Legalization of Hemp Production โ€“ An End-of-Year Present?

Morgan Lewis

Morgan Lewis

On December 20, President Donald Trump signed the Agriculture Improvement Act of 2018 (Farm Bill)[1], which in part removes hemp and hemp-derived products, including cannabinoids, with less than 0.3% tetrahydrocannabinol (THC), from the definition of marijuana in the Controlled Substances Act (CSA).[2] The Farm Bill continues to chip away at the criminalization of cannabidiol (CBD)-based products but does not address the US Food and Drug Administration (FDA) position that CBD-containing products are active drug products that cannot be sold as dietary supplements or foods. Whether FDA issues a new position on CBD, or issues an enforcement discretion policy for CBD products that do not make drug claims, will determine the scope of risk associated with marketing these products.

Prior to the 2018 Farm Bill, legal hemp production in the United States was restricted to research and pilot programs, and the legal status of CBD-containing products was unclear. The lack of clarity occurred because the CSA regulated both hemp and marijuana, which are the same species of plant, Cannabis sativa L., as controlled substances unless the part of the hemp plant used was the mature stalks or oil or cake made from the plant seeds.[3]

Therefore, prior to the 2018 Farm Bill, the only products containing hemp or CBD that could be legally marketed were products, including textiles, papers, and body care items, made from parts of the hemp plant outside of the definition of marijuana (i.e., mature stalks and seeds). Other CBD-based products were within the definition of marijuana and therefore a Schedule I controlled substance.

The 2018 Farm Bill legalizes the production of hemp and products made from hemp, hemp derivatives including CBD oil and extracts, and establishes that these products are no longer controlled substances, as long as the cannabis plant and products derived from the plant contain no more than 0.3% THC. The 2018 Farm Bill also allows the US Department of Agriculture (USDA) to transfer to states and Native American tribes the primary jurisdiction over hemp production in their states and reservations as long as they submit a hemp management plan that is approved by the Secretary of Agriculture. States that choose to regulate hemp production will need to track where hemp is produced, develop a method for testing the THC concentration of hemp, and have procedures for destroying hemp that is produced with a THC concentration of more than 0.3%, as well as license hemp producers. States can also choose to have more stringent requirements than those in the Farm Bill. Hemp growers in states and tribal jurisdictions that do not submit a plan will be subject to a comparable plan established by USDA.

While the removal from the CSA of “hemp” and cannabinoids as defined in the Farm Bill[4] will mean the sale of the product no longer constitutes a criminal act under the CSA, there are still legal and regulatory challenges to marketing CBD-based products that are regulated by FDA, e.g., foods, dietary supplements, drugs, and cosmetics. FDA’s current position is that CBD is an active pharmaceutical ingredient that can only be marketed as a new drug subject to an approved New Drug Application. Whether FDA will modify its position regarding the marketing of CBD products is unclear, but it’s clear that the market is not likely to wait for a new policy from the FDA.

Below is a brief analysis of issues arising from the Farm Bill for FDA-regulated products containing CBD ingredients.

