure to rescind it immediately is a clear violation of congressional intent and established law.”
The Collaborative Laboratories for Environmental Analysis and Remediation (CLEAR) at the University of Texas at Arlington (UT-Arlington) and the University of Texas at El Paso (UT-El Paso) has begun collaborating with Curtis Mathes Grow Lights (CMGL), a subsidiary of the Curtis Mathes Corporation, and the hemp genetics company ZED Therapeutics. The research will involve characterizing the phytochemical effects of phytochrome manipulation using various LED horticultural lights of differing light spectrum, and novel high-yielding varietals of hemp. All of the hemp plants will be grown by renowned geneticists Adam Jacques, Christian West, and Oriah Love of ZED Therapeutics under the CMGL Harvester LED lights at their Oregon facility. Drs. Kevin Schug and Zacariah Hildenbrand will oversee the analysis of the corresponding samples for the expression of terpenes, flavonoids, and other classes of therapeutic compounds. The expression of 15 primary cannabinoid species will be performed concurrently by Matthew Spurlock of ZED Therapeutics.
“Since its inception, CLEAR has focused almost exclusively on improving environmental stewardship in the energy sector. It is nice to now diversify into the horticultural industry to better understand how chemically-diverse plants like hemp respond to different environmental-friendly LED lights,” says Professor Kevin Schug, Shimadzu Distinguished Professor of Analytical Chemistry and co-founder and the Director of CLEAR.
Hemp has recently garnered significant attention in the mainstream media as a result of the medicinal benefits of its primary natural constituent, CBD. The collaboration amongst UT-Arlington, UT-El Paso, CMGL and ZED Therapeutics is designed to better understand how the variable of light can influence the expression of other medicinal elements.
“We are incredibly excited about our growing collaborations with UT-Arlington, UT-El Paso, and ZED Therapeutics,” says CMGL’s COO, Robert Manes, “This particular research exploring phytochrome manipulation in hemp may unlock new lighting protocols whereby the modulation of different wavelengths is associated with the expression of different phytochemical profiles.”
This research also has the potential to discover novel molecules that may be present in the ZED Therapeutic hemp varietals using high-resolution exploratory instruments that are unique to the laboratories of CLEAR, such as Liquid Chromatography Quadrupole Time-of-Flight Mass Spectrometry (LC-QTOF-MS).
“We are always searching for new ways to expand our genetic catalogue and it will be interesting to see what sort of effects light modulation have on cannabinoid, terpene, and flavonoid expression,” says Adam Jacques of ZED Therapeutics, “Phytochrome manipulation, and any resulting epigenetic effects, is a poorly understood principle of horticulture and we see a significant opportunity with this research to unearth new knowledge.”
“Hemp is a unique plant both in its light spectrum adaptation and the wide range of phytochemicals it can potentially produce,” says Christian West of ZED Therapeutics, “I’ve been waiting my whole career to be a part of this research and having the lighting knowledge of CMGL combined with the analytical power of UT-Arlington and UT-El Paso is priceless in expanding our understanding of the plant.”
CannaSafe was allegedly the first to break the news about vaping health issues caused by EVALI, the lung condition responsible for the 2019 vape crisis. According to the press release, they provided testing data that proved black market vapes contained dangerous chemicals, likely including vitamin E acetate, the chemical that the CDC says is linked to EVALI.
CannaSafe say they have plans to expand into a number of states beyond California. They are also planning to build a facility dedicated to CBD testing to meet market needs in the near future.
According to a press release sent out last week, the American Association for Laboratory Accreditation (A2LA) announced the accreditation of Trichome Analytical to ISO/IEC 17025:2017. Trichome Analytical is the first cannabis testing lab accredited to the standard in the state of New jersey.
Based in Mount Laurel, New Jersey, Trichome Analytical is a DEA-registered third-party cannabis testing lab that offers hemp compliance testing for state and federal guidelines.
