Hemp insiders brace for FDA’s CBD enforcement policy

Even as the hemp industry observed National CBD Day over the weekend, industry insiders remain unclear on what to expect in terms of long-delayed guidance from the U.S. Food and Drug Administration for using cannabidiol in food, beverages, dietary supplements and cosmetics.

FDA officials filed draft guidance on CBD Enforcement Policy with the White House Office of Management and Budget in mid-July, signaling that long-awaited and much-needed clarity could finally be coming to the industry.

The hemp industry has been waiting for the FDA to provide a legal path forward for hemp-derived CBD products since the 2018 Farm Bill was signed.

Recognizing the business opportunities hemp offers, from offering high-protein, high-fiber animal feed to providing over-the-counter wellness benefits for humans, the hemp industry was ready to take off.

But the FDA quickly issued a reminder in December 2018 that although hemp had become a legal crop and was no longer a controlled substance, CBD and THC were still not legal to add to food – and promised it would consult with the industry to develop “predictable and efficient guidelines.”

Kelly Shea

SVP Government Affairs & Corporate Communications

Charlotte’s Web

What does the FDA’s submission of draft guidance on CBD Enforcement Policy to the White House OMB mean for the industry?

We saw that FDA submitted to OMB for their review “Cannabidiol Enforcement Policy; Draft Guidance for Industry.” We also saw that they marked the document as “Not Economically Significant” which means they expect it to have less than a $100 million impact. Because the guidance is described as an “enforcement policy,” I am thinking it is unlikely to say much about a new pathway.

Commissioner Hahn said at the meeting of the National Association of State Departments of Agriculture in February, “We’re not going to be able to say you can’t use these products. It’s a fool’s errand to even approach that[.] We have to be open to the fact that there might be some value to these products and certainly Americans think that’s the case. But we want to get them information to make the right decisions.”

This guidance could answer the second half of Commissioner Hahn’s quote. FDA could plan to reiterate the “illegality” but then say they will only enforce in certain cases such as covid cure claims and other prohibited health claims, making products that look like candy for children, etc.

I think if “that’s the way the document goes,” it will again be a source of deep frustration for the industry and for investors (as both seek regulatory certainty for the market to grow).

The industry needs regulatory certainty. The industry needs to know that full spectrum hemp extract is not considered a “drug” by FDA, but is considered a dietary supplement and is then fully regulated as a dietary supplement for consistency, food safety GMPs, testing transparency and all other applicable requirements.

We also look to Congress to clarify the work they did in the 2018 Farm Bill and provide a better structure for the manufacturing, processing, sales and transportation of hemp products.

Patrick McCarthy

CEO

ValidCare

What does the FDA’s submission of draft guidance on CBD Enforcement Policy to the White House OMB mean for the industry?

Hard to know for sure… but hopefully a strong position on:

1. Required testing and corresponding labeling to match product composition.
2. Meaningful ramifications for companies that health claims.

What do you anticipate this will include and how long will it take before the industry sees the document?

No crystal ball here, but would expect at least another 90 days due to pandemic and election year priorities.

What does the industry need to see from FDA?

In regard to enforcement policy (separate from regulatory decision), the industry needs clear guidance on what products (from seed through processing to final composition) are allowable, what testing needs to be conducted to ensure consumer safety and how labeling should be approached to ensure consumer safety and avoidance of claims or misrepresentation of product categorization.

What will happen if the industry doesn’t see some guidance on CBD soon?

Without guidance:

1. The top, well-funded brands (estimate 10-25 in health/wellness, cosmetics and animal categories) will survive and may thrive if they invest in safety science and avoid claims.  Most will work to blend products with supplements to mitigate risk, and also launch other cannabinoids (e.g., CBG, CBN, etc).
2. More charlatans will continue irresponsible behavior and harm industry credibility — and God forbid cause harm through use of a person or animal of an unsafe product.

How has a lack of FDA action affected the industry?

Lack of regulation has dried up investment, caused poor operators to go under or merge, allowed savvy marketers to drive product sales without trusted third-party standards and testing.

