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Market Confusion on CBD and Hemp; FDA Commissioner Resigns amid Congressional Pressure for Federal Guidance

By Ian Stewart & Neil Willner

The Commissioner of the Food and Drug Administration (FDA), Scott Gottlieb MD, who has received high marks for his leadership of the agency since May 2017, announced his resignation on March 5, 2019, stating that he wants to spend more time with his family. His resignation came only days following testimony that he gave before the House Appropriations Committee regarding the FDA’s regulatory plans for CBD (cannabidiol). Congress also heard testimony from the Secretary of the U.S. Department of Agriculture on the status of industrial hemp cultivation pursuant to the 2018 Farm Bill.

FDA Commissioner Testifies about CBD

In testimony before the House Appropriations Committee, FDA Commissioner Gottlieb detailed the start of new regulatory plans for CBD. Initially, the FDA will hold a public meeting in April to hear from industry stakeholders about effective regulations for hemp-derived CBD. Gottlieb also mentioned that the FDA is forming a work group with “some senior officials in the agency” to study regulatory options for CBD.

Gottlieb noted that creating a regulatory framework for CBD “is not a straightforward issue” because CBD is a compound in an existing FDA-approved medication and under the Federal Food, Drug, and Cosmetic Act (FDCA) it cannot be added to products intended for human consumption.

Hinting at a possible regulatory framework, Gottlieb said “CBD could potentially exist in a high concentration, pure formulation as a pharmaceutical product” while also existing at lower concentrations that could be sold as foods and dietary supplements.

Gottlieb acknowledged the possibility that promulgating CBD regulations could take longer than expected, testifying he will seek congressional guidance to “have a discussion about whether or not there are other frameworks that could help address this” if the FDA determines that the pathway to CBD regulations could be a multi-year process.

USDA Secretary Testifies about 2018 Farm Bill

Meanwhile, USDA Secretary Sonny Perdue testified before the full House Agriculture Committee on the status of the 2018 Farm Bill. “Proceeding very judiciously because of the uniqueness of the hemp crop,” Perdue stated that the USDA plans to issue its hemp regulations by fall 2019 and in time for the 2020 growing season. Accordingly, the USDA is hosting a webinar listening session on industrial hemp production on March 13.

Under the 2018 Farm Bill, the USDA is tasked with issuing regulations to implement a program for commercial production of industrial hemp across the United States. The USDA also must review and approve industrial hemp plans submitted by states or Indian tribes within 60 days of submission.

Secretary Perdue made clear that the USDA will not begin approving state plans until final USDA regulations are in place. Nevertheless, several states have already submitted plans for USDA approval, including Pennsylvania and Kentucky. Accordingly, these plans will have to wait for approval until USDA regulations are finalized.

Confusion to Persist

Although many were looking for clarity coming out of these recent hearings, Commissioner Gottlieb’s sudden resignation has created further uncertainty with regard to how the FDA will manage the regulatory pathway for CBD. The expectation that the FDA will liberalize its position on CBD also comes at a time when the agency is preparing to take a more aggressive stance on regulating the dietary supplement industry. Whoever takes the helm at FDA, it should be expected that the agency will maintain a fairly consistent position that CBD and other cannabinoids must follow the scientific process like any other chemical component which will take many months at the minimum.

Additional information can be found at www.wilsonelser.com/cannabis.

 

Ian Stewart

Ian Stewart

Ian is a partner in the Los Angeles office of Wilson Elser. He is co-founder and chair of the Wilson Elser Cannabis Law practice and uses his 20 years of legal experience to help clients navigate the legalities around cannabis and hemp. Ian works with licensed cannabis operators to comply with their obligations under the law and to develop risk management best practices. He also regularly consults with insurance companies to assist with cannabis-related underwriting practices and the development of new policy forms.

He is currently Chair of the National Cannabis Industry Association’s Finance and Insurance Committee, as well as Vice-Chair of the California Cannabis Industry Association’s Insurance Committee. Ian received his B.A. from Washington University in St. Louis, and his JD from St. Louis University. He has been with Wilson Elser for the past 18 years.

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