2018 Farm Bill Series: How will hemp CBD legalization play out?

Jamie Schau

November 30th, 2018

2018 Farm Bill Series – Part 2 of 2

How will hemp CBD legalization play out?

Within a matter of days, hemp-derived CBD may be federally legalized in the United States. But how will this new law play out, and what will it mean for the industry?

The most significant change resulting from the Farm Bill will be the removal of industrial hemp from the controlled substances list, which will legalize the production and sales of hemp and its extracts (CBD)across the country. This will allow for mainstream retailers and manufacturers to safely enter the space without concerns over grey area legal issues at the federal level (burdensome tax requirements such as those stipulated in 280E,crop insurance, interstate shipping, banking challenges), as well as allowing for better-funded CBD research that includes human trials and is broader in scope.

With that door open, what will manufacturers need to do to get their products authorized and onto shelves, and then scale? When can major retailers start stocking CBD products?

The short answer is: it depends.

First – it depends on which states they are established in and planning to roll out product to. The language in the proposed Farm Bill dictates that individual states will be tasked with establishing regulations surrounding hemp and overseen by the U.S. Department of Agriculture (USDA), and regulations are bound to differ between states. Some will elect to form regulatory agencies in-house, others may relegate CBD regulation to an existing state body, such as the Department of Health, Revenues, or Medical Marijuana Authority, and many will likely defer to the standards set out by the FDA or other federal agencies.

This has, in fact, begun taking place already in cannabis legal states. For example, California’s Department of Public Health recently released a FAQ indicating that: “Until theFDA rules that industrial hemp-derived CBD oil and CBD products can be used as a food or California makes a determination that they are safe to use for human and animal consumption, CBD products are not an approved food, food ingredient,food additive, or dietary supplement.”[1]In California’s case, there are multiple pathways to the legal sales of CBD,and one of them is FDA approval. The Golden State is not alone, many others are expected to follow suit and defer to the FDA.

Which brings us to our second variable: Much of the industry’s success will depend on how the FDA decides to approach CBD (as a food additive, supplement, cosmetic) once it has been legalized. Promisingly, the FDA has shown signs of openness and friendliness toward CBD, having considered the medicinal value and safety of the cannabinoid in the past, and even approved CBD-based Epidiolex seizure medication after concluding in a May 2018 letter to the DEA that “CBD and its salts…do not have a significant potential for abuse and could be removed from control under the [Controlled Substances Act] (CSA)”[2].A bold statement during a time when the DEA was adamant about hemp-derived CBD remaining a controlled substance.

Only time will tell how each regulatory body responds to this unprecedented potential legal change, but hopes are high that significant political and financial interests as well as overwhelming consumer demand for hemp-derived CBD will drive rapid and positive change among the regulatory bodies involved – just as it has among legislators.

[1] https://bit.ly/2N9agTE

[2] https://bit.ly/2QyzsZe