While the U.S. Food and Drug Administration (“FDA”) continues to drag its feet in forging a clear path for the sale and marketing of hemp-derived cannabidiol (“Hemp CBD”) products, foreign agencies and industry players are leading the way by adopting their own sets of regulations.

Last week, giant beauty retailer Sephora announced it was now enforcing standards specifically tailored for all Hemp CBD products found on its shelves to ensure these products meet the company’s high-quality standards.

To comply with these CBD standards, all Hemp CBD products sold at Sephora must:

1. Exclusively contain full-spectrum or broad-spectrum Hemp CBD extracts, no isolate.
2. Be derived from hemp grown in the U.S.
3. Be accompanied by a certificate of analysis that could be made available for customers upon request.
4. Be tested three times for quality and purity, including CBD concentration levels as well as microbial and chemical contaminants.
5. Comply with the “Clean At Sephora” standards imposed on all products carried by the company, which ban the use of over 50 ingredients, including sulfates, parabens, phthalates, mineral oils and other potential toxins.

As the first national retailer to adopt CBD guidelines, Sephora is raising the need to assist consumers in navigating this complex regulatory landscape.

Hemp CBD topicals represent a significant percentage of the booming CBD market. According to an August 2019 report released by Grand View Research, Inc., the global CBD skincare market is expected to reach $1.7 billion by 2025, with North America leading the way. Yet, back in 2017, 60% of online CBD products reviewed in a study published in the Journal of American Medical Association, were found to be mislabeled. Mislabeled often meant false potency claims, with 26% of these products containing lower concentrations of CBD than listed on their labels.

Add to that the issue of adulteration and the sad reality that many CBD topicals–and CBD products, generally –contain dangerous substances. The issues are obviously hugely problematic and stress the need for standards like those adopted by Sephora to protect consumers from public health crises.

We applaud Sephora for leading the way in regulating the industry and hope that the company’s initiative will further pressure the FDA to fulfill its responsibility to ensure the safety of our nation’s cosmetics (among other things) by adopting its own regulations for the sale and marketing of these products.

We’ll continue to update you on any other regulatory development via this blog.

In recent years, the United States has seen a proliferation of ketamine clinics. From 2015 to 2018, the number of clinics increased from 60 to 300; that number is undoubtedly higher today. People are increasingly using ketamine for ailments that resist treatment through traditional pharmaceutical drugs.

In an even larger trend, the health care provider community seems to be exploring various alternative therapies and emerging medicines to improve quality of care. Recently, the decriminalization of psilocybin (by various cities) has been in the news as an emerging medicine. Similar to ketamine, psilocybin has shown great promise in clinical trials for helping to effectively treat depression and PTSD (and we’ve written about psilocybin several times on this blog, including here and here).

With respect to ketamine infusion therapy (which is the prime time attraction of ketamine clinics), the medical research based promise is for treatment of chronic neuropathic pain, chronic pain (instead of opioids), and various medication-resistant mental health disorders, including depression, bi-polar disorder, and PTSD (among others). According to the American Psychiatric Nurses Association:

Ketamine infusion therapy involves the administration of a single infusion or a series of infusions for the management of psychiatric disorders (e.g., major depressive disorder, post-traumatic stress disorder, acute suicidality). Ketamine is a noncompetitive N-methyl-D-aspartate (NMDA) receptor antagonist that has traditionally been used for the induction and maintenance of anesthesia.

Still, for all its promise, would-be clinic owners, practitioners, and consumers may be confused about the legality of such clinics. There are questions about the logistics of opening and running one of these types of businesses, given the complex interplay of laws and regulations promulgated by bodies from the U.S. Food and Drug Administration (FDA) to cities and counties. This post is dedicated to clearing up some of the confusion behind ketamine clinic set-up and operation.

What are the exact legalities behind ketamine?

Sine 1970, ketamine has only been approved by the FDA for the induction and maintenance of anesthesia. However,  it is also being used for off-label infusions for the management of psychiatric disorders and chronic pain management (enter the clinics). The FDA doesn’t have any regulations on point for the control and oversight of ketamine clinics when it comes to infusion therapy and the states don’t really either.

In 1999, the Drug Enforcement Administration (DEA) listed ketamine as a Schedule III controlled substance (a depressant) pursuant to the Controlled Substances Act, which means it has a moderate to low abuse potential (lower than Schedules I and II), a currently accepted medical use, and a low to moderate potential for physical or psychological dependence. Ketamine makes its home on Schedule III alongside anabolic steroids and testosterone. According to the Feds, ketamine is safer than cannabis (which is a Schedule I controlled substance).

So, how does one lawfully open and operate a ketamine clinic for infusion therapy given the foregoing?

