With the enactment of the 2018 Farm Bill on December 20, 2018, hemp has been removed from schedule I of the Controlled Substances Act and is no longer a controlled substance in the US. It is important, however, to recognize that the 2018 Farm Bill does not affect or modify the federal government’s authority to regulate hemp, or products derived from hemp, under applicable laws, including those administered by the U.S. Food and Drug Administration (FDA). Consequently, while the 2018 Farm Bill opened up potential hemp production and distribution in the US, the federal regulatory implications of hemp legalization continue to evolve, through both formal regulations and incremental agency opinions and memos. This article outlines important recent activity undertaken by the US Department of Agriculture (USDA), FDA, and other agencies on hemp, as well as what this means for hemp-derived products like cannabidiol (CBD).

Recent USDA Steps on Hemp Legalization

The 2018 Farm Bill took the long-awaited step of authorizing the production of hemp and removing hemp and hemp seeds from the Drug Enforcement Administration’s (DEA) schedule of Controlled Substances, with the aim of “ensuring the free flow of hemp in interstate commerce” (Section 10114). The 2018 Farm Bill allows states and tribes to regulate hemp production, subject to the limitations that hemp may be grown only (1) with a valid USDA issued license, (2) under a USDA-approved state or tribal plan, or (3) under the 2014 Farm Bill industrial hemp pilot authority (which will expire one year after USDA establishes a plan for issuing USDA licenses). Several states are developing plans for approval by USDA, even as USDA is developing the federal regulations under which all hemp businesses will be required to operate. USDA intends to issue those rules by the fall of 2019 in order to have guidance in place for the 2020 growing season.

In the interim, many questions remain about the production and interstate distribution of hemp. On May 28, 2019, USDA’s Office of the General Counsel issued a legal opinion to clarify certain questions, advising that:

After USDA publishes regulations implementing the new hemp production provisions, states and tribes may not prohibit the interstate transportation of hemp lawfully produced under a state or tribal plan or under a USDA license.
States and tribes may not prohibit the interstate transportation or shipment of hemp lawfully produced under the 2014 Farm Bill.

While the 2018 Farm Bill sought to open up hemp production, it also preserved the authority of states and tribes to enact and enforce more stringent laws regulating the production of hemp. Thus, while a state or tribe cannot block the shipment of hemp through their jurisdiction, they may impose other regulatory burdens. For example, many states have restrictions regarding the use of CBD derived from hemp. Therefore, it remains critical to consult applicable state or tribal law before undertaking any activity involving hemp or hemp derivatives.

USDA has also opened the door to hemp seed imports, issuing guidance that hemp seed may be imported if it is accompanied with a phytosanitary certification issued by the plant protection agency of the exporting country. Hemp seed from Canada must also include a federal seed analysis certificate. All hemp seed imports remain subject to inspection by U.S. Customs and Border Protection (CBP).

Federal Trademark Registrations Now Available for Certain Hemp-Derived Products

The United States Patent and Trademark Office (USPTO) has also taken steps to implement the 2018 Farm Bill’s hemp provisions, recently issuing a guidance document entitled “Examination of Marks for Cannabis and Cannabis-Related Goods and Services after Enactment of 2018 Farm Bill.” The Guide provides new opportunities for obtaining federal trademark registrations for non-ingestible hemp-derived products. However, the Guide provides that the federal registration of trademarks for “foods, beverages, dietary supplements, or pet treats containing CBD will still be refused … even if derived from hemp, as such goods may not be introduced lawfully into interstate commerce.” This action underscores the complicated situation in the US regarding CBD products in interstate commerce.

FDA Authority over Hemp and its Derivatives in Food

Although the 2018 Farm Bill significantly changed the federal regulatory status of hemp production, it made no changes to FDA’s authority under the Federal Food, Drug, and Cosmetic Act (FD&C Act) to regulate food products containing hemp or hemp-derived products. All food products, including dietary supplements and food additives, pet food, and animal feed, are subject to the same regulatory compliance requirements, regardless of whether the products or their ingredients fall within the definition of “hemp” under the 2018 Farm Bill.