Kristen Goedde with Trichome Analytical says they are hoping to provide testing for consumer safety and accurate labeling for the state’s new hemp market. “The evolution of the hemp and cannabis industries increasingly demands rigorous, high quality analytical testing,” says Goedde. “Obtaining accreditation is an essential measure for laboratories seeking to ensure consumer safety and reliable labeling. Trichome is honored to have our quality systems validated by A2LA, and we look forward to elevating cannabis and hemp operations to new heights – right here in our home state.”
By Seth Mailhot, Steve Levine, Emily Lyons, Megan Herr 1 Comment
On August 20, 2020, the Drug Enforcement Administration (DEA) published an Interim Final Rule on industrial hemp and hemp derivatives (the interim rule), which immediately went into effect, to conform DEA regulations with the Agriculture Improvement Act of 2018 (the 2018 Farm Bill).
The 2018 Farm Bill effectively removed industrial hemp from the definition of “marijuana” in the Controlled Substances Act (CSA). Additionally, tetrahydrocannabinols contained in industrial hemp, such as cannabidiol (commonly known as CBD), were also removed from the purview of the CSA.
The 2018 Farm Bill defines hemp 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.
Accordingly, because cannabis and its “derivatives, extracts, [and] cannabinoids” are not considered “marihuana,” so long as their delta-9 tetrahydrocannabinol (THC) concentration is at or below 0.3% on a dry weight basis, the regulation of hemp fell outside the authority of the DEA. However, the DEA’s interim rule attempts to draw a hard line in the sand as to when the plant, and any products derived therefrom, are considered “marihuana,” thereby still subject to the DEA’s purview.
Specifically, the interim rule promulgates the DEA’s position that hemp processors can convert otherwise legal hemp into illegal “marihuana,” thereby bringing it back under the DEA’s authority, if such processing and extraction increases the THC content above the 0.3% THC threshold, even momentarily. Specifically, the interim rule states:
[T]he definition of hemp does not automatically exempt any product derived from a hemp plant, regardless of the Δ9-THC content of the derivative. In order to meet the definition of ‘hemp,’ and thus qualify for the exemption from [S]chedule I, the derivative must not exceed the 0.3% Δ9-THC limit. The definition of ‘marihuana’ continues to state that ‘all parts of the plant Cannabis sativa L.,’ and ‘‘every compound, manufacture, salt, derivative, mixture, or preparation of such plant,’ are [S]chedule I controlled substances unless they meet the definition of ‘hemp’ (by falling below the 0.3% Δ9-THC limit on a dry weight basis) or are from exempt parts of the plant (such as mature stalks or non-germinating seeds) . . . As a result, a cannabis derivative, extract, or product that exceeds the 0.3% Δ9-THC limit is a [S]chedule I controlled substance, even if the plant from which it was derived contained 0.3% or less Δ9-THC on a dry weight basis.
Accordingly, the DEA’s stance creates a substantial risk for processors who will be considered to be in possession of a Schedule I controlled substance during the extraction process if the THC content exceeds the 0.3% THC threshold at any point during processing, an almost inevitable result of the extraction process. Nevertheless, the interim rule states:
the definition of hemp does not automatically exempt any product derived from a hemp plant, regardless of the Δ9-THC content of the derivative. In order to meet the definition of ‘hemp,’ and thus qualify for the exemption from [S]chedule I, the derivative must not exceed the 0.3% Δ9-THC limit.
Although the DEA impliedly recognizes the fact that hemp processing can result in a temporary increase in THC content, it still took the position that, should the THC content exceed 0.3% THC at any point during the extraction process, processors will be considered to be in possession of a Schedule I controlled substance, regardless of whether the finished product complies with federal law.
Consequently, the interim rule creates significant criminal risk for anyone processing industrial hemp, as the DEA has asserted that the processing of hemp into extracts, derivatives and isolated cannabinoids (which are arguably legal under the 2018 Farm Bill) can result in unintentional violation of federal law, thereby subjecting processors to the risk of significant criminal liability. That said, the interim final rule does not appear to be a shift in DEA policy since the passage of the 2018 Farm Bill in December 2018, nor has DEA issued any warnings to industrial hemp manufacturers or otherwise signaled a change in enforcement policy by issuing the Interim Final Rule.
