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Law at the Speed of Business

What is CBD?

Cannabis contains about 500 naturally occurring compounds, including 70 cannabinoids. The two most commonly used cannabinoids are tetrahydrocannabinol (THC) and cannabidiol (CBD). THC is the principal psychoactive component in cannabis that produces a “high” when the plant is smoked or ingested. THC is the main psychoactive component of the cannabis plant that makes some varieties of marijuana a sought-after recreational drug. CBD, on the other hand, has no psychoactive effects.  

Both THC and CBD are extracted primarily from the leaves, resin, or flowering tops of cannabis plants. CBD is often sold and used on its own and is typically processed or combined with other substances to create a commercial product. Widely sold online, CBD has been marketed as helping to treat the following conditions: 

•       Insomnia.

•       Anxiety.

•       Chronic pain.

•       Inflammation.

•       Opioid addiction.

•       Post-traumatic stress disorder.

•       Nausea resulting from chemotherapy.

•       Epilepsy.

Of these conditions, CBD has only been clinically proven to treat two rare forms of epilepsy. More rigorous studies on humans are needed to substantiate other claims being made by CBD proponents about its health benefits.

CBD can be extracted from both marijuana and hemp. Hemp is cannabis that has a THC concentration of no more than 0.3 percent (7 U.S.C. section 1639). In contrast, most marijuana flowers have THC levels between 10 percent and 20 percent, but can contain as much as 40 percent.  

Hemp-based CBD products often contain trace amounts of THC. However, CBD acts to modulate and mitigate some of the psychoactive effects of THC. This action, combined with the relatively low concentration of THC in hemp-derived CBD, effectively eliminates the psychoactive effects of THC in CBD.

There are three different types of CBD: 

•       Phyto-cannabinoid rich (PCR) CBD. PCR CBD is extracted from the whole plant and is commonly referred to as “full spectrum” or “whole plant” CBD. PCR CBD contains all cannabinoids, terpenes, and other compounds found in the cannabis plant. Because PCR CBD contains multiple cannabinoids, it is purported to deliver enhanced benefits of the “entourage effect,” or the interaction among the hundreds of different compounds comprising the cannabis plant. THC is one of the compounds found in PCR CBD and may induce psychoactive stimulation depending on its concentration. PCR CBD is minimally refined, leaving most of the cannabinoids and terpenes intact.

•       Broad spectrum CBD. Broad spectrum CBD contains all phyto-cannabinoids in the plant but does not contain any detectable amount of THC. Like PCR CBD, it can deliver the enhanced benefits of the entourage effect, albeit without the psychoactive effects of THC.

•       CBD isolate. CBD isolate is purified CBD that has been extracted from cannabis, typically hemp, and isolated from the other cannabinoids. At room temperature, CBD isolate is a tasteless, odorless white powder that can be vaporized or ingested orally. Removing the other cannabinoids from the product diminishes the synergistic effects that can purportedly be reached by combining these substances in a PCR or broad spectrum CBD extract.

Many different strains of hemp and cannabis have been bred to create extracts that are rich in CBD and have varying levels of THC. Any CBD content level that is four percent or above is considered high. CBD levels have reached as high as 20 percent in some strains.

 

Uses

CBD can be used in many ways, including: 

•       Edibles, such as candy, salad oil, baked goods, honey, and beverages.

•       CBD Oil.

•       Balms, salves, ointments, and lotions.

•       Smoking CBD-rich hemp or cannabis flowers.

•       Pills or capsules.

•       Oil-based or water-soluble CBD tinctures.

•       Epidiolex, a prescription drug.

One of the biggest potential markets for cannabis products is CBD oil. CBD oil is marketed primarily for medical or therapeutic purposes. It can be taken orally, applied topically, or inhaled through a vaporizer. To make CBD oil, CBD extract is mixed with a carrier oil, such as hemp seed oil or olive oil, to help with absorption or ingestion. CBD oil containing THC levels above 0.3 percent are typically sold at medical or recreational marijuana dispensaries.

