FDA Conducts First Public Hearings Regarding CBD

­On Friday, May 31, 2019, the Food and Drug Administration (“FDA”) conducted its first public hearing to create a regulatory framework for the legal marketing and sale of cannabidiol (“CBD”) products. The FDA asked the industry for more data on safety and efficacy of CBD and the industry presented little data and asked the FDA to hurry up and adopt a regulatory framework.

In December 2018, Congress enabled industrial production of CBD from hemp by legalizing hemp and hemp-derived products including CBD with low (i.e., less than 0.3 % on a dry weight basis) concentrations of THC as part of the Agriculture Improvement Act of 2018 (the “Farm Bill”) and removed hemp from the Controlled Substances Act (so that hemp is no longer a controlled substance under federal law). However, Congress expressly preserved the FDA’s existing authority to regulate products containing CBD (and other hemp or hemp-derived compounds) under the Federal Food, Drug and Cosmetic Act (the “FDA Act”) and section 351 of the Public Health Service Act. So despite the Farm Bill, the FDA has regulatory authority related to use of hemp-derived CBD.

It is the FDA’s position that the marketing and sale of hemp-derived CBD products is not allowed until the FDA adopts a regulatory framework or deems CBD products as generally recognized as safe. While the FDA is reviewing potential policy and regulatory options, a multi-billion dollar market is developing with thousands of products containing CBD – including products marketed as food, beverages, dietary supplements and other health and wellness products. Many industry participants and consumers believe that in the absence of a regulatory framework, the marketing and sale of these products is legally permissible. This situation seems to give an advantage to those willing to market their products and risk FDA reprisals, while other potential new entrants are frustrated with having to determine whether they should enter the market or wait until the FDA adopts a regulatory framework.

In collaboration with the Federal Trade Commission (“FTC”), the FDA has issued a small number of formal warning letters to businesses that have marketed products containing CBD in violation of the FDA Act, especially products that the FDA and FTC have determined have made deceptive, unsubstantiated health-related claims that could pose serious health and safety risks. The FDA has not yet taken any action with regard to the great majority of the CBD industry.

While industry participants in the May 31 hearing emphasized speed to adopt a framework so as to clear up the regulatory uncertainty and to validate the existing market for CBD products, the FDA focused on the lack of safety and therapeutic data and research related to CBD. Industry participants also declared their belief that there are minimal safety concerns based on prior use of CBD and THC but without any data to back up their belief.

The FDA has invited CBD-related scientific data and information and public comments by July 2, 2019. In the meantime we expect many questions from current industry participants and those that wish to enter the market.

 

 

Michael Weiner

Michael Weiner

Michael is a partner in Dorsey's Corporate Group and the head of the Corporate department in Denver. His practice focuses on the representation of emerging growth companies in the areas of corporate formation, mergers and acquisitions, venture capital and angel finance, and securities regulation.

Christopher J. Barry

Christopher J. Barry

Chris has over 30 years of experience in public and private securities offerings, stock exchange listings, mergers and acquisitions, tender offers, proxy contests, contests for corporate control and shareholder disputes, corporate governance and general business counseling, new businesses formation and venture capital transactions.

David Mangum

David Mangum

Dave advises clients on corporate and transactional matters, including startup formation and financing, buy-side and sell-side mergers and acquisitions, corporate governance, commercial contracting, and public company disclosure.

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Chris Koa

Chris has over 20 years of experience with domestic and international cloud computing, software licensing, information technology (“IT”), e-commerce, strategic sourcing, privacy, cybersecurity, data breach response and other technology transactions from both customer and provider perspectives, as well as M&A transactions, joint ventures, venture capital financings, equity public offerings including IPOs and other corporate transactions.

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