Federal regulators’ murky response to the rapid legalization of the hemp extract CBD has created a patchwork of state responses — ranging from broadly permissive to raids on retailers and seizures of trailers loaded with lucrative leaf.
At a meeting Friday, FDA panelists asked pharmaceutical companies and patient organizations whether the widespread availability of off-the-shelf CBD products — ranging from pet food to skin oils touted as salves for all sorts of ailments — had an impact on efforts to research and develop cannabis-based medicines. But companies that want to use CBD as medicine countered that federal red tape is what’s holding up progress on developing drugs.
Confusion about the status of CBD dates back to December, when Congress’s farm bill threw a curve ball at regulators and state officials. It legalized hemp production nationwide, and with it the plant’s most profitable byproduct, the non-intoxicating drug cannibidiol, or CBD. The chemical also is found in marijuana, which is still banned under federal law, though plentiful in 33 states that have legalized it for either medical or recreational use.
The FDA has reminded Congress that there was already one approved product containing CBD — a prescription drug for two specific forms of childhood epilepsy — but that it needed at least a year to make federal rules that reflected the oil’s safety and effectiveness, as a medical product or a low-dose additive for foods, ranging from lattes to waffles.
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In the meantime, states are working on their own rules to handle the growing number of farmers and retailers hoping to cash in on CBD. It’s already a $1.5 billion market, and it should expand to $16 billion by 2025, according to Cowen analyst Vivien Azer.
“State legislators and policymakers are responding to the ground truth in their own backyards and doing a range of things,” said Coleen Klasmeier, an attorney with Sidley Austin LLP who represents industry clients. “More needs to happen at the federal level before anyone can do anything long term.”
Like snake oil salesmen of yore, some advocates claim the compound is good for what ails you — everything from insomnia to diabetes to PTSD, Parkinson’s disease, addiction, anxiety and depression. And that doesn’t even include the skin and beauty products.
Hemp and marijuana are two versions of the same plant. Marijuana, which is distinguished by containing at least 0.3 percent of the psychoactive extract THC that gives people a high, remains in the federal government’s most-restricted drug class.
While the FDA is responsible for only a section of the CBD regulatory maze, that realm is large, and federal lawmakers, growing frustrated with the uncertainty in their own states, have called on the agency to speed up its plans.
FDA has approved only one CBD-based drug, the epilepsy treatment, but off-the-shelf medical claims have run wild. So far the FDA has taken a whack-a-mole approach, dishing out warning letters to manufacturers that make unsubstantiated cancer-killing or Alzheimer’s-treating claims but largely leaving the rest of the industry alone.
The Department of Agriculture, which would regulate hemp production itself, has promised to issue a framework this year. Other agencies, from the Drug Enforcement Administration to the Department of Transportation, have been thrust into the debate as states take aggressive steps to confiscate supplies or stop hemp-carting 18-wheelers from traveling across borders.
“In addition to the fact that you’ve got states moving in different directions, you got multiple federal agencies that are still trying to sort through the regulatory framework for these products,” said Michael Werner, a lobbyist with clients in the CBD industry. “So the whole thing right now is extraordinarily confusing.”
FDA has “outlined a step-wise approach to evaluate the regulatory strategy to determine whether it is safe to include CBD in foods or other consumer products,” Deputy Commissioner Amy Abernethy tweeted this month. “The goal is to do this as quickly as possible without risking public health.”
In one of his last Congressional testimonies, former FDA Commissioner Scott Gottlieb suggested one scenario: that potent CBD be regulated as a pharmaceutical requiring FDA approval, while low-dose products stay on the shelves.
GW Pharmaceuticals, which makes the CBD-based epilepsy drug Epidiolex, wants the agency to provide incentives to manufacturers developing cannabis-based medicines, said CEO Justin Gover. He’s concerned that the widespread availability of CBD would slacken pharmaceutical interest in researching its medical value, a worry also raised by Gottlieb.
Friday’s FDA meeting won’t resolve any big issues but might help crystallize the complex issues involved, said Ian Stewart, a California lawyer with Wilson Elser who represents CBD clients. “Even if the meeting is a disaster and nothing comes out of it, that’s not going to stop the industry.”
A coalition of multistate CBD manufacturers will make the case at the meeting that states have already laid the groundwork for CBD regulation. They have pathways for approving cannabis producers and retailers and in some cases are even requiring bar codes that allow tracking of products.
“It has often been the FDA’s perspective to funnel everything towards this safety issue. But you can stand back for a minute and say ‘wait, this product has been consumed this way for five years, it’s been regulated at the state level, and there have not been serious incidences,” said Jessica Wasserman, a partner with Greenspoon Marder who is advising the coalition.
But only 33 states have legalized marijuana in some form, and not all have built those frameworks that can translate to CBD.
Instead, states have taken a variety of approaches as CBD has blossomed in popularity. Laws range from “this is legal” to banning it as if it were a controlled substance “even though it’s not,” said Jonathan Havens, co-founder of the Cannabis Law Practice at Saul Ewing Arnstein & Lehr LLP.
Earlier this year South Dakota passed a bill removing FDA-approved CBD drugs from a list of controlled substances. Soon after, South Dakota’s attorney general issued a news release saying all forms of industrial hemp and CBD remain illegal in the state, with the exception of Epidiolex.
However, some county attorneys say they won’t prosecute such cases. “I do not think CBDs are illegal under South Dakota law,” said Mark Vargo, Pennington County state’s attorney.
In Maine, meanwhile, Democratic Gov. Janet Mills signed a bill that would allow manufacturers to add CBD to food. The bill is a response to a crackdown from the Maine health department ordering the products pulled off the shelves, but contradicts FDA guidance.
Georgia passed a law in May that also establishes a state-regulated industry for hemp farming and CBD oil sales. But the state’s agriculture commissioner, Gary Black, said FDA regulations bar Georgia retailers from selling food products or dietary supplements with CBD.
In Texas, lawmakers are trying to toe the line between opening the door to legal hemp production, a profitable business for farmers, while keeping the door shut on marijuana.
Retailers — and farmers — are confused, said state Rep. Tracy King, a Democratic lawmaker who represents a rural South Texas district and authored a bill, which establishes a state-regulated hemp industry. Gov. Greg Abbott has yet to indicate whether he will sign the bill.
Until then, the sale of CBD products will remain illegal in Texas, said Shannon Edmonds, director of governmental relations at the Texas District and County Attorneys Association.
The patchwork of regulation has also created headaches for national retailers that want to stock their shelves with profitable CBD oils.
Lazarus Naturals, which sells CBD products online to individuals and other retailers, doesn’t face any legal issues in Oregon, where it’s based, but warns customers in other states that CBD is still a “high risk” product, said Dylan Summers, the company’s director of government affairs.
“Unfortunately if your local law enforcement is saying you can’t do it, there’s not much we can say,” said Summers. “It’s a tricky situation.”