Know Your Rights: Understanding State Hemp Regulations
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:
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.
In a new video for Cheddar, Allison Margolin explains some common misconceptions about hemp legalization and the 2018 Farm Bill:
The House Committee on Agriculture is in the process of finalizing the 2018 Farm Bill, which is expected to go into effect later this month. It’s likely that the bill’s provisions will include the legalization of hemp, in the form of the removal of the plant from the government’s list of Schedule I Controlled Substances. Not only will this mean that hemp can be grown much more widely, it will also affect the production of hemp derivatives, including hemp-derived CBD. However, the legality of CBD products remains more complicated than this news may suggest.
As discussed in a prior blog post, the legal status of CBD can be very confusing to consumers, businesses, and lawmakers alike. As a substance that is derived from the cannabis plant, but is not cannabis’ main active ingredient, CBD currently occupies an unclear middle ground – particularly in California, where the state has imposed additional rules affecting how the various types of CBD may be legally used.
The legalization of hemp, though a step forward in the overall process of cannabis legalization, doesn’t do much to resolve the confusion surrounding CBD products. Even after hemp is legalized, CBD will be considered a drug and therefore subject to regulation by the FDA. Though the FDA has approved certain cannabis-derived CBD medications, CBD’s status as a drug makes it illegal to use as an ingredient in any kind of food or food additive.
Topicals, oils, and other non-edible forms of hemp-derived CBD, on the other hand, may not necessarily be banned once hemp is legalized. However, the FDA has yet to make a statement regarding this possibility – though they have sent unambiguous legal warnings to CBD businesses that make unsubstantiated or false claims about their products, indicating that they plan to regulate all CBD products to some degree, they’re less clear about the future legal status of hemp-derived CBD and non-edible hemp derivatives in general.
In California, the law on CBD edibles will remain paradoxical even after hemp is legalized. While CBD products with THC levels of 0.3% or more will be treated as cannabis edibles and therefore legal, CBD products with lower THC levels – or no THC at all – will be considered food products and therefore banned, regardless of whether they’re derived from cannabis or hemp. However, hemp-based non-edible CBD products are not currently regulated by any state agency, meaning their legal status remains unclear. For the sake of the state’s cannabis consumers and businesses, hopefully California will respond to the new Farm Bill by clarifying the legal status of these products.
Cannabidiol (CBD for short) is a naturally-occurring element of the cannabis plant that has recently exploded in popularity and availability. Like tetrahydrocannabinol (THC), CBD is believed to have therapeutic and medical benefits, but unlike THC, CBD has no intoxicating effects. Across the country, people can now find CBD products everywhere. But are they safe and legal?
Many products advertised as CBD are imported from other countries or produced in unregulated, unlicensed operations, with no verification that they are free from toxic compounds or that they even contain CBD. Even if the products contain “pure” CBD, knowledgeable experts contend that CBDs have little or no benefits when they are stripped from THC and other cannabinoids and compounds naturally occurring in the marijuana plant. CBDs appear to exhibit their medical and healing properties only when they are left combined with the other cannabinoids like THC, as they are found in nature.
CBD Production and Sales Remain a Federal Crime Without FDA Approval and a Doctor's Prescription
The law on CBD products is confusing, due to conflicts among local, state, federal, and international laws. Under the Supremacy Clause to the US Constitution, federal law controls to the extent it conflicts with state or local law. State law also controls to the extent it conflicts with city or county laws. Federal law in this area is moving, but it is not clear in what direction. Some predict the federal government will relinquish all regulation of CBDs and cannabis generally to the states, and keep a hands-off approach. Others expect the federal government to strictly regulate CBDs and cannabis as they do with prescription drugs through the FDA, leaving the states with little control. This approach was foreshadowed by the DEA’s recent memo announcing that drugs including CBD with THC content below 0.1% will 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 disallows any importing or exporting of CBD products without a permit.
Under federal law, CBD with THC content above 0.1% remains 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).
Without Commercial Cannabis License, CBDs Are Banned in California Food Products
In California, the Department of Public Health recently issued a memo confirming that CBD products are not allowed in any food products in the state (unless the products are regulated as commercial cannabis edibles, which by definition contain THC levels of at least 0.3%). Thus, under state law, CBDs are allowed to be sold and ingested as long as they include THC, and are banned in food if they come from industrial hemp with little or no THC. The reason CBD products with no THC are banned by state law is that California incorporates federal law regarding food additives, dietary use products, food labeling, and good manufacturing practices for food. Currently, the United States Food and Drug Administration (FDA) has concluded that it is a prohibited act to introduce or deliver for introduction into interstate commerce any food (including any animal food or feed) to which THC or CBD has been added.
This is regardless of the source of the CBD – i.e., whether the CBD is derived from cannabis or industrial hemp. CBD used as a topical or smokeable product could arguably be allowed under either federal or state law as it may not be considered to be a food that is ingested.