Another large market for cannabis products is CBD tinctures. Tinctures are different from oils in that the CBD in tinctures is suspended in a small amount of distilled alcohol and is only meant to be consumed orally. Producers of CBD tinctures often add carrier oils and other complementary ingredients, such as orange oil, to improve the taste of a tincture. Like CBD oil, CBD tinctures containing THC levels above 0.3 percent are typically sold at medical or recreational marijuana dispensaries.

Epidiolex Oral Solution

In June 2018, the US Food an Drug Administration (FDA) announced that it had approved the first CBD-based drug, Epidiolex (cannabidiol) oral solution. This medicine is the first treatment for two rare forms of epilepsy, Lennox-Gastaut syndrome and Dravet syndrome. Experts expect Epidiolex to be prescribed for other types of epilepsy as well. FDA approval of this drug represents the first time that the US has acknowledged there are medicinal benefits to be obtained from substances derived from cannabis. In its announcement, the FDA signaled that it is willing to work with pharmaceutical companies to bring cannabis derived products to market.

2018 Farm Bill

The 2018 Farm Bill addresses some of the risks associated with the production and sale of hemp-derived CBD by legalizing hemp at the federal level (Pub. L. No. 115-334). Specifically, the 2018 Farm Bill:

•       Removes hemp from the Controlled Substances Act of 1970 (CSA) definition of marijuana, which in turn removes hemp and hemp-derived products from the list of Schedule I controlled substances under the CSA (21 U.S.C. sections 801-971).

•       Shifts hemp’s supervision from the DEA to the United States Department of Agriculture (USDA).

While the 2014 Farm Bill permitted research on industrial hemp under narrow circumstances (Pub. L. No. 113-79), the 2018 Farm Bill expands on these preliminary allowances by legalizing the cultivation, transport, and sale of hemp under certain regulations that address: 

•       Reporting requirements regarding the land to be used for planting.

•       Requirements for testing THC concentration.

•       Effective disposal of plants and products produced in violation of the 2018 Farm Bill.

•       Compliance with law enforcement.

•       Annual inspections of hemp producers.

•       Submission of information on hemp producers to the USDA.

•       The process for certifying that resources and personnel are available to carry out these practices and procedures.

(7 U.S.C.1639p (as added by Pub. L. No. 115-334 section 10113).)

Status of CBD Under Federal Law

The 2018 Farm Bill permits the purchase, sale, or possession of CBD in all 50 states, if it: 

•       Contains no more than 0.3 percent THC.

•       Is derived from hemp grown by a licensed business that is approved by the federal and state government under the 2018 Farm Bill.

Therefore, broad spectrum CBD oils and tinctures and hemp-derived CBD isolate are legal at the federal level if the above conditions are met. If CBD is extracted from hemp, the hemp must contain no more than 0.3 percent THC and have been grown by a licensed business even in those states where recreational cannabis is legal.

CBD extracted from marijuana is currently deemed a Schedule I controlled substance by both the FDA and DEA under the CSA. Under state law, Marijuana-derived CBD products can only be purchased by qualifying patients in states with medical cannabis laws or by customers in states permitting the use of recreational cannabis.

Despite hemp’s recent classification change under the CSA, there is currently no official oversight of CBD or CBD products. However, the DEA rescheduled CBD as part of the regulatory process for Epidiolex and the FDA has publicly clarified its position on the inclusion of CBD in food, beverages, and dietary supplements (see, FDA Regulations).

DEA Regulations

On September 28, 2018, the DEA announced that drugs containing CBD with THC content below 0.1 percent are considered Schedule V drugs if they have been approved by the FDA. This was the first time the DEA lowered any type of cannabis from Schedule I and marked the final step in the regulatory process for Epidiolex. Schedule V substances are considered to have the lowest abuse potential and a low potential for psychological or physical dependence.