In addition, the DEA took several other steps in the interim final rule towards the deregulation of hemp products:
Adding language stating that the definition of “tetrahydrocannabinols” does not include “any material, compound, mixture, or preparation that falls within the definition of hemp set forth in 7 U.S.C. § 1639o”.
Removing from Schedule V a “drug product” in an FDA-approved finished dosage formulation that contains cannabidiol (CBD) and no more than 0.1 percent (w/w) residual tetrahydrocannabinols (e.g. Epidiolex).
Removing DEA import and export controls for hemp extract that does not exceed the statutory 0.3% THC limit.
The consumer-facing CBD industry operates in a regulatory gray zone even as it grows in prominence. Illegal to market as an unapproved drug, dietary supplement or food additive under the Food, Drug & Cosmetic Act, nevertheless, the CBD industry has flourished with ingestible products widely available. With the increased consumer interest in CBD, headwinds in the form of mislabeled or contaminated products and unsubstantiated therapeutic claims, combined with regulatory uncertainty, continue to be a drag on legitimate market participants and consumer perception of CBD products. The regulation of hemp-derived CBD falls under the purview of the Food and Drug Administration (FDA) and its charge to protect the public health. Despite having jurisdiction to regulate CBD products, the FDA has done little to bring regulatory certainty to the CBD marketplace. However, the FDA, with the assistance of the National Institute of Standards and Technology (NIST), recently took important steps that can be described as “getting their ducks in a row” for the eventual regulation of hemp-derived CBD in consumer products. Always looming is the threat of criminal enforcement of the Controlled Substances Act (CSA) by the Department of Justice’s Drug Enforcement Administration (DEA) for plants and products not meeting the definition of hemp.
Prior to July 2020, the FDA’s regulation of the CBD industry was limited to a public hearing, data collection, an update report to Congress on evaluating the use of CBD in consumer products, and issuing warning letters to those marketing products for treatment of serious diseases and conditions. The FDA recognizes that regulatory uncertainty does not benefit the Agency, the industry or consumers and, therefore, is evaluating a potential lawful pathway for the marketing of CBD products. In furtherance of this effort, the FDA took several recent actions, including:
Producing a CBD Testing Report to Congress1
Providing draft guidance on Quality Considerations for Clinical Research2
Sending a CBD Enforcement Policy to the Office of Management and Budget for pre-release review and guidance3
Not to be overlooked, the NIST announced a program to help testing laboratories accurately measure compounds, including delta-9 tetrahydrocannabinol (THC) and CBD, in marijuana, hemp and cannabis products, the goal being to increase accuracy in product labeling and to assist labs in identifying THC concentrations in order to differentiate between legal hemp and federally illegal marijuana. These actions appear to be important and necessary steps towards a still be to determined federal regulatory framework for CBD products. Unfortunately, a seemingly innocent interim final rule issued by the DEA on August 21, 2020 (Interim Final Rule), may prove to be devastating to hemp processors and the CBD industry as a whole.4 While the DEA describes its actions as merely conforming DEA regulations with changes to the CSA resulting from the 2018 Farm Bill, those actions may make it exceedingly difficult for hemp to be processed for cannabinoid extraction without violating the CSA in the process.
