Federal Hemp & CBD Update – What’s Legal and What’s Not?

Posted by Margolin & Lawrence on January 24, 2019

CBD products are everywhere – including tinctures, creams, gummies, pills, and drinks. But is it legal to buy, sell, and produce them?  The answer may depend on where you are. In the December 2018 Farm Bill, the federal government removed CBD (and industrial hemp and all cannabis derivatives with less than 0.3% THC) from the Controlled Substances Act altogether.  But that is not the end of the story, as the FDA continues to regulate CBD products through enforcement of the Food, Drug & Cosmetic Act, and state governments also have restrictions. Federal and state laws are changing quickly in this area, so anyone involved with these products is encouraged to consult with a lawyer and stay informed on recent developments.

Federal Farm Bill Removes Hemp and CBD from the Controlled Substances Act

In September 2018, the federal Drug Enforcement Administration (part of the Department of Justice) issued a memorandum announcing that drugs including CBD with THC content below 0.1% would be taken off of Schedule 1 of the controlled substances schedules, and moved to Schedule 5, which allows CBD products to be sold through traditional pharmacies with a doctor’s prescription so long as the particular product is first approved by the FDA. The order also disallowed any importing or exporting of CBD products without a permit.  

On December 20, 2018, the federal government took a further step, removing industrial hemp and all derivatives of cannabis with less than 0.3% THC – including CBD products – from the Controlled Substances Act.  This means that CBD products are no longer an inherently illegal substance under federal law, so long as they contain less than 0.3 percent THC. They are not Schedule 1, Schedule 5, or any Schedule – they have been de-scheduled. CBD products with THC content above 0.3% remain classified as a Schedule 1 controlled substance, subject to severe criminal sanctions. The Rohrbacher-Farr amendment creates a limited exception, preventing the DOJ from prosecuting anyone in strict compliance with state medical marijuana laws (adult-use or recreational uses of CBD products may still be prosecuted).

Does this mean that people nationwide now have free reign to buy, sell, and produce products with CBD as long as they don’t have too much THC?  Not quite.

Federal Law Still Restricts CBD

In June 2018, several months before the federal government removed CBD and industrial hemp from the Controlled Substances Act, the FDA announced that it had approved Epidiolax, the first drug comprised of an active ingredient derived from marijuana – CBD – to treat rare, severe forms of epilepsy.

Due to CBD’s new status as the active ingredient in a federally-approved drug, federal laws continue to restrict the use of CBD in specific circumstances, including in the use of food and non-approved drugs.  The federal Food, Drug, and Cosmetic Act is enforced by the federal Food and Drug Administration, which released a statement on the day the Farm Bill was passed, clarifying the federal status of CBD.  

It Remains Illegal Under Federal Law to Market CBD Products with Certain Health Claims Without FDA Approval

As explained by the FDA, it remains illegal under federal law to “introduce[ ] into interstate commerce” any CBD product  “that is marketed with a claim of therapeutic benefit, or with any other disease claim,” without the product first having been “approved by the FDA for its intended use.”  This same rule applies to any other product marketed as a drug for human or animal use. This means that “[c]annabis and cannabis-derived products claiming in their marketing and promotional materials that they’re intended for use in the diagnosis, cure, mitigation, treatment, or prevention of diseases (such as cancer, Alzheimer’s disease, psychiatric disorders and diabetes) are considered new drugs or new animal drugs and must go through the FDA drug approval process for human or animal use before they are marketed in the U.S.”

It Remains Illegal Under Federal Law to Add CBD to Food

The FDA also explained in its latest statement that it remains illegal under federal law to add either THC or CBD to any food products.  

“Additionally, 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. This is because both CBD and THC are active ingredients in FDA-approved drugs and were the subject of substantial clinical investigations before they were marketed as foods or dietary supplements. Under the FD&C Act, it’s illegal to introduce drug ingredients like these into the food supply, or to market them as dietary supplements. This is a requirement that we apply across the board to food products that contain substances that are active ingredients in any drug.”

Under federal law, then, CBD products may now be produced, bought, and sold, so long as they are not marketed with any claims of therapeutic benefit, and so long as CBD is not added to food or marketed as a dietary supplement. That is not the end of the story, however, as state laws may create additional restrictions. 

Many States Allow CBD and Other Hemp-Based Products to be Produced and Sold

According to the National Conference of State Legislatures, 39 states had some kind of industrial hemp cultivation or production program as of August 2018.

As of 2018, the states with existing commercial hemp programs are:

  • Arizona

  • California

  • Colorado

  • Indiana

  • Kentucky

  • Maine

  • Massachusetts

  • Minnesota

  • Montana

  • North Dakota

  • Oregon

  • Rhode Island

  • South Carolina

  • Tennessee

  • Vermont

  • Virginia

  • West Virginia

Now that the farm bill has legalized hemp, some states are updating their regulations on hemp and hemp-derived CBD, with more expected to follow suit in the near future. For instance, Alabama has reportedly authorized the production of hemp-derived CBD, Pennsylvania plans to allow the full commercial production of industrial hemp, Michigan no longer counts hemp-derived products as marijuana, Colorado has loosened funding restrictions on commercial hemp farming, and Utah has begun registering businesses to legally sell hemp and CBD.

In order to determine whether any CBD-based business is allowed, it is important to look at current state and local laws, to set up production operations in an area that is friendly to these products, and to make sure the business is only selling products in areas that allow them. Since the status of industrial hemp programs, as well as various laws allowing CBD-based products for medical or other purposes, are subject to change, businesses should stay in contact with local authorities to ensure they’re in compliance with the existing law.

California is one of the states that has laws in place authorizing the production of industrial hemp. However, California has not yet fully set up its industrial hemp registration and licensing system – once it does so, there will likely be more legal guidance and clarity on the sales of hemp and CBD-based products.  According to the California state Department of Food and Agriculture:  “All growers of industrial hemp for commercial purposes must register with the county agricultural commissioner prior to cultivation. Registration is not yet available. The fees and process for registration will be developed by CDFA, which will consider recommendations from the Industrial Hemp Advisory Board.”

For more information on California’s laws, check this space next week for a blog post on the current state of California’s hemp and CBD laws.

If you have any other questions, reach out to us at info@margolinlawrence.com, or, for California-based businesses, check our guide to California's cannabis laws.

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This blog is not intended as legal advice and should not be taken as such. The possession, use, and/or sale of marijuana is illegal under federal law.