Category Archives: General

Neville Bilimoria Quoted on FDA Rules in Cannabis Era

Duane Morris partner Neville M. Bilimoria is quoted in the Law360 article, “CBD Rules In Limbo As FDA Grapples With New Cannabis Era.”

Hemp may have been legalized less than a year ago, but CBD derived from it is already on its way to becoming a multibillion-dollar industry. However, sales of everything from CBD gummies to lattes are occurring in a legal gray area as the U.S. Food and Drug Administration struggles with regulating the largely unstudied ingredient. […]

“This is a watershed year for the FDA and its coming to grips with the increasing demand from the consumer public over marijuana, cannabis, CBD, hemp. It’s trying to catch up to what the consumers are touting as being therapeutic uses for CBD and THC,” Mr. Bilimoria said. “It’s basically saying, ‘Wait, everybody slow down. We’re the FDA. We rely on science before we can approve any uses and regulate any uses of cannabis or CBD.'” […]

Mr. Bilimoria said he can’t blame the FDA for “taking it slow,” but said doing so is frustrating when CBD is already all over store shelves. […]

To read the full article, visit the Law360 website (subscription required).

USDA Issues Regulatory Framework for Hemp Production Under 2018 Farm Bill

Seth Goldberg
Seth A. Goldberg

The long awaited regulations establishing a regulatory framework under the 2018 Farm Bill passed last December were issued today (10/29/19).  An Interim Final Rule will be published in the Federal Register later this week, which will make the U.S. Domestic Hemp Production Program effective.   As explained in the Interim Final Rule: “The program includes provisions for maintaining information on the land where hemp is produced, testing the levels of delta-9 tetrahydrocannabinol, disposing of plants not meeting necessary requirements, licensing requirements, and ensuring compliance with the requirements of the new part.”  USDA has published the Interim Final Rule and Guidelines for Sampling and Guidelines for Testing pursuant to the Interim Final Rule on its website.

Among other key provisions, the new regulatory framework provides for USDA’s approval of State and Tribal Land hemp programs established under the 2018 Farm Bill, which will end debate as to whether hemp activities in a State or Tribal Land receiving such approval are federally lawful.  To be approved, those plans will have to contain stringent requirements for testing the THC content of hemp to ensure it does not meet the definition of marijuana, and contain procedures for the enforcement of violations of the State or Tribe’s hemp program.  Importantly, the regulatory framework provides for USDA’s granting of hemp production permits in states and territories that do not establish hemp programs for approval by USDA.

Duane Morris attorneys will be publishing a more fulsome review of the Interim Final Rule.  Please visit our Alerts and Updates webpage, or our cannabis industry webpage for that information.

 

Oregon Court Stays Ban of Flavored E-Vaping Products

On September 26, 2019, the Oregon Health Authority (OHA) issued a public health warning to Oregon citizens “urging people to immediately stop using all vaping products.”  Shortly thereafter, on October 3, 2019, Gov. Kate Brown issued Executive Order 19-09.  EO 19-09 directed the Oregon Health Authority and the Oregon Liquor Control Commission (OLCC) to adopt emergency rules banning the sale of all flavored vaping products for 180 days.

In response, on October 11, 2019, the OHA and OLCC issued temporary rules that banned all flavored vaping product sales in the state.  In a statement announcing the emergency rules, the agencies explained that “[t]he ban covers all tobacco and cannabis (marijuana and hemp) vaping products that contain natural or artificial flavors . . . [t]obacco-flavored tobacco or nicotine products, as well as marijuana-flavored marijuana or THC products that use only marijuana-derived flavorings, including terpenes, are not included in the ban.”  The ban was set to take effect on October 15, 2019, and last for six months.

However, a group of vaping-related businesses filed suit in Oregon state court, seeking judicial review of the emergency rule.  On October 17, 2019, the Oregon Court of Appeals issued an Order that temporarily stayed the enforcement of these rules, pending the court’s ultimate decision on the matter.  Vapor Technology Association, et al. v. Oregon Health Authority, No. A172417 (Or. Ct. App., Oct. 17, 2019).

This stay comes just days after a Michigan court issued a preliminary injunction to prohibit a similar emergency ban from taking effect.  Over the past several weeks states throughout the country, including Rhode Island, Washington, and Montana have issued similar bans on flavored vaping products. New York’s contemplated ban on menthol-flavored nicotine vaping products was put on hold following a temporary stay on the ban issued by a court. These recent court decisions staying and enjoining such bans indicate that additional challenges may be forthcoming in those jurisdictions and any others that institute similar bans.

Michigan Court Issues Preliminary Injunction Prohibiting State’s Emergency Ban of Flavored Nicotine Products From Taking Effect

By Joe Pangaro, Associate, and Jessica Linse, Law Clerk, Duane Morris LLP

On September 18, 2019, Michigan became one of the first states to impose a ban on flavored e-cigarettes. The Michigan Department of Health and Human Services (“MDHHS”) issued emergency regulations that stated, in part, that a retailer shall not “[s]ell, offer for sale, give, transport, or otherwise distribute, nor possess with intent to sell, give, or otherwise distribute a flavored nicotine vapor product.” The ban went into effect immediately upon the release of the emergency regulations and was supposed to last for six months.

Shortly thereafter a local vape shop owner filed suit in state court against MDHHS, Governor Gretchen Whitmer, and the State of Michigan seeking a preliminary injunction to prevent the emergency rules from going into effect.  See Marc Slis, et al. v. State of Michigan et at., Nos. 19-000152-MZ, 19-000154-MZ (Mich. Ct. Cl., Oct. 15, 2019). At the preliminary injunction hearing, one plaintiff testified the emergency rules forced him to “shutter[] his business and that his customers have been obtaining their flavored vaping products from Wisconsin.”  Id. at 7. Another presented evidence that the emergency rules “ban plaintiff from using its tradename and branding.” Id. The court found both harms constituted “irreparable harm” necessary for preliminary injunction.

