What the FDA’s Proposed CBD Regulations Could Mean for Businesses

Published on March 1, 2019

Bipartisan Congressional support for a legal pathway for food and drink products infused with cannabidiol, better known as CBD, could mean big things for CBD companies looking to expand into new markets. But patience is a virtue.

On Wednesday, February 27th, Food and Drug Administration (FDA) Commissioner Scott Gottlieb responded to questions from Congress and provided new details about alternative pathways for CBD regulation.

In December 2018, President Trump signed the 2018 Farm Bill into law, which effectively legalized hemp and hemp-derived products after decades of federal prohibition.

Cannabis plants must legally contain less than 0.3 percent THC in order to be classified as hemp. Hemp is grown primarily for industrial purposes. However, with the exploding popularity of non-intoxicating CBD, hemp is also being bred to manufacture CBD products.

Immediately following the legalization of hemp, the FDA released a lengthy statement reserving the right to regulate cannabis-based products. The agency pledged to take action against businesses making unsupported claims about CBD’s therapeutic potential, even if the products are derived from legal hemp. Since then, state and local officials in New York City, Maine, and Ohio have cracked down on the sale of CBD foods and beverages.

On Friday, February 15th, several members of Congress sent a letter to Gottlieb requesting a path forward. They expressed that these crackdowns “spurred a tremendous amount of confusion among product manufacturers, hemp farmers, and consumers of these products.”

They urged Gottlieb to answer three questions:

  1. When will FDA provide guidance on lawful pathways for food products with CBD?
  2. Has FDA advised states—such as New York, Maine or Ohio—that have recently taken enforcement actions against food products with CBD?
  3. When will FDA hold a public hearing on the regulation of products containing CBD?

On Wednesday, the commissioner offered a theoretical regulatory model that the FDA could implement for CBD. He described the issue of CBD-infused food, drink, and supplement products as “not a straightforward issue,” due to the fact that the FDA has already approved a CBD medication for epilepsy, Epidiolex, and that the cannabinoid is currently a “subject of substantial clinical investigation.”

Gottlieb said that CBD could theoretically exist “in a high concentration, pure formulation as a pharmaceutical product” and “at a different concentration as a food product or dietary supplement.” The reason for the separation is “to preserve the incentive to study CBD as a pharmaceutical product,” Gottlieb said.

“We believe [CBD] does have therapeutic value and has been demonstrated,” he said. If the task of developing an alternative regulatory approach for CBD proves “sufficiently complicated,” Gottlieb said the FDA will “come back and have a discussion with Congress about how we might be able to work together on this,” suggesting that further legislative action beyond the Farm Bill may be necessary. He answered the third question with his announcement of a public meeting “sometime in April”, which the agency will formally announce soon.

The reason that people are fighting for legal CBD-infused products boils down to access to a massive and very profitable market. A recent report by The Brightfield Group, a cannabis and CBD market research firm, pegs the market for hemp-derived CBD products at about $591 million in 2018, growing, at “conservative estimates”, to reach $22 billion as near as 2022.

In 2018, Brightfield reported that 16 percent of the hemp-CBD market was edibles and drinks, with another 13 percent being dietary supplements. Both segments are expected to grow.

Reports from Canaccord, another research firm, analyzed that CBD-infused products have the potential to actually outperform THC products, reaching up to 20 percent of the market for cannabis-containing consumables by 2022. The market for CBD beverages alone, excluding food and dietary supplements, could achieve a value of $260 million in the United States.

It is clear that hemp-derived CBD-infused edibles, beverages, and supplements present enormous market potential; there are literally hundreds of options for infused products ready to be developed and marketed as soon as the FDA paves the way for investment and distribution to take place.

McCarton Ackerman is a Columnist at Grit Daily. He is the Communications Coordinator at Lazarus Naturals

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