Wednesday, March 11, 2020 Headlines | Marijuana Today Daily News

Marijuana Today Daily Headlines
Wednesday, March 11, 2020 | Curated by host Shea Gunther

// The CDC’s coronavirus failure was predicted by its VAPI response (Leafly)

// Mississippi Medical Marijuana Measure At Risk After House Approves Alternate Ballot Question (Marijuana Moment)

// Iowa House passes bill changing THC limit in state’s medical marijuana program (Des Moines Register)


These headlines are brought to you by MJToday Media, publishers of this podcast as well as our weekly show Marijuana Today and the most-excellent Green Rush Podcast. And check out our new show Weed Wonks!


// FDA Invites The Public To Submit More Comments On CBD (Marijuana Moment)

// California passes $1 billion in cannabis tax revenue two years after launching legal market (OC Register)

// Columbia Care Reports $23 Million Revenue in Q4 and Sees 2020 Exceeding $155 Million (New Cannabis Ventures)

// The Green Organic Dutchman Takes $127 Million Charge In Fourth Quarter (Green Market Report)

// NJ medical marijuana: State’s top court says patients can’t be fired (North Jersey)

// Canada Defends Marijuana Legalization In Response To International Skepticism (Marijuana Moment)

// Toronto’s New Ketamine Clinic Offers Treatment by Tripping Through K-Holes (Merry Jane)


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Photo: 葉 正道 Ben/Flickr

Sephora Paves the Way in Regulating CBD Cosmetics

While the U.S. Food and Drug Administration (“FDA”) continues to drag its feet in forging a clear path for the sale and marketing of hemp-derived cannabidiol (“Hemp CBD”) products, foreign agencies and industry players are leading the way by adopting their own sets of regulations.

Last week, giant beauty retailer Sephora announced it was now enforcing standards specifically tailored for all Hemp CBD products found on its shelves to ensure these products meet the company’s high-quality standards.

To comply with these CBD standards, all Hemp CBD products sold at Sephora must:

  1. Exclusively contain full-spectrum or broad-spectrum Hemp CBD extracts, no isolate.
  2. Be derived from hemp grown in the U.S.
  3. Be accompanied by a certificate of analysis that could be made available for customers upon request.
  4. Be tested three times for quality and purity, including CBD concentration levels as well as microbial and chemical contaminants.
  5. Comply with the “Clean At Sephora” standards imposed on all products carried by the company, which ban the use of over 50 ingredients, including sulfates, parabens, phthalates, mineral oils and other potential toxins.

As the first national retailer to adopt CBD guidelines, Sephora is raising the need to assist consumers in navigating this complex regulatory landscape.

Hemp CBD topicals represent a significant percentage of the booming CBD market. According to an August 2019 report released by Grand View Research, Inc., the global CBD skincare market is expected to reach $1.7 billion by 2025, with North America leading the way. Yet, back in 2017, 60% of online CBD products reviewed in a study published in the Journal of American Medical Association, were found to be mislabeled. Mislabeled often meant false potency claims, with 26% of these products containing lower concentrations of CBD than listed on their labels.

Add to that the issue of adulteration and the sad reality that many CBD topicals–and CBD products, generally –contain dangerous substances. The issues are obviously hugely problematic and stress the need for standards like those adopted by Sephora to protect consumers from public health crises.

We applaud Sephora for leading the way in regulating the industry and hope that the company’s initiative will further pressure the FDA to fulfill its responsibility to ensure the safety of our nation’s cosmetics (among other things) by adopting its own regulations for the sale and marketing of these products.

We’ll continue to update you on any other regulatory development via this blog.

The Ketamine Clinic Craze: Legalities and Possibilities

In recent years, the United States has seen a proliferation of ketamine clinics. From 2015 to 2018, the number of clinics increased from 60 to 300; that number is undoubtedly higher today. People are increasingly using ketamine for ailments that resist treatment through traditional pharmaceutical drugs.

In an even larger trend, the health care provider community seems to be exploring various alternative therapies and emerging medicines to improve quality of care. Recently, the decriminalization of psilocybin (by various cities) has been in the news as an emerging medicine. Similar to ketamine, psilocybin has shown great promise in clinical trials for helping to effectively treat depression and PTSD (and we’ve written about psilocybin several times on this blog, including here and here).