First, ketamine infusion therapy is an off-label use for ketamine in the U.S. “Off-label use” (which is extremely common) is:

the use of pharmaceutical drugs for an unapproved indication or in an unapproved age group, dosage, or route of administration. Both prescription drugs and over-the-counter drugs (OTCs) can be used in off-label ways, although most studies of off-label use focus on prescription drugs.

According to the FDA, “once the FDA approves a drug, healthcare providers generally may prescribe the drug for an unapproved use when they judge that it is medically appropriate for their patient.” Oftentimes, a healthcare provider may prescribe a drug off-label because there might not be an approved drug out there yet to treat the subject medical condition or because no other medication has worked yet for the patient.

Ketamine infusion therapy fits squarely into legitimate off-label use for those mental health conditions not effectively treated by what’s on the pharmaceutical market today (and there are definitely more treatment possibilities out there as medical research continues). And as long as the healthcare provider in charge judges the infusion therapy to be ethical and not violative of safety standards, they may prescribe it accordingly.

Second, ketamine is still a controlled substance even if it’s being used for off-label administration, so you still have to follow all federal and state laws around Schedule III registration, storage, inventory management, security, record keeping, and prescription protocols (which is not insignificant). Whomever on site is administering, manufacturing, storing, or distributing the drug, from the doctor to the nurse practitioner to the on-site pharmacist, must register with the DEA in accordance with Part 1301 of Title 21 of the Code of Federal Regulations on and after August 12, 1999.  Failure to follow these very specific legal directives can lead to immediate criminal liability under federal law.

Third, multiple existing and state laws and regulations will apply to a ketamine clinic. Specifically, clinics should analyze state (and federal) medical, drug and facility statutes and regulations to identify various regulatory barriers to entry. Local laws will also likely come into play regarding the licensing and permitting of the clinic within certain zones of a city’s or county’s borders.

Fourth, because there is no FDA regulation on point for the control and oversight of ketamine clinics, it’s “dealer’s choice” on how the business is operated– including patient safety protocols. Because of this, multiple medical community interest groups have established recommended business and patient protocols to ensure that these clinics are abiding by a variety of ethical and corporate standards for ultimate patient care. See, for example, this comprehensive ketamine infusion therapy checklist developed by the American Association of Nurse Anesthetists.

Fifth, given that ketamine infusion therapy is still an off-label use, the liabilities for ketamine clinics is fairly far-reaching. The consequences of medical malpractice may be greater because of the off-label use of the drug; dosing and frequency of treatments, marketing and promotions, medical claims and statements of efficacy, patient screening and determination of appropriateness of administration, and coordination with mental health care providers (to name just a few) are going to be areas of vulnerability as a result.

Despite the growing body of research behind ketamine as an effective treatment for certain mental health issues and mood disorders, in 2017, an American Psychiatric Association (APA) task force related to ketamine cautioned medical practitioners (in a consensus statement) around the expanding use of the drug as an off-label treatment.

Ketamine is also widely known as a popular party drug (“Special K“). If a clinic is not scrupulous regarding its patient population and intake procedures (using minimal screening and untrained providers), or is looking to make a buck over a growing medical fad, anyone could get access to ketamine infusions. That access would be available under the auspices of having a chronic, untreatable mood disorder. As such, legitimate concerns also exist that legitimate patients won’t get enough of the treatment or they’ll get too much of the drug to their detriment.

Finally, esketamine nasal spray (a derivative of ketamine) was separately approved by the FDA for treatment-resistant depression last year. The new drug’s name is Spravato and its maker is Janssen, a division of Johnson & Johnson. On the back of this FDA approval, I can only imagine that more and more clinics will open across the nation, utilizing Spravato and continuing to explore off-label uses and applications of ketamine (especially since neither the FDA or DEA have really cracked down on these clinics).

Be sure to stay tuned as this exciting area of emerging medicine evolves.

The Agriculture Improvement Act of 2018 (2018 Farm Bill) legalized hemp by removing the crop and its derivatives from the definition of marijuana under the Controlled Substances Act (CSA) and by providing a detailed framework for the cultivation of hemp. The 2018 Farm Bill gives the US Department of Agriculture (USDA) regulatory authority over hemp cultivation at the federal level. In turn, states have the option to maintain primary regulatory authority over the crop cultivated within their borders by submitting a plan to the USDA.

This federal and state interplay has resulted in many legislative and regulatory changes at the state level. Indeed, most states have introduced (and adopted) bills that would authorize the commercial production of hemp within their borders. A smaller but growing number of states also regulate the sale of products derived from hemp.

In light of these legislative changes, we are presenting a 50-state series analyzing how each jurisdiction treats hemp-derived cannabidiol (Hemp CBD). Today we turn to Oregon.