FDA Report to Congress “Sampling Study of the Current Cannabidiol Marketplace to Determine the Extent That Products are Mislabeled or Adulterated”
On July 8, 2020, the FDA produced a report to the House and Senate Committees on Appropriations detailing the results of a sampling study to determine the extent to which CBD products in the marketplace are mislabeled or adulterated. The study confirmed what the FDA, Congress and the marketplace already knew – that in this regulatory vacuum, there are legitimate concerns about the characteristics of consumer CBD products. These concerns include whether products contain the CBD content as described in the label, whether products contain other cannabinoids (including THC) and whether products were contaminated with heavy metals or pesticides. With these concerns in mind, the FDA tested 147 CBD and hemp products purchased online for the presence of eleven cannabinoids, including determinations of total CBD and total THC, and certain heavy metals. The key tests results included the following:
94% contained CBD
2 products that listed CBD on the label did not contain CBD
18% contained less than 80% of the amount of CBD indicated
45% contained within 20% of the amount listed
37% contained more than 20% of the amount of CBD indicated
49% contained THC or THCA at levels above the lowest concentration that can be detected
Heavy metals were virtually nonexistent in the samples
Due to the limited sample size, the FDA indicated its intention to conduct a long-term study of randomly selected products across brands, product categories and distribution channels with an emphasis on more commercially popular products. In furtherance of this effort, on August 13, 2020, the FDA published a notice soliciting submissions for a contract to help study CBD by “collecting samples and assessing the quantities of CBD and related cannabinoids, as well as potential associated contaminants such as toxic elements, pesticides, industrial chemicals, processing solvents and microbial contaminants, in foods and cosmetics through surveys of these commodities.”5
Even though this report was not voluntarily produced by the FDA, rather it was required by Congress’ Consolidated Appropriations Act of 2020, it importantly solidified a basis for the need for regulation. With less than half of the products tested falling within the 20% labeling margin of error, this suggests rampant and intentionally inaccurate labeling and/or significant variability in the laboratory testing for cannabinoids.
NIST Program to Help Laboratories Accurately Measure Compounds in Hemp, Marijuana and Cannabis Products
Proper labeling of cannabinoid content requires reliable and accurate measurement of the compounds found in hemp, marijuana and cannabis products. As part of NIST’s Cannabis Quality Assurance Program, NIST intends to help labs produce consistent measurement results for product testing and to allow forensic labs to distinguish between hemp and marijuana.6 As succinctly stated by a NIST research chemist, “When you walk into a store or dispensary and see a label that says 10% CBD, you want to know that you can trust that number.” Recognizing the lack of standards due to cannabis being a Schedule I drug for decades, NIST intends to produce standardized methods and reference materials the help labs achieve high-quality measurements.
NIST’s efforts to provide labs with the tools needed to accurately measure cannabis compounds will serve as an important building block for future regulation of CBD by the FDA. Achieving nationwide consistency in measurements will make future FDA regulations addressing CBD content in products achievable and meaningful.
FDA Industry Guidance on Quality Considerations for Clinical Research on Cannabis and Cannabis-Derived Compounds
On July 21, the FDA released draft guidance to the industry addressing quality considerations for clinical research of cannabis and cannabis-derived compounds related to the development of drugs. These recommendations are limited to the development of human drugs and do not apply to other FDA-regulated products, including food additives and dietary supplements. However, by indicating that cannabis with .3% or less of THC can be used for clinical research and discussing testing methodologies for cannabis botanical raw material, intermediaries and finished drug products, the FDA is potentially signaling to the consumer-facing CBD industry how the industry should be calculating percentage THC throughout the product formulation process.
While testing of botanical raw material is guided by the USDA Interim Final Rule on Hemp Production,7 the FDA warns that manufacturing processes may generate intermediaries or accumulated by-products that exceed the .3% THC threshold and may be considered by the DEA to be Schedule I controlled substances. This could be the case even if the raw material and finished product do not exceed .3% THC. The FDA’s guidance may eventually become the standard applied to regulated CBD products in a form other than as a drug. However, through its guidance, the FDA is warning the CBD industry that the DEA may also have a significant and potentially destructive role to play in the manufacturing process for CBD products.
