The market for CBD (cannabidiol) in the United States is measured in the billions of dollars. Yet, it’s a wild west, with companies producing and selling products, sometimes in a legal vacuum. We sat down with a cannabis expert to find out whether CBD products are actually federally legal to market and sell. Cannabis attorney expert, David Feldman explains, the legal landscape, marketing concerns, and how CBD in food and beverage is treated differently by regulators than other CBD products.
For the full interview on federal law governing marijuana and investment in the cannabis industry, click here: https://www.talksonlaw.com/talks/investing-in-green-funding-the-marijuana-industry
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JC: Why don’t we talk about some of the controversy around CBD. First of all, what’s the legal status? Is it treated the same as marijuana with THC?
DF: It is not simple and people are very confused. They see CBD in their corner stores and they think it’s fine, it must be safe, it must be approved.
JC: Somehow my grandmother has it in her leg ointment.
DF: Well hopefully, she’s getting it through a doctor and with a medical card in her state so that it is something that is carefully-prepared and a little more scientifically safe. But the legal status right now is that CBD derived from hemp is no longer a controlled substance under the Controlled Substances Act. That means, you don’t have criminal violations just for making hemp or CBD derived from hemp, putting aside food and beverage, which is regulated by the FDA. What happened was the Farm Bill said, “States, you are free to submit a plan to the U.S. Department of Agriculture for how you want to produce and sell hemp and CBD in your state. We will then approve those plans or not.” So you can submit a plan, if you don’t submit a plan, individual companies in your state can submit to the USDA for approval. Or a state can decide to opt out and say no hemp or CBD allowed in their state. In order to be federally legal, you need to either have a state-approved plan, or a company-approved plan, and as of now, the USDA has not yet even said how the plans are to be submitted. So, we don’t have rules for how to submit potential rules.
JC: Is this just kind of the wild west where companies see a vacuum and they’re gonna operate and wait for the warning letter, and wait to be punished rather than ask permission?
DF: There is a lot of that happening, especially since people feel, “Well it’s not criminal anymore.” You can still face civil violations for not following the rules that don’t exist yet, and people need to be careful of that, and you have to be very careful, as we’ve talked about, about what if any claims you’re making in your product. The FDA has declared, following the Farm Bill passage, that any hemp or CBD in food or beverage needs their approval, and they have not yet figured out exactly how they want to approve food and beverage products. So if there’s one thing that’s still potentially criminal within hemp and CBD, it’s violating FDA law in regard to going ahead with food and beverage products. The FDA recently sent a warning letter to one of the biggest public companies saying, “You’re making claims with your products that this could treat Alzheimer’s and cancer and some other things, and they are very much focusing on trying to stop companies from making medical claims and other things that are not yet scientifically substantiated. And so the belief is that CBD is legal now, and it’s not quite yet. It will be once these rules are written, and it still won’t be allowed in food or beverage until the FDA says how they want to deal with it, and they’re being much more cautious than the USDA at this point.
JC: Let’s talk about food and beverage. I’ve had two companies pithed to me as the “CBD seltzer” or the “CBD of Gatorade.” How are these companies going around raising capital if it’s in this kind of gray area?
JF: Well, you can still operate within a state legal program, and the same way we did before when it was still a federal crime. And you can make the choice as an investor that you’re not going to face federal enforcement and so on. But with food and beverage, you still have criminal risk under the Food, Drug, and Cosmetics Act for making false claims for producing something that’s not FDA-approved. And so these companies do have to be careful, but most of them are trying to operate under state programs that permit-
JC: So they’re launching in states where marijuana is perhaps decriminalized or legalized?
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