Oregon was one of the first states to allow the production of industrial hemp following the enactment of the 2014 Farm Bill. Pursuant to Chapter 571 of the Oregon Revised Statutes, the Oregon Department of Agriculture (“ODA”) oversees the cultivation and processing of industrial hemp, Hemp CBD products, and commodities. Any grower or processors (known as “handlers” in the state) must secure a license from the ODA and comply with comprehensive reporting, recordkeeping and total THC testing requirements.

Oregon is also one of the states that have interpreted the 2014 Farm Bill to allow for the commercial sale of industrial hemp and Hemp CBD products, including products intended for human consumption. “Consumption” means “to ingest, inhale, topically apply to the skin or hair.” This means that Oregon permits the sale and marketing of Hemp CBD foods, non-alcoholic beverages, dietary supplements, cosmetics and smokables so long as they contain no more than 0.3% total THC and are free of certain chemicals.

Another unique aspect of Oregon hemp law is that it provides an opportunity for ODA-licensed growers and handlers to sell and transfer their products to the state’s marijuana recreational market so long as they satisfy certain licensing, testing, labeling and recordkeeping requirements.

Although the hemp rules only regulate the production and sale of hemp and Hemp CBD products within the state, ODA-licensed growers and handlers are free to sell or transfer these products outside of the state so long as they contain no more than 0.3% total THC. Under Oregon law, the exportation (and importation) of hemp and Hemp CBD products containing more than 0.3% total THC is strictly prohibited. This means that out-of-state growers, processors, manufactures and distributors wishing to sell their Hemp CBD products in Oregon must also ensure compliance with Oregon’s total THC testing standards before their product cross state lines. Violating this law is a Class C felony.

When it comes to transportation, the ODA rules mandate that any industrial hemp or industrial hemp seeds transported within the state be accompanied by a copy of the hemp registration and a copy of the pre-harvest test results that corresponds to the harvest lot in transit.

Earlier this year, the ODA submitted a plan to the U.S. Department of Agriculture to oversee the production of hemp under the 2018 Farm Bill. However, the Oregon agency ultimately decided to continue operating its hemp program under the 2014 Farm Bill. Therefore, the requirements currently imposed on hemp stakeholders will remain in place until October 30, 2020.

Currently, the Oregon legislature is technically still in session: we previewed Senate Bill 1561 and the other hemp-related draft bills here. Unfortunately, the session is now hanging by a thread due to a controversial walk out, and there is a chance we don’t see a state hemp plan for commercial production and sale, a state hemp commission, or any of the other hemp-related proposals that seemed to have real legs before the session.

For more updates on Oregon’s Hemp CBD laws, stay tuned to the Canna Law Blog. And for previous coverage in this series, check out the links below:

Last fall, we ran a 13-part series taking a hard look at each of the 2020 presidential candidates’ history and views related to marijuana. We assigned each candidate a letter grade corresponding with our analysis (for the final summary post, go here). In that popular series, grading criteria was as follows:

• Current stance on marijuana: What have they recently said about marijuana legislation? When did they adopt this stance? We awarded higher grades to candidates who currently support legalizing marijuana and even better grades if they have openly supported legalization for more than just the past couple years.
• Website and social media: Did the candidate include marijuana on their website? How often do they mention marijuana on social media? We used the candidates’ websites and social media as a litmus test of their dedication to the legalization of marijuana. While most candidates have expressed support for legalization, some only speak on the issue when prompted or have very few statements on the matter. If a candidate does not actively advocate for marijuana, we doubt their conviction.
• Past legislative history: How many marijuana-related bills did this candidate introduce, sponsor or sign? Did this candidate legislate the War on Drugs? How much opportunity did this candidate have to legislate bills? We considered the legislative history of each candidate to determine whether they would be likely to take real action to legalize marijuana as president.
• Past rhetoric: What has the candidate said about marijuana over the course of their political career? What about the War on Drugs? The views of most candidates have evolved over time, but we gave lower grades to candidates with a history of strong anti-marijuana remarks.

Many candidates have since dropped out of the race, but a handful remain. After we concluded the series, businessman and former NYC mayor Michael Bloomberg announced his entry in to the race. Bloomberg’s summary is below.

Grade: D-

Stance on marijuana: This past December, Bloomberg’s campaign told the Wall Street Journal that he supports the decriminalization of marijuana. However, he does not mention marijuana reform on his social media nor on his campaign website. Bloomberg’s website paints the former NYC mayor as a long-time advocate for criminal justice reform, but his past rhetoric and legislative history tell a much different story.

History with marijuana legislation: In 2001, Bloomberg was elected mayor of New York City as a Republican. He won reelection in 2005 and again in 2009. In 2018, Bloomberg registered as a Democrat and in November of 2019 his announced he was running for president.