With respect to ketamine infusion therapy (which is the prime time attraction of ketamine clinics), the medical research based promise is for treatment of chronic neuropathic pain, chronic pain (instead of opioids), and various medication-resistant mental health disorders, including depression, bi-polar disorder, and PTSD (among others). According to the American Psychiatric Nurses Association:

Ketamine infusion therapy involves the administration of a single infusion or a series of infusions for the management of psychiatric disorders (e.g., major depressive disorder, post-traumatic stress disorder, acute suicidality). Ketamine is a noncompetitive N-methyl-D-aspartate (NMDA) receptor antagonist that has traditionally been used for the induction and maintenance of anesthesia.

Still, for all its promise, would-be clinic owners, practitioners, and consumers may be confused about the legality of such clinics. There are questions about the logistics of opening and running one of these types of businesses, given the complex interplay of laws and regulations promulgated by bodies from the U.S. Food and Drug Administration (FDA) to cities and counties. This post is dedicated to clearing up some of the confusion behind ketamine clinic set-up and operation.

What are the exact legalities behind ketamine?

Sine 1970, ketamine has only been approved by the FDA for the induction and maintenance of anesthesia. However,  it is also being used for off-label infusions for the management of psychiatric disorders and chronic pain management (enter the clinics). The FDA doesn’t have any regulations on point for the control and oversight of ketamine clinics when it comes to infusion therapy and the states don’t really either.

In 1999, the Drug Enforcement Administration (DEA) listed ketamine as a Schedule III controlled substance (a depressant) pursuant to the Controlled Substances Act, which means it has a moderate to low abuse potential (lower than Schedules I and II), a currently accepted medical use, and a low to moderate potential for physical or psychological dependence. Ketamine makes its home on Schedule III alongside anabolic steroids and testosterone. According to the Feds, ketamine is safer than cannabis (which is a Schedule I controlled substance).

So, how does one lawfully open and operate a ketamine clinic for infusion therapy given the foregoing?

First, ketamine infusion therapy is an off-label use for ketamine in the U.S. “Off-label use” (which is extremely common) is:

the use of pharmaceutical drugs for an unapproved indication or in an unapproved age group, dosage, or route of administration. Both prescription drugs and over-the-counter drugs (OTCs) can be used in off-label ways, although most studies of off-label use focus on prescription drugs.

According to the FDA, “once the FDA approves a drug, healthcare providers generally may prescribe the drug for an unapproved use when they judge that it is medically appropriate for their patient.” Oftentimes, a healthcare provider may prescribe a drug off-label because there might not be an approved drug out there yet to treat the subject medical condition or because no other medication has worked yet for the patient.

Ketamine infusion therapy fits squarely into legitimate off-label use for those mental health conditions not effectively treated by what’s on the pharmaceutical market today (and there are definitely more treatment possibilities out there as medical research continues). And as long as the healthcare provider in charge judges the infusion therapy to be ethical and not violative of safety standards, they may prescribe it accordingly.

Second, ketamine is still a controlled substance even if it’s being used for off-label administration, so you still have to follow all federal and state laws around Schedule III registration, storage, inventory management, security, record keeping, and prescription protocols (which is not insignificant). Whomever on site is administering, manufacturing, storing, or distributing the drug, from the doctor to the nurse practitioner to the on-site pharmacist, must register with the DEA in accordance with Part 1301 of Title 21 of the Code of Federal Regulations on and after August 12, 1999.  Failure to follow these very specific legal directives can lead to immediate criminal liability under federal law.

Third, multiple existing and state laws and regulations will apply to a ketamine clinic. Specifically, clinics should analyze state (and federal) medical, drug and facility statutes and regulations to identify various regulatory barriers to entry. Local laws will also likely come into play regarding the licensing and permitting of the clinic within certain zones of a city’s or county’s borders.

Fourth, because there is no FDA regulation on point for the control and oversight of ketamine clinics, it’s “dealer’s choice” on how the business is operated– including patient safety protocols. Because of this, multiple medical community interest groups have established recommended business and patient protocols to ensure that these clinics are abiding by a variety of ethical and corporate standards for ultimate patient care. See, for example, this comprehensive ketamine infusion therapy checklist developed by the American Association of Nurse Anesthetists.

Fifth, given that ketamine infusion therapy is still an off-label use, the liabilities for ketamine clinics is fairly far-reaching. The consequences of medical malpractice may be greater because of the off-label use of the drug; dosing and frequency of treatments, marketing and promotions, medical claims and statements of efficacy, patient screening and determination of appropriateness of administration, and coordination with mental health care providers (to name just a few) are going to be areas of vulnerability as a result.

Despite the growing body of research behind ketamine as an effective treatment for certain mental health issues and mood disorders, in 2017, an American Psychiatric Association (APA) task force related to ketamine cautioned medical practitioners (in a consensus statement) around the expanding use of the drug as an off-label treatment.

