As published in the Legal Intelligencer

Bartenders are mixing it into cocktails. Professional athletes are using it to treat injuries. Mondelez International—the owner of Oreo, Ritz Crackers and other billion-dollar food and beverage brands—is considering adding it to snacks.

CBD is everywhere. From upscale coffee shops to the shelves of major retailers such as CVS and Walgreens, products containing the compound can be purchased across the United States.

But despite its proliferation in the marketplace, CBD continues to generate confusion among consumers—and debate among state and federal lawmakers. Moreover, its cultivation, distribution and use raise complex legal questions and uncertainties.

What Is CBD?

CBD is short for cannabidiol, one of over a myriad chemical compounds (called cannabinoids) found in cannabis plants. Cannabis is commonly referred to as “marijuana” or, outside of drug-related contexts, “hemp.” Alongside tetrahydrocannabinol (THC), cannabidiol is one of the primary extracts of cannabis.

THC, CBD and other cannabinoids induce certain physical and psychoactive responses in the human body. These chemicals work by interacting with receptors in the body’s endocannabinoid system, which is partially responsible for appetite, memory, pain tolerance and other physiological processes.

When people discuss the effects or supposed health benefits of cannabis, they are almost always referring to the effects of THC or CBD. However, while the two compounds share some medical and recreational applications, and possess an almost identical chemical structure, they affect the body in different ways. THC is psychoactive; it alters brain functions. CBD, on the other hand, does not seem to impact users’ perception. In other words, THC will get you “high”—CBD will not. In fact, there is an ongoing scientific debate as to whether CBD may actually block THC from binding with the brain’s CB1 receptor, thus mitigating some of THC’s psychoactive effects.

It is believed that CBD reduces pain and inflammation and is effective in treating treat conditions as disparate as epilepsy, multiple sclerosis, arthritis and even depression.

The Legal Status of CBD

Is CBD legal? In 2019, the answer is more than a simple “yes” or “no.”

As of this writing, legislatures in more than half of all states in the United States have legalized cannabis for medical use. In 10 states, as well as the District of Columbia, people 21 years or older can consume cannabis recreationally. Other jurisdictions have decriminalized cannabis possession. Nonetheless, the substance remains illegal under federal law, which classifies cannabis as a Schedule I drug under the Controlled Substances Act (CSA).

That said, the U.S. government does not consider all cannabis the same. The aforementioned distinctions—between CBD and THC, between marijuana and hemp—carry significant legal meaning. To understand why, one must understand the impact of a recent change in federal policy.

The 2014 Farm Bill established a legal avenue for cannabis cultivation by creating a new category: industrial hemp. The legislation defined industrial hemp as cannabis “grown or cultivated for purposes of research conducted under an agricultural pilot program or other agricultural or academic research.” The law further provided that hemp cultivation was “allowed [only] under the laws of the state in which such institution of higher education or state department of agriculture is located and such research occurs.”

Four years later, the 2018 Farm Bill, transformed federal cannabis policy in two crucial ways. First, the law allowed anyone, not just researchers in the 2014 pilot program, to cultivate industrial hemp (under certain restrictions—see below). Second, it clarified the definition of industrial hemp to encompass any cannabis plant with a THC concentration of 0.3% or less. Notably, Section 12619 of the law explicitly removed industrial hemp from Schedule 1 of the CSA.

Broadly speaking, federal law no longer prohibits businesses and individuals throughout the United States from producing or distributing CBD and CBD-containing products. That is, cannabidiol is now federally legal, so long as the compound is derived from hemp (i.e., cannabis with less than 0.3% THC content) and not marijuana (cannabis with a THC content exceeding the federal maximum). Marijuana-derived CBD is still proscribed by the CSA, and may only be produced, sold and possessed pursuant to state-regulated marijuana programs.

While the 2018 Farm Bill generally legalized hemp—and by extension, hemp-derived CBD—restrictions still apply. In addition to the rules surrounding THC content, hemp cultivators are subject to state regulations and, ultimately, federal approval.

The Brookings Institution notes: “Under Section 10113 of the Farm Bill, state departments of agriculture must consult with the state’s governor and chief law enforcement officer to devise a plan that must be submitted to the Secretary of the U.S. Department of Agriculture. A state’s plan to license and regulate hemp can only commence once the Secretary of USDA approves that state’s plan. In states opting not to devise a hemp regulatory program, USDA will construct a regulatory program under which hemp cultivators in those states must apply for licenses and comply with a federally-run program. This system of shared regulatory programming is similar to options states had in other policy areas such as health insurance marketplaces under ACA, or workplace safety plans under OSHA—both of which had federally-run systems for states opting not to set up their own systems.”

A December 2018, statement from U.S. Food and Drug Administration Commissioner Scott Gottlieb provided additional caveats. The FDA cautioned against marketing CBD products with claims regarding therapeutic benefits or efficacy in the “diagnosis, cure, mitigation, treatment or prevention of diseases (such as cancer, Alzheimer’s disease, psychiatric disorders and diabetes),” as any such product would be subject to FDA approval first. The administration also warned that the Federal Food, Drug, and Cosmetic Act (FD&C Act) makes it unlawful to “introduce food containing added CBD or THC into interstate commerce, or to market CBD or THC products as, or in, dietary supplements, regardless of whether the substances are hemp-derived.”

Members of the pharmaceutical industry should not interpret the Gottlieb letter as an outright repudiation of CBD products. Last year, in fact, the FDA approved Epidiolex, a CBD-based oral solution for the treatment of epileptic seizures. It is the first cannabis-derived drug to earn FDA approval.

Continue reading here »

Reprinted with permission from the May 24, 2019 issue of The Legal Intelligencer. © 2019 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.

ABOUT OFFIT KURMAN

Offit Kurman is one of the fastest-growing, full-service law firms in the mid-Atlantic region. With over 185 attorneys offering a comprehensive range of services in virtually every legal category, the firm is well positioned to meet the needs of dynamic businesses and the people who own and operate them. Our twelve offices serve individual and corporate clients along the I95 corridor in the Virginia, Washington, DC, Maryland, Delaware, Pennsylvania, New Jersey, and New York City regions. At Offit Kurman, we are our clients’ most trusted legal advisors, professionals who help maximize and protect business value and personal wealth. In every interaction, we consistently maintain our clients’ confidence by remaining focused on furthering their objectives and achieving their goals in an efficient manner. Trust, knowledge, confidence—in a partner, that’s perfect.

Find out why Offit Kurman is The Better Way to protect your business, your assets and your family by connecting via our Blog, Facebook, Twitter, Instagram, YouTube, and LinkedIn pages. You can also sign up to receive LawMatters, Offit Kurman’s monthly newsletter covering a diverse selection of legal and corporate thought leadership content.

MARYLAND | PENNSYLVANIA | VIRGINIA | NEW JERSEY | NEW YORK | DELAWARE | WASHINGTON, DC