Congress Makes History and Changes the CBD Game for Good

By: Tsion “Sunshine” Lencho and Rebecca Stamey-White

CBD entrepreneurs finally spy dry land in their search for legally-compliant options for producing CBD

Everyone anxiously monitoring the Congressional debate around the 2018 Farm Bill can finally breathe easier as both houses have done what many feared impossible: reconciled differences to arrive at a Farm Bill, which, for the first time in 80 years will legalize the regulation, production, and interstate commerce of industrial hemp. (And if you’re reading this thinking, “wait, wasn’t hemp already legal?” Don’t worry, it’s pretty confusing, start with our previous post here, or even better here).

To be clear, we still are a few additional steps away from a booming hemp industry as we had in the 1800s through the Depression years.  The President needs to sign the legislation and seems expected to do so.  Other federal agencies (notably FDA, DEA, FTC and TTB, as far as our clients are concerned) also need to provide further guidance on hemp-based CBD products. And the states need to set up their own regulatory frameworks (is any of this sounding familiar?).

So for those of you here in California about to rush off and start a curbside CBD lemonade stand (or a much larger play), remember the passage of the Farm Bill doesn’t change California’s ban on hemp-based products (including CBD) in food products and alcohol products, as we discussed in this previous post.

So, what does the 2018 Farm Bill do? It:

  • Adopts a States’ Rights Approach: It amends the Agricultural Marketing Act of 1946 (7 U.S.C. 1621 et seq.) and places the majority of power to regulate hemp production in the hands of the states, District of Columbia, Puerto Rico, U.S. territories, and sovereign tribal nations. It specifically does not preempt states’ rights to set in place regulations that are more stringent than the Farm Bill.

  • Puts Federal Oversight in the Hands of the Secretary of Agriculture: It puts in place a structure that states are to follow. States must apply to the Secretary of Agriculture with a plan for regulating Hemp. The plan will be approved (or denied) by the Secretary within 60 days of receipt.  The plan may reference existing state laws and/or regulations concerning hemp.

    • For those familiar with the regulatory schemes enacted for cannabis, wine or other state regulated consumer products, the structure of the farm bill is familiar. States must enact procedures for licensing premises, tracking the hemp products from seed to sale, and ensuring that the hemp grown contains the *magic* number: less than 0.3% of delta-9 tetrahydrocannabinol (THC).

  • Allows Interstate Commerce:  It makes clear the intent of Congress to allow the intra and interstate commerce in hemp and hemp products.

  • Frees Up Other Agencies to Enact Regulations: It leaves to the FDA and other agencies the right to further regulate hemp products under the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.). Importantly, the Farm Bill does not make CBD a lawful food ingredient or dietary supplement. We expect that the FDA will have to issue a new opinion as to whether it is an adulterant and/or if it may be lawfully included as an ingredient in food.

  • Deschedules CBD: The confusion of yesteryear is laid to rest once and for all (assuming we don’t vote in prohibitionists in the future). The Controlled Substances Act was amended and makes clear that “marihuana” does not include hemp or hemp-derived cannabinoids, including CBD.

  • Excludes Controlled Substance Felons: The Farm Bill bans from the market any person convicted of a felony relating to a controlled substance under State or Federal law before, on, or after the date of enactment of the law during the 10-year period following the date of the conviction (no equity program attempted here).

  • Decriminalizes Violations: Negligent actions are subject to a corrective action plan and are not criminal violations. Three strikes and you’re out of the hemp market for 5 years. For conduct greater than negligence, the Feds leave it to state enforcement.

BUT, WHAT CAN I DO NOW?

Because we get that many of you have felt like you’re in a freefall waiting for the law to be signed and regulations enacted, we thought it might be helpful, to provide a NOW and SOON list for parsing the current landscape:

NOW: In California, where we’re based, it’s time to start contacting the CDPH (916) 650-6500 / fdbinfo@cdph.ca.gov) and ABC (916) 419-2500 / Headquarters@abc.ca.gov to update their protocols and guidance on food and beverage products containing CBD. Many California counties already operate under the CDFA’s California Industrial Hemp Program (might as well call them too: 916-654-0435 / industrialhemp@cdfa.ca.gov).

Located elsewhere? Check your state laws and regulations and if they permit hemp-derived CBD activity, start following their rules/guidelines. Businesses making or selling CBD products that decide to accept the risks of violating federal law need to ensure compliance with state law.

If your state does not yet have a hemp program, tread carefully.

Don't come this far only to be banned from the market. For marijuana-derived CBD, this means getting cannabis licenses, complying with local zoning and permitting restrictions, conducting mandatory testing, complying with packaging and advertising requirements, only selling from licensed retailers, paying required taxes, keeping detailed records, having good standard operating procedures, and complying with all the numerous laws and regulations.  For hemp-derived CBD, this means making sure the products derive from lawful state operations from state ag or education departments or pilot program members in states that permit commercial use, conducting lab testing to ensure the products don’t have unlawful ingredients or harmful chemicals, and thinking hard about how you want to package and advertise these products, lest the FDA comes calling over those disease and structure/function claims or the FTC challenges your advertising claims.

SOON: California’s industrial hemp rulemaking will move forward, the legislature may weigh in when session starts back up again in 2019, and eventually, expanded licensing will begin. While you’re on the phone, you might as well also call your state assembly members and senators and ask them to lead the charge.

For more on the legal status of CBD, please subscribe to our blog for up to date information or reach out to discuss engaging us to help build your hemp castle (because it’s pretty much the wonder crop, we hear).

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