The court also found the Plaintiffs established a likelihood of success on the merits of their claims, because the MDHHS rules were procedurally invalid under Michigan law. Id. at 8.  Specifically, an agency must comply with standard procedures for the promulgation of new rules except in “emergency” situations, and the Court did not find there was a “genuine emergency” that warranted circumventing the standard rule-making process with respect to flavored nicotine vaping. “The plaintiffs have convinced the Court that defendants’ proffered reasons for the emergency declaration have fallen short.  It is not enough under [Michigan law] for DHHS to merely identify a problem.”  Id. at 10.

The court also considered the potential harm to the public that would result from allowing the ban to be enacted. After recognizing “compelling interests on both sides of the issue,” the court cited witnesses for the Plaintiffs that testified about their improved health after switching from traditional tobacco products to e-cigarettes. “Thus, plaintiffs have presented evidence that at least some segment of the population will be harmed by the vaping ban.” Id. at 14. Ultimately, after carefully weighing all factors pertinent to granting a preliminary injunction, the court concluded the Plaintiffs carried their burden, and issued a preliminary injunction preventing Michigan’s emergency rules from going into effect.

The Michigan ban of flavored e-cigarettes is significant because many other states around the country have since enacted similar bans, either through emergency regulation or executive order. These states include Rhode Island, Oregon, New York, Washington, Missouri and Montana, and the city of Los Angeles.  Each of these bans may face similar challenges in the near future, and this court’s decision to block the emergency rules, which is in line with another recent ruling by a District Court in Indiana, indicate that such challenges may be successful.

FDA Warns Florida Company: CBD Oil is Not a Dietary Supplement

Despite recent bipartisan calls on the FDA to regulate hemp-derived CBD products, the U.S. Food & Drug Administration appears to be adhering to the status quo, at least with respect to issuing warning letters to companies deemed noncompliant with existing regulations. Case in point: on September 18, 2019, the FDA issued a warning letter (posted to the FDA’s website last week) to Alternative Laboratories, a dietary supplement manufacturer based in Naples, Florida.

According to the letter, the FDA conducted an inspection of Alternative’s dietary supplement manufacturing facility over five days in May and June; the inspection focused on the adequacy of labels for certain products manufactured and distributed by the company.

The letter focuses on Alternative’s allegedly impermissible representation of 2-amino-5 methylheptane and Octodrine (DMHA) as a dietary ingredient in certain products. It also calls attention to the fact that Alternative’s product label for CBD oil distributed under the “Green Roads” brand name runs afoul of the Food, Drug & Cosmetic (FD&C) Act in that the product “cannot be a dietary supplement because … [the] FDA has concluded based on available evidence that CBD products are excluded from the dietary supplement definition under” the FD&C Act.

To support its contention that CBD products cannot be dietary supplements as defined by federal law, the FDA notes in its warning letter to Alternative that “CBD is the active ingredient in the approved drug product Epidiolex,” designed to treat certain rare, severe forms of epilepsy. Further, the FDA stresses that significant clinical research investigations concerning the use of CBD have been made public, including investigations related to Epidiolex and Sativex, a drug for the treatment of spasticity due to multiple sclerosis (MS) that has been approved for use in 25 countries (outside the U.S.) and for which the drug manufacturer,  GW Pharmaceuticals, plans to seek FDA approval.

The fact that warning letters keep coming–from both the FDA and the FTC–signifies that although there may be a groundswell of public demand for regulatory reform and clarity on the issue of CBD products, the federal regulatory agencies appear to be staying the course. As such, companies operating in the space should remain vigilant and adhere to a compliance policy that reflects–for now–the reality of current regulations and restrictions.

Duane Morris Named One of America’s Top Trusted Corporate Law Firms

Duane Morris has been named one of America’s Top Trusted Corporate Law Firms by Forbes.

The publication writes:

More than 13 million attorneys practice at more than 400,000 law firms in the U.S., according to the American Bar Association, and those firms are becoming increasingly specialized. … Many firms have been expanding into new areas of law necessitated by the emergence of technologies such as blockchain and of state laws legalizing cannabis use. …

[Duane Morris] has a growing and strong focus on the legal cannabis industry, partnering with the American Trade Association of Cannabis and Hemp and representing cannabis companies in one of the first public cannabis industry mergers, a $640 million deal.

For more information, visit the Forbes website.

Duane Morris Partner Jennifer Briggs Fisher Quoted in CNBC Article, “Underbanked Cannabis Industry Struggles to Finance Double-digit Growth, Leaving Business Owners Empty-handed”

Harmony Dispensary, a medical marijuana cultivator and dispensary in Secaucus, New Jersey, has a Zen-looking shopfront with light green walls, clean glass shelves showcasing various offerings, and a line of modern-looking cannabis-related products — a pipe, herb grinder and stash jar — all emblazoned with the Harmony logo.

Since its opening in 2018, the dispensary has serviced thousands of customers, but it has struggled to hold on to a bank account. “We approached six institutions to support our banking needs and were eventually dumped from all three that agreed to work with us,” Shaya Brodchandel, chief executive of Harmony Dispensary, said. In each case, Harmony received no warning from the banks, just a check in the mail, forcing them to scramble for solutions to pay suppliers, bills, staff and conduct general business.

[…]

“Cannabis is already a risky environment, and you face additional risk when engaging in new solutions that are brought into the market and not necessarily backed by solid financial institutions,” said Jennifer Briggs Fisher, partner at Duane Morris in San Francisco, who leads the firm’s cannabis industry group.

[…]

To read the full article, visit the CNBC website.