CBD Is Now Legal – Kind Of, Sort Of

The burgeoning industry around CBD, the non-intoxicating part of the cannabis plant, is euphoric.  After decades of being unfairly lumped with marijuana as a banned controlled substance, Congress had the good sense – and common sense – to separate hemp-derived CBD (containing no more than 0.3% of THC, the psychoactive part of cannabis) from marijuana and delist it as a banned substance as part of last month’s “Farm Bill.”  This long overdue action paves the way for integration of CBD – believed to have significant medicinal value for a variety of ailments – into the mainstream of American healthcare.  Even before passage of the Farm Bill, consumer demand for CBD had become rampant and can only be expected to grow.  The legislative “legitimization” of CBD also means that the federal government is now free to conduct and sponsor scientific research to determine the full nature and extent of its perceived health benefits.  Positive findings will only enhance the growth of the U.S. and international markets for CBD, for both over-the-counter and pharmaceutical applications.

Lest CBD proponents be overcome by euphoria, however, the news is not all good, at least for the moment. While the Farm Bill removes hemp-derived CBD from the list of banned controlled substances, it makes clear that it is still fully subject to federal law in all other respects.  This includes the laws enforced by the Food and Drug Administration.  Seemingly within minutes of the Farm Bill becoming law, the FDA Commissioner announced that it will still be illegal under the Federal Food, Drug and Cosmetic Act for any food or dietary supplement product passing through interstate commerce to contain CBD, even if it is hemp-derived.  At the same time, the commissioner said the agency will consider whether there are circumstances in which CBD might be permitted in a food or dietary supplement. Tracking the FDA, California similarly bans CBD in food and dietary supplements (but ironically not cannabis, including “high”-inducing THC, which is now legal in the state) but in the wake of the Farm Bill also can be expected to review and likely relax its restrictions.  Meanwhile, it’s important to note that the FDA and California prohibitions are limited to edibles; there is no regulatory prohibition on the use of CBD in topicals and other non-ingestible products.

While the FDA and California and other states revamp their CBD policies for food and dietary supplements, pursuant to the Farm Bill, the states and the federal government will be developing their own plans for the regulation of hemp-derived CBD.  CBD industry members need to pay close attention to and comply with those regulatory plans as they develop in their states, and be prepared to comply with the federal regulatory plan should their state opt not to have one.  Also, and just as crucially, CBD marketers should steer clear of drug claims.  While the FDA doesn’t have the resources or inclination to prevent interstate commerce in CBD altogether, it has every incentive and capability, as it has shown in the past, to crack down hard on companies making unapproved and illegal disease treatment claims for CBD.  And now that the “green rush” of CBD is clearly on, the Federal Trade Commission will no doubt also be on the prowl for unscrupulous CBD marketers looking to prey on vulnerable consumers suffering from pain and other ailments by fabricating or overstating the health benefits of their products.

This is an exciting, but also precarious, time to be in the CBD business.  Proceed ardently and ambitiously, but with eyes wide open to the legal traps that lie ahead.

Happy New Year to the readers of FTCAdLaw.    

Talking about Direct Response, FTC, Online Marketing



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