FDA Submits CBD Enforcement Policy Guidance to the White House
On July 22, 2020, the FDA submitted to the White House Office of Management and Budget a “Cannabidiol Enforcement Policy – Draft Guidance for Industry” for its review. The contents of the document are not known outside of the Executive Branch and there is no guarantee as to when, or even if, it will be released. Nevertheless, given the FDA’s interest in a legal pathway forward for CBD products, the submission is looked upon as a positive step forward. With this guidance, it is important to remember that the FDA’s primary concern is the safety of the consuming public and it continues to collect data on the effects of ingestible CBD on the human body.
It is doubtful that this guidance will place CBD products in the dietary supplement category given the legal constraints on the FDA and the lack of safety data available to the FDA. The guidance likely does not draw distinctions among products using CBD isolate (as found in Epidiolex), full or broad spectrum hemp extract, despite the FDA’s expressed interest in the differences between these compositions.8 Instead, the FDA is more likely to establish guardrails for CBD ingestible products without authorizing their marketing. These could include encouragement of Good Manufacturing Practices, accuracy in labeling, elimination of heavy metal and pesticide contamination, and more vigorous enforcement against marketing involving the making of disease claims. The FDA is not expected to prescribe dosage standards, but may suggest a maximum daily intake of CBD for individuals along the lines of the U.K.’s Food Standards Agency guideline of a maximum of 70 mg of CBD per day.9
Identifying concerns in the current marketplace; promoting accuracy in testing; highlighting the line between FDA regulation and DEA enforcement; and proposing guidance to the industry all appear to be signs of substantial progress on forging a regulatory path for ingestible CBD products.
The DEA’s Interim Final Rule Addressing Derivatives and Extracts Could Have a Devastating Impact on the Cannabinoid Industry
The seemingly benign Interim Final Rule published by the DEA in August with the stated intent of aligning DEA regulations with the changes to the CSA caused by the 2018 Farm Bill’s definition of hemp could cut the legs out from under the hemp-derived CBD industry.10 Claiming it has “no discretion with respect to these amendments,” the DEA rule states that “a cannabis derivative, extract, or product that exceeds the 0.3% delta-9 THC limit is a schedule I controlled substance, even if the plant from which it was derived contained 0.3% or less delta-9 THC on a dry weight basis.”11 Under this interpretation of the 2018 Farm Bill language and the CSA, it is unclear whether processors of hemp for cannabinoid extraction would be in possession of a controlled substance if, at any time, a derivative or extract contains more than 0.3% delta-9 THC even though the derivative or extract may be in that state temporarily and/or eventually falls below the 0.3% threshold when included in the final product. It would not be unusual for extracts created in the extraction process to exceed 0.3% delta-9 THC in the course of processing cannabinoids from hemp.
The implications of the rule may have a chilling effect on those involved in, or providing services to, hemp processors. It is known, as revealed by the Secretary of the USDA to Congress, that the DEA does not look favorably on the legalization of hemp and development of the hemp industry. The DEA’s position is that the rule merely incorporates amendments to the CSA caused by the 2018 Farm Bill’s definition of hemp into DEA’s regulations. In doing so, the DEA made explicit its interpretation of the Farm Bill’s hemp provisions that it presumably has held since the language became operative. What is not known is whether this changes the DEA’s appetite for enforcing the law under its stated interpretation, which to date it has refrained from doing. Nevertheless, the industry is likely to respond in two ways. First, by submitting comments to the Interim Final Rule, which will be accepted for a 60-day period, beginning on August 21, 2020. Anyone concerned about the implications of this rule should submit comments by the deadline. Second, by the filing of a legal challenge to the rulemaking on grounds that the rule does not correctly reflect Congressional intent in legalizing hemp and, consequently, the rulemaking process violated the Administrative Procedure Act. If both fail to mitigate harm caused to the CBD industry, the industry will have to look to Congress for relief. In the meantime, if the hemp processing industry is disrupted by this rule, cannabis processors holding licenses in legal states may be looked upon to meet the supply needs of the CBD product manufacturers.
