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CBD Developments in the Food and Beverage Industry

Hospitalitas Newsletter

The Agriculture Improvement Act of 2018, commonly referred to as the Farm Bill, dramatically changed and improved 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 natural 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 and dietary supplements.

While the 2018 Farm Bill, signed into law on December 22, 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 both research and commercial purposes. Significantly, the 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; and
  • allows the states and Indian tribes to submit plans and apply for primary regulatory authority over the production of hemp in their jurisdictions.

However, the United States Food and Drug Administration (FDA) still exercises regulatory authority over the addition of hemp and its derivatives, including CBD, to conventional foods, beverages, dietary supplements, cosmetics and other products introduced in interstate commerce. 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 on December 20, 2018, 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 FD&C Act 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." Commissioner 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. Commissioner 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 Commissioner 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, Commissioner 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. Commissioner 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 is set to take place on May 31, 2019. Additional recent developments have further encouraged industry participants. For example, in testimony before the U.S. Senate Appropriations Committee on March 28, 2019, Commissioner Gottlieb publically stated that FDA is currently 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." Commissioner Gottlieb further reiterated that, "We're concerned about it, but we heard Congress loud and clear here. We know you want a pathway."

However, Commissioner Gottlieb abruptly announced his resignation on March 5, 2019 after 22 months at the helm of FDA. Current head of the National Cancer Institute, Dr. Ned Sharpless, has been named Acting Commissioner, and will take over the agency when Commissioner Gottlieb formally departs from FDA in April. HHS Secretary Alex Azar stated that Dr. Sharpless's appointment is temporary, and a search for a permanent commissioner is underway. It remains to be seen how these shifts in leadership may affect FDA's budding momentum on CBD at the federal level.

This is a trend that the food and beverage industry must continue to monitor for the foreseeable future, as no national framework yet exists. Several states, including Maine and Ohio, have developed regulations to ban the sale or use of CBD. 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. 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.

For assistance with understanding laws governing CBD in your state or jurisdiction, please contact the author, Kyle Diamantas, or any member of Baker Donelson's FDA Group.

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