The topic of cannabis was first addressed publicly by Bloomberg in 2001, when he was asked in an interview if he had smoked marijuana. Bloomberg replied: “You bet I did. And I enjoyed it.”

Despite this lighthearted admission, Bloomberg was opposed to marijuana legalization throughout the course of his mayoral career, in the past referring to cannabis as a “narcotic”, asserting that it reduces IQ, and refusing to acknowledge the possibility of its medicinal use. His time as mayor also coincided with a spike in arrests for cannabis possession. In fact, the number of arrests for possession under Bloomberg exceeded that of the previous three mayors combined. In 2011, Bloomberg also opposed a bill proposed by state senators that reduced the penalty for possession of small amounts of cannabis.

To his credit, Bloomberg softened his stance on marijuana a bit in 2012, when he vocally supported a proposal to end arrests for possessing marijuana in public view. In 2013, the then-mayor also supported a proposal that would change marijuana possession from a misdemeanor to a violation.

Bloomberg’s presidential campaign website presents his time as mayor as successful at criminal justice reform, citing reduced murder rates and reduced incarceration during his time as mayor. Arguably the most memorable aspect of Bloomberg’s mayorship, however, was the expansion of New York City’s “stop-and-frisk” program, which allowed police officers to detain and search members of the public without probable cause. This policing strategy undoubtedly resulted in many arrests and convictions for marijuana possession.

In 2013, a judge ruled that the implementation of this program by the NYPD to be unconstitutional, as blacks and Latinos were disproportionately frisked. Despite this express finding of racial profiling, Bloomberg long maintained his support for the program, vetoing policing reform bills as mayor and claiming that stop-and-frisk was an effective method of crime reduction years after he had left office. This past November, Bloomberg finally admitted that stop-and-frisk had done more harm than good, but this apology comes far too late.

Conclusion: We award Bloomberg a “D-” grade because he does not support the legalization of marijuana and because of his history of anti-marijuana rhetoric and policies. As mayor of New York, Bloomberg actively obstructed attempts to reform the criminal justice system and fully supported a racist policing tactic, even after a judge ruled that its implementation had been unconstitutional.

Last week, the Food Standard Agency (“FSA”), the agency responsible for protecting public health in relation to food in England, Wales and Northern Ireland (collectively, the “UK”), cleared a path for the sale of CBD-infused food for the next 12 months.

Specifically, the FSA is giving the CBD industry until March 31, 2021 to submit valid novel food authorization applications to ensure these products meet specific safety standards. Following the March 31, 2021 deadline, only products for which a valid application has been submitted will be allowed to remain on the market.

Although the UK recently severed its ties with the European Union, the FSA has opted to align its policy with that of the European Food Safety Authority (“EFSA”). The EFSA guidance on cannabinoids strongly echoes the U.S. Food and Drug Administration (“FDA”)’s in that it mandates that all food products infused with hemp or its derivatives receive a pre-market approval under the European Union “novel food” regulation because these products were not significantly used as a food or food ingredient before May 15, 1997.

According to the reporting of Hemp Industry Daily, CBD companies wishing to sell into the UK market will send approval plans to the EFSA through the end of 2020, at which point all applications will be transferred to the FSA.

So for now, the sale of CBD-infused foods is lawful in the UK so long as these products are:

1. Properly labeled, including free of health claims;
2. Safe to consume; and
3. Do not contain THC or other controlled substances.

Despite the fact that the FSA gave the green light on the sale of CBD-infused foods, the agency also warned consumers about its potential side effects.

Based on a scientific report issued by the country’s Committee on Toxicity of Chemicals in Food, Consumer Products and the Environment (“COT”), the FSA guidelines warn pregnant and nursing women “not to consume CBD products” and recommends that healthy adults limit their daily dosage to no more than 70 milligrams, which is the equivalent of 28 drops of 5% CBD oil.

After reviewed scientific data of Epidiolex previously used by European and foreign health authorities, including the FDA, for the approval of the drug, the COT concluded that because the data was intended for pharmaceutical and not over-the-counter use, the “trade-off between risks and benefits that does not apply to food.”

Therefore, in drafting this new policy, the FSA opted for a pragmatic approach that balances the consumer demand for CBD-infused food products with the protection of public health and provides much needed clarification about the legality of selling and marketing CBD-infused foods.

That being said, the guidelines also create some serious challenges for the industry. Indeed, the novel food application process is a demanding and onerous process. Unless a blanket authorization will cover each end-form of CBD (this issue has yet to be clarified by the FSA), this would mean that only a handful of CBD companies could afford applying. This, in turn, would consolidate these products and offer a monopoly to the companies that manage to secure an approval.