Anything to add?

Wouldn’t expect the OMB enforcement policy to bring regulatory clarity; but instead clarity on what won’t be tolerated.  Cosmetics, ingestible human and animal products are the three categories that stand out.

Funding for regulation, research or enforcement (unless OMB shifts a budget item) will still come through the legislative process; which is unlikely in the near term.

The regulatory process remains clear for CBD as a drug as re-emphasized by FDA.  And until there is enough “science based data” provided (by industry or others) to answer FDA’s liver safety, drowsiness and reproductive concerns, I would expect the agency to focus on what industry “can’t do” vs. what it can do.

Smart brands will invest in consistent formulations, responsible testing and labeling, and real-world science to demonstrate safety in humans and animals.

Michael Bronstein

Founder

American Trade Association for Cannabis and Hemp (ATACH)

What does the FDA’s submission of draft guidance on CBD Enforcement Policy to the White House OMB mean for the industry?

The submission of FDA’s draft enforcement guidance on CBD to the White House is further public acknowledgement that the federal government is contemplating a policy response.

For those who have closely followed the issue of FDA enforcement and what the agency has said, I anticipate few surprises.

Between public comment, questions it has asked, research, warning letters, and regulatory actions, FDA has created a body of work from which it will suggest enforcement guidance.

The longer-term interest for industry is building a regulated market, providing the information FDA has been looking for to inform policy decisions and hammering out a sensible policy that responsibly meets consumer demands. The current situation isn’t tenable for the industry, government, or the consumer and there is enormous pressure to come up with the right solution.

Jackson Garth

President & CEO

Verde Leaf

What does the FDA’s submission of draft guidance on CBD Enforcement Policy to the White House OMB mean for the industry?

The U.S. Food and Drug Administration (FDA) recently submitted its Cannabidiol Enforcement Policy Draft Guidance to the White House Office of Management and Budget. With approval from the OMB, the public release of the enforcement policy could come in very soon, which will cause panic for some companies and for others these regulations will bring peace.

This is exciting news for the industry because we will all finally know what the rules of the game are and how to play by them. This will also be the benchmark for improvement for the industry. We have to start somewhere.

With the new regulations coming into place, thousands of CBD-based businesses will be reassured that their efforts in being compliant will not go to waste as it has been with regulations being a constant moving target.

This will also allow for us to finally clear through and start weeding out the companies who are not operating by best standards. I know several companies and our strategic partners, who want to operate with the highest standards and bring quality products to our customers and consumers just like Verde Leaf.

Regulations are what is needed and wanted to help the CBD industry flourish and give the consumers what they are demanding.

Hunter Buffington

Executive Director

Hemp Feed Coalition

What does the FDA’s submission of draft guidance on CBD Enforcement Policy to the White House OMB mean for the industry?

I would really love to see the document to be able to respond. It is unfortunate that while they shared it with the White House, industry has not seen it. We continue to wait and see what the FDA is willing to enforce. Meanwhile the CBD industry is expanding its market and consumer base with unregulated products.

What do you anticipate this will include and how long will it take before the industry sees the document?

Sooner would be so much better for the industry and our consumers. Because it is an “enforcement policy” I think the industry shares my concerns about who will be the enforcement agency. Hemp is a food and dietary supplement and not a drug.

What does the industry need to see from FDA? In a perfect world, what will be in the policy?

I would like to see a few items.

1. Truth in labeling – this would be easier to enforce without infringing on formulation and recipe protection. This would also allow the producers who have led the industry to continue to do so, and prevent bad players from potentially harming our consumers.
2. Identify that seed and seed products have no natural cannabinoids – this was stated by the FDA in response the GRAS notification for hempseed protein, hulled seeds and oil! It is food.
3. Move forward with the recognition that hemp extracts are like any other botanical extract and should be regulated the same.
4. Methods to track lots to ensure that contaminated or adulterated products can be removed from the shelves immediately.

What will happen if the industry doesn’t see some guidance on CBD soon? How has a lack of FDA action affected the industry?