Ketamine is also widely known as a popular party drug (“Special K“). If a clinic is not scrupulous regarding its patient population and intake procedures (using minimal screening and untrained providers), or is looking to make a buck over a growing medical fad, anyone could get access to ketamine infusions. That access would be available under the auspices of having a chronic, untreatable mood disorder. As such, legitimate concerns also exist that legitimate patients won’t get enough of the treatment or they’ll get too much of the drug to their detriment.

Finally, esketamine nasal spray (a derivative of ketamine) was separately approved by the FDA for treatment-resistant depression last year. The new drug’s name is Spravato and its maker is Janssen, a division of Johnson & Johnson. On the back of this FDA approval, I can only imagine that more and more clinics will open across the nation, utilizing Spravato and continuing to explore off-label uses and applications of ketamine (especially since neither the FDA or DEA have really cracked down on these clinics).

Be sure to stay tuned as this exciting area of emerging medicine evolves.

BREAKING NEWS: FDA and USDA Start Making Sense on Hemp CBD

According to Hemp Industry Daily reporter Laura Drotleff, it an eventful week for hemp regulation at the National Association of State Department of Agriculture (NASDA) meeting in Arlington, Virginia. Drotleff reported on two major developments at NADSA. These developments came from the Food and Drug Administration (FDA) and the US Department of Agriculture (USDA), respectively, which are the primary regulators of hemp and its derivative products. Both are analyzed below.

FDA Changing Its Tune on Hemp CBD?

FDA Commissioner Stephen Hahn, M.D., said that the agency is working towards regulating hemp-derived CBD (Hemp CBD) products and admitted that the agency’s approach to Hemp CBD is not sustainable:

We’re not going to be able to say you can’t use these products. It’s a fools errand to even approach that[.] We have to be open to the fact that there might be some value to these products and certainly Americans think that’s the case. But we want to get them information to make the right decisions.

Finally! The FDA is finally taking a rational approach to Hemp CBD. This is a major departure from the FDA’s recent messaging on Hemp CBD and it’s coming from the head of the agency.

It was only three months ago, on November 25, 2019, that the FDA sent out a whopping 15 warning letters to companies selling CBD and issued a consumer update stating that CBD was dangerous and could harm people before they even knew the harm occurred. Now, Dr. Hahn is admitting that the agency sees value in Hemp CBD and wants to make sure that consumers get enough information to make the right decision. Good! That’s what the FDA should be doing instead of constantly repeating that most Hemp CBD products are unlawful.

Now I know what you’re thinking: Aren’t you getting a little over-enthusiastic about a single statement on Hemp CBD? It’s not as if the law has changed or the FDA’s actually issued any regulations on Hemp CBD. Plus, hasn’t the FDA made positive statements on Hemp CBD before?

Yes, it’s true that Dr. Hahn has not established a regulatory framework for Hemp CBD with his statements, or convinced Congress to alter the Food, Drug and Cosmetic Act (FDCA) to accommodate Hemp CBD. It’s also true that before leaving his post, former FDA Commissioner Scott Gottleib, M.D., testified to Congress that “[w]e believe [CBD] does have therapeutic value and has been demonstrated[.]” That being said, there is reason to be excited the statements made in Arlington because of who said it and who heard it.

Let’s start with Dr. Hahn. The FDA’s issue with Hemp CBD stems from the FDCA’s “Drug Exclusion Rule” which, simply put, means that an article that has been approved or investigated as a drug cannot be a dietary supplement or be added to food unless the article was marketed as a supplement or food before it was investigated. CBD has been approved as an article in the drug Epidiolex and the FDA does not believe that CBD was marketed as a food or supplement prior to that investigation. But, the FDCA grants the FDA Commissioner can override the Drug Exclusion Rule by issuing “a regulation, after notice and comment, finding that the article would be lawful under [the FDCA].”  As head of the FDA, Dr. Hahn has the ability to regulate Hemp CBD so his statements are important.

Now, let’s talk about the audience which was made up of representatives from state departments of agriculture across the country. We’ve been doing a series on how states treat Hemp CBD and if you’ve been following it you know that states have been struggling to regulate Hemp CBD in light of the FDA’s position. Some states have regulated Hemp CBD despite the FDA’s slow movement, others are locked into the FDA’s policy, banning Hemp CBD in foods and dietary supplements. Many are somewhere in between, trying to figure out how the FDA will act. A positive statement like this from Dr. Hahn, made directly to the NASDA is likely to have ripple effects on enforcement policies across the state. This doesn’t mean that everything will change overnight, but I think it does portend a change in Hemp CBD policy across the US.