Nevertheless, the FSA guidelines are a step in the right direction because they  encourage the Hemp-CBD industry to work together, educate and advise, but also set an example for other regulatory agencies, including the FDA, in forging a clear path for the sale and marketing of these products around the globe.

Two major President Trump-centric events have been unfolding these past few weeks, and each has alternatingly claimed the limelight and been overshadowed by the other. First, we have the ongoing Senate impeachment hearings, which began January 16, and second, phase one of the U.S.-China trade deal, which was signed and made public on January 15.

With respect to the trade deal, certain commentators have highlighted the appearance of hemp in the agreement. One prominent marijuana publication published an article the day after the trade agreement was made public, on January 16, claiming that, “China Must Import More Hemp From U.S. Under New Trade Deal.” That is an overly generous interpretation. We’ll investigate and clarify that optimistic claim below. The short gloss is that China may buy more hemp from the U.S. under the new trade deal, but China is definitely not obligated to buy more (or any) U.S. hemp as a result of the trade deal.

Even though China has been both officially and unofficially producing hemp for centuries, U.S. hemp is, like most U.S. products and even agricultural commodities, attractive to Chinese businesses and consumers. Like many sectors where China is working a 996 schedule to catch up and overtake the U.S. as the global economic superpower, China and Chinese companies are actively pursuing ethical and unethical ways to acquire U.S. technology and know-how, including our best agricultural practices, trade secrets, and the best crops our hemp geneticists can produce.

As I noted in a prior blog post, China has an outsized role in global hemp production, and Chinese companies own approximately half of the global cannabis patents. But it is interesting that China has not yet matured in large-scale way from the labor-intensive growing and processing of hemp to the technology-intensive production of cannabinoids (like CBD, CBG, and CBN) and cannabinoid-derived products. Currently, China only accounts for about 11% of the CBD produced globally, but as more global markets and consumers open up to hemp-derived products, China will exert its influence. Frankly, it is likely impossible for China to house 1/7 of the world’s population and not affect global markets by the mere discussion of a change in government support for China-based industries, companies, and products.

Now to the terms of the trade agreement. The phase one portion of the trade agreement covers the general categories of intellectual property (including pharmaceutical-related intellectual property that is rapidly becoming ground zero for the battle between big pharma/biotech and natural products companies), forced technology transfers, trade in food and agricultural products, agricultural biotechnology, financial services, macroeconomic policies and exchange rate matters, expanding trade generally, and bilateral evaluation of the trade relationship and dispute resolution.

Many commentators have expressed doubts that the trade agreement is good for the U.S. or that it will do anything beyond merely extending the rollout of the next round of tariffs post-the November presidential election on the way toward near-total decoupling between the U.S. and China. But if we take the terms of the trade agreement at face value, in 2020, China must increase its importation of “agricultural goods . . . no less than $12.5 billion above the 2017 corresponding baseline,” and in 2021, “no less than $19.5 billion above the 2017 corresponding baseline.” Also, a footnote in the agreement says, “At the request of the United States, China will strive to purchase and import $5 billion per year of the U.S. agricultural products…in addition to the minimum amounts set forth herein.”

Even though this “import” statement is not binding, it could represent additional purchases of agricultural goods. In the agreement, we find “true hemp (cannabis sativa l.), raw or processed but not spun; tow and waste of true hemp (including yarn waste and garnetted stock)” as one of 216 categories of agricultural commodities of which China is required to increase its purchases. If I were a gambler, I would not take those 1/216 odds (less than half of 1%) that China’s increased agricultural purchases are guaranteed to significantly impact the U.S. hemp industry. That 1/216 equals approximately $90 million of increased purchases in 2020, which would account for a roughly 7% increase in the projected 2020 U.S. hemp industry, which overall is projected to grow at 14% compounded annual growth through 2022. Chinese companies could just as easily decide they want to buy $90 million more human hair, which is also one of the 216 agricultural goods on the list with hemp. U.S. companies wanting to export hemp to international markets is an order of magnitude larger than those willing to research and put forth the investment in order to do so.

In a future post I will delve more deeply into the intellectual property implications of the trade deal on the U.S. and world cannabis (including hemp) industries. China has a big head start in cannabis patents compared to every other nation, but I think that western nations, especially the U.S., are particularly good at catching up, especially if Sputnik was any indication of what we are capable of when we are motivated to make significant advancements in any area we see as strategically important. In the meantime, do not hold your breath that this phase one trade deal will be a windfall for U.S. hemp farmers.

If you are interested in keeping up with China-focused legal developments, check us out on our award-winning China Law Blog.

Happy MLK Day!

