High Stakes: Is Federal Law Cracking Down on Hemp?
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Despite hemp’s legalization, there remains much uncertainty when it comes to the practical operation of the industry.
In late March, for example, the FDA issued warning letters to several CBD businesses, the first to be issued since the passage of the Farm Bill and the legalization of hemp-derived CBD.
The warning letters were addressed to Advanced Spine and Pain, LLC in New Jersey, Nutra Pure LLC in Washington, and PotNetwork Holdings, Inc. in Florida. While the exact charges varied between the businesses, the letters generally stated concern that products offered by the companies may be “intended for use as drugs” or make claims in marketing that “may not be substantiated by competent and reliable scientific evidence.”
Are cases like these normal teething issues for an emerging industry? Or a sign that federal powers are mistreating cannabis-related businesses?
The Farm Bill, the CBD industry, and the FDA
Section 12619 of the Farm Bill modified the Controlled Substances Act to no longer include hemp when it refers to the prohibition of “marihuana” as a controlled substance. The Farm Bill defined hemp by referencing Subtitle G, Section 297A of the Agricultural Marketing Act of 1946, which describes hemp as a form of cannabis containing a tetrahydrocannabinol (THC) concentration of “not more than 0.3 percent on a dry weight basis.”
This removal of hemp from the Controlled Substances Act allowed the Farm Bill to enroll industrial hemp as a crop that can be covered under the 1980 Federal Crop Insurance Act. It also moved oversight of hemp production away from the US Drug Enforcement Agency (DEA) and towards the much larger Food and Drug Administration (FDA), which is responsible for overseeing food safety, dietary supplements, over-the-counter drugs, and a number of other areas relevant to the hemp industry.
Shortly after the passage of the Farm Bill, the US Food and Drug Administration (FDA) issued a statement from its Commissioner, Scott Gottlieb, saying that the FDA are “aware of the growing public interest in cannabis and cannabis-derived products, including cannabidiol (CBD),” and restated that while the Farm Bill may have made changes to how hemp is regulated in the US, it expressly preserved the FDA’s authority over hemp and hemp products under the Federal Food, Drug, and Cosmetic Act and the Public Health Service Act.
The statement also includes several advisory notices to those involved in the CBD business, saying that the FDA intends to hold the CBD industry to the “same standard to which we hold any product marketed as a drug for human or animal use,” meaning that a CBD or hemp company wishing to make any therapeutic or medical claims about its product must be able to scientifically prove these to the FDA and receive FDA certification. In the same vein, the addition of hemp products to foodstuffs or hemp products marketed as dietary supplements will also have to follow FDA regulations to be recognized as safe.
FDA issues a round of warning letters to CBD businesses
And so that was how the situation remained for several months, with the federal agency working to create an informed regulatory system for hemp and CBD products.
The FDA announced plans to hold a public hearing to talk to those involved in the production of cannabis- and hemp-derived products about their scientific basis and to obtain information about their safety, quality, and marketing strategies. It also updated sections of its official website to better assist in understanding the new FDA requirements, and announced the establishment of a high-level internal working group that was tasked with exploring how CBD can be lawfully marketed under current regulations, and whether future statutory or regulatory change may be needed.
Then, on March 28, the FDA issues its first warning letters to CBD businesses. Recipients were given fifteen working days to contact both the FDA and FTC with explanations of how they intend to correct the various infractions noted in the letter. The FTC also noted that continued violation of the related Federal Trade Commission Act could result in legal action.
The FDA Commissioner had previously said that while the FDA has limited resources for the enforcement operations, it would be taking action against companies that make product statements that are deemed to be exaggerated or “over-the-line.”
“I believe these are egregious, over-the-line claims and we won’t tolerate this kind of deceptive marketing to vulnerable patients,” wrote Commissioner Gottlieb in a statement issued after the warning letters were issued. “These products have not been shown to be safe or effective, and deceptive marketing of unproven treatments may keep some patients from accessing appropriate, recognized therapies to treat serious and even fatal diseases.”
Despite these enforcement actions, there remains a lack of clear direction over what exactly CBD and hemp companies can do to avoid federal action being taken against them, other than avoiding “over-the-line” statements in their marketing. It’s expected that the public hearing planned for the end of May will offer some further clarity for what “compliance with FDA rules” may look like in practice.
Interstate hemp transport runs afoul of conflicting state and federal law
It isn’t just those involved in the production of hemp and hemp-derived products that need to worry about navigating this new legal landscape, the transportation of hemp has also recently come under fire.
In January, one interstate truck driver was arrested for the felony trafficking of marijuana after he was stopped by Idaho State Police while conducting a delivery. The driver was transporting 6,700 pounds of hemp that had been legally cultivated in Oregon to the firm Big Sky Scientific, which is based in Colorado. The delivery shipment was seized by the state police.
Around the same time, police in Pawhuska, Oklahoma, arrested four men and seized $500,000 worth of industrial hemp. The police believed the hemp to be marijuana, and so charged the men — one driver and three security personnel — with marijuana trafficking offenses.
In response to the arrest in Idaho, Big Sky Scientific went to federal court to contest the seizure of its hemp and to have the charges against the delivery driver dropped. On February 19, the United States District Court for the District of Idaho denied Big Sky’s motion for a preliminary injunction.
The court concluded that while the Farm Bill did legalize hemp “produced in accordance with subtitle G” of the Agricultural Marketing Act, the regulatory framework for industrial hemp required by the Farm Bill has not yet been created, either at the federal or state level. Since no framework exists, it would have been impossible for the hemp cargo to comply with regulations and therefore be covered by the interstate commerce protections offered by the Farm Bill.
“[The hemp] could not have been produced in accordance with subtitle G because Oregon does not have a federally-approved plan and the Secretary of the United States Department of Agriculture has yet to establish its own plan as Subtitle G requires be done,” writes the court in its response. “This is undisputed. It matters not whether the cargo might meet the requirements of subtitle G if such a plan (or something similar) had existed when the crop was grown and harvested [or was delayed by] the recent shutdown of … the federal government.”
Big Sky Scientific has reportedly appealed to the Ninth Circuit Court of Appeals to reverse this decision. Idaho’s House of Representatives has since passed a bill that, if enacted into law, would allow legal hemp transport through Idaho provided the transporter gets a permit from the state and does not unload any cargo there.
Hemp sales in the United States are projected to reach $2.6 billion by 2022, with half of this figure expected to be down to hemp-derived CBD products. But clearly, meeting such projections may not be plain sailing unless clarification is passed down to explain how exactly the hemp industry can act in accordance with the wishes of the FDA and the federal courts. As the FDA Commissioner prepares to step down, the future of CBD and hemp policy in America is perhaps as uncertain as it’s ever been.