USDA Ditches DEA Registration

Drotleff also covered a very promising statement from USDA Undersecretary Greg Ibach, who told the NASDA that the USDA has reached an agreement with the Drug Enforcement Agency (DEA) to remove the requirement that only DEA-registered labs test hemp for THC. The DEA wrinkle was not part of the 2018 Farm Bill but was included in the USDA’s interim hemp rules issued in October.

The DEA registration was widely opposed by the agriculture community. Requiring DEA registration on all labs testing hemp creates a huge potential for a bottleneck as all hemp must be tested 15 days before harvest and there are less than 50 DEA-registered labs that could even undertake these tests. Many state departments of agriculture saw this as such a burden that they decided not to even submit a hemp cultivation plan to the USDA, electing to run out the clock with the 2014 Farm Bill, which expires October 31, 2020, rather than operate under the USDA’s interim rules and 2018 Farm Bill. The DEA Registration was a big part of this.

There are still challenges in THC testing, including the need to test for Total THC (delta-9 THC and THCA), which has caused some cultivars of hemp that would have been legal under the 2014 Farm Bill to fail under the 2018 Farm Bill). Still, this is a step in the right direction and quite promising, considering that the USDA will again accept public comments after the 2020 season.

Conclusion

The USDA and FDA are the two federal agencies directing the domestic hemp market. This process is far from over, but the NASDA meeting indicates that policy is moving in the right direction. If nothing else, these agencies are cognizant of how their decisions are perceived by the public and by state regulators. If you’re interested in hemp and Hemp CBD, stay focused on the FDA and USDA and make sure to participate in the public discourse.

The Sale of CBD Foods Is Legal in the UK (For Now)

Last week, the Food Standard Agency (“FSA”), the agency responsible for protecting public health in relation to food in England, Wales and Northern Ireland (collectively, the “UK”), cleared a path for the sale of CBD-infused food for the next 12 months.

Specifically, the FSA is giving the CBD industry until March 31, 2021 to submit valid novel food authorization applications to ensure these products meet specific safety standards. Following the March 31, 2021 deadline, only products for which a valid application has been submitted will be allowed to remain on the market.

Although the UK recently severed its ties with the European Union, the FSA has opted to align its policy with that of the European Food Safety Authority (“EFSA”). The EFSA guidance on cannabinoids strongly echoes the U.S. Food and Drug Administration (“FDA”)’s in that it mandates that all food products infused with hemp or its derivatives should receive a pre-market approval under the European Union “novel food” regulation because these products were not significantly used as a food or food ingredient before May 15, 1997.

According to the reporting of Hemp Industry Daily, CBD companies wishing to sell into the UK market will send approval plans to the EFSA through the end of 2020, at which point all applications will be transferred to the FSA.

So for now, the sale of CBD-infused foods is lawful in the UK so long as these products are:

  1. Properly labeled, including free of health claims;
  2. Safe to consume; and
  3. Do not contain THC or other controlled substances.

Despite the fact that the FSA gave the green light on the sale of CBD-infused foods, the agency also warned consumers about its potential side effects.

Based on a scientific report issued by the country’s Committee on Toxicity of Chemicals in Food, Consumer Products and the Environment (“COT”), the FSA guidelines warn pregnant and nursing women “not to consume CBD products” and recommends that healthy adults limit their daily dosage to no more than 70 milligrams, which is the equivalent of 28 drops of 5% CBD oil.

After reviewed scientific data of Epidiolex previously used by European and foreign health authorities, including the FDA, for the approval of the drug, the COT concluded that because the data was intended for pharmaceutical and not over-the-counter use, the “trade-off between risks and benefits that does not apply to food.”

Therefore, in drafting this new policy, the FSA opted for a pragmatic approach that balances the consumer demand for CBD-infused food products with the protection of public health and provides much needed clarification about the legality of selling and marketing CBD-infused foods. Nevertheless, the guidelines also create some serious challenges for the industry. Indeed, the novel food application process is a demanding and onerous process. Unless a blanket authorization will cover each end-form of CBD (this issue has yet to be clarified by the FSA), this would mean that only a handful of CBD companies could afford applying. This, in turn, would consolidate these products and offer a monopoly to the companies that manage to secure an approval.

Nevertheless, the FSA guidelines are a step in the right direction, as they  encourage the Hemp-CBD industry to work together, educate and advise, which, hopefully, will inspire the FDA in forging a clear path for the sale and marketing of these products within U.S. borders, too.