I think that the industry has done a good, not great, job of self-regulating and there are a number of organizations that have been scrutinizing products; like the Clean Label Project.

I have begun to see state agencies responsible for food safety; beginning to create their own programs in place of federal regulations. These include truth in labeling, and here in Colorado testing programs and manufacturing guidelines.

Gretchen Schmidt

Faculty Program Director of Criminal Justice Studies

Excelsior College

What does the FDA’s submission of draft guidance on CBD Enforcement Policy to the White House OMB mean for the industry?

It is a step forward and it is a signal that CBD is on the FDA’s radar since the passing of the 2018 Farm Bill.  The fact that the FDA is still leaving open the forum for public comment signals that they are not ready to move forward to a final document. It can be argued that no real action will be taken by the FDA until there is federal (cannabis) legalization or legalization in all states in the United States.

What do you anticipate this will include and how long will it take before the industry sees the document?

The draft guidance will likely be reflective of the warnings it has been issuing around broad claims being made by some cannabis business such as “will cure COVID-19” or “Weight loss product.”  It is reasonable to expect that the FDA’s guidelines, when issued will follow their guidelines around other wellness products.

What will happen if the industry doesn’t see some guidance on CBD soon? How has a lack of FDA action affected the industry?

The lack of guidance and FDA action has set limits where considerable growth is possible. It also hinders the ability to do adequate research to explore additional ways CBD can be effective for health and wellness. Finally, if the FDA were to set regulations it would help create additional credibility for the products being produced and help break down the stigma around cannabis.

Brandon Beatty

Founder & CEO

Bluebird Botanicals

What does the FDA’s submission of draft guidance on CBD Enforcement Policy to the White House OMB mean for the industry?

It means that regulations could finally be near. The CBD industry has been awaiting the FDA’s enforcement policy since the passage of the 2018 Farm Bill and has seen very little movement on this front in the past 18 months.

This submission of the draft guidance to the White House indicates that regulations could be coming within the near future, which is cause for cautious optimism among CBD business owners.

What do you anticipate this will include and how long will it take before the industry sees the document?

It’s hard to say what this will include since the scope of the report has not been made public. Ideally, the document will be shared within the next several weeks, although that will depend on how quickly the White House OMB completes its review and how many revisions are required.

What does the industry need to see from the FDA?

In a perfect world, the FDA will issue guidance for the use of CBD in dietary supplements, food, and beverage. Their guidance will ideally adhere to scientific research and industry standards in determining acceptable daily limits of CBD, serving sizes, and reasonable labeling requirements for manufacturers.

This would entail setting a maximum daily limit of CBD intake within the range of what’s offered on the market today. This would also entail setting clear guidelines on what testing must be performed on CBD products.

What will happen if the industry doesn’t see some guidance on CBD soon? How has a lack of FDA action affected the industry?

If the industry doesn’t receive FDA guidance soon, then Congressional action is necessary.

The lack of FDA action up until this point has allowed shady companies to sell mislabeled and untested products to consumers, which not only jeopardizes the consumer’s health but also hurts the reputation of the industry at large.

Without regulations, these “fly by night” companies will be able to continue growing their businesses with unscrupulous practices at the expense of consumers and business owners alike. In this situation, it would become imperative for Congress to step in and mandate the FDA to speed up their process.

Brian Furnish

President

Hempin Hill Farm

What does the FDA’s submission of draft guidance on CBD Enforcement Policy to the White House OMB mean for the industry?

I don’t expect much out of this guidance other than trying to keep companies from making false claims.

The industry needs for the FDA to declare that hemp products are food or dietary supplement. Drug designation can be for products that go through the process. The entire industry is struggling because of the lack of action by the FDA.

Josh Schneider

CEO

Cultivaris Hemp

What does the FDA’s submission of draft guidance on CBD Enforcement Policy to the White House OMB mean for the industry?

Shawn Hauser

Partner and Chair, Hemp & Cannabinoid Practice Group

Vicente Sederberg LLP

What does the FDA’s submission of draft guidance on CBD Enforcement Policy to the White House OMB mean for the industry?