FDA Regulations

The legality of CBD that is not used in FDA approved drugs is less clear. As an initial step towards clarifying the legal status of CBD after the passage of the 2018 Farm Bill, the FDA issued a statement noting that the new legislation preserves the FDA’s authority to regulate products containing cannabis and cannabis-derived compounds like CBD, regardless of whether they come from hemp or marijuana.

Unsubstantiated Health Claims

FDA rules prohibit companies from making therapeutic claims about products not approved by the FDA that claim to contain CBD or other cannabis-derived compounds, whether they come from hemp or not. These unauthorized claims have resulted in the agency issuing warning letters to several companies since 2015. CBD products making therapeutic claims in their marketing and promotional materials 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 US.

The Federal Trade Commission (FTC) Act may also be implicated when businesses selling CBD products make unsubstantiated health claims. It is unlawful under the FTC Act for a business to advertise that a product can prevent, treat, or cure human disease unless the business has reliable scientific evidence, including, when appropriate, well-controlled human clinical studies, substantiating that the claims are true at the time they are made. In March 2019, the FTC joined the FDA in sending warning letters to companies that advertised and sold CBD products claiming to treat Alzheimer’s, cancer, and other serious diseases.

Mislabeled CBD

CBD products sometimes have more THC and less CBD than claimed, which increases manufacturers’ and retailers’ risk of penalties for violating labeling laws under the federal Food, Drug, and Cosmetic Act (FDCA). To increase credibility and reduce the risk of these penalties, manufacturers should consider providing a Certificate of Analysis (CoA), issued by a third-party lab, for its product. A CoA is a lab report showing the chemical make-up of a substance. A CBD CoA shows the quantity of various cannabinoids in a product, including THC and CBD, as well as various contaminants. Aside from Indiana and Utah, this testing is voluntary and the results are not confirmed by independent experts.

CBD-Infused Food, Beverages, and Dietary Supplements

Under the FDCA, it is illegal to introduce into the food supply active ingredients: 

•       That are contained in FDA-approved drugs.

•       That have been the subject of substantial research that has been made public.

(21 U.S.C. 321(ff)(3)(B)(i) and (ii).)

Because CBD is an active ingredient in Epidiolex, regardless of whether the CBD is hemp-derived, it unlawful to: 

•       Introduce food or drinks containing CBD into interstate commerce.

•       Market CBD products as dietary supplements.

Although food, beverages, and dietary supplements containing CBD are generally prohibited from being introduced in interstate commerce, the FDA has authority to issue a regulation allowing the use of a pharmaceutical ingredient in a food or dietary supplement. However, the FDA only considers doing so if it can determine that all other requirements in the FDCA are met, including those required for food additives or new dietary ingredients (21 C.F.R. section 101.14). 

To that end, the FDA held its first public hearing on May 31, 2019 to obtain scientific data and information about the safety, manufacturing, product quality, marketing, labeling, and sale of products containing CBD. The information from the hearing and comments provided to the public docket informs the FDA’s regulatory oversight of CBD-infused products.

CBD-Infused Cosmetics

Although the FDCA is silent on the inclusion of hemp-derived CBD in cosmetics, the FDA still has regulatory authority over CBD-infused cosmetics and their ingredients. To clarify this authority, the FDA released a Q&A on April 2, 2019 that discusses the application of existing regulations to CBD-infused cosmetics.

The federal government defines a cosmetic product as any item that is intended to be rubbed, poured, sprinkled, sprayed, or otherwise applied to the human body for cleansing, beautifying, promoting attractiveness, or altering a person’s appearance (21 U.S.C. section 321 (i)). Unlike drugs, cosmetics and ingredients in cosmetics are not subject to pre-market approval. The FDA relies on consumer complaints to aid in monitoring the cosmetics industry.

Under the FDCA, cosmetic products that are marketed and sold in US interstate commerce cannot be adulterated or misbranded. The presence of a harmful ingredient in a cosmetic product causes the FDA to deem that product adulterated. According to the FDA Q&A, CBD does not fall into the category of a harmful ingredient.