Los Angeles Allows CBD Businesses Without a Cannabis License to Register for Business Tax Certificate to Engage in Commercial Activities
The City of Los Angeles recently issued a form for businesses seeking a Business Tax Registration Certificate to engage in commercial activities related to industrial hemp and/or CBD derived from industrial hemp in the City of Los Angeles. This form allows your business to pay local taxes, but it does not protect you from criminal prosecution under state or federal law. It likely also signals that enforcement of state CBD laws is not a high priority of the Los Angeles Police Department.
International Treaties Ban All Cannabis Extracts Including CBDs
In addition to local, state, and federal law, international treaties place obstacles to the sale of CBD products. The United Nations has had a series of International Drug Control Conventions (treaties of which the US and Canada are part), and while CBD is not specifically listed in the schedules of the Conventions, "extracts" of cannabis are apparently included within Schedule 1, meaning they are prohibited.
Given the controls required by the UN Conventions, the US would be unable to keep its obligations under the treaties if CBD products were de-controlled under federal law. The Federal Controlled Substances Act, moreover, indicates that scheduling decisions will be made in accordance with treaty obligations. For example, under section201(d)(I) of the CSA, if control of a substance is required under an international treaty or convention in effect on October 27, 1970, the Attorney General is required to impose controls on the substance by placing it under the schedule he deems most appropriate to carry out such obligations.
The World Health Organization Expert Committee on Drug Dependence is scheduled to review the UN’s classification of CBD, THC, and cannabis in general at its November 2018 meeting, which could lead to a change in the international treaty.
The result of all these different layers of law leave many confused. We expect that the laws will adapt over time to allow for open sales of CBD products, whether or not they also contain THC. For now, however, the law is full of problems for CBD products and cannabis in general, and we applaud those working to reform the laws for these products that are all around us.
Last Tuesday, the Board of Supervisors in Riverside County approved an ordinance allowing the following commercial activities starting on 26th December: Testing, Manufacturing, Distribution and Wholesale Nurseries. There is now a 60-day deliberative period regarding the cannabis businesses in Riverside based on the newly approved ordinance. The Board also voted to allow a limited number of dispensaries and cultivators to operate in 2019. Up to nineteen dispensaries and fifty grows will be permitted in unincorporated Riverside County as decided by a 3-2 vote following a public hearing that last nearly four hours. The Board also approved an “Implementation Plan for Retail and Cultivation” uses that is scheduled for process in early January 2019. The proposal process will include pre-registration by interested applicants, and the issuance of a Request for Proposals by the Planning Department. However, there are certain conditions that will be enforced regarding additional taxation and fees associated with each of these activities as determined by the Planning Commission.
By Raza Lawrence and Allison Margolin
On September 28, 2018, the DEA issued a rule announcing that drugs including CBD with THC content below 0.1% will 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 disallows any importing or exporting of CBD products without a permit.
It is important to note that the ruling is narrow in that it only applies to CBD products with less than 0.1% THC. However, products with higher THC content could continue to be sold under state law and without federal FDA or DOJ regulation under the Rohrabacher–Farr amendment. Ironically, the new federal policy is to tolerate sales of CBD products with high levels of THC, but to restrict sales of CBD products with low levels of THC by requiring FDA approval, a huge task in itself. Some sources indicate that it can cost more than $1 billion to bring one FDA-approved product to the market, including approximately $50-840 million to bring treatments through the stages of Basic Research/Drug Development and Pre-Clinical/Translational Research, and approximately $50-970 million to complete the Clinical Trials (Phases 1, 2, and 3).
The new ruling is bad news for anyone hoping to sell CBD with no or low levels of THC and without FDA approval. Already, in July 2018, the California Department of Public Health ruled that hemp-derived CBD would not be allowed in food or drinks for humans or pets in California.
CBD products could potentially be sold as edible cannabis products under California state law if the producers obtain commercial cannabis manufacturing licenses from the state and local government, and the products are distributed and sold through outlets with state and local commercial cannabis licenses. Even if everyone involved complied with California state cannabis laws, they would still be subject to enforcement, punishment and being shut down by the FDA, unless they contain over 0.1% THC, in which case they could be sold under state law with no federal interference.
The Rohrabacher–Farr Amendment would not protect any low- or no-THC CBD distributors, even those who strictly complied with state law, from enforcement actions from the FDA, as Rohrabacher–Farr only restricts the DOJ from interfering with state regulation of medical marijuana. The FDA is part of the Department of Health and Human Services, not the DOJ, and thus retains the ability to regulate CBD – its regulations trump any state laws relating to CBD under the supremacy clause of the US Constitution.