For our international readers, Martin Luther King, Jr. Day is a federal U.S. holiday marking the birthday of its eponymous civil rights hero. Dr. King was the chief spokesperson for nonviolent activism in the Civil Rights Movement, which successfully protested racial discrimination in federal and state law. Dr. King was assassinated in 1968, four years after the passage of one of the great U.S. laws of the 20^th century, the Civil Rights Act of 1964. His death also came two years prior to one of the 20^th century’s most controversial and insidious laws, the Controlled Substances Act of 1970 (CSA).

The CSA is a half-century old this year, and it’s looking much worse for the wear. We have commemorated MLK Day each of the past few years on this blog by examining the status of cannabis and civil rights. In short, things were bad, are bad, and are not improving quickly enough (if at all). Marijuana arrests continue to track upward despite more states legalizing distribution and sale of the plant, and despite broad non-enforcement of federal law.

We did see promising expungement efforts around the country last year, from San Francisco to Illinois to New York. But that is not enough. The War on Drugs persists in insidious ways, particularly with respect to black and Latino Americans. This includes everything from disproportionate incarceration to disenfranchisement under “progressive” new laws, like the 2018 Farm Bill.

In each of 2018 and 2019 we observed that Dr. King died 50 years ago, but his legacy continues to resonate and expand. The year 2020 will be politically momentous: let’s hope that state and federal governments finally turn the corner. Not only should cannabis be decriminalized once and for all, but the leaders among us should strive to make amends for a half-century of failures.

The Food and Drug Administration (FDA) may soon change its tune on hemp-derived CBD (Hemp CBD) thanks to a bill recently filed by chairman of the House Agriculture Committee, Rep. Collin Peterson (D-MN) and cosponsored by Reps. Thomas Massie (R-KY), James Comer (R-KY) and Chellie Pingree (D-ME).

HR 5587 is an Act “To amend the Federal Food, Drug, and Cosmetic Act [(FDCA)] with respect to the regulation of hemp-derived cannabidiol and hemp-derived cannabidiol containing substances.” As of the time of this writing, the bill’s text is not available on Congress.gov but is provided by Marijuana Moment’s Kyle Jaeger, who wrote a great article on the bill.

If passed in its current form, HR 5587 would amend the FDCA’s definition of dietary supplement (21 U.S.C. 321(ff)(3)(B)) as shown below in bold:

The term “dietary supplement” does  not include—

(i) an article (other than hemp-derived cannabidiol or a hemp-derived cannabidiol containing substance) that is approved as a new drug under section 355 of this title, certified as an antibiotic under section 357 of this title, or licensed as a biologic under section 262 of title 42, or

(ii) an article (other than hemp-derived cannabidiol or a hemp-derived cannabidiol containing substance) authorized for investigation as a new drug, antibiotic, or biological for which substantial clinical investigations have been instituted and for which the existence of such investigations has been made public,

which was not before such approval, certification, licensing, or authorization marketed as a dietary supplement or as a food unless the Secretary, in the Secretary’s discretion, has issued a regulation, after notice and comment, finding that the article would be lawful under this chapter.

The bill would also amend the FDCA to clarify that federal law does not prohibit a person from introducing Hemp CBD into interstate commerce, as shown by the proposed amendments to 21 U.S.C. 331(ll):

The introduction or delivery for introduction into interstate commerce of any food to which has been added a drug approved under section 355 of this title, a biological product licensed under section 262 of title 42, or a drug or a biological product for which substantial clinical investigations have been instituted and for which the existence of such investigations has been made public (other than hemp-derived cannabidiol or a hemp-derived cannabidiol containing substance)[.]

This would be a significant change as the FDA has long held that Hemp CBD cannot be classified as dietary supplement because the FDCA’s definition of dietary supplement explicitly exempts any article that is approved or investigated as a drug unless the article was marketed as a dietary supplement or food prior to being publicly investigated as a drug. The FDA’s view is that Hemp CBD was not marketed as such prior to the investigation of CBD as a drug. The FDA could deal with this through regulation, as the FDCA does grant the FDA Secretary the authority to regulate around the definition of dietary supplement. That hasn’t happened, though, and it appears that the FDA is running out of time.

HR 5587, as currently drafted, only would apply to Hemp CBD, not other cannabinoids such as CBN or CBG. The 2018 Farm Bill encompasses all hemp-derived cannabinoids in its definition of “hemp,” so HR 5587 could encompass more than just CBD without having to amend the Farm Bill. It’s likely that this bill was drafted in light of the CBD craze over the last few years, so it isn’t all that surprising that CBD is the only cannabinoid listed. If HR 5587 picks up steam, it will be interesting to see whether the language is revised to encompass other, less popular cannabinoids, in order to prevent recurring problems.