If a company wants to add a hemp-derived ingredient to food, the substance must be either: (1) the subject of a regulation promulgated by FDA permitting the specific use of the substance; or (2) generally recognized as safe (GRAS) for its intended use. FDA establishes regulations after the manufacturer proves to FDA that the intended use of the additive presents a reasonable certainty of no harm to consumers. Alternatively, many food manufacturers opt to make a self-determination as to the GRAS status of their product, although many food manufacturers choose to request FDA’s review and concurrence as to their GRAS self-determination through the agency’s voluntary GRAS Notification program. Indeed, FDA already has evaluated the safety of several hemp-derived products for use in food through GRAS Notifications—dehulled hemp seed, hemp seed protein, and hemp seed protein—and had no safety concerns.

Where CBD, in particular, is concerned, however, there are some special considerations. A rather obscure provision of the FD&C Act prohibits the use of an approved drug in food, while a similar provision in the FD&C Act’s definition of a dietary supplement likewise prohibits approved drugs from being used in supplements. There are now, of course, existing approvals for pharmaceutical use of CBD, most notably the naturally-derived CBD that is used for the drug Epidiolex. Although there are circumstances when these restrictions would not apply (for both food and supplements), FDA has taken the position that CBD cannot lawfully be added to food or dietary supplements on the basis of these provisions, regardless of whether the CBD is derived from hemp or cannabis.

Given the federal regulatory situation, it may seem surprising that so many food-related products containing CBD are currently on the market. The primary reason is that so far FDA has exercised its discretion to not pursue enforcement actions against food and dietary supplement products containing CBD, except when products are making egregious and impermissible claims that the product will cure, mitigate, treat, or prevent disease in man or other animals. Given a lack of resources, FDA is unlikely to undertake more extensive activity in the near future for more borderline claims or cases. Indeed, some have argued that if a product makes no claims, then there is virtually no risk of FDA enforcement action. However, when FDA evaluates its jurisdiction over a product the agency looks not just at the specific claims made, but the intent of the product as a whole. Consequently, the issue becomes whether there is an implied claim as to the purpose of the substance. If a substance does not contribute to the taste or aroma of the food, or does not serve a specific technical purpose (preservative, caking agent, etc.), for example, then it could be argued that it can only be there for nutrition (food) or for some medicinal effect (drug). This is a very murky area of potential FDA enforcement, but in the end FDA has limited resources and some companies are willing to take the business risk.

FDA recently held a public meeting to receive stakeholder input on how the agency could approach the regulation of CBD specifically, and a docket has also been opened for the submission of written comments. With over 100 speakers and ~1400 comments (as of June 10, deadline for submission is July 2), however, it is likely to be a substantial amount of time before FDA announces its regulatory decision. In the interim, the market for hemp- and CBD-containing products is anticipated to expand significantly, leaving companies in a challenging position as to federal regulatory compliance.

¹ Section 301(ll).

² See FDA’s guidance for more information: https://www.fda.gov/news-events/public-health-focus/fda-regulation-cannabis-and-cannabis-derived-products-questions-and-answers.

³ https://www.regulations.gov/docket?D=FDA-2019-N-1482.

ABOUT AUTHORS

Cynthia Taub is a partner in Steptoe & Johnson LLP's DC office. She handles a wide range of environmental, chemical regulatory and litigation matters. In the area of cannabis regulation, her practice includes compliance counseling related to federal and state regulation of hemp, CBD, and other cannabis derivatives, as well as related to pesticide residue regulation.

Deborah Attwood is an associate in Steptoe & Johnson LLP’s DC office, advising on regulatory compliance for food and beverages (including dietary supplements and packaging), medical devices, drugs, and cosmetics. She advises on federal compliance considerations relating to the use of cannabis- and hemp-derived substances in these products.