ATW’s legal takeaways: CBD state regulation is constantly developing patchwork of laws

Editor’s note: This article is part of a series of “ATW legal takeaways” columns by attorneys with Amin Talati Wasserman LLP.

A flood of new state legislation regarding CBD and hemp products has already been proposed, amended and enacted in just the first six months of 2023.

Due to increasing concerns regarding intoxicating hemp compounds and synthetically derived cannabinoids, pressure from the marijuana industry, as well as continued inaction by FDA to implement a federal regulatory framework, states have led the way in developing laws and regulations governing the sale and distribution of these products.

While certain regulatory trends have evolved at the state level since 2018, the state laws that have been established can best be characterized as a “patchwork” that is constantly changing and likely to cause further confusion, frustration and complications in manufacturing, selling and distributing CBD and hemp products.

2018 Farm Bill

How are states allowed to impose their own restrictions on CBD and hemp products? The Agriculture Improvement Act of 2018 (commonly known as “the 2018 Farm Bill”) removed hemp from Schedule I of the Controlled Substances Act (CSA) and legalized hemp production in the U.S. as of Dec. 20, 2018.

“Hemp” is broadly defined 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.” Thus, the 2018 Farm Bill legalized a wide range of hemp-derived substances, but only by removing them from federal scheduling.

Under the 2018 Farm Bill, states may no longer prohibit the interstate transportation or shipment of lawfully produced hemp and hemp products. Notably, however, the 2018 Farm Bill also states, “Nothing in this subsection preempts or limits any law of a State or Indian tribe that…(i) regulates the production of hemp; and (ii) is more stringent than this subtitle.”

Thus, as a memo published by the USDA Office of the General Counsel confirms, while states cannot prohibit the interstate transportation or shipment of lawfully produced hemp under federal law, the 2018 Farm Bill preserves states’ authority to enact and enforce hemp-production laws that are more stringent than laws imposed under federal law. And of course, products containing hemp are also subject to FDA oversight.

FDA, for its part, has declined to regulate CBD/hemp at the federal level, citing safety concerns that cannot be managed under existing regulatory frameworks. As a result of this inaction, a frequently changing patchwork of state laws has developed, making it critical for companies manufacturing, distributing and selling CBD/hemp products to keep track of these changes.  

Patchwork of state laws

The first set of state laws that emerged following the passage of the 2018 Farm Bill primarily focused on labeling requirements for CBD/hemp products, as well as testing requirements to ensure delta-9 THC limits (typically <0.3% on a dry weight basis) and contaminant limits are not exceeded. Several states also established product and/or retailer registration requirements.

Then, in 2021, Oregon seemed to begin a new trend by enacting legislation that set milligram limits on THC, imposed age restrictions and prohibited certain synthetically derived cannabinoids. Specifically, Oregon began prohibiting the sale of hemp products with 0.5 milligrams (mg) or more of THC to those under 21 years of age. Oregon also began prohibiting “artificially derived cannabinoids” such as delta-8 THC, and imposed delta-9 THC limits of 2 mg per serving and 20 mg per package for “hemp edibles” such as food, beverages and dietary supplements.

As the 2023 legislative session commenced, an influx of state legislation was proposed to further restrict certain CBD/hemp products in other states. Numerous states have proposed or implemented restrictions or outright bans on synthetically derived or potentially intoxicating compounds such as delta-8 THC, delta-10 THC, HHC (hexahydrocannabinol, a hydrogenated derivative of THC), THC-O, THC-P, THCV and CBN (cannabinol). These measures were proposed or implemented due to concerns regarding residual contaminants and the unknown safety profiles associated with the above compounds.

But the most common restrictions this legislation session are those to:

Below are additional examples of recently passed or enacted state laws and regulations demonstrating the above trends, though they are not exhaustive. Manufacturers, distributors and retailers of CBD and hemp products should keep a close eye on the developments in all states where they are selling affected products because changes are frequent and often enacted with little public notice. In some states, violations are subject to fines as well as criminal penalties.

Colorado

Colorado has allowed the sale of hemp food, dietary supplements and cosmetic products for several years. However, products must also comply with approved source, testing (e.g., showing <0.3% total THC and that limits of certain contaminants are met) and labeling requirements (e.g., identifying in milligrams the total THC content per serving and container; no medical or health claims).