The Psilocybin Movement is Like the Cannabis Movement (Except When It’s Not)

There is a bona fide movement underway with psilocybin. Decriminalization occurred last year in Denver, Oakland and Santa Cruz, and that was just a start: nearly 100 other cities are looking at decriminalizing psychedelics. At the state level, ballot measures are out for signature in California and Oregon. Federally, legislation has been proposed to allow research into psychedelic drugs, alongside calls for decriminalization.

On the commercial side, well-funded private companies (for- and non-profit) are pushing ahead with Food and Drug Administration (FDA) psilocybin studies, patent acquisition, and registration of other intellectual property. Many of these private companies are set to go public. Others are public already. All in all, a race is underway to explore the attributes of psychedelic mushrooms and to leverage their promise in commercial applications.

Because psilocybin and other entheogens are Schedule I drugs in the United States (and strictly controlled under international law), the comparison is often made between what is happening with psilocybin and what happened with marijuana over the past few decades. It’s not a terrible comparison, but it’s not perfect either. Below is a high-level survey of psilocybin, contrasting the lay of the land with historical cannabis progress.

Like cannabis, psilocybin will advance on two tracks

On the first track, psilocybin is moving ahead via initiatives and initiated ordinances, just like marijuana from 1996 to the present. The scope of the psilocybin initiatives is similar to the early marijuana ballot measures in that they focus primarily on decriminalization. These initiatives do not contemplate a commercial model and it seems unlikely that they will be lucrative. They certainly do not yet resemble the second wave of “retail model” programs that became standard with medical and adult use cannabis. Mushrooms and cannabis are very different in nature.

The second track for psilocybin is the pharmaceutical model. We also saw this with cannabis, first with synthetic drugs and then with Epidiolex (the first non-synthetic cannabis drug to win FDA approval). With psilocybin, this second track is moving faster. The FDA already has granted “breakthrough therapy” status to a pair of psilocybin applicants for depression-related formulas, after approving another antidepressant designed to mimic hallucinogenic ketamine last year.

On those tracks, psilocybin will advance slower (and faster) than cannabis

Psilocybin will continue to be decriminalized around the United States in 2020 and beyond. But that is not the same thing as broad legalization. The closest we may get to “legalization” will be in proposals such as Oregon’s Measure 34, which goes beyond mere decriminalization to create a state-sanctioned “patient and caregiver” framework. This type of proposal envisions psilocybin-assisted therapy in controlled environments. It rules out the retail model entirely.

On the pharmaceutical side, the FDA’s willingness to grant breakthrough therapy status to psychedelic drugs, as mentioned above, has put psilocybin approvals in an expeditious place. Research companies, along with FDA, are seemingly “all in” on psilocybin’s potential in battling treatment-resistant depression. The funding and sophistication required are definitely there.

This targeted pharmaceutical approach will serve psilocybin promoters well, as contrasted with cannabis, which has been touted broadly and amorphously for every use from chronic pain to Alzheimer’s disease. Expect psilocybin to move more quickly than cannabis on the pharma track. Concurrently, expect the groundswell of broader “legalization” efforts to continue, even if we never see psychedelics sold at retail.

Cannabis legalization helped pave the way for psilocybin

Any legal right of adults to decide what to put into their own bodies must be re-litigated with every controlled substance. That was true 100 years ago with alcohol, it’s true with cannabis, and it’s going to be true with psychedelics going forward. Much of this litigation happens in the court of public opinion. People begin to believe that prohibition is useless, that incarcerating people for using drugs is wrong and that new rules are needed. This is how we ended up with laws from the 21st Amendment to the U.S. Constitution (1933), to California’s Proposition 215 (1996) to Oregon’s proposed Measure 34 (2020).

For at least several years, most Americans have supported the medical use of psychedelic drugs. As I previously discussed in a close reading of Oregon’s proposed Measure 34, the “legalization” model is similar to the trail blazed by locally cannabis. When enough cities and states move along the continuum from prohibition to decriminalization and beyond, the legal status quo becomes untenable. People will push this hard; people will try things. At some point, federal policy finally evolves and change becomes inevitable. All of that should happen this decade with psilocybin.