  • Pharmaceuticals – The Drug Enforcement Administration (DEA) will likely reconsider its scheduling decision for FDA-approved CBD drugs, which are currently listed as Schedule V controlled substances. In July 2018, FDA approved the first CBD based drug Epidiolex, for the treatment of seizures associated with Lennox-Gastaut and Dravat syndrome. FDA’s approval forced DEA to reconsider the scheduling of CBD, because Schedule I drugs by definition are substances without an accepted medical use. However, because the United States is also a signatory to the Single Convention on Narcotics, 1961, which lists cannabis extracts as Schedule I, DEA’s actions also had to be consistent with the requirements of the treaty. Therefore, DEA compromised by limiting rescheduling of CBD from Category I to V to only certain FDA-approved drug products that contain no more than 0.1% THC, a level now inconsistent with the Farm Bill.[5] Whether the Farm Bill affects company decisions to pursue CBD-based products as new drugs remains to be seen.
  • Dietary Supplements – Under the Federal Food, Drug, and Cosmetic Act (FFDCA), the definition of “dietary supplement” excludes products that have been “authorized for investigation as a new drug for which substantial clinical investigations have been instituted and made public.”[6] Because FDA has concluded that CBD is a drug based on its approval of Epidiolex, CBD currently cannot be marketed as a dietary supplement or dietary ingredient. FDA has been active in issuing warning letters to companies selling CBD and hemp products online that claim to prevent, diagnose, treat, or cure disease as they are unapproved drugs. Although FDA has not actively enforced against CBD products not marketed with drug claims, the sale of the products would nonetheless continue to be a violation of the FFDCA. The 2018 Farm Bill specifically states that it does not affect anything in the FFDCA so Congress specifically avoided interfering with FDA’s current position. Consequently, the sale of CBD products as dietary supplements continues to be a violation of the FFDCA until further comment from the FDA.
  • Food Ingredients – Similar to dietary supplements, under Section 301(ii) of the FFDCA, it is illegal to introduce or deliver into interstate commerce any food (including animal food or feed) to which a substance with an active drug ingredient has been added. There are a few exceptions, including when the ingredient was marketed in food before it was approved as a drug. However, FDA has concluded that none of the exceptions apply to THC or CBD and therefore, the agency has stated that it is a prohibited act to market any food to which THC and CBD have been added.[7] However, other hemp-based products, such as hemp seed oil, could potentially be marketed in food if the product is approved as a food additive or is considered generally recognized as safe (GRAS). There are currently three pending GRAS notices for hemp seed, and food manufacturers interested in marketing hemp seed should pay close attention to if or how FDA responds to these notices.
  • Cosmetics ­– Cosmetics containing hemp extracts, even those with trace amounts of THC, have been legally marketed since 2001 when DEA exempted these products from the CSA provided the products were produced from parts of the cannabis plant outside the definition of marijuana, and the product did not cause THC to enter the body.[8] FDA has been relatively silent on the use of CBD in cosmetics, but the agency has been active when manufacturers tie the use of CBD or hemp seed to drug claims on the cosmetics (e.g., cancer, antiaging, inflammation, rosacea). With the passing of the Farm Bill, manufacturers should be able to use a wider range of hemp-based products in cosmetics including hemp-based CBD.
  • Imports and Exports – The US Customs and Border Protection (CBP) allows the import of hemp based products as long as they meet federal standards and have been produced legally.[9] Illegal hemp is routinely seized at ports of entry and there may be some confusion with the passing of the 2018 Farm Bill as to what products can now be imported and what types of documentation will be required. Manufacturers interested in importing hemp-based products into the United States should be on the lookout for additional guidance from CBP and be prepared to document that the product meets the definition of hemp in the Farm Bill, i.e., below 0.3% THC.
  • Other Practical Considerations
    • The provisions of the Farm Bill relating to hemp production must be implemented by USDA and the states, so expect this process to take several months to years.
    • Growers and manufacturers of hemp and CBD products will need to ensure the products are properly tested using validated tests and test results properly documented to demonstrate that the products contain less than 0.3% THC.
    • Seller/retailers of CBD products should conduct adequate due diligence of their suppliers, closely review claims for CBD products, and ensure adequate processes for confirming THC test results.

[1] Agriculture Improvement Act of 2018, H.R. 2, 115th Cong. (2018).

[2] CBD or cannabidiol is a class of cannabinoids.

[3] The CSA excluded from the definition of marijuana the mature stalks of such plant, fiber produced from such stalks, oil or cake made from the seeds of such plant, any other compound, manufacture, salt, derivative, mixture, or preparation of such mature stalks (except the resin extracted therefrom), fiber, oil, or cake, or the sterilized seed of such plant which is incapable of germination” (emphasis added); 21 U.S.C. § 802(16).

[4] Section 2971 defines hemp as “the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.”

[5] Drug Enforcement Admin., Schedule of Controlled Substances: Placement in Schedule V of Certain FDA-Approved Drugs Containing Cannabidiol; Corresponding Change to Permit Requirements, 83 Fed. Reg. 48950 (Sept. 28, 2018).

[6] FFDCA, §§ 201(ff)(3)(A)-(B).

[7] See Food & Drug Admin., FDA and Marijuana: Questions and Answers (last visited Dec. 10, 2018).

[9] US Customs and Border Protection, Importing hemp products into the U.S. (last updated May 11, 2018).


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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