In addition to removing obstacles related to making Hemp CBD a dietary supplement, the bill would also require the US Department of Agriculture (USDA), in consultation with other federal agencies, to submit to Congress a study on the following:

• the costs and requirements for establishing and operating a hemp testing program, including the costs and requirements for operating or contracting with a laboratory approved by the Drug Enforcement Agency;
• the costs and requirements for the destruction of hemp crops determined to be in excess of 0.3 percent delta-9 tetrahydrocannabinol or opportunities for remediation or alternative uses;
• the feasibility of producer compliance with sampling timetables;
• the feasibility of producer compliance with reporting requirements; and
• other known or potential challenges by the participation of States or producers in the domestic hemp production program.

It’s probably too early to tell whether this HR 5587 has a chance to become law. It was presented with bipartisan support, but the legislative process can be unpredictable. Even if this bill does eventually become law, it will likely be subject to significant changes along the way. We simply don’t have enough information at this point to know what will happen.

We do know, however, that HR 5587 sends a clear message to the FDA, and to a lesser extent to the USDA, that lawmakers are not pleased with the treatment of hemp. For the FDA, this seems to be based on the agency’s continued hostility towards Hemp CBD. For the USDA, it seems that lawmakers have heard the backlash against the USDA’s testing requirements including the need to test for total THC at DEA-certified labs.

Remember, federal agencies only exist because of federal lawmakers. They are creatures of statute, statutes that were crafted by lawmakers in Congress. If agencies fail to interpret a statute in the way the legislature wants, it has the unique power to amend the statute. That’s what is happening here.

This may seem like an outright rebuke, but in all fairness to the FDA, former commissioner Dr. Scott Gottlieb has told Congress that a legislative change may be needed in order for the FDA to regulate Hemp CBD in a timely manner.  In addition, the USDA has publicly stated that testing hemp for THC content has proved challenging.

We’ll keep an eye on HR 5587 and all things Hemp CBD. 2020 is likely going to be another big year for cannabis, especially at the federal level. Stay tuned.

Hemp was legalized federally just over a year ago. During the run-up, legislators from Mitch McConnell to Ron Wyden said things like “[b]y removing hemp from the federal list of controlled substances, farmers can explore the bright future of this versatile crop, found in everything from a coffee mug to your car dashboard.” One planting season in, however, farmers aren’t doing so much “exploring” with respect to hemp: instead, the Brightfield Group estimates that 87% of 2019 hemp acreage was planted for CBD extraction. Among the many hemp farmers our law firm represents in Oregon, Washington and California, that number feels closer to 100%.

Will people get rich farming hemp for CBD? It’s hard to say, given the newness of that market, apparent oversupply issues and pricing volatility for CBD. Assuming long-term and robust demand for CBD products, though, it’s likely that large family farms will eventually dominate output, just as in U.S. agriculture generally. It also seems likely that the margins for these large farms will expand and contract similarly to margins for other crops, based on many complex factors. Today’s small hemp-CBD start-ups growing from 1 to 99 acres will likely diminish in profitability and prevalence.

And that’s where genetics come in. If hemp is to be like other crops, it seems probable that the truly big money will not be in hemp production, but in the creation and licensing of proprietary plant material. Along those lines, Oregon’s biggest hemp company already is a seed company called Oregon CBD. That oufit is approaching $1 billion in annual revenues after just a few short years in operation.

If you want a certain CBD-rich strain–or a CBG strain, or a CBN strain, or any other kind of hemp strain–you would go to a seed company. You would do this even though seed certification is not addressed under the 2018 Farm Bill because you want to be sure that you get females and those females do not germinate into 0.3%+ THC plants. You would do this because you want proven genetics and you want warranties around those genetics. And eventually, you would do this because you want to be sure your hemp seeds are designed for production with certain types of herbicides in mind, a la Roundup Ready corn.

The federal regulatory environment is shaping up to facilitate success for firms with valuable hemp genetics. Currently, hemp genetics firms are able to formally register and protect their intellectual property, design products with specified epigenetic factors in mind (i.e. approved pesticides), and count on clear federal parameters for their business models. Some of these are helpful, others less so. Each crucial plank is briefly summarized below.

