Association of Food Industries

2020: Cannabidiol --
Looking Back and Forward 

Tish E. Pahl, Esq.
Olsson Frank Weeda Terman Matz PC

Six months ago, the appetite for cannabidiol was insatiable. CBD was everywhere – candy, snacks, beverages and instant consummables; dog and cat food and livestock feed; malt beverages and wine; creams and lotions; in clothing and tampons; in vape cartridges and smokable bud; and in tinctures, pills, and elixirs. Analysts estimated the CBD market to be at least $20 billion in 2022 to 2024.  

By the end of 2019, however, major CBD companies had missed their 2019 sales targets. Retailers were pulling CBD products from their shelves and consumer product companies that had been looking to introduce CBD in their brands went silent.  

The dampened enthusiasm stems from several events in 2019, with that uncertainty continuing in 2020.

What is CBD?

Parts of the Cannabis sativa plant have been controlled as marijuana under the Controlled Substances Act since 1970. The most commonly known compounds are delta-9-tetrahydrocannabinol and cannabidiol. THC produces marijuana’s psychoactive effects; CBD is not, by itself, psychoactive.

The Farm Bills, Hemp and CBD 

The 2014 Farm Bill removed “hemp” – defined as Cannabis sativa containing no more than 0.3% THC on a dry weight basis – from the definition of marijuana in the CSA. The 2014 Farm Bill enabled pilot programs for cultivation and market research of hemp-based products, including CBD.  

The 2018 Farm Bill, signed into law on Dec. 20, 2018, amended the CSA and removed hemp and its extracts, derivatives and cannabinoids, including CBD, from the definition of marijuana. The 2018 Farm Bill, however, preserved the authority of FDA over hemp and its derivatives in foods, dietary supplements, drugs and other regulated products.  

The FDA and CBD

FDA’s assertion of authority over CBD and CBD-containing products is not new. In early 2013, FDA began permitting GW Pharmaceuticals to make a CBD extract available to severely ill epilepsy patients under an “expanded access” or “compassionate use” program. On May 7, 2014, FDA accepted GW Pharmaceuticals’ Investigational New Drug application for its CBD-containing extract, Epidiolex®, signaling the commencement of clinical trials. FDA approved Epidiolex® in June 2018 to treat two severe epilepsies.  

FDA has been issuing warning letters to CBD marketers since at least 2015. Marketers were making claims that their CBD products would treat and cure serious diseases such as pain and cancer in humans and animals, thus rendering the products as “new” and unapproved drugs in violation of the Federal Food, Drug and Cosmetic Act.  

FDA has long made clear that, regardless of claims made, CBD was an active drug ingredient that was not permitted in supplements or conventional food. By May 2015, FDA’s Marijuana Q&A explained that CBD was excluded from the dietary supplement definition under section 201(ff) of the FDC Act because CBD had been authorized for investigation as a new drug. In warning letters it issued in February 2016, FDA specifically cited to the CBD clinical development underway. (See, e.g., Warning Letter to HealthyHempOil.com Feb. 4, 2016). Since at least July 2016, FDA has been equally clear that section 301(ll) of the FDC Act similarly prohibits the addition of CBD in conventional foods. While there is an exception if the substance was marketed as a dietary supplement or a conventional food before the new drug investigations were authorized, FDA concluded this was not the case for CBD.  

FDA’s articulation of its authority over CBD has continued. With the passage of the 2018 Farm Bill in December 2018, FDA issued a press release reiterating that its traditional authorities were preserved. The agency convened a public meeting on cannabis and cannabis compounds in May 2019 and opened a docket for receipt of data and information. Nearly 4,500 comments were submitted to the agency. The agency indicated an intent to develop a “regulatory framework” for CBD that might permit the ingredient for non-drug uses.  

FDA’s November 2019 Actions

FDA continued to issue warning letters in 2019 (seven through October), including to prominent cannabis company Curaleaf, Inc. The agency ramped up enforcement in November 2019 and, in one day, issued 15 warning letters to CBD marketers. All the letters cited companies both for making illegal drug claims and for CBD being an illegal ingredient in human and animal foods and supplements.  

The agency made another important announcement at the same time. Having reviewed the available data, FDA announced that it could not conclude that CBD was generally recognized as safe among qualified experts for use in human or animal food. FDA cited specific safety concerns for CBD, including liver injury, interactions with other drugs and male reproductive toxicity. FDA also noted there were significant data gaps with little information on the cumulative use of CBD in the diet across multiple products.  

The only avenue that would seem to remain for CBD in foods would be through a formal food additive petition process to the agency – a long and expensive proposition that could be difficult to achieve given FDA’s current views on the lack of safety data for CBD in foods.  

Though the agency continued to object both to the claims and to the presence of CBD in foods and supplements, many in industry assumed that a company could evade FDA problems if it avoided therapeutic claims. Many of the companies receiving warning letters simply removed objectionable claims (sometimes only temporarily) and continued to market CBD-containing products.  

