December 11, 2018
On February 7, 2014, President Obama signed the 2014 Farm Bill (the “Bill”) into law. The Bill would prove to drastically accelerate the growth of the cannabidiol (“CBD”) oil market. In particular, the Bill included a provision that allowed farmers to grow “hemp” through permits provided by institutions of higher learning or state agricultural departments. Pursuant to the language of the Bill, Hemp was defined as any part of the Cannabis sativa L. plant that contained no more than 0.3% of Tetrahydrocannabinol (“THC”), on a dry weight basis. The CBD oil business is now projected to be a $1 billion market by 2020. What are some of the CBD oil marketing regulations that exist today and where are we headed?
How do marketing regulations effect the CBD oil industry?
Current Uses of CBD Oil
CBD oil is being sold in an array of products today, from coffee to shampoo. Users believe that CBD oil benefits include improved sleep, anxiety reduction and pain relief. The pervasiveness of CBD oil products now available in the marketplace gives the impression that these businesses are marketing entirely legal products. However, federal and state regulations are not so clear cut on the legality of CBD oil sale and marketing.
Federal Regulations
The Food and Drug Administration (“FDA”) regulates the sale of drugs and cosmetics under the Food, Drug and Cosmetic Act (the “Act”). Cosmetic products and ingredients, with the exception of color additives, do not require approval of the Federal Drug Administration (“FDA”) before they go to market. The FDA defines a drug as “a substance intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease.” Prior to offering a product to the consuming public, if the associated product marketing includes claims of curing, mitigation, treatment or prevention of disease, the FDA must first be provided the opportunity to test the product for purposes of evaluating if the product works, proper dosage and if there are any safety concerns.
Presently, the FDA considers CBD a drug, making it an illegal food ingredient. The FDA has proactively sought to protect consumers who, it believes, are being deceptively-marketed to by CBD oil businesses in interstate commerce. Specifically, the FDA has taken action against product purveyors that claim that CBD oil may cure, mitigate, treat or prevent serious diseases, such as cancer. When the FDA identifies businesses that are marketing CBD oil products with what appear to be unfounded efficacy claims, warning letters may be sent, notifying the subject businesses of potential violations and seeking a response as to how the cited violations will be cured.
Please note that, to date, CBD remains on the Schedule 1 list of illegal drugs under the Controlled Substances Act (“CSA”). Recently, we blogged about how the 2018 Farm Bill has been drafted to remove CBD from the CSA list of illegal drugs. The CSA presently stipulates that it is unlawful to advertise for sale a Schedule 1 controlled substance. The U.S. Drug Enforcement Administration (“DEA”) has not made CBD enforcement a priority but, under the letter of the law, it may do so. As such, until the 2018 Farm Bill is signed into law, marketers should proceed with caution in their advertising of CBD oil products in interstate commerce.
Navigating Federal and State CBD Oil Marketing Regulations
In addition to federal law, CBD oil businesses must be aware of state regulations that apply to the marketing of CBD oil products. State specific laws vary significantly and run the gamut from that of Indiana, which allows the distribution and retail sale of “low-THC hemp extract,” to Nebraska, where it remains illegal to possess, manufacture, distribute or dispense CBD products. In addition to state and federal regulations, social media platform policies are important to review and comply with for those who market online. Against this backdrop, CBD oil businesses are well-advised to speak with an experienced marketing attorney before advertising their CBD oil products in this rapidly-evolving regulatory climate.
If you are interested in learning more about this topic or need to review your CBD oil marketing practices, please e-mail us at info@kleinmoynihan.com or call us at (212) 246-0900.
The material contained herein is provided for informational purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney. Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.
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