As in the cannabis space, we are fortunate to have clients working on the both the research/commercial side of psilocybin, as well as decriminalization. And we will continue to chart developments with psychedelics in general as things progress. Until then, and for more on psilocybin, check out the following posts:

Hemp CBD Across State Lines: Ohio

The Agriculture Improvement Act of 2018 (“2018 Farm Bill”) legalized hemp by removing the crop and its derivatives from the definition of marijuana under the Controlled Substances Act (“CSA”) and by providing a detailed framework for the cultivation of hemp. The 2018 Farm Bill gives the US Department of Agriculture (“USDA”) regulatory authority over hemp cultivation at the federal level. In turn, states have the option to maintain primary regulatory authority over the crop cultivated within their borders by submitting a plan to the USDA.

This federal and state interplay has resulted in many legislative and regulatory changes at the state level. Indeed, most states have introduced (and adopted) bills that would authorize the commercial production of hemp within their borders. A smaller but growing number of states also regulate the sale of products derived from hemp.

In light of these legislative changes, we are presenting a 50-state series analyzing how each jurisdiction treats hemp-derived cannabidiol (“Hemp CBD”). Today we turn to Ohio.

Hemp cultivation in Ohio is regulated by the Ohio Department of Agriculture (“ODA”). Notably, Ohio was among the first states that got a 2018 Farm Bill hemp production plan approved by the USDA. Way to go, Buckeyes! People who want to grow hemp in Ohio will need to obtain licenses from the ODA and hemp cultivated there is subject to testing requirements established by the USDA’s interim hemp rules.

When it comes to Hemp-CBD, the state has not dialed in its regulatory regime. The ODA is in the process of reviewing public testimony before adopting rules affecting the processing of Hemp CBD products. In late 2019, there was a public hearing concerning proposed processing rules that would govern many different types of Hemp-CBD products (as of today, those regulations haven’t been officially adopted). It’s important to note that these rules would not let anyone go and start processing. Instead, licenses would be required and it looks like the state’s requirements will be pretty comprehensive.

The products that the rules would govern include “hemp buds, flowers, cigarettes, cigars, shredded hemp, cosmetics, personal care products, dietary supplements or food intended for animal or human consumption, cloth, cordage, fiber, fuel, paint, paper, particleboard, and any other product.” So basically, anything under the sun. Notably, the rules anticipate the production of Hemp-CBD products (e.g., cosmetics and food) but also anticipate the use of hemp in all kinds of other products that will not be marketed for Hemp-CBD content (e.g., paint and fuel). These rules are therefore extremely comprehensive.

These rules would also impose some strict requirements on manufacture, including pretty standard things that our hemp attorneys see in other states. This includes testing and labeling, to start.

In sum, while Ohio probably isn’t anywhere near the top of the list when people think about states that allow hemp, it’s actually more friendly than a lot of other large states (looking at you California). While states like California are still in prohibitionist mode for all kinds of Hemp-CBD products, states like Ohio are taking the wheel. For more updates on Ohio’s Hemp-CBD laws, stay tuned to the Canna Law Blog.

For previous coverage in this series, check out the links below:

The Four Basic Labeling Requirements for CBD Products

Last week, I attended Portland’s Hemp CBD Connex, an annual event that highlights the vast potential of hemp and CBD.

Of interest to me–because my practice focuses on the regulatory framework of CBD products–was a panel entitled “Weeding Through the CBD Jungle: How to Grow, Run and Be Successful.” This panel was led by two experienced industry leaders: Stuart Bennett, VP of Contract Manufacturing for Canopy Growth, and Alex Rullo, Executive VP of Strength of Hope. Both panelists discussed the dos and don’ts of selling and distributing CBD products in interstate commerce and stressed the importance of complying with the CBD laws of each state in which a product is sold. This was music to my ears!

As you already know if you follow our blog, the Food and Drug Administration (“FDA”) has taken the position that CBD-infused foods and dietary supplements cannot be lawfully sold or marketed in the United States. Yet, states have adopted their own approaches to regulating CBD products that are not necessarily consistent with the FDA’s current position.

Some states, including Colorado and Oregon, allow the manufacture and sale of all CBD products, including food, dietary supplements, smokable products, and cosmetic products. Other states, like Idaho, strictly prohibit the production and/or sale of any such products. A handful of other states, including California, have banned certain categories of CBD products (usually food and dietary supplements) but seem to take no issue with the sale of other products, such as CBD cosmetics.

In addition, some states that have legalized the sale of Hemp CBD products impose their own regulations, including but not limited to labeling and testing requirements.

As we previously discussed, CBD manufacturers and distributors selling their products in interstate commerce should familiarize themselves with labeling and marketing laws in each state where they plan on placing their products. As a rule of thumb, companies should adopt the most stringent rules, such as those imposed by Indiana, Texas and Utah, to ensure compliance across state lines.

