Federal Courts Say They Will Decide Cases Against CBD Product Manufacturers When the Smoke Clears

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Epstein Becker & Green

The cannabidiol (“CBD”) consumer product marketplace is booming.  And, while FDA has maintained its position that CBD, even hemp-derived CBD, may not be included as an ingredient in conventional foods or dietary supplements, FDA has signaled its intent to create a lawful marketing pathway for these products.  Also, while FDA has issued Warning Letters to companies who made egregious claims about their products curing serious diseases and conditions like Alzheimer’s disease and cancer, FDA has also signaled a willingness to exercise enforcement discretion over CBD products that pose less serious safety concerns.  What has resulted is CBD manufacturers, retailers, and other businesses living in FDA regulatory purgatory.  Fortunately, several courts have recently held that CBD companies will not face consumer product liability, at least while their FDA regulatory fate is being decided.

A number of federal lawsuits were recently brought by consumers against manufacturers of various types of CBD products, ranging from ingestible foods and beverages, dietary supplements, topical oils and sprays, and vape products. The plaintiffs in these cases all bring similar claims, that the products purchased were misleading as to the amount of CBD in the product and/or that the products were mislabeled and falsely advertised as dietary supplements.  The plaintiffs’ claims are based, at least in part, on assertions that the defendants violated the federal Food, Drug, and Cosmetic Act (“FD&C Act”) by introducing adulterated and misbranded products into the U.S. market.

However, over the course of 2020, at least three judges have found that the outcome of these cases will have to wait until FDA completes its rulemaking on the regulation of CBD products. Citing the primary jurisdiction rule, the judges each issued a stay on their respective cases. The judges found that FDA has primary oversight over claims involving the illegal sale or marketing of CBD products, and that regulatory clarity is needed before a decision may be made on the matters brought by the plaintiffs. Thus, the fate of these cases now depend on when and whether FDA will issue regulations governing CBD products.

There is no definitive timeline for the issuance of any rulemaking by FDA.  In May 2019, FDA held a public hearing where it invited interested parties to comment on matters that would inform the agency’s decision-making about creating a legal pathway for the marketing of CBD conventional foods, dietary supplements, and cosmetics.  On January 15, 2020, an FDA representative testified before the House Committee on Energy and Commerce’s Subcommittee on Health, discussing the important role FDA plays in research involving cannabis and cannabis-derived compounds for potential medical uses.  During the testimony, FDA maintained that, “[a]t present, any food containing CBD or purported CBD dietary supplement product in interstate commerce is in violation of the FD&C Act,” but that the agency is also “working diligently to consider whether and how legal pathways might be established to allow the safe marketing of certain dietary supplements and/or food products containing CBD.”  Later in March 2020, FDA Commissioner Hahn made a statement to update the public on the steps the agency has been taking as part of its evaluation of the CBD regulatory regime. The primary initiatives described in the statement include educating the public on potential harm from CBD products, addressing data gaps by promoting cannabis research, and monitoring the CBD market for enforcement against those bad actors posing the greatest risk to public safety.  However, the Commissioner did not offer additional clarity as to the timeframe in which industry can expect a rulemaking that would change the regulatory landscape for the marketing of CBD consumer products.

Based on the stay orders issued in the CBD consumer cases, federal judges are not likely to consider FDA’s enforcement actions or public statements as definitive enough to support a court ruling, with some citing the possibility that the rule FDA ultimately produces may apply retroactively.  As a result, in addition to offering clarity to industry stakeholders, future steps taken by FDA will also prove impactful in setting federal precedent in this series of cases against CBD product manufacturers.  Manufacturers and consumers alike should stay updated on the status of developments in this field in order to be best prepared for the upcoming changes to the cannabis regulatory landscape.

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