CBD and the FDA: A Regulatory Fog Hangs Over a Booming Business

CBD productsSince the 2018 Farm Bill legalized hemp at the federal level, the production and sale of products containing CBD, the non-psychoactive compound found in both hemp and marijuana, has become a booming business and ubiquitous presence. CBD stores and outlets offering everything from CBD-infused cosmetics and supplements to edibles and beverages (and dog treats and clothing and…) are on almost as many corners as Starbucks. Some estimate that the U.S. CBD market will be worth $16 billion by 2025. That is quite a hefty sum generated by products that remain, the Farm Bill notwithstanding, of dubious legality.

The haziness surrounding CBD’s legal status has less to do with CBD itself and more to do with the countless foods, beverages, and other products now on the market that contain the compound. That is because under the Federal Food Drug and Cosmetic Act (FDCA), products covered under the FDCA, even if derived from hemp, may not be introduced lawfully into interstate commerce without the approval of the U.S. Food and Drug Administration (FDA).

One: The Number of FDA-Approved CBD Products

To date, the total number of FDA-approved CBD products is one: a prescription drug for people with certain seizure disorders.

That is why the agency has sent sternly worded warnings to dozens of companies that added CBD to nutritional supplements, cosmetics, vaping products, foods, and drinks in purported violation of the FDCA. The letters note that it is currently illegal to market CBD by adding it to a food product or labeling it as a dietary supplement and that failure to correct FDCA violations “may result in legal action without further notice, including, without limitation, seizure and injunction.”

Even though the FDA’s threats of cracking down against CBD products have been more smoke than fire so far, they still put companies who manufacture and offer CBD infused products on shaky ground. But with an expanding and increasingly competitive CBD market beckoning, most CBD entrepreneurs are conducting business as usual, even in the face of the FDA’s recalcitrance.

The FDA Wasn’t Ready for the CBD Explosion

The biggest problem is that the FDA was simply not prepared to address the issue of CBD-containing products under their purview after the Farm Bill opened the floodgates on the compound. The research and study the FDA requires before giving its seal of approval remains lacking, and the agency notes that it is in the process of “evaluating the regulatory frameworks that apply to certain cannabis-derived products that are intended for non-drug uses, including whether and/or how the FDA might consider updating its regulations, as well as whether potential legislation might be appropriate.”

With the prodding of the dietary supplement and natural product industries, efforts to bring clarity to the CBD legal landscape have gained urgency. This includes recently introduced federal legislation that would provide the FDA with the flexibility to allow CBD to be marketed in dietary supplements by incorporating CBD into the definition of dietary supplements under the FDCA.

Additionally, the proposed federal budget recently released by the current administration provides for an allocation of $5 million to the FDA for the express purpose of research, product review, inspections and enforcement, and policy development relating to cannabis-derived substances such as CBD.

As with continuing efforts to update laws and regulations involving banking and financial services for state-legal cannabis enterprises, constructing a legal framework for CBD is an ongoing process. Hopefully, it is one that can give CBD entrepreneurs comfort as they build and grow their businesses.

CBD Questions? Call the Michigan Cannabis Industry Attorneys at Kreis Enderle Today

At Kreis Enderle, we help current participants and those who wish to become part of Michigan’s cannabis and hemp industries to move forward with their businesses with confidence and clarity. Our cannabis law attorneys constantly stay abreast of developments in the evolving legal landscape and work closely with our clients to keep them informed and ahead of those changes. Additionally, Kreis Enderle brings a wealth of diverse banking experience and capabilities to the representation of cannabis industry clients.

If you have questions related to the development, manufacturing, and retail sale of CBD products, please contact one of Kreis Enderle’s cannabis law attorneys at (800) 535-4939 to arrange for a consultation.

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