It is possible that today’s DEA ruling could later lead to reclassification of all cannabis from a Schedule 1 to Schedule 5 substance, which would mean that all cannabis could fall under the jurisdiction of the FDA and could only be sold through pharmacies with doctor’s prescriptions and must be produced by companies with FDA approval (i.e., large drug companies).
Since 2009, the FDA has had the authority to regulate tobacco products, which are now controlled by only a few large corporations, as are many other drugs regulated by the FDA. The same could happen to cannabis. Individuals and organizations in the cannabis community should lobby the government to prevent this monopolization by ensuring that cannabis is descheduled as a controlled substance.
Earlier this year, the FDA's parent agency stated that CBD has little potential for abuse – hopefully the government's future approach to CBD will follow this lead and remove CBD's schedule 1 classification.
This editorial, by Allison Margolin and Raza Lawrence, also appears in the July 25th, 2018 edition of The Daily Journal.
On June 25, the Food and Drug Administration announced that it was approving Epidiolex, a cannabidiol (CBD) oral solution for the treatment of seizures associated with two rare and severe forms of epilepsy. This is the first drug approved by the FDA comprised of an active ingredient derived from marijuana.
The approval is a sign of the growing acceptance of CBD, and cannabis generally, to treat various medical ailments. THC, not CBD, is the primary psychoactive (intoxicating) component of marijuana. But CBD is believed to have its own distinct health benefits for conditions ranging from anxiety to cancer, and has recently exploded in popularity. CBD-based products seem to be everywhere, including Walmart, although the 9th U.S. Circuit Court of Appeals ruled this year that CBD is properly banned as a controlled substance under federal law, and the FDA warned in its recent press release that it will continue to crack down on “illegal marketing of CBD-containing products with serious, unproven medical claims.”
California’s health department also recently made clear that state law forbids adding CBD products (whether from cannabis or industrial hemp) to any food. Regardless, the FDA’s ruling could open up CBD and cannabis generally to broader acceptance in government and society.
The FDA’s approval contradicts the federal classification of cannabis as a Schedule 1 substance, the same as heroin, which is defined as one with a high potential for abuse and no medical value. The FDA specifically found, as part of its approval of Epidiolex, that CBD has medical benefits that have been supported by rigorous scientific research and clinical studies. Litigants could use the FDA approval to challenge marijuana’s Schedule 1 status in court. Or, reading the tea leaves, the government could re-classify or de-classify marijuana on its own. Under the law, Congress, the president, and the heads of the
Drug Enforcement Administration and FDA would each have the power to remove marijuana from Schedule 1.
What happens next if cannabis is removed from Schedule 1? There are different possible paths. Under one scenario, feared by many in the cannabis industry, cannabis would become regulated by the FDA as a Schedule 2 (or 3 or 4 or 5) controlled substance. Complying with FDA regulations can be extremely expensive and time-consuming, which is why drug companies are all large corporations rather than “mom and pop” operations. The estimated cost of bringing a new prescription drug to market is $2.6 billion.
In California, the cannabis industry has operated for years under an informal system of non-profit “collectives,” with only vague legal guidelines and no regulation. This year, the state is transitioning to a new system of state and local licensing and regulations. California cannabis cultivators, manufacturers, distributors, and retailers are already struggling to comply with the new high taxes and complicated regulations imposed by California. If the FDA were to take over the regulation and licensing, the costs of compliance would likely be much higher, and only those with the deepest pockets would have the resources required to produce and sell cannabis. The costs of compliance would inevitably be passed on to consumers, who would face sky-high cannabis prices similar to those of prescription drugs.
Federal control and regulation of cannabis, however, is not inevitable. Many would prefer the approach taken by proposed federal legislation that removes federal penalties and allows each state to sets its own marijuana policy within its borders, similar to how alcohol is now treated. Under this approach, the FDA would not regulate cannabis like a prescription drug, but could still prevent misleading health claims or misrepresentations on labels, and enforce basic quality standards, as it does for dietary supplements.
Unlike synthetic drugs derived for billions of dollars in corporate labs, cannabis is just a plant. It is not toxic or physically addictive. People who use it for medical purposes can safely and effectively determine and adjust their own doses. States could set reasonable restrictions and regulations on commercial
cannabis as they do with alcohol, but would not need to subject it to the intense scrutiny of prescription drugs.
The approval of Epidiolex is promising to the extent it increases awareness and legitimacy of cannabis as medicine. But it also raises the concerning possibility that all cannabis may soon be regulated like prescription drugs, and controlled by large corporations, rather than by the people and small businesses who grew the industry up from the ground.
Back in September, we published a blog post titled “Where Can I Get a Distribution License in California.” Now that the ordinances for the majority of jurisdictions in California have been reviewed and somewhat solidified, Margolin and Lawrence presents an updated list on the viable locations for distribution licenses in California.