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Avoiding CBD Product Pitfalls in 2021

December 3, 2020


Over the last two years, store shelves across America have been increasingly showcasing a brand-new line of products: CBD products. From lotions to drinks to pet food, it seems that now pretty much anything can be infused with CBD. There are thousands of CBD products on the market right now, but while the industry is rapidly growing, it remains to be seen how many CBD companies will stick around. That is because many CBD products on the market do not comply with regulatory restrictions on its use.

It is anticipated that in 2021, the United States Food and Drug Administration (“FDA”) will finally issue formal regulations that will further define the parameters of selling CBD products, and many companies will need to scramble to make sure their products are in compliance once these regulations are issued by the FDA. Until then, however, in order to mitigate risk and avoid having to completely course correct, CBD companies must do their best to navigate and comply with the applicable federal guidance and state regulations on what is permitted to be sold to consumers.

What is CBD?

CBD is the abbreviation for cannabidiol, one of the many cannabinoids, or chemical compounds, found in hemp. Hemp became legal in December 2018, when Congress passed the Agriculture Improvement Act of 2018 (2018 Farm Bill, PL 115-334), which removed hemp from the definition of marijuana in the Controlled Substances Act. The Farm Bill specifically defined “industrial hemp” as cannabis with less than 0.3 percent of the psychoactive compound delta-9-tetrahydrocannabinol (“THC”) on a dry weight basis. Any CBD product that is being sold in the market today therefore must contain less than this extremely low concentration of THC, which, unlike its marijuana counterpart, will not cause any psychoactive effect when used by consumers.

There is very limited medical research on CBD, but there are theories that it works with the endocannabinoid system in the human body by binding to cannabinoid receptors. When perusing CBD products on any grocery store or pharmacy shelf, you will glean that CBD products are being marketed to help with everything from pain to sleeplessness to chronic illness.

What Does the FDA Say About Hemp & CBD Products?

The Farm Bill explicitly preserved the FDA’s authority over hemp products. Therefore, hemp and CBD products must meet any applicable FDA requirements and standards, just like any other FDA-regulated product. For example, the FDA’s existing authority over foods, dietary supplements, human and veterinary drugs, and cosmetics equally applies to hemp products to the extent such hemp products fall within those categories. These safeguards help ensure that consumers have access to safe and accurately labeled hemp products, and, in the case of drugs, that patients can depend on the effectiveness of these products.

To date, the FDA has only approved one pharmaceutical drug containing CBD – Epidiolex – which has mainly been used to treat seizures. This is significant for CBD companies because this approval transformed CBD into an “active ingredient in a drug product” that has been approved by the FDA. In turn, this classification limits other uses for CBD in non-drug products.

As to using industrial hemp generally, the FDA has deemed only three hemp seed-derived food ingredients as “generally recognized as safe” for human consumption, or “GRAS”: hulled hemp seed (GRN765), hemp seed protein powder (GRN771), and hemp seed oil (GRN778). Hemp seeds are the seeds of the hemp plant, but they do not naturally contain THC, the main psychoactive ingredient in cannabis. The hemp seed-derived ingredients that are the subject of these GRAS notices contain only trace amounts of THC and CBD, which the seeds may pick up during harvesting and processing when they are in contact with other parts of the plant. Some of the intended and permissible uses for these ingredients include adding them as a source of protein, carbohydrates, oil, and other nutrients to beverages (juices, smoothies, protein drinks, plant-based alternatives to dairy products), soups, dips, spreads, sauces, dressings, plant-based alternatives to meat products, desserts, baked goods, cereals, snacks and nutrition bars. Products that contain any of these hemp seed-derived ingredients must declare them by name on the ingredient list.

What Should Companies Know Before Marketing CBD Products?

When it comes to selling a new CBD product, companies must be aware of the complex and unsettled state of FDA regulations regarding CBD products. Other than Epidiolex, the FDA has not approved any cannabis product for the treatment of any disease or condition and, thus, has not determined that cannabis is safe and effective for use with any particular disease or condition. Therefore, companies must avoid marketing or labeling their CBD products as being a potential cure or treatment for any health condition or disease and should even stay away from suggesting their products assist generally with things like “pain relief,” “anxiety relief,” or “sleep aid.” Over the past two years, the FDA has issued dozens of warning letters to companies making outlandish claims that CBD will cure serious diseases such as cancer and more recently, COVID-19. Beyond avoiding those claims, CBD companies also must provide an express warning on its labels notifying consumers that the products have not been approved by the FDA.

The next area of regulatory scrutiny has been marketing CBD products as “dietary supplements,” a term defined by the FDA. While the FDA has given little guidance to companies on how they can market CBD, the FDA has expressly stated that due to CBD’s use as an active ingredient in at least one pharmaceutical drug, it cannot be marketed as a dietary supplement or be added to human or pet food. Therefore, companies should avoid marketing or labeling any CBD products in a way that could suggest to consumers that it is a dietary supplement or a conventional food for humans or pets.

The only other expressly approved use of CBD by the FDA is in cosmetics, such as topical lotions, creams, or soaps. If a company is selling a CBD-infused cosmetic, then it must still comply with all FDA regulations regarding cosmetic labelling, which range from font size to warning language to label placement. It is also important to note that there are over fifteen states which also have issued specific regulations on labeling CBD products. Many states require that a scannable QR code be prominently displayed on the outer product label, for example, or that certain language be on the label. In order to ensure that you are fully compliant, companies must check all state law where they sell products.

The main takeaway for CBD companies is that it is a complex and highly regulated industry. When looking to manufacture, launch, and market a new CBD product, it is highly recommended that a company consult with legal counsel who is familiar with the federal and state labeling laws and specifically, about product marketing requirements in the cannabis industry.

If you have any questions or concerns regarding CBD products, the Cannabis Law attorneys at Montgomery McCracken are available to assist.