Cannabusiness Advisory

Judging CBD Products by Their Cover

August 15, 2018


As the legal cannabis market continues to explode, extract products, in particular, are receiving a lot of attention. Cannabidiol (CBD), for instance, is a cannabis extract widely produced and sold in the U.S., often advertised as having certain medicinal benefits. And while the laws surrounding these extract products can sometimes be cloudy, the regulatory requirements pertaining to their packaging and advertising can create even more confusion.

CBD is a non-psychotropic cannabinoid that can extracted into edibles, oils, tinctures, capsules, and topical creams. Although neither psychoactive nor addictive, and containing only nominal amounts of THC, the DEA ruled in 2016 that CBD is derived from cannabis and is, therefore, classified as a Schedule I drug under the Controlled Substances Act. While many have argued this ruling, a Ninth Circuit court recently upheld the DEA’s decision, and as a result, CBD remains a Schedule I drug at the federal level.

Regarding packaging and advertising, the U.S. Food and Drug Administration, which is responsible for the control and supervision of dietary supplements and over-the-counter drugs (among other things), has only provided a handful of opinions about what is and is not permissible. First, the FDA has affirmatively decided that CBD products may not be advertised as “dietary supplements.” Under the Federal Food, Drug and Cosmetic Act, any product in clinical trials by the FDA as a “new drug” – which CBD presently is – cannot be labeled as a dietary supplement.

The FDA has also ruled that CBD may not be advertised as a “drug” – at least until the “new drug” clinical investigation is complete, and CBD is deemed safe and effective to treat medical conditions. The FDA deems a product a “drug” if it is intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease (or to affect the structure or function of the body). This means that CBD products may not be packaged or advertised using affirmative health claims (e.g., “CBD helps the following medical conditions…”). Products that are marketed as “drugs” are subject to much more stringent regulatory requirements, and companies that ignore these rules are much more likely to hear from the FDA.

The FDA has regularly issued warning letters over the last few years to companies inappropriately marketing CBD products, but has yet to take any proactive steps to disrupt the industry. For the most part, marketing/advertising claims related to CBD’s effect on serious diseases, or campaigns directed at vulnerable populations, are most likely to draw FDA attention and potential legal action.

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