It means the industry will get some sort of enforcement policy for CBD products under which certain hemp-CBD businesses would operate (still in violation of federal law in certain circumstances) while the FDA continues to assess a change in law potentially regulating CBD products as ingredients in foods and dietary supplements.

Although what the industry needs is a clear regulatory structure, a risk-based enforcement policy may give businesses at least some needed clarity in manufacturing and retail standards and additional enforcement by FDA that will help to eliminate bad actors who are taking advantage of the current lack of enforcement.

This could be similar in form to the risk-based enforcement policy the cannabis industry operates under  (the 2013 Department of Justice’s Guidance for Marijuana Enforcement aka the “Cole Memo”)  that has in practice governed state-legal cannabis business (even after its rescission by former Attorney General Jeff Sessions) in that a federal agency would identify its enforcement priorities that would trigger its enforcement of federal law.

Based on FDA’s statements, it is possible that this guidance could be limited only to certain product types and be quite restrictive, though, leaving the industry in a very difficult position.

It’s also possible that this enforcement guidance influences the FDA’s ultimate approach to regulating CBD as an ingredient in consumer products.

What do you anticipate this will include and how long will it take before the industry sees the document?

I anticipate we won’t see the document until the fall at the earliest, but it’s certainly possible the guidance gets delayed until next year, especially as we near the presidential election.

The details and ultimate release date for the guidance are unknown, but based on FDA’s progress reports and statements relating to its ongoing safety evaluation of CBD, I think we can expect the guidance that addresses the agency’s primary safety concerns and product quality standards, such as mislabeling, unlawful claims, high levels of THC, pesticides, and contaminants such heavy metals.

It’s also possible that FDA addresses standards of measuring THC content in various types of finished products, something the agency addressed in its recent guidance for cannabis-based drugs.

Given FDA’s clear statements and concerns regarding the safety of CBD in food, it’s possible this guidance does not include food or simply re-affirms its current prohibition.

Given the FDA’s statements to date, the industry does not have reason to be optimistic about this guidance and should continue to focus on reforming the Food, Drug and Cosmetics Act.

What does the industry need to see from FDA? In a perfect world, what will be in the policy?

The industry needs a regulatory structure that regulates hemp-CBD like other ingredients ( i.e, subject to the existing regulatory framework for foods and dietary supplements), and enforces against bad actors.

A viable regime that protects consumer safety would require hemp ingredients to conform with the existing FDCA regulations for dietary supplements and in foods, where they can be used as ingredients if they meet safety standards for such uses.

These standards would include requirements such as food facility registration, meeting current good manufacturing practice regulations, labeling requirements (including nutrition labeling, allergen disclosures, contact information, etc), adverse event reporting requirements, and new dietary ingredient and food additive provisions where applicable.

The FDA would also ideally set a clear, attainable standard for measuring THC content in end products, and establish protections for intermediary hemp products.

The FDA would also address certain safety concerns with warning label requirements,  as it does with other products, such as warnings related to use by pregnant or nursing women and by children (except with parental or health professional supervision).

What will happen if the industry doesn’t see some guidance on CBD soon? How has a lack of FDA action affected the industry?

The entire hemp supply chain (including consumers) will continue to suffer, which is particularly challenging in a pandemic/recession, and the US will further hinder the true hemp economy that it intended with the passage of the 2018 Farm Bill.

We will also likely continue to see a proliferation of the “state patchwork” of regulation, which is untenable.

Without some federal guidance, I think we will see states go even further in developing state-level regulation that conflicts with federal law and are impracticable for states to implement and enforce.

The FDA’s failure to regulate consumable hemp products long after the legalization of hemp has forced states to regulate to protect consumer safety, which has created a patchwork of inconsistent state regulations that make it incredibly difficult for businesses in practice.

The situation is becoming untenable for businesses and regulators alike, and is incredibly confusing for consumers.

