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CBD Developments in the Food and Beverage Industry

Albion Minerals®

The Agriculture Improvement Act of 2018, commonly referred to as the Farm Bill, dramatically altered the landscape for companies seeking to grow, market, distribute and sell products containing hemp and its derivatives, including CBD (cannabidiol). CBD has no psychoactive properties, unlike THC (tetrahydrocannabinol), the other primary commercially viable cannabinoid found in the plants of the cannabis genus. Due to its non-psychoactive properties and purported health benefits, CBD is rapidly becoming one of the hottest trends in the consumer product space and is currently marketed in a variety of foods, beverages, cosmetics, soaps, dietary supplements and other health and wellness products.

While the Farm Bill, signed into law on Dec. 22, 2018, primarily reauthorized prior expenditures from the previous 2014 Farm Bill, it took the important and widely anticipated step of removing federal prohibitions that had stymied the hemp industry for decades. In doing so, the Farm Bill effectively cleared and clarified the path for the cultivation and interstate distribution of hemp and its derivatives for commercial purposes. Significantly, the Farm Bill:

• Expanded the previous definition of hemp, which is now defined as any part or derivative of the cannabis plant with 0.3 percent or less THC;

• Removed hemp grown under certain conditions from the Controlled Substances Act;

• Authorized the Department of Agriculture to regulate hemp as a basic agricultural commodity;

• Generally permits hemp and its derivative products, like CBD, to be introduced and transported in interstate commerce with reduced restrictions; and

• Allows the states and Native American tribes to submit plans and apply for primary regulatory authority over the production of hemp in their jurisdictions.

However, the U.S. Food and Drug Administration (FDA) still exercises regulatory authority over the addition of hemp and its derivatives, including CBD, to foods, beverages, dietary supplements, cosmetics and other products introduced in interstate commerce that fall under FDA’s regulatory ambit. FDA’s authority is provided by the federal Food, Drug and Cosmetic Act (FDCA), which prohibits the adulteration or misbranding of food in interstate commerce. FDA currently takes the position that all cannabinoids, including CBD, are impermissible additives that cause food and dietary supplements to be adulterated under the FDCA. FDA has been less clear as to whether it views CBD as an appropriate cosmetic ingredient.

After the Farm Bill was signed into law, now former FDA commissioner Scott Gottlieb issued a statement recognizing the enormous public interest in hemp and CBD but cautioned that, despite passage of the bill, “it’s unlawful under the [FDCA] to introduce food containing added CBD or THC into interstate commerce, or to market CBD or THC products as, or in, dietary supplements, regardless of whether the substances are hemp-derived.”

Gottlieb did, however, conclude that pathways remain available for FDA to consider whether there are circumstances in which certain cannabis-derived compounds, primarily CBD, might be permitted in a food or dietary supplement. Gottlieb stated that “[a]lthough such products are generally prohibited to be introduced in interstate commerce, the FDA has authority to issue a regulation allowing the use… in a food or dietary supplement” and that FDA is “taking new steps to evaluate whether [FDA] should pursue such a process.”

Despite Gottlieb’s immediate post-Farm Bill affirmations regarding CBD’s legality in foods and beverages, which temporarily dampened industry and consumer expectations, many within the industry have been encouraged by more recent developments. For example, in late February 2019, Gottlieb announced that FDA would hold a public hearing to discuss the safety, manufacturing, product quality, marketing, labeling and sale of products containing cannabis or cannabis-derived compounds, including CBD. Gottlieb further noted that FDA’s goal is to develop “an appropriately efficient and predicable regulatory framework for regulating CBD products.” FDA’s CBD public hearing took place on May 31, 2019. Similarly, in testimony before the U.S. Senate Appropriations Committee on March 28, 2019, Gottlieb publically stated that FDA is exercising “enforcement discretion” over CBD products, and currently only “tak[ing] enforcement action against CBD products that are on the market if manufacturers are making …’over-the-line’ claims.” Gottlieb further reiterated that, “We’re concerned about it, but we heard Congress loud and clear here. We know you want a pathway.”

More recently, on July 12, 2019, FDA Principal Deputy Commissioner Amy Abernathy, MD, PhD, formally announced that FDA plans to expedite the development of regulations specific to CBD, with the intent of issuing a progress report by the end of summer or early Fall 2019. Abernathy’s announcement comes on the heels of increased bipartisan pressure from Congress on FDA to act expeditiously in developing sound regulations governing the sale, distribution and use of CBD, particularly with respect to CBD as a food additive and dietary ingredient. To be sure, on June 25, 2019, Senator Ron Wyden issued a letter to the FDA urging the agency to issue formal guidance announcing a CBD enforcement discretion policy no later than Aug. 1, 2019. Wyden further urged the FDA, pending publication of a permanent final rule, to issue an interim final rule ensuring that a regulatory pathway exists for the lawful use of CBD as a food additive and as a dietary ingredient. Across the aisle, on June 27, 2019, Senate Majority Leader Mitch McConnell met with Acting FDA Commissioner Ned Sharpless and similarly urged him to develop regulations so that hemp-derived CBD can be lawfully marketed in the United States. Following the meeting, McConnell issued a public statement reaffirming that “Congress’s intent was clear from the passage of the Farm Bill that these products [CBD foods and dietary ingredients] should be legal, and our farmers, producers and manufacturers need clarity as well as a workable pathway forward regarding the agency’s enforcement.”

Regulation of CBD at both the state and federal levels continues to be a trend that the food and beverage industry must continue to monitor for the foreseeable future, as no national framework yet exists and the patchwork of state regulation continues to evolve. Several states have recently developed regulations to ban the sale or use of CBD, while several other states have introduced legislation to completely legalize hemp and CBD in all forms within their jurisdictions. New York City recently announced its plans to fine restaurants using CBD in foods and beverages. The California Department of Public Health announced in 2018 that state law banned CBD in food products, relying on FDA’s current thinking on the issue; however, even more recently, the California legislature introduced legislation to legalize CBD statewide. It is likely that states will continue to develop a patchwork of regulations on CBD until FDA definitively resolves the lingering questions and addresses CBD’s future as a legal component of foods and beverages and as a dietary ingredient. NIE

Kyle Diamantas is an associate with Baker Donelson in Orlando, FL. He focuses his practice on civil litigation and regulatory compliance, with an emphasis on U.S. Food and Drug Administration (FDA), Federal Trade Commission (FTC), and state equivalent regulatory and compliance issues and disputes. Diamantas can be reached at kdiamantas@bakerdonelson.com.

Albion Minerals®