Duane Morris partners Neville Bilimoria and Seth Goldberg were quoted in an article in Chicago Lawyer magazine discussing legal issues related to the recent spate of vaping-related illnesses and deaths. Read our partners’ thought leadership on the Duane Morris website or the full article on the Chicago Lawyer website (subscription required).
It has been more than one year since the Agricultural Improvement Act of 2018 (better known as the 2018 Farm Bill) was enacted removing hemp and hemp-derivatives like CBD from the Controlled Substances Act. And while the U.S. Food and Drug Administration (FDA) has held a public hearing on the use of cannabis, including hemp-derived CBD, in products like food and beverage, the industry anxiously awaits guidance or rules on advertising and labeling (which includes the label and packaging, as well as anything that you say about the product, including any claim that you make on your label, package, website, social media, etc.) for CBD-containing products.
Add to this lack of guidance, FDA currently takes the position that CBD may not be incorporated into and sold as food or a dietary supplement. A number of states have also specifically prohibited the use of CBD in foods, such as Massachusetts, Washington and North Carolina. Therefore, any company wishing to include CBD in food or beverages should proceed with caution. On the other hand, a broad spectrum of statutes and regulations exist from other states on the advertising and labeling of CBD-containing foods and beverages, including some states that require any product containing CBD to be packaged in be child-resistant, tamper-evident, and light-resistant containers. Even if you are not selling in a state that requires this type of packaging, it can still be beneficial from a products liability perspective to follow the more stringent packaging regulations.
By: Justin A. Santarosa and Jennifer Briggs Fisher
Gavin Newsom, Governor of California, released his proposal for the State’s budget today, outlining a number of items of importance for the California cannabis industry.
The most noteworthy proposal is regulatory consolidation. In an effort to improve and simplify regulatory oversight of commercial cannabis activity, the Governor’s office is proposing to consolidate the three licensing entities that are currently within the Bureau of Cannabis Control, the Department of Food and Agriculture, and the Department of Public Health, into a single “Department of Cannabis Control” by July 2021.
Such a change would be welcomed by many operators in the State, especially vertically integrated operators who must now contend with multiple state agencies that have different regulatory requirements and interpretations. This may also boost M&A activity in the state, given that it could lead to more consistent regulations regarding ownership changes and a more efficient regulatory approval process. A single regulatory agency would also streamline fee collections and enforcement. More details on this proposal are expected in the Spring of 2020 and we will be watching closely for those updates.
Additionally, the budget looks to “fix” what many consider to be a broken cannabis taxation regime. The Governor states that the goal of the proposal is to reduce the tax collection burden on the cannabis industry and simplify the tax collection process. The proposed changes move the responsibility for the cultivation excise tax from the final distributor to the first, and for the retail excise tax from the distributor to the retailer.
While no changes to the tax rates are specified, the proposed budget does state that the Governor will consider other changes to the existing cannabis tax structure, including the number of taxes and tax rates. The California tax burden is viewed as one of the major inhibitors of the growth and success of the cannabis market in the state.
We will continue to monitor these developments as they unfold, so please check back for further updates and analysis.
To register for the event, visit the Food and Drug Law Institute website.
Duane Morris associate Kelly Bonner shares legal insight on CBD products and services in the January issue of DaySpa magazine.
From the publication:
- Consider the source. CBD can be derived from both hemp and marijuana, which have different definitions in U.S. law and are subject to different statutory and regulatory requirements. Hemp-derived CBD products are not illegal to sell and possess under federal law, as long as they contain no more than 0.3 percent tetrahydrocannabinol (THC). Marijuana has more than 0.3 percent THC, and is a Schedule I controlled substance under the federal Controlled Substances Act.
- Get proof. Given the current lack of federal testing requirements for CBD products, it can be difficult to ensure that those purchased from third-party vendors contain no more than the permitted level of THC. So it’s extremely important that spas get anything containing CBD from a trustworthy supplier who can verify ingredients, confirm THC levels with third-party labs and/or provide certifi cates of analysis.
- Act locally. While the 2018 Farm Bill lifted the federal ban on the commercial cultivation of hemp and derivatives that contain no more than 0.3 percent THC, the ability to manufacture, market and sell CBD products is still heavily regulated at the state level, and changing rapidly.
- Make no promises. The U.S. Food and Drug Administration (FDA) has issued warning letters to a number of CBD companies that have touted their products as having certain health benefi ts in their promotional materials and on packaging or websites. Spas should ensure that any products or services offered don’t come with false or misleading claims.
- Handle with care. Although research into the risks of CBD use is ongoing, the FDA has noted potential adverse health effects linked to the use of cannabis products containing THC by pregnant or lactating women. Even though CBD topicals typically contain very low levels of THC, spas should be up front with clients about potential risks.
