Cannabusiness Advisory

CBD as a Dietary Supplement – A Potential Regulatory Avenue for Retail Hemp Operators Selling THC Extracts

February 6, 2020


On January 13, 2020, Representative Collin Peterson, the Chairman of the House Agricultural Committee, introduced a new bipartisan bill, H.R.5587 (Bill 5587), in the U.S. House of Representatives that would potentially provide significant developments for the regulation of hemp-derived cannabidiol (CBD).  In short, Bill 5587 would (1) regulate CBD as a dietary supplement, provided all other applicable requirements for a dietary supplement are satisfied and (2) allow CBD to be included as an additive in foods that are introduced in interstate commerce and (3) mandate research by the UDSA on challenges faced in the industry.

First, a Recap of How CBD is Presently Treated.

The Agriculture Improvement Act of 2018 (2018 Farm Bill), removed industrial hemp containing not more than 0.3% of tetrahydrocannabinol (THC) and certain hemp by-products (such as CBD) from Schedule I of the U.S. Controlled Substances Act.  It further preserved the authority of the U.S. Food and Drug Administration (FDA) to regulate hemp/CBD and hemp/CBD-related products under the Federal Food, Drug, and Cosmetic Act and Section 351 of the Public Health Service Act. Accordingly, products containing hemp and hemp-derived CBD are subject to the same requirements as FDA-regulated products containing any other substance.

However, after the passage of the 2018 Farm Bill, the then-FDA Commissioner Scott Gottlieb issued a statement restating the FDA’s stance that CBD is a drug ingredient and, therefore, illegal to introduce into the food supply or market as a dietary supplement or for therapeutic effects without approval from the FDA. Since then, several warning letters have been released by the FDA and the Federal Trade Commission (FTC) to businesses selling hemp/CBD products alleging violations of the Food Drug and Cosmetics Act, and the Federal Trade Commission Act of 1914. These letters concern statements made by hemp/CBD-related businesses in their websites and marketing materials, which, according to the FDA and FTC, express concern regarding the sale or production of any CBD-infused food, pet food, or drinks, or any CBD products being promoted with unsubstantiated health claims.

On October 31, 2019, the U.S. Department of Agriculture (USDA) published an Interim Final Rule, establishing the U.S. Hemp Production Program and setting forth a regulatory framework for hemp production and cultivation. While many industry participants hoped the Interim Final Rule would provide some clarity and certainty as to the use of CBD in foods and drinks, the Rule remained silent on the issue. However, among other notable developments for hemp, the Interim Final Rule did expressly provide clarification that hemp may be transported across state lines even in circumstances where hemp production is prohibited under state law.

How Bill 5587 Changes the Present Framework

The Bill 5587 presents three significant developments for hemp operators – namely, with respect to dietary supplements, foods and research as they relate to hemp-derived CBD.

First, the Bill would amend the Food, Drug and Cosmetics Act by providing that a product containing hemp-derived CBD would not be excluded from the statutory definition of a “dietary supplement” on the grounds that (1) CBD is an article that was approved as a new drug, antibiotic or biologic or (2) that CBD was an article authorized as a new drug, antibiotic or biologic, for which substantial clinical investigations have been introduced and have been made publicly available.

Second, with regard to food, Bill 5587 proposes to amend 21 USC 331(ll) to exclude hemp-derived CBD and CBD substances derived from hemp from being prohibited as additives to food introduced in interstate commerce to which an FDA-approved drug or biological product has been added or to which has been added to a drug or biological product with substantial clinical investigations that have been introduced and been made public.  This is significant given the FDA’s approval of the CBD-containing prescription drug, Epidiolex.

Lastly, Bill 5587 includes a provision that would mandate the USDA to research “regulatory and market barriers for farmers engaged in hemp production,” particularly in regard to the costs of instituting hemp testing programs and the destruction of hemp exceeding the THC limit and “other known or potential challenges” faced in the industry.

As Bill 5587 progresses through the legislative hoops, from being referred to the Energy and Commerce Committee and the House Agriculture Committee, and then subsequently referred it to the Subcommittee on Biotechnology, Horticulture and Research, on January 23, 2020, retailers selling CBD and CBD-derived products remain to operate in a world of uncertainty. Many businesses in the industry face the difficult choice of either selling such CBD products despite FDA and FTC’s strong stance against the use of such products in foods or beverages and as dietary supplements or withholding from participating altogether and risking being “late to the game” as others reap the benefits of sales. The latter can be extremely frustrating for hemp retailers as experts project CBD sales will hit $20 billion by 2024.

However, for those businesses that do decide to participate in the sale of hemp-derived CBD products, they should be aware of the complex cluster of state laws regulating the manufacture and sale of CBD products.  While some states prohibit or restrict the sale of CBD products, among those states that do, in fact, permit CBD products, each such state has established its own requirements, including regulations governing testing, labeling, and sourcing, among others.

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