The Class Action Lawsuits

Companies continuing to market CBD products are facing another, significant risk in the form of class action lawsuits for violations of state law.  Actions include:  

  • Dasilva v. Infinite Product Company LLC, 2:19-cv-10148 (C.D. Cal.)
  • McCarthy v. Charlotte’s Web Holdings, Inc., 5:19-cv-07836-BLF (N.D. Cal.)
  • Snyder et al v. Greens Road of Florida LLC, 0:19-cv-62342-UU (S.D. Fla)
  • Potter v. Potnetwork Holdings, Inc. et al, 1:19-cv-24017-RNS (S.D. Fla.)
  • Gaddis v. Just Brands USA, Inc. et al., 0:19-cv-62067-RS (S.D. Fla.)
  • Ahumada v. Global Widget LLC, 1:19-cv-12005-ADB (D. Mass.)
  • Consumer class actions pose a serious threat. One court, Snyder et al v. Greens Road of Florida LLC, 0:19-cv-62342-UU (S.D. Fla), has stayed the lawsuit pending FDA’s action and other courts may follow. Nevertheless, the costs of defending a class action can be catastrophic.
  • CBD-containing topicals will continue to be popular options as the ingredient can be used in cosmetics. However, marketers have had difficulty avoiding therapeutic, drug-type claims for supposed cosmetic products, such as for pain relief, acne, psoriasis, and eczema, which are unlawful under the FDC Act.
  • The Federal Trade Commission might pursue CBD marketers making unsubstantiated advertising claims. Given the FTC’s ability to extract financial concessions and pursue corporate owners individually, an FTC order could be crippling. The agency sent warning letters in September and the more outlandish CBD claims would make for easy FTC enforcement.
  • FDA activity will certainly continue. With the 2020 appropriations, FDA will be issuing two reports in the coming months on CBD. Given that so many companies are continuing to ignore FDA’s warning that CBD is not a permissible ingredient in foods or supplements, it’s possible the agency might use its other enforcement tools, such as recalls, court remedies, seizures and injunctions.
  • If FDA waits too long to develop its regulatory framework, Congress could amend the FDC Act to clear a pathway for CBD. However, it’s possible legislators will be less eager to amend the FDC Act for the benefit of a single product and especially when doing so means ignoring the FDA’s scientific and medical judgement regarding CBD safety.Deference to FDA’s expertise, however, did not stop the introduction of H.R. 5587.

In addition, a class action complaint accuses Curaleaf of violating federal securities laws by making materially false and misleading allegations regarding the efficacy of its CBD products. In re Curaleaf Holdings, Inc. Securities Litigation, 1:19-cv-04486-BMC (E.D. N.Y.).

Congress Losing Patience

Congressional pressure on FDA to support hemp agriculture by permitting CBD in foods and supplement is considerable. In September 2019, 26 House members sent a letter urging the agency to allow CBD in dietary supplements and as a food additive.

The fiscal year 2020 budget appropriation signed into law on Dec. 20, 2019 includes directions to FDA on CBD. Congress appropriated $2 million to FDA for “research, policy evaluation, market surveillance, issuance of an enforcement discretion policy, and appropriate regulatory activities.” FDA is also required to provide reports to Congress within 60 and 180 days, respectively, 1) regarding progress on an enforcement discretion policy for CBD and 2) the results of a sampling study examining which CBD products are mislabeled or adulterated.  

In January 2020, House Agriculture Committee Chairman Collin Peterson (D-MN) introduced H.R. 5587 that would override the statutory bar that prohibits CBD in dietary supplements and conventional foods because it is an active drug ingredient with no history of use in the food supply. The bill would amend section 201(ff) of the FDC Act so that CBD could be considered a dietary ingredient and would amend section 301(ll) of the FDC Act so that conventional foods would not be unlawful solely because they contain CBD.  

The law would not otherwise amend the FDC Act. Consequently, CBD would still have to be either GRAS or approved under a food additive petition to be added to food; to be included in a dietary supplement, it would have to be subject to a new dietary ingredient (NDI) notification which includes the basis on which the manufacturer concluded CBD is reasonably expected to be safe under the labeled conditions of use.   

The same week Chairman Peterson released his bill, Dr. Douglas Throckmorton from FDA’s Center for Drug Evaluation and Research testified before the House Energy and Commerce Committee. Dr. Throckmorton reiterated FDA’s authority over CBD, restated the agency’s safety concerns and emphasized the dearth of data about CBD consumption in the diet. Dr. Throckmorton estimated that developing a regulatory framework for CBD in foods and supplements could take three to five years.

What happens in the meantime?

The future for CBD in 2020 remains muddled. Looking ahead:

Consumer class actions pose a serious threat. One court, Snyder et al v. Greens Road of Florida LLC, 0:19-cv-62342-UU (S.D. Fla), has stayed the lawsuit pending FDA’s action and other courts may follow. Nevertheless, the costs of defending a class action can be catastrophic.  

  • CBD-containing topicals will continue to be popular options as the ingredient can be used in cosmetics. However, marketers have had difficulty avoiding therapeutic, drug-type claims for supposed cosmetic products, such as for pain relief, acne, psoriasis, and eczema, which are unlawful under the FDC Act.
  • The Federal Trade Commission might pursue CBD marketers making unsubstantiated advertising claims. Given the FTC’s ability to extract financial concessions and pursue corporate owners individually, an FTC order could be crippling. The agency sent warning letters in September and the more outlandish CBD claims would make for easy FTC enforcement.
  • FDA activity will certainly continue. With the 2020 appropriations, FDA will be issuing two reports in the coming months on CBD. Given that so many companies are continuing to ignore FDA’s warning that CBD is not a permissible ingredient in foods or supplements, it’s possible the agency might use its other enforcement tools, such as recalls, court remedies, seizures and injunctions.
  • If FDA waits too long to develop its regulatory framework, Congress could amend the FDC Act to clear a pathway for CBD. However, it’s possible legislators will be less eager to amend the FDC Act for the benefit of a single product and especially when doing so means ignoring the FDA’s scientific and medical judgement regarding CBD safety.Deference to FDA’s expertise, however, did not stop the introduction of H.R. 5587.

 

Association of Food Industries: Serving the U.S. Food Import Trade Since 1906
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