While it’s impossible to cover all state labeling and marketing laws in one blog post, I thought I would provide a brief overview of the label components that have become standard in the industry:

The FDA’s General Labeling Requirements

Every state that authorizes the sale of CBD products also mandates, in one way or another, that the labels of CBD products sold within their borders be labeled in accordance with the Food, Drug and Cosmetic Act (“FDCA”). Under the FDCA, the labels of any product sold in the United States must contain four basic elements:

(1) An identity statement, which indicates what the product is;
(2) A net weight statement;
(3) A list of all ingredients, which in states like New Mexico and Colorado, must clearly identify hemp and CBD. This requirement makes it difficult for companies that are steering clear from using the term “CBD” in an attempt to mitigate the risk of enforcement action. For more information on this issue, please read here; and
(4) The name and address of the manufacturer, packer or distributor along with their street address.

Scannable Bar Code or QR Code

A growing number of states are mandating the use or a scannable bar code, QR code link or web address linked to a document containing information, pertaining to:

  • the batch identification number;
  • the product name;
  • the batch date;
  • the expiration date, which in some states like Indiana, must be not more than two (2) years from the date of manufacture;
  • the batch size;
  • the total quantity produced;
  • the ingredients used; and
  •  certificate of analysis.
FDA Warning Statement

States like Colorado require that the following statement appear on CBD product labels: “FDA has not evaluated this product for safety or efficacy.”

No Medical or Health Claims

As we have discussed at length, the FDA has limited its enforcement actions against CBD companies that make outrageous and unfounded health claims about the therapeutic values of their products. Nevertheless, many states demand that the labels of CBD products sold within their borders be free of any health claims. It’s important to understand that drug claims don’t need to be explicit. If a company implies that its product can be used to treat a disease, the FDA and local authorities may conclude that the product is a drug.  Consequently, if a CBD company makes any medical, disease, or bodily structure or functional claims or implications about its products, the FDA will likely conclude that the company is marketing unapproved drugs in violation of the FDCA.

Ensuring compliance with the labeling and marketing laws (and policies) of each state in which a CBD product is sold can be challenging, yet it is a crucial step in mitigating the risks of enforcement action by federal and state agencies.

Hemp CBD Across State Lines: North Dakota

The Agriculture Improvement Act of 2018 (“2018 Farm Bill”) legalized hemp by removing the crop and its derivatives from the definition of marijuana under the Controlled Substances Act (“CSA”) and by providing a detailed framework for the cultivation of hemp. The 2018 Farm Bill gives the US Department of Agriculture (“USDA”) regulatory authority over hemp cultivation at the federal level. In turn, states have the option to maintain primary regulatory authority over the crop cultivated within their borders by submitting a plan to the USDA.

This federal and state interplay has resulted in many legislative and regulatory changes at the state level. Indeed, most states have introduced (and adopted) bills that would authorize the commercial production of hemp within their borders. A smaller but growing number of states also regulate the sale of products derived from hemp.

In light of these legislative changes, we are presenting a 50-state series analyzing how each jurisdiction treats hemp-derived cannabidiol (“Hemp CBD”). Today we turn to North Dakota.

In 2019, North Dakota legalized the cultivation of hemp under the 2014 Farm Bill. However, the new law (HB 1349) does not address the regulation of Hemp-CBD products.

According to guidelines released by the Attorney General (AG), the state seems to defer to FDA guidance when regulating Hemp-CBD products. In addition, even following the enactment of HB 1349, which excludes the term “hemp” from marijuana, law enforcement remained hostile to Hemp-CBD making the sale of these products in the state risky.

Given that the state has decided not to submit a plan under the 2018 Farm Bill and instead continues operating under the 2014 Farm Bill until it expires on October 30, 2020, it seems unlikely that North Dakota will change its position on the sale of these products. So for the time being, CBD companies should refrain from selling their products in this not-so-hemp-friendly state.

For previous coverage in this series, check out the links below:

Hemp CBD: Will Federal Courts Wait to Decide CBD Cases Until the FDA Issues Regulations?

Not long ago Hemp Industry Daily reported on a decision by U.S. District Judge Ursula Ungaro in the Southern District of Florida in which the Court stayed a putative class action lawsuit against a seller of CBD products until the FDA completes rulemaking regarding the marketing, including labelling, of hemp-derived ingestible products. The case is Snyder v. Green Roads of Florida, 0:19-cv-62342-UU.

