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Caution on the Hemp High

25 January 2019 • Jumbleberry
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By Sarah Steudle, Law Clerk

U.S. President Trump’s signing of the Agriculture Improvement Act of 2018 (the “2018 Farm Bill”) in December effectively legalized industrial hemp as a substance under U.S. federal law. As a result, many businesses jumped the gun to get a piece of the now legal hemp market. However, before you get caught up in the hemp high, we want to remind you that as with the production and marketing of any other product there are still regulatory factors to consider.

Is your cannabis product legal?

The 2018 Farm Bill specifically referred to and legalized industrial hemp, which is legally classified in the U.S. as cannabis and derivatives of cannabis containing less than 0.3 percent (on a dry weight basis) of the psychoactive compound THC. It did not legalize marijuana, which is classified as cannabis containing 0.3 percent of THC or more, and as such remains an illegal substance under the Controlled Substances Act. This means that not all cannabis products are now legal. Because of this, it’s very important to ensure that the cannabis product you are marketing or intend to market meets the above definition of industrial hemp. It is then critical to ensure that you completely trust the supplier or manufacturer of your cannabis product. While the cannabis used in your product may meet the definition of legal industrial hemp, the 2018 Farm Bill specifically preserved the authority of the U.S. Food and Drug Administration (the “FDA”) to regulate products containing cannabis or cannabis-derived compounds. So, what does this mean for you?

Do you need FDA approval?

On the date of signing the 2018 Farm Bill, the FDA released a statement about what the bill has not changed. That is, in short, that the FDA still very much has a say in the cannabis market, especially when it comes to using it in food, cosmetics and supplements and in particular with respect to interstate commerce. Here are a few main points, among many other things, that you should consider when it comes to the FDA regulation of cannabis products,

  • Medical and Drug Claims: The FDA focuses its enforcement on any product making drug claims and they have stated that they very much “continue to be concerned at the number of drug claims being made about products not approved by the FDA that claim to contain CBD or other cannabis-derived compounds.” The key point to take away from this is that only FDA-approved products can make drug/medical claims, and even these claims must be in line with FDA-approved labeling requirements. So as with any other product, it is important to look carefully at the claims being made in your cannabis product labeling and marketing to determine whether they might be deemed medical or drug claims, such as references to the diagnosis, cure, treatment or prevention of diseases.

  • Dietary Supplements: Defined as products that are taken by mouth that contain a “dietary ingredient”, such as vitamins, herbs or any other substance that can be used to supplement the diet – for which some marketers have suggested the use of cannabis-derived substances. However, is it important to note that the FDA still considers it illegal to market products containing CBD or THC as dietary supplements, even if derived from legal industrial hemp.

  • Food and Interstate Commerce: It is currently illegal for food products containing added CBD or THC, even if derived from legal industrial hemp, to be introduced into interstate commerce. However, the FDA has also recently recognized that certain derivatives of the hemp plant – hulled hemp seeds, hemp seed protein and hemp seed oil - can be added to and legally marketed in human foods without approval.

Most importantly, the FDA has reiterated that as with any other product, they will continue to warn consumers and take enforcement action where they believe consumers are at risk.

Other Regulatory Marketing Guidelines and Regulations

The marketing guidelines and regulations of other U.S. authorities, in particular the Federal Trade Commission (the “FTC”), will still very much apply in this hemp market especially in regard to beauty and wellness products. To help you navigate this part of the regulatory world here is a quick reminder about a few commonly enforced items:

  • Substantiated Claims: Substantiation is the most scrutinized element of every claim from a regulatory perspective, whether the FDA or FTC, so it is very important that if you are making specific claims they can be backed up by competent and reliable scientific evidence.

  • Truth and Transparency: Regulators, including the FTC, put a lot of emphasis on ensuring ads are truthful and not misleading, especially if the advertising claims might or have proven to affect consumers’ health and/or their finances. It’s very important to review your marketing content on a regular basis for elements that might be perceived as deceptive.

  • Disclosures: The FTC has a lot of material on the use of disclosures, especially in online ads. It is especially important that required disclosures are clear and conspicuous and that during a transaction a consumer knows what they are paying for.

  • Endorsements and Testimonials: If you are using endorsements and testimonials in the marketing of your product, even if through another party, make sure that all parties involved are meeting the standards of the FTC. Such as, having proper disclosures in place and having the material reflect the honest opinions, findings, beliefs, or experience of the individual providing the endorsement or testimonial.

For other aspects to consider and for more information, the FTC has published many helpful guides on many topics to help guide your marketing content and practices. ______________________________________________________________________________

The Farm Bill has legalized industrial hemp; however, the market is complicated and there exists regulatory murkiness. It remains to be seen how this will change or clarify over time. We will be keeping a close eye on developments in this area and will do our best to keep up-to-date on any significant progress. This blog post is by no means an exhaustive summary of the many aspects to consider in the production and marketing of legal cannabis products and as always, we recommend that you consult with your legal counsel to help navigate this especially complicated area of regulation.

DISCLAIMER The blog sets out a variety of materials to be used for educational purposes only; the author(s) do not intend the blog to be a source of legal advice. Please retain and seek the advice of a lawyer and use your own good judgement before choosing to act on any information included in the blog. If you choose to rely on the materials, you do so entirely at your own risk.

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