The Interim Final Rule also addresses synthetically derived tetrahydrocannabinols, finding them to be Schedule I controlled substances regardless of the delta-9 THC content. This part of the rule could impact the growing market for products containing delta-8 THC. While naturally occurring in hemp in small quantities, delta-8 THC is typically produced by chemically converting CBD, thereby likely making the resulting delta-8 THC to be considered synthetically derived.
The hemp-derived cannabinoid industry continues to suffer from a “one step forward, two steps back” syndrome. The USDA’s highly anticipated Interim Final Rule on hemp production (released Oct. 31, 2019) immediately caused consternation in the CBD industry, and continues to, due to certain restrictive provisions in the rule. Disapproval in the rule is evident by the number of states deciding to operate under their pilot programs for the 2020 growing season, rather than under the conditions of the Interim Final Rule.12 With signs of real progress by the FDA on regulating the CBD products industry, yet another interim final rule could undercut the all-important processing portion of the cannabinoid supply chain by injecting the threat of criminality where there is no intent by processors to violate the law. It is not a stretch to suggest that both the USDA and FDA are being significantly influenced by the DEA. The DEA’s Interim Final Rule is just another troubling example of the legal-illegal dichotomy of cannabis that continues to plague the CBD industry.
U.S. Food & Drug Admin., Report to the U.S. House Committee on Appropriations and the U.S. Senate Committee on Appropriations, Sampling Study of the Current Cannabidiol Marketplace to Determine the Extent That Products are Mislabeled or Adulterated (July 2020).
U.S. Food & Drug Admin., Cannabis and Cannabis-Derived Compounds Quality Considerations for Clinical Research: Guidance for Industry(July 2020).
U.S. Food & Drug Admin., Cannabidiol Enforcement Policy: Draft Guidance for Industry (July 2020).
Implementation of the Agriculture Improvement Act of 2018, 85 FR 51639 (Aug. 21, 2020) (to be codified at 21 C.F.R. §§ 1308, 1312).
U.S. Food & Drug Admin., Collection and Analysis of Products Containing CBD and Cannabinoids, Notice ID RFQ_75F40120R00020 (Aug. 13, 2020).
Agricultural Improvement Act of 2018, Pub. L. 115-334, title X, 10113 (codified at 7 U.S.C. §§ 1639o-1639s).
U.S. Food & Drug Admin., Report to the U.S. House Committee on Appropriations and the U.S. Senate Committee on Appropriations, Cannabidiol (CBD), p. 14 (March 2020).
U.K. Food Standards Agency, Food Standards Agency Sets Deadline for the CBD Industry and Provides Safety Advice to Consumers (Feb. 2020) at https://www.food.gov.uk/news-alerts/news/food-standards-agency-sets-deadline-for-the-cbd-industry-and-provides-safety-advice-to-consumers.
According to a press release published in late August, CBD watchdog Leafreport found a large number of inaccuracies when testing CBD-infused beverages on the market today. Leafreport conducted independent lab testing on 22 different CBD-infused beverages and found more than half of the products had less CBD than the label claimed. To be specific, 12 out of the 22 products tested contained less CBD than advertised.
Canalysis Laboratories, the lab contracted to conduct the testing, found two of the products didn’t even contain any CBD. 18 of the beverages had CBD levels with a label claim variance greater than 10%. 14 of the beverages had CBD levels with a label claim variance greater than 40%. Only 4 of the beverages achieved an ‘A’ letter grade for coming within 10% of their advertised CBD levels.
According to Lital Shafir, head of product at Leafreport, the CBD beverage market is a bit tricky, largely due to product formulation issues. “This is in line with our expectations because CBD beverages are difficult to formulate and contain relatively small amounts of CBD, which means that variations of even a few milligrams can have a big effect,” says Shafir. “The CBD industry is completely unregulated and there have been many cases of companies selling products that contain little to no CBD. That’s why third-party testing is important for brands in this industry.”
Interestingly, this report did not find a positive correlation between a company’s reputation and their product’s test results. The full study can be found here. Leafreport is an independent, peer-reviewed website dedicated to increasing transparency in the CBD marketplace.
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