1. Intellectual Property.  Earlier this year, USDA’s Plant Variety Protection Office (PVPO) began accepting applications of seed-propagated hemp for protection under the Plant Variety Protection Act. PVPO examines new applications and grants certificates that protect varieties for 20 years. Elsewhere, the U.S. Patent and Trademark Office (USPTO) already has granted its first hemp plant patent, with more in the pipeline. Plant patents afford similar protections to protected plant varieties with respect to duration and scope. (For a good explanation of the interplay and differences between plant variety and patent protection for plants, go here.)
2. Epigenetics.  Last month, the Environmental Protection Agency approved a list of ten pesticides to be used in hemp production. This means that firms creating and registering hemp plant media will have crucial guidelines for seed design. It seems very likely that hemp strains eventually will be built with the application of certain chemical agents in mind, again like Roundup Ready corn, if this type of research and development is not underway already.
3. Crop Insurance.  The USDA’s Risk Management Agency (RMA) recently announced a pilot insurance program for hemp growers. Farmers will now have greater incentive to grow hemp at scale and to innovate, which, in turn, means a more lucrative and dependable market for seed genetics firms. In the bigger picture, the USDA itself will also encourage cultivation by providing a federal plan for producers in states or tribal territories without their own USDA-approved plans.
4. Crop Testing Rules.  The problematic total THC testing protocol in USDA’s final interim rule will create demand for innovation in genetics– unless we see major changes following the close of public comment on January 29. But wherever we end up, seed firms will strive to create and refine cultivars that: a) express certain cannabinoids predominantly and b) pass testing strictures. It has already been argued, for example, that the current testing rules could eliminate the viability of current CBD strains altogether. Time to innovate.

In all, some farmers will do well growing hemp, particularly the larger family farms. Others will inevitably fail. But the big money will be made in plant genetics, including the design, sale and licensing of intellectual property. As certain hemp cultivars move to the fore, the next few years will be crucial. And the owners of those cultivars stand to profit handsomely.

On January 2, the Food and Drug Administration (“FDA”) issued non-binding guidance (“Guidance”) in which the agency explains how it intends to prioritize enforcement actions to tackle the growing increase in youth use of electronic nicotine delivery systems (“ENDS”)–more commonly and broadly referred to as “e-cigarettes”–as well as to address vaping-associated lung injuries. According to a press release by the U.S. Department of Health and Human Services, the FDA intends to ban flavored cartridge-based ENDS that appeal to children, including fruit and mint flavors, beginning 30 days from the publication of the notice of availability of this guidance in the Federal Register.

Specifically, the agency intends to prioritize enforcement against:

• Any flavored, cartridge-based ENDS product (other than a tobacco- or menthol-flavored ENDS product);
• All other ENDS products for which the manufacturer has failed to take (or is failing to take) adequate measures to prevent minors’ access; and
• Any ENDS product that is targeted to minors or whose marketing is likely to promote use of ENDS by minors.

Since the enactment of the 2018 Farm Bill, a wide range of hemp-derived CBD (“Hemp CBD”) products have sparked the interest of American consumers, including CBD vaping devices. Despite the growing popularity of CBD smokable products, the FDA has yet to issue regulations for these products. Consequently, the sale of Hemp-CBD-infused smokable products is in a legal gray area, not explicitly allowed nor prohibited under federal law.

The lack of FDA regulation surrounding this issue likely stems from the fact that many of these products are free of tobacco and/or nicotine.

As we previously discussed, federal law gives the agency the authority to regulate the sale, manufacture, and marketing of tobacco products under the 2009 Family Smoking Prevention and Tobacco Control Act (“TCA”). In 2016, the FDA finalized a rule that extended its regulatory authority to all products meeting the TCA’s statutory definition of a tobacco product, including e-cigarettes.

The FDA now oversees all products “made or derived from tobacco that [are] intended for human consumption . . . .” The definition also includes components, parts, and accessories of tobacco products and excludes products that are classified as drugs or devices under the Food, Drug, and Cosmetic Act (“FDCA”), even if those products are made or derived from tobacco.

The FDA has consistently declined to interpret “tobacco products” so broadly as to include products free of nicotine or tobacco. Under this reasoning, it seems to follow that most Hemp-CBD smokable products, which are free of nicotine and tobacco, would not be considered “tobacco products.”

The newly published Guidance seems consistent with this rationale.

The Guidance expressly provides that it “does not address products that are not tobacco products” and that only “[l]iquids that do not contain nicotine or other material or derived from tobacco, but that are intended or reasonably expected to be used with or for the human consumption of a tobacco product, may be components or parts and, therefore, subject to FDA’s tobacco control authorities.” (Emphasis added).

So, while most Hemp-CBD-infused vaping devices don’t fall under the FDA’s jurisdiction, and thus, won’t be affected by this upcoming enforcement effort, industry players should keep in mind that:

1. Any flavored CBD vaping product that does contain nicotine is subject to this federal ban;
2. Any CBD vaping product that contains nicotine and for which the manufacturer fails to take adequate measures to limit minors’ access is subject to FDA enforcement actions;
3. Any CBD vaping product that is targeted at minors or whose marketing is likely to promote the ENDS use by minors falls under the FDA ban; and
4. The manufacture, sale and marketing of non-flavored, nicotine or tobacco-free CBD vaping products, as well as other smokable hemp products, may nonetheless be banned under certain state laws. Accordingly, manufacturers, distributors and retailers of these products should refrain from selling their products in these jurisdictions to mitigate the risk of local enforcement actions.