Demand for cannabidiol (CBD) products continues to climb, and
the market has risen to the occasion. There is now a robust array
of foods, oils, lotions, capsules and cosmetics containing CBD for consumer use. But with this wide
selection also comes the concern that not all of the products in
the market are of comparable quality, and the risk that certain bad
actors could inhibit good faith distributors and manufacturers’
ability to operate successfully. Further, while early research and
consumer reports claiming that CBD can help consumers manage
chronic pain and anxiety continue to support the strong market
demand for these products, not everyone is as optimistic about
CBD’s potential to be an effective supplement for consumers. This
uncertainty in the market has led many to call for a more
comprehensive regulatory scheme for CBD products.
Benefits of Federal CBD Regulations
Manufacturers and distributors would benefit from a
comprehensive federal regulatory scheme, as the absence of such a
regulatory scheme increases their legal exposure. For example,
without clear regulations on labeling requirements for CBD
products, it becomes more difficult to defend certain consumer tort
claims. If a clear federal standard was in place outlining labeling
requirements, manufacturers and distributors could reduce the risk
of these lawsuits by simply complying with the articulated standard
and relying on this compliance to defeat plaintiffs’ claims.
Without such a standard, however, there is ambiguity in the law
that can lead to lawsuits. In fact, in 2020, many CBD manufacturers
faced lawsuits premised on allegedly inadequate labels. At the
time, courts stayed these cases pending regulatory action by the
Food and Drug Administration (FDA). But the FDA’s continued
inaction risks courts permitting the revival of these actions.
The lack of a clear regulatory scheme and the confusion inherent
in attempting to comply with multiple states’ regulatory
schemes has also led to lawsuits featuring plaintiffs who claim
they were misled regarding the legality of the CBD product they
purchased. This increased risk of litigation is another reason why
industry leaders should continue to urge the federal government to
implement a comprehensive regulatory scheme to govern CBD products.
Everyone, from consumers to distributors to manufacturers, would
face more safety and efficiency if there are clear, uniform
guidelines to govern the manufacturing, labeling, distribution, and
use of such products.
Federal Inactivity Leaves CBD Industry in Limbo
Unfortunately, calls for comprehensive federal regulation have
remained unanswered. In January 2023, the FDA announced that it would not release CBD
regulations and would instead leave the task to Congress with FDA
input. There was a glimmer of hope in the summer of 2023 that
Congress might act, or direct the FDA to act, as ranking members of
both the Senate Health, Education, Labor and Pensions Committee and
the House Energy and Commerce Committee (E&C) requested
information from stakeholders on the FDA’s regulation of CBD. Months passed,
however, and neither committee issued statements to follow up on
the progress of a comprehensive regulatory plan. In January 2024, a
coalition of over two dozen hemp industry organizations wrote a
public letter to the ranking members of the E&C to request a
hearing specifically addressing the FDA’s inaction. As of the time of this
writing, however, the FDA has still not provided any indication
that it will issue any regulations of CBD products.
This lack of a clear path forward may be the result of tension
among federal agencies on how to address cannabis products more
broadly, including marijuana. The Secretary of the United States
Department of Health and Human Services (HHS) has faced pressure
from the Biden administration to reconsider the classification of marijuana as a Schedule I
drug under the Controlled Substances Act (CSA) for years. Yet
marijuana continues to be a Schedule I drug, and it remains unclear
how the regulatory framework for CBD would be impacted if marijuana
were to shift to a Schedule III drug.
The only agency that presently seems intent on regulating CBD is
the Drug Enforcement Administration (DEA).
According to a letter from the DEA issued in February 2023,
two prevalent synthetically derived CBD subtypes, Delta-8-THC and
Delta-9-THC, are considered controlled substances under the CSA and
are illegal for recreational use, even though naturally derived
Delta-8 is not a controlled substance under the CSA. This
letter did not clarify whether or how the DEA will begin enforcing
this interpretation of the CSA. It also stands in stark contrast to
President Biden’s prior requests for the Secretary of HHS and
the Attorney General to review marijuana’s classification as a
Schedule I drug under the CSA, as well as his decision to pardon thousands of people convicted of
marijuana-related crimes that occurred on federal land.
State CBD Regulations
As is often the case in the face of federal inaction, the states
have stepped in and implemented their own legislation to regulate
the CBD industry. While these efforts do set some standards for the
industry, they also lead to a patchwork regulatory scheme, making
it more difficult for industry leaders to ensure that they comply
with the law in every jurisdiction in which they operate. The
emergence of a varied regulatory scheme across multiple states also
requires distributors and manufacturers to carefully track
legislation as it proceeds in numerous jurisdictions to ensure that
they protect their interests in a continuously evolving regulatory
landscape. For example, in the last year, numerous states,
including Tennessee, passed legislation curtailing how distributors
can sell CBD and who can purchase it. On the other hand, other
states, including Maryland, have moved toward legalizing marijuana
more generally, signaling a broader acceptance of all cannabis
products, including, presumably, hemp-derived CBD products.
Unless and until the federal government implements a
comprehensive regulatory scheme, it will continue to be imperative
for industry stakeholders to pay close attention to how each state
approaches regulation.
Originally Published by Cannabis Business Executive
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