While CBD has been on the federal government’s radar for quite some time now, it is only after the passage of the 2018 Farm Bill that we have seen a real indication that the federal government is seriously evaluating the substance. While 2018 was a year of great momentum for CBD with the FDA approving Epidiolex and WHO’s ECDD determining that CBD had no adverse reactions or addictive qualities (recommending it not be scheduled), Spring 2019 has been uniquely productive for cannabis and CBD at the federal level, with multiple agencies issuing statements and guidances on their respective approaches to CBD. As the agency appointed the authority on the subject, FDA has been a guiding light for the rest of the alphabet soup.
Since the Farm Bill deferred to FDA determinations relating to the legality of CBD, there has been a strong push for answers as to CBD’s status coming not only from the public but also from members of Congress. (http://www.brownsonnorby.com/wp-content/uploads/2019-2-15-Congress-to-FDA-re-CBD.pdf ). In turn, (now former) FDA Commissioner Scott Gottlieb issued a statement offering some interim guidance until FDA could get its arms around CBD. (https://www.fda.gov/news-events/press-announcements/statement-fda-commissioner-scott-gottlieb-md-new-steps-advance-agencys-continued-evaluation?utm_campaign=040219_Statement_FDA%20announces%20new%20steps%20on%20cannabis-related%20products&utm_medium=email&utm_source=Eloqua) The statement, which outlines FDA’s initiative to understand CBD and cannabis in order to regulate the substances, reiterates FDA’s position that CBD is not approved by FDA in any regard (excepting Epidiolex, of course) but leaves open the possibility for approval should the agency’s review of the substance so warrant. Thus, FDA is not only creating a “high-level internal agency working group to explore potential pathways for dietary supplements and/or conventional foods containing CBD to be lawfully marketed” it is also seeking information and input from the public, noting there are “critical” questions to answer
to help inform the FDA’s regulatory oversight of [CBD and other cannabis and cannabis-derived products] – especially as the agency considers whether it could be appropriate to exercise its authority to allow the use of CBD in dietary supplements and other foods. As I stated in December, the FDA would only consider this path if the agency were able to determine that all other requirements in the FD&C Act are met, including those required for food additives or new dietary ingredients.
This solicitation for comments is in conjunction with the much-anticipated meeting for May 31, 2019 to address CBD with the public and stakeholders, and to inform the agency on CBD in anticipation of structuring regulations therefore. (https://www.regulations.gov/document?D=FDA-2019-N-1482-0001).
[FDA] is announcing a public hearing to obtain scientific data and information about the safety, manufacturing, product quality, marketing, labeling, and sale of products containing cannabis or cannabis-derived compounds.
While the specifics concerning FDA’s regulation of CBD remain unknown, it has long been FDA’s position that medical or health claims related to the substance are forbidden, and as such, last month FDA also issued 3 warning letters to CBD companies, pointing to medical claims as a central problem. Interestingly, though, FDA also noted that the companies’ claims were also reviewed by FTC “for potential violations of Sections 5(a) and 12 of the FTC Act, 15 U.S.C. 45(a) and 52.” (See e.g. https://www.fda.gov/inspections-compliance-enforcement-and-criminal-investigations/warning-letters/advanced-spine-and-pain-llc-565256-03282019 ).
it is unlawful under the FTC Act, 15 U.S.C. § 41 et seq., to advertise that a product can prevent, treat, or cure human disease unless you possess competent and reliable scientific evidence, including, when appropriate, well-controlled human clinical studies, substantiating that the claims are true at the time they are made.
As such, companies–which already should have been wary of making such claims, as they have long been cited as violative of FD&C Act—should be highly cautious about claims, or statements that may be construed as claims, being made on their websites, as they will now have to answer to two agencies for such violations.
Finally, FDA updated its FAQ on cannabis, attempting to resolve some commonly asked questions. (https://www.fda.gov/news-events/public-health-focus/fda-regulation-cannabis-and-cannabis-derived-products-questions-and-answers). Interestingly, while maintaining its pre-stated position that CBD in food, supplements, and pet products is not approved, FDA explained that though “[c]ertain cosmetic ingredients are prohibited or restricted by regulation, but currently that is not the case for any cannabis or cannabis-derived ingredients.” (Id.) As such, the recent and rapidly growing cannabis-beauty market is seemingly in the clear, and companies like Estée Lauder and Sephora, which have entered the cannabis-cosmetic market can breathe a sigh of relief—for now, at least. (https://www.cnbc.com/2019/02/20/cannabis-beauty-is-becoming-a-real-category-as-sephora-others-promote-cbd-infused-products.html)
Given that the Farm Bill assigned responsibility to FDA for addressing CBD’s legality, the other federal agencies are largely waiting for FDA’s determinations in order to formulate their own standards.
In April, TTB issued a circular following receipt of “many inquiries from industry members about whether they may produce alcohol beverages containing ingredients, such as cannabidiol (CBD), derived from ‘hemp.’” https://www.ttb.gov/industry_circulars/archives/19-1-print.html
Looking to FDA for guidance, TTB concluded that “any applications for formulas containing ‘hemp’ ingredients (other than ingredients derived from hemp seeds or hemp seed oil)” will be returned for “correction.” (Id., emphasis added.)
TTB will continue to process applications for formulas for alcohol beverages that contain ingredients derived from hemp seeds or hemp seed oil.
