Hemp and CBD Federal Roundup: March 2020

By David Gately and David Kramer

Mar 23, 2020

The entire U.S. federal government, and particularly the U.S. Food and Drug Administration (FDA), is primarily focused on addressing and preventing the further spread of COVID-19. In fact, on March 17, 2020, FDA Commissioner Dr. Stephen M. Hahn published an op-ed in USA Today warning consumers about fraudulent products being marketed with unfounded claims regarding their ability to prevent, treat, or cure COVID-19. The FDA also issued warning letters to companies responsible for marketing such products.

In addition, the FDA posted an FAQ regarding food safety and COVID-19, among other resources, has indicated that it is effectively stopping all non-critical inspections and suspending onsite audits, and acknowledged the “essential” nature of food and healthcare products (making it likely that producers of such products will be permitted to continue operating in the face of “shelter in place” orders).

In the weeks immediately preceding the widespread outbreak of COVID-19, however, both the FDA and the United States Department of Agriculture (USDA) provided positive updates regarding the regulation of hemp and CBD. We have summarized these developments below in an effort to keep clients and stakeholders abreast of recent news, even during these otherwise trying times.

FDA Commissioner Hahn Acknowledges It Would Be “A Fool’s Game” to Tell People They Can’t Use CBD Products

On February 26, 2020, recently-appointed FDA Commissioner Hahn made his first public comments about CBD products. These comments were encouraging for industry stakeholders, as Commissioner Hahn acknowledged that we are past the point of no return when it comes to allowing people to use CBD products. Commissioner Hahn said:

"People are using [CBD] products. We're not going to be able to say you can’t use these products. It’s a fool’s game to try to even approach that. We have to be open to the fact that there might be some value in these products and certainly American’s think that’s the case. But we want to get them information to help them make the right decisions.”

In addition to the above statement, Commissioner Hahn sent several tweets on March 5, 2020, demonstrating that the FDA is aware of the prevalence of CBD products in the marketplace and that the agency is now focused on protecting and educating the public and clarifying the agency’s regulatory approach to these products. Commissioner Hahn also acknowledged that products containing CBD isolate may be regulated differently than products containing “full-spectrum” or “broad-spectrum” hemp extract—a position that many stakeholders have long adopted and advocated for.

The FDA’s Long-Anticipated CBD Report, and Public Update, Reiterate the FDA’s Commitment to Developing Regulatory Pathways for CBD Products

As VS previously highlighted, on March 5, 2020, the FDA issued its first report to Congress pursuant to the Further Consolidated Appropriations Act, 2020 regarding the FDA’s (i) progress in evaluating lawful pathways for the marketing of CBD products and (ii) determinations for a risk-based enforcement policy regarding the same. On the same day, the FDA also issued a public update discussing its efforts to better understand the safety concerns and potential benefits associated with CBD products. Although the public update and report did not reveal significant changes to the FDA’s approach or give any definitive guarantee or timeline for a formal enforcement policy, it did contain a few notable areas of progress.

Significantly, the FDA made statements suggesting that products containing “full-spectrum” or “broad-spectrum” hemp extract may not be regulated in the same manner as products containing CBD isolate, and requested specific data relating to the production and marketing of products containing hemp extract products. To that end, the FDA is re-opening its public docket, “Products Containing Cannabis or Cannabis-Derived Compounds,” to provide a forum to obtain relevant information.

The FDA also announced that it will initiate studies, coordinate with federal, state and, international regulatory agencies, and sample and evaluate the current marketplace as part of the agency’s efforts to gather relevant information. Parties with relevant data and scientific research regarding the safety and efficacy of CBD should consider providing the FDA with data to inform its evaluation of a regulatory approach for CBD. Until the FDA issues definitive guidance, however, manufacturers and retailers must work to ensure that their products are compliant under applicable law and avoid making any false statements or health or drug-related claims.

USDA Delays Enforcement of Certain Testing and Disposal Requirements Included in the Interim Final Rule; Further Changes on the Horizon?

Following its release of the Interim Final Rule (IFR) in October 2019 – the regulations governing hemp production in the United States – USDA received thousands of public comments, many of which criticized the IFR’s core provisions, including those requiring hemp to be tested by a lab registered with the Drug Enforcement Administration (DEA) and, separately, the requirement that growers use a DEA-registered reverse distributor (or law enforcement) for the disposal of non-compliant hemp plants.

Recognizing the DEA’s “insufficient capacity for testing and disposing of non-compliant plants” and the “significant hindrance [that these requirements would have on] the growth of a domestic hemp market at this nascent stage[,]” USDA announced on February 27, 2020, that it would delay enforcing these testing and disposal requirements until October 31, 2021, or the date on which the final rule is published, whichever comes first.

USDA’s willingness to adapt to the industry’s concerns in response to public feedback from stakeholders is a positive sign for hemp producers—and their relationship with USDA—going forward. Indeed, Secretary of Agriculture Sonny Perdue recently commented that, in his view, the IFR is “a draft plan” that may be subject to additional changes in accordance with federal rulemaking and notice procedures.

A Growing Number of States Remain Committed to Their 2014 Farm Bill-Compliant Pilot Programs

Despite the fact that (i) states can now submit 2018 Farm Bill-compliant hemp production plans to USDA and (ii) as of March 17, 2020, 12 states and 14 tribes have received USDA-approval for their hemp production plans, at least 17 states are nevertheless electing to continue operating their hemp programs in accordance with the 2014 Farm Bill, at least through the 2020 growing season. (The 2014 Farm Bill will be repealed on October 31, 2020).

States preferring to continue operating under the 2014 Farm Bill is hardly surprising, given that many of the IFR’s more challenging provisions – including the narrow sampling window, and the Total THC testing requirement – only apply to growers cultivating pursuant to the 2018 Farm Bill (unless the grower’s state has independently imposed such requirements). This means that some of the largest hemp-producing states—including Colorado and Kentucky—have effectively opted-out of the 2018 Farm Bill (and USDA regulation) and will continue to operate under the 2014 Farm Bill through the end of the 2020 season.

Notably, cultivators, lawmakers, and state departments of agriculture have asked USDA to extend the operability of the 2014 Farm Bill. In response to those requests, Secretary Perdue recently commented that, absent fixes to some of the more problematic IFR provisions, “I will be absolutely as flexible as the law allows in order to perpetuate the 2021 [growing season] under the state rules of 2014.” However, it remains to be seen whether the Secretary will be able to implement such a change absent federal legislation.

We at VS are encouraged by these recent positive developments and are hopeful that they bode well for future reform on the federal level.

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