We have tracked the growing number of lawsuits against companies selling CBD products:

We also regularly write about the need for companies to tread carefully in the marketing, labeling, and selling of CBD products in this uncertain regulatory environment:

So does the Snyder decision mean that companies selling CBD products may forge ahead and worry about the consequences later? The answer is a resounding “no” for three reasons. But before getting into that, a bit of background.

The Snyder plaintiffs allege Green Roads misrepresented the amount of CBD in its products

According to the complaint, Green Roads sells a number of CBD products including oil, gummies, capsules, topicals, syrups, tea and coffee. Snyder purchased a 250mg version of CBD oil and another plaintiff purchased a “Relax Box” containing gummies, tea, and oil. Both plaintiffs allege they relied on the product labels in making the decision to purchase and that the product labels misrepresented the amount of CBD that each product contained and that, as a result, each was over-charged for the products. (This is quite similar to the allegations in the JustCBD lawsuit). The plaintiffs seek to represent a class of all purchasers of all of Green Roads’ products within the applicable statute of limitations period. The complaint alleges two claims for relief: unjust enrichment and violation of the Florida Deceptive and Unfair Trade Practices Act (the “FDUPTA”).

Green Roads moved to dismiss the complaint for lack of standing, failure to state a claim for relief, and, in the alternative, to stay the lawsuit based on the primary jurisdiction doctrine. The Court granted portions of Green Roads’ motion and stayed the remainder of the lawsuit. The Court dismissed the lawsuit for lack of standing to the extent plaintiffs sought to maintain claims regarding products they did not purchase. This ruling limited plaintiffs’ lawsuit to the products they purchased. The Court denied Green Roads’ motion for failure to state a claim—so for the products plaintiffs did purchase, they can maintain the claims for unjust enrichment and violation of the FDUPTA.

The Court granted Green Roads’ motion to stay based on the primary jurisdiction doctrine. Generally, that doctrine applies where a plaintiff’s claims implicate a federal agency’s expertise with a regulated product. In finding the doctrine applicable, the Court noted that regulatory oversight of CBD ingestible products, including labeling, is currently the subject of rulemaking at the FDA and that the FDA is “under considerable pressure from Congress” to expedite the publication of regulations and policy guidance.

After weighing the factors applicable to primary jurisdiction analysis, the Court found that the plaintiffs would suffer little prejudice if the action was stayed and that guidance from the FDA would benefit the Court greatly. As the Court intimated: if Green Roads’ labeling practice were compliant with FDA standards, plaintiffs likely could not prevail on the FDUPTA claim; if not, plaintiffs chances of success are much improved. So the Court stayed the lawsuit pending the FDA issuing regulations, which regulations will have a huge, and perhaps decisive, affect on the merits of the lawsuit.

But the ruling should not be viewed as a great victory for CBD companies faced with consumer class action lawsuits.

The decision in Snyder is not binding on other federal or state courts

A decision issued by a federal district court is not binding on other courts (setting aside the controversy surrounding nationwide injunctions). This is constitutional law 101, but nonetheless critically important here. Although other courts may find Snyder persuasive, no other federal district court or state court is required to reach the same result in a similar case; unlike a decision by the U.S. Supreme Court or a decision by a federal Circuit Court of Appeals, which binds all federal district courts within the circuit. This means that the practical effect of the Snyder decision may be minimal; not all CBD lawsuits are automatically stayed because of this decision. On the other hand, a CBD company that finds itself defending a marketing-related lawsuit should examine whether it makes sense to ask the court to stay the litigation and may rely on Snyder for its persuasive value.

The decision in Snyder only pressed “pause” on the litigation

That the Court stayed the litigation is far from a victory for Green Roads. Once the FDA promulgates rules, it is full steam ahead on the plaintiffs’ claims for unjust enrichment and violation of the FDUPTA. The victory for Green Roads was that the Court limited plaintiffs’ claims to only those products they actually had purchased. Recall that the plaintiffs had sought to represent purchasers of all of Green Roads’ products, but the Court ruled plaintiffs do not have standing to assert claims (i.e. have suffered no injury) with respect to the marketing of products they did not purchase. This ruling dampens significantly the risk to Green Roads.

The rules and regulations that the FDA ultimately issues may not be favorable for the defendant

Ultimately, the issue for Green Roads is that the FDA issues rules and regulations which make it more likely to be found liable. Plaintiffs may end up in a better position without having to incur attorneys’ fees and other litigation costs. In that respect, this is not necessarily a bad decision for the plaintiffs. On the other hand, Green Roads may find itself off the hook. You can bet both sides are crossing their fingers.