For such alcoholic beverages containing permissible hemp components, TTB advises that:
the product label must accurately and specifically identify the ingredient in a manner that makes it clear that the ingredient is not a controlled substance (e.g., “hemp seed oil” rather than “hemp oil”). Additionally, labeling statements for alcohol beverage products may not create the misleading impression that the product contains a controlled substance or has effects similar to those of a controlled substance.
Early in May 2019, USPTO issued guidance concerning CBD trademarks. A simple search of the TESS system shows hundreds of pending CBD trademark applications, which had been in something of a purgatory the past several years given the uncertain nature of the substance. However, following the Farm Bill, some clarity has been provided.
For applications filed on or after December 20, 2018 [(the date of the Farm Bill)] that identify goods encompassing cannabis or CBD, the 2018 Farm Bill potentially removes the CSA as a ground for refusal of registration, but only if the goods are derived from ‘hemp.’ * * * If an applicant’s goods are derived from “hemp” as defined in the 2018 Farm Bill, the identification of goods must specify that they contain less than 0.3% THC. * * * For applications filed before December 20, 2018 that identify goods encompassing CBD or other cannabis products, registration will be refused due to the unlawful use or lack of bona fide intent to use in lawful commerce under the CSA.
While applicants filing prior to December 20, 2018 will have an opportunity to amend their applications to reflect a filing date of December 20, 2018, it is unclear whether this alteration will impact IP rights (based on “first to file”). Because USPTO has determined that pre-December 20, 2018 dates indicate “unlawful use or lack of bona fide intent to use in lawful commerce under the CSA” it follows that reliance on “first use in commerce” date predating the Farm Bill as a basis for superior rights will be futile. How, then, will superior rights be determined for CBD trademarks? This question will most likely be answered in the near future by either USPTO or the federal courts.
In sum, for those entities seeking trademark protection for CBD products, in addition to the requirement that the application filing date be on or after December 20, 2018, it is also critical that the application note that: the CBD is derived from hemp; the CBD product contains less than .3% THC; and, the CBD product is not an unapproved product under FDA’s regulatory authority (food, dietary supplement, drug, beverage, pet product).
Following the passage of the Farm Bill, USDA conducted listening sessions to hear from the industry regarding the changes imposed by the bill. Seeing a great deal of interest in the hemp provision during the initial session USDA conducted another session to address hemp in particular. (https://www.ams.usda.gov/rules-regulations/farmbill-hemp/webinar-comments). In conjunction with the session, USDA received numerous comments from the farming, insurance, and legal industries providing suggestions “to assist the USDA in developing sampling procedures, testing requirements, licensing, compliance and other procedures related to hemp production.” (Id.) Since the hemp session in March, USDA has issued its first hemp-related guidance which concerns the importation and cultivation of hemp seeds allowing farmers to import from international sources so long as the seeds are documented as having .3% THC or less. (https://www.ams.usda.gov/content/importation-hemp-seeds).
In late April USDA issued a statement that it would provide intellectual property protection for new hemp varieties, affording those in the industry protection under the Plant Variety Protection Act not previously enjoyed. https://www.ams.usda.gov/content/usda-now-accepting-applications-seed-propagated-hemp-plant-variety-protection
Certificate owners have rights to exclude others from marketing and selling their varieties, manage the use of their varieties by other breeders, and enjoy legal protection of their work.
This, paired with the USPTO’s recent guidance, is a big win for the hemp and CBD industry, which can now protect their brand and product from infringement.
With hemp-derived substances no longer within its purview under the Farm Bill, DEA has set out to find an efficient and accurate means of distinguishing between hemp and marijuana in the field, and solicited information regarding devices that may effectively accomplish this objective.
The purpose of this notice is to gather information to determine if there are vendors in the marketplace capable of providing field test kits (color tests, instruments, etc.) that can distinguish between hemp (non-controlled cannabis with a THC content of less than 0.3%) and marijuana (federal controlled cannabis with a THC content above 0.3).
The Big Takeaway
Until FDA puts out an official position with official guidance, companies may continue to develop and market CBD products with caution—however, CBD is no longer operating under the federal radar, and in fact has more attention than ever and as such, companies have an opportunity to shape government policy as well as public opinion. That being said, the main takeaway from the various agency actions this spring is that labels and marketing matter! At a minimum, labels should clearly state that the CBD is hemp-derived, having less than .3% THC content, and care should be taken in making medical claims (or any claims that FDA may perceive as medical claims).
*Also Hopping on the CBD Bandwagon, the: Federal District Court
In addition to agency determinations, this Spring in a much-watched patent dispute case the Federal District Court issued a ruling on summary judgment that a patent issued to UCANN concerning CBD was not invalid. The motion by Pure Hemp asserted that the UCANN patent was invalid on the basis that it concerned a substance occurring in nature. However, the court found that:
“Pure Hemp has failed to establish beyond genuine dispute that a liquefied version of cannabinoids and related chemicals at the concentrations specified in the 911 Patent is anything like a natural phenomenon. * * * the 911 Patent specifies threshold concentrations of cannabinoids and related chemicals. Pure Hemp nowhere claims that these precise concentrations, or anything close to them, occur in liquid form in nature.”
The industry will continue to watch this matter, as the outcome could have significant ramifications for many in the CBD sphere as the patent is arguably overbroad and could result in further requests for injunction by the patent holder UCANN against the numerous CBD entities it contends are infringing on its exclusive rights.