Due to the recent increasing popularity and safety concerns associated with intoxicating hemp products and synthetically derived cannabinoids in Colorado, a state task force was convened under the directive of Senate Bill 22‑205 to discuss and provide legislative recommendations concerning the regulation of these products. For example, while certain forms of hemp-derived THC such as delta‑8, delta-9 and delta-10 are technically permitted under federal law, they can cause a “high” similar to marijuana, and arguably should be subject to similar restrictions and measures to limit access by minors.

The task force issued its final report and final agency supplement with its recommendations to regulate these cannabinoids and products containing them at the beginning of 2023.

Senate Bill 23-271 which closely tracked the task force’s proposals, was subsequently introduced.

However, at least partially due to pressure from the marijuana industry to close the loophole on these products, several controversial amendments were made to the bill.  

On June 7, 2023, Governor Jared Polis of Colorado signed Senate Bill 23-271 into law, which includes the below requirements and restrictions (among others). It is possible (if not likely) that Colorado’s framework will serve as a model for other states looking to regulate intoxicating hemp products and synthetically derived cannabinoids.

The new Colorado law:

Florida

Florida currently allows the sale of hemp products, subject to meeting approved source, testing and labeling requirements. Senate Bill 1676, if signed by the governor, would impose additional restrictions such as requiring child-resistant packaging, prohibiting labeling or advertising of hemp products that would be attractive to children, and prohibiting the sale of ingestible products to those under 21 years of age, among other requirements. 

Tennessee

A new Tennessee law allows the sale of products containing hemp-derived cannabinoids, but places several restrictions on their manufacture, sale and distribution. Senate Bill 378, signed into law in May 2023, defines “hemp-derived cannabinoid” as (1) cannabinoids other than delta-9 THC or its isomer derived from a hemp in a concentration of more than 0.1%; or (2) hemp-derived product containing delta-9 THC in a concentration of 0.3% or less on a dry weight basis.

A hemp-derived cannabinoid includes delta-8, delta-10 THC, HHC, THCO, THCP, THCV and THCA, and the law excludes CBD, CBN, CBG (cannabigerol) and other cannabinoids that are unlikely to cause intoxication. The law prohibits the sale of hemp-derived cannabinoid products to those under 21 and requires these products to be maintained behind the counter at retail. It also imposes a 6% tax, requires a license to manufacture or sell hemp-derived cannabinoid products, establishes labeling and testing requirements, and requires child-resistant packaging.

Virginia

Virginia prohibits the sale of products intended for oral consumption or inhalation containing any amount of THC to those under 21 and imposes testing and labeling requirements for hemp products. In April 2023, Senate Bill 903 was signed into law and imposes the following additional restrictions:

Washington

Washington’s governor recently signed into law Senate Bill 5367, which, effective July 23, 2023, classifies hemp products with “any detectable amount of THC” as “cannabis products” that can only be sold by a licensed cannabis retailer. Regulators are likely to issue a rule or guidance in the future defining what is a “detectable amount.” The new law also prohibits the manufacture or sale of synthetic forms of THC.

Vermont

An emergency rule was adopted in April 2023 that, among other things, prohibits the sale of hemp products with more than 1.5 mg THC per serving, or more than 10 mg total THC per package, unless the ratio of CBD to THC is at least 20:1 and the products are registered and regulated cannabis products. Products marketed to mimic the intoxicating effects of THC—and the marketing or sale of hemp-derived intoxicating cannabinoids and synthetic cannabinoids—are also prohibited.

ATW takeaways

While common themes are evident in state legislation so far, it is a best (and necessary) practice to closely monitor further developments, especially where criminal penalties could be imposed. Several other states are still in the process of creating their own regulatory frameworks.

In addition, while FDA has yet to establish a framework for regulating CBD and hemp products, it is likely keeping a close eye on state regulatory frameworks and engaging in close communication with state regulators on what restrictions are working or not, especially as it relates to intoxicating hemp compounds. Thus, it is likely FDA will push for at least some common restrictions that have emerged through state legislation, including implementing child-resistant packaging, required labeling such as warnings, and age restrictions.