To read the full text, read the January issue of DaySpa magazine.
Seth Goldberg, Duane Morris partner and Cannabis Industry Group team lead, is quoted in The Philadelphia Inquirer article, “Reading the tea leaves: What 10 cannabis bigwigs predict 2020 will bring to the world of weed.”
Mr. Goldberg says:
We’ll see adult-use in Illinois. While vaping bans are likely to be removed, additional restrictions around THC vaping could be imposed by states.
The hemp space seems situated to expand as the regulations become more clear, and the federal banking regulators have recently announced that hemp can be banked like any other legal product.
A lot is contingent on the federal government. If the STATES Rights Act or SAFE Banking Act were to pass, the latter of which seems to have the best chance in 2020, there will be a boost. Conversely, tightening of enforcement by the federal government could have the opposite effect. FDA regulations around vaping and CBD as a drug, dietary supplement, food/beverage may also be issued in 2020, which would shape the market for those products.
Bottom line, businesses and individuals in 2020 must remain mindful of the differences between the federal and state regulatory framework and the state-by-state regulatory patchwork, and be nimble in responding to changes.
To read the full article, visit The Philadelphia Inquirer website.
One day after a federal judge dismissed a lawsuit challenging the U.S. Food and Drug Administration’s (FDA) regulatory authority over e-cigarettes, a published study funded by the National Institutes of Health (NIH) reported that more than 20% of High School seniors in the U.S. reported vaping THC (the psychoactive cannabinoid found in marijuana) in 2019.
According to the study, 20.8% of 12th graders reported marijuana vaping in the past 12 months, while 14% reported marijuana vaping in the past 30 days. (These figures, in 2018, were 13.1%, and 7.5%, respectively.) According to the report, the absolute increases from 2018 to 2019 in 12th graders who reported vaping marijuana within the previous 30 days were “the second largest … ever tracked by Monitoring the Future for any substance in its 45-year history[,]” only outpaced by the increase in nicotine vaping from 2017 to 2018.
Other age groups showed increases in THC vaping as well; the percentage of 10th graders who reported marijuana vaping in the past 12 months increased from 12.4% in 2018 to 19.4% in 2019 and the percentage of 10th graders who reported marijuana vaping in the past 30 days increased from 7% in 2018 to 12.6% in 2019. Moreover, the percentage of 8th graders who reported vaping marijuana in the past 12 months increased from 4.4% in 2018 to 7% in 2019; for use in the past 30 days, the percentage increased from 2.6% to 3.9% over the same time period.
Based on the results of the just-released study, Judge Guirola’s opinion–in which the court held that the delegation of authority to the FDA under the Family Smoking Prevention and Tobacco Control Act was not unconstitutional–could be afforded renewed significance. Both the federal court’s order and the NIH-funded study documenting the rise in THC vaping among adolescent come in the midst of heightened scrutiny of e-cigarette and vaping products generally, in light of the widely reported lung-related health issues stemming from use of certain vaping products.
Given the new data from the NIH-funded study and the FDA’s recently confirmed regulatory authority over the products alleged to be causing the lung-related illnesses, it appears likely that calls for regulators to scrutinize and crack down on the manufacture and sale of e-cigarettes and vaping products will only grow.
The report honors a wide range of people, organizations and entities making an impact across the cannabis, hemp and CBD culture. Duane Morris is featured in the Knowledge and Health category as a business “pushing the boundaries of our understanding and sharing the complexities of cannabis, hemp, and CBD with the world” and for “providing legal education and guidance to cannabis.”
From the report:
Duane Morris was the first Am Law 100 firm to engage cannabis on a national platform. Their legal teams support clients across the cannabis supply chain, assisting with regulations, financial transactions, and general litigation. The practice is led by Partners and Cannabis Team Leaders, Jennifer Briggs Fisher and Seth Goldberg. They extend support to the entire cannabis community with their regular series of informational webinars exploring regulatory, business and financial complexities.
For more information, visit the Cannabis 50 website.
Since the 2018 Farm Bill passed in December 2018, removing hemp from the Controlled Substances Act and thus legalizing it under federal law, consumer goods containing the hemp-derivative cannabidiol (CBD) have become exceptionally popular. With that growing popularity among consumers has come increased scrutiny by federal regulators whose mission is consumer safety and protection, such as the Food and Drug Administration and Federal Trade Commission, and now by the plaintiffs’ bar, which files consumer class actions based on advertising. As the recent spate of warning letters and consumer class actions demonstrate, hemp-derived CBD product manufacturers and others in the supply chain for those products have to be mindful of the claims they make to consumers about their products.