by Hilary Bricken, Principal, Harris Bricken
Back in 2015, we wrote about the U.S. Postal Service (“USPS”) taking issue with companies placing cannabis ads in the mail. In a written notice dated November 27, 2015, issued by the Portland, Oregon, District Mailing Requirements Office, the USPS explained:
[i]f a mailpiece contains an advertisement for marijuana, that mailpiece is nonmailable” where the federal Controlled Substances Act (“CSA”) makes it unlawful to place an ad in any publication with the purpose of “seeking or offering illegally to receive, buy, or distribute a Schedule I controlled substance. . . If an advertisement advocates the purchase of clinical marijuana through a Medical Marijuana Dispensary, it does not comply with U.S.C. 21 843(c).
Unless you’ve been living under a rock, you know that the CSA, prohibits using federal mail channels to actually engage in drug trafficking. This means that mailing actual cannabis/THC products exceeding 0.3%, or related paraphernalia, was, and remains, a big “non-mailable” no-no.
Then, in 2019, we wrote about the Business Mail Acceptance (“BMA”) internal advisory on “Acceptance Criteria for Cannabidiol (CBD) Oil and Products Containing CBD.” Essentially, due to the passage of the 2014 Farm Bill, the USPS got tons of questions from CBD purveyors about mailing CBD products to consumers via USPS channels, and the BMA advisory sets forth the necessary elements mailers needed to meet under the 2014 Farm Bill to legitimately mail their hemp-derived CBD products. At the time (March 2019), BMA made clear in its advisory that the acceptance criteria was only temporary as the 2018 Farm Bill had just passed and would ultimately change the requirements for “mailability” of CBD products. USPS then essentially made the BMA advisory public (with updated) later in 2019 (see here), and it updated the external advisory again in August of 2021 to come in line with the 2018 Farm Bill.
Now, in a little bit of twist, USPS again is visiting the mailability of certain hemp and cannabis products– but not because of the 2018 Farm Bill, and not necessarily because of any THC or CBD-related issues.
Back in 2020, as part of a COVID-19-focused, massive 2021 Appropriations bill, Congress enacted a prohibition on USPS from accepting packages of vapor products for delivery and also added vaping products to the Prevent All Cigarette Trafficking Act (“PACT”) (and as part of the Preventing Online Sales of E-Cigarettes to Children Act (“POSECCA”)). Specifically, POSECCA extends “the prohibition on mailing of cigarettes under section 1716E of title 18, United 12 States Code, . . . to electronic nicotine delivery systems . . .” The term “electronic nicotine delivery system” (“ENDS”) means:
(A) any electronic device that, through an aerosolized solution, delivers nicotine, flavor, or any other substance to the user inhaling from the device; (B) includes—(i) an e-cigarette; (ii) an e-hookah; (iii) an e-cigar; (iv) a vape pen; (v) an advanced refillable personal vaporizer; (vi) an electronic pipe; and (vii) any component, liquid, part, or accessory of a device described in subparagraph (A), without regard to whether the component, liquid, part, or accessory is sold separately from the device; and (C) does not include a product that is—(i) approved by the Food and Drug Administration for (I) sale as a tobacco cessation product; or (II) any other therapeutic purpose; and (ii) marketed and sold solely for a purpose described in clause (i).
Notably, this POSECCA FDA exception for mailability is currently meaningless where the FDA has not approved any ENDS product for smoking cessation or another therapeutic use. PACT (which is part of the larger federal Jenkins Act and imposes onerous reporting and disclosure requirements on mailers subject to its authority) contains various Business/Regulatory exceptions that allow for the mailing of cigarettes, but they’re few and far between (see 18 U.S. Code Section §1716E(b). Notably, PACT has severe penalties for non-compliance, including prison time.
The immediate industry reaction (in both the tobacco and cannabis/hemp industries) was that POSECCA’s language was so broad and unqualified that it could easily apply to ENDS products that don’t contain nicotine, including those that house liquid THC and/or CBD. With the passage of POSECCA, USPS was charged with promulgating and adopting regulations for its implementation. To prepare, back in April, the USPS issued industry guidance to ENDS mailers, and that USPS guidance gave some hope to the hemp-CBD ENDS folks in that maybe they would be exempt from POSECCA (and maybe PACT through one of its several Business/Regulatory exemptions) in some fashion depending on the outcome of the rules.
On October 21, 2021, that hope was ultimately dashed with the effectiveness of the USPS’s Final Rule. The USPS pulls no punches in determining that the ENDS subject to POSECCA and PACT include any ENDS product regardless of whether it carries liquid nicotine (unless a PACT or POSECCA exception is met). And in regards to public comments about being able to mail vapes that contain liquid CBD, the USPS specifically states that:
The FDA likewise has not approved any ENDS product for therapeutic delivery of any non-nicotine substance, including, in particular, CBD or other substances derived from marijuana [(so no POSECCA exception can be had)]. Once again, except for hemp-derived CBD containing no more than 0.3 percent THC by dry weight, cannabis and cannabis derivatives remain nonmailable under the Controlled Substances Act regardless of the POSECCA and notwithstanding any State or local laws on ‘medical’ marijuana. Far from taking marketing claims of therapeutic benefit at face value, the FDA has undertaken enforcement action against companies making such claims about CBD and other cannabis-related products absent new drug approvals from the FDA.
An important note is that even though the USPS’s position is that hemp-derived CBD in line with the 2018 Farm Bill (and the USPS’s current hemp mailability standards from August 2021) is still mailable, it becomes nonmailable if it comes in an ENDS device (unless an exception is met). The USPS is very clear in its stance that “. . . hemp-based non-ENDS products are unaffected, as are ENDS products falling within one of the PACT Act’s exceptions”.
Undoubtedly, this Final Rule is going to upend business and product deployment strategies for countless ENDS companies/mailers in both tobacco and hemp-CBD/CBD circles. The impact to online sales in particular could be staggering, especially given that shortly after the passage of POSECCA, UPS and FedEx decided to stop making deliveries/shipments of ENDS products that violate the mailing law (and DHL, seeing the writing on the wall, stopped accepting such shipments even before the law’s passage). ENDS sellers will likely now have to turn to private courier systems, which means operational costs are going to go up (assuming ENDS sellers can really establish a reliable supply and delivery chain in the wake of the Final Rule). Going forward, purchasing and receiving ENDS in any form will be both difficult and expensive for any business complying with the law as interpreted by USPS.
Re-published with the permission of Harris Bricken and The Canna Law Blog
Hilary Bricken is an attorney at Harris Bricken, PLLC in Los Angeles and she chairs the firm’s Canna Law Group. Her practice consists of representing marijuana businesses of all sizes in multiple states on matters relating to licensing, corporate formation and contracts, commercial litigation, and intellectual property. Named one of the 100 most influential people in the cannabis industry in 2014, Hilary is also lead editor of the Canna Law Blog. You can reach her by email at [email protected].
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