State regulation of CBD

On Dec. 20, 2018, President Donald Trump signed into law the Agriculture Improvement Act of 2018 (also known as the 2018 Farm Bill). The 2018 Farm Bill categorized hemp as an agricultural commodity under the regulatory purview of USDA. The bill also removed “hemp” from the definition of “marijuana” in Schedule I of the Controlled Substances Act (CSA), provided the THC concentration is within the defined limit—confirming hemp and hemp derivatives, such as CBD, that meet the definition are not controlled substances. In doing so, the legislation ended years of back-and-forth between the hemp industry and the Drug Enforcement Administration (DEA) regarding the legal status of hemp extracts such as CBD.

One of the biggest unknowns is how states will regulate CBD and other hemp products, and this will have a significant impact on the CBD marketplace. Under the 2018 Farm Bill, states that opt to regulate hemp on their own must submit a plan to USDA for approval; USDA then has 60 days to approve or reject the plan. Kentucky recently submitted its plan, and other states that are already invested in hemp production and have robust industrial hemp pilot programs established under the 2014 Farm Bill, such as Colorado and Oregon, are likely to follow.

In addition, states that previously prohibited CBD based on DEA’s position, such as Alabama, have reversed course and announced hemp-derived CBD below 0.3 percent THC can be legally produced, sold and possessed in the states following passage of the 2018 Farm Bill. The industry is awaiting similar news from states such as Ohio and South Dakota that currently have in place prohibitions against CBD, although the federal legislation allows these states to continue to restrict access to CBD, or states could choose to limit CBD sales to licensed cannabis dispensaries.

In California—arguably one of the largest markets for CBD—the Department of Public Health issued an FAQ document in July 2018, stating CBD derived from hemp is prohibited for use in food or dietary supplements, while continuing to allow the sale of CBD derived from marijuana that is sourced from, produced and sold by those with commercial cannabis licenses. The passage of the 2018 Farm Bill is unlikely to change the state’s position since it is based primarily on FDA’s opinion regarding CBD, rather than whether hemp-derived CBD is a controlled substance.

Learn more about CBD regulation at the state and federal level in INSIDER’s CBD Digital Magazine.

Rend Al-Mondhiry, senior counsel, Amin Talati Upadhye LLP, advises the dietary supplement, food, cosmetic, and over-the-counter medicine industries on a broad range of regulatory and compliance matters. She is committed to helping companies responsibly develop and market products, drawing on her years of experience advising the nation’s leading dietary supplement and food companies on complex ingredient and labeling issues. She reviews product labels, ingredients and advertising claims to determine compliance with federal and state regulations, and assisting companies in matters before FDA, FTC and the National Adverting Division (NAD). She also advises clients on compliance with California’s Proposition 65, U.S. Customs issues, class action defense strategies, and FDA matters including warning letters, recalls, detentions, seizures, and import alerts.