However, in addition to ingredients that are specifically prohibited by the FDCA, cosmetics are adulterated if they contain any poisonous or deleterious substance that may harm users. The FDA Q&A discusses this as it applies to cannabis: 

”Ingredients not specifically addressed by regulation must nonetheless comply with all applicable requirements, and no ingredient – including a cannabis or cannabis-derived ingredient – can be used in a cosmetic if it causes the product to be adulterated or misbranded in any way.” 

The FDA deems a cosmetic misbranded if it is:

•       Labeled in a false or misleading way.

•       Does not bear required labeling information.

•       Made or filled in a deceptive manner.

This is true for all cosmetics, including those containing hemp-derived CBD. 

While the FDA has not determined that the presence of CBD makes a cosmetic adulterated or misbranded, cosmetics containing CBD may violate the FDCA if they make specific, unsubstantiated health claims. Companies selling CBD-infused cosmetics, such as Kroger, Walgreens, CVS Health, and Vitamin Shoppe, all of which announced in 2019 that they intend to sell CBD cosmetic products in their stores, should be aware of the FDA’s regulations and track any future regulatory developments.

State Regulation of CBD

The 2018 Farm Bill does not explicitly preempt the patchwork of state laws that currently regulate hemp and hemp products, including CBD. In fact, section 10113 of the 2018 Farm Bill clarifies that nothing in it preempts or limits more stringent state laws related to hemp production. Therefore, if a state includes the elements required by the Farm Bill in its hemp production plan, it can impose additional, stricter regulations. States are limited, however, from prohibiting the transport of hemp products under Section 10114 of the 2018 Farm Bill.

Several states allow CBD for medical purposes, while many have no clear rule addressing it. It is legal in approximately ten states and fewer than five states consider CBD illegal. 

Most states have yet to change their laws to match the federal rules under the 2018 Farm Bill, which has left local law enforcement and prosecutors uncertain of the legality of CBD. The absence of clear CBD regulations at the federal level has prompted some cities and states, even ones that have legalized certain forms of cannabis, to require retailers to remove CBD edibles from their shelves and to levy fines against establishments that sell CBD-infused food and beverages.  

While most states have no explicit prohibitions against the sale of hemp-derived CBD products, recent law enforcement actions or pronouncements in some jurisdictions raise the risk of the retail sale of hemp-derived CBD products. For example: 

•       In early 2019, officials in New York City, Ohio, North Carolina, and Maine asked retailers to stop selling CBD edibles and restaurants to stop selling CBD-infused food and drinks, saying the FDA does not recognize them as safe.

•       California and Georgia have banned the addition of CBD to food.

•       Officials in Texas, Ohio, Nebraska, and other states have arrested people for selling CBD products regardless of whether they contain THC levels higher than the amount permitted under the 2018 Farm Bill.

Other states have taken a more liberal approach to regulating CBD. For example: 

•       A recent Colorado law appears to clash with FDA rules by stating that hemp and its derivatives can be legally added to food for sale.

•       In Missouri, which approved medical marijuana in November 2018, CBD may be served in alcoholic beverages.

Still others have adopted specific strategies for regulating CBD in food and beverages. For example: 

•       Indiana, Utah, Texas, and Florida require a QR code that allows consumers to look up batch numbers, potency, and other ingredients.

•       In May 2019, Oklahoma Governor Kevin Stitt (R) approved a bill to establish labeling requirements for CBD and hemp extracts.

•       In Florida, a state hemp program went into effect July 1, 2019, establishing licensing requirements and a framework for dealing with violations, corrective measures, and enforcement in the sale of CBD products.

As the USDA and FDA move forward with issuing or clarifying regulations and guidance on hemp and CBD, outstanding questions and potential obstacles on this topic are likely to be addressed. In the meantime, the production and distribution of CBD and food, beverages, dietary supplements, and cosmetics containing CBD present some risks, as is the case with any other novel ingredient.