The lack of regulation has been devastating for many businesses, impacting the entire hemp supply chain. In addition to the dysfunctional state patchwork, CBD companies are experiencing massive delays in executing their business plans, challenges in obtaining investment and traditional access to capital, and having to allocate extreme costs and resources dedicated to compliance.

It’s important not to forget that the consumers are particularly affected, as the FDA’s lack of regulation or enforcement jeopardizes consumer safety. The lack of a regulatory regime has opened the door for “bad actors” ignoring safety standards and selling false/misleading products, who are on an equal playing field with responsible businesses complying with quality and safety standards.

Michael McGuffin

President

American Herbal Products Association

What does the FDA’s submission of draft guidance on CBD Enforcement Policy to the White House OMB mean for the industry?

I’ll start by suggesting that we really need to be considering what this will mean for industry and consumers. And the meaning completely depends on the contents of the draft guidance.

If FDA restates the status quo and does not add to its current enforcement attention, that will be a disservice to consumers and will leave industry without clarity on how to proceed (an aside – which would be really bad for American hemp farmers).

In other words, if the agency restates that its enforcement policy will continue to be limited to (1) acting against blatant drug claims, and (2) occasional enforcement on post-market analysis of CBD or THC levels, there will be no progress and no benefit to the guidance.

On the other hand, if FDA states a new enforcement policy that would be a significant benefit for industry and consumers, if the new enforcement policy is to set aside its interpretation that CBD is unlawful and now enforce all of the other regulations that apply to other botanical ingredients used in foods and supplement.

We could expand this further: What will FDA’s draft guidance mean for the economy? – and I again think that if the guidance clears out the uncertainty and initiates prompt and thorough regulatory enforcement that could be a boon for farm and retail economies, not to mention the hemp and CBD industry.

What do you anticipate this will include and how long will it take before the industry sees the document?

With regard to timing, we noticed that there was just under 2 months between the time FDA posted its prior draft guidance to OMB (the one on Cannabis … Quality Considerations for Clinical Research) and the agency’s issuance of that guidance.

Whether that provides any expectation here, though, is unknown, and could depend to some degree on what happens in the OMB process. On the question of expectations, I can only speculate and have no “inside information” to rely on. But the continuum of possibilities probably starts with the “status quo” described above (undesirable, as already discussed).

At the other end would probably be a statement of enforcement discretion, wherein FDA states it will set aside it’s interpretation of the pre-IND restrictions (this is the basis for the agency’s oft-repeated assertion that CBD may not be added to food or included in supplements) and consider all other regulations to now have force, and then state its CBD enforcement policy to be to enforce all of the rules that apply to all other botanical ingredients used in foods and supplements.

The agency shies away from use of enforcement discretion, though, so guidance that refrains from this but states a new “hemp enforcement policy” would be of significant benefit, if this states FDA’s intention to enforce all of the rules that apply to all other botanical ingredients used in foods and supplements to products that contain hemp and hemp extracts.

What does the industry need to see from FDA?

What we need to see is for FDA’s enforcement policy to be the same as its enforcement policy for all other herbs, such as chamomile and burdock and echinacea.

In this scenario, FDA would promptly initiate enforcement of very basic regulatory issues, such as food facility registration, current good manufacturing practice rules, proper labeling (nutrition, allergens, etc.), and pre-market safety obligations, among others.

What will happen if the industry doesn’t see some guidance on CBD soon? How has a lack of FDA action affected the industry?

FDA’s lack of action to date has contributed to a situation in which hundreds, and probably thousands of CBD- and hemp-containing product that are not being subjected to FDA’s significant authority to regulate these products are readily available to American consumers.

This absence of active enforcement is inconsistent with the Agency’s stated priorities, which FDA often describes as including protection of public safety and to ensuring product quality.

As long as FDA is not conducting cGMP inspections, allowing new dietary ingredient notifications, or policing compliance with product labeling, for example, it can’t possibly meet its own priorities.

This is obviously a disservice to consumers, and for industry it has created much uncertainty which has harmed both hemp farmers and the emerging hemp and CBD products industry.