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Congress Lays Out Expectations for FDA on Hemp-CBD in Budget Report

hemp cbd report congress

The House Appropriations Committee (the “Committee”) publishes reports to accompany annual spending bills. One such report, released on June 3, provided insight on hemp-derived CBD (“Hemp-CBD”). The Committee’s report on didn’t get much coverage in the media, outside of some ace reporting from the folks at Marijuana Moment. Despite that, it’s kind of a big deal because it outlines Congress’ expectations for the Food and Drug Administration (“FDA”) when it comes to Hemp-CBD.

The Committee’s passage on Hemp-CBD starts by focusing on its concerns:

Cannabidiol Regulatory Pathway—The Committee is concerned about the proliferation of foods and dietary supplements marketed in violation of the Federal Food, Drug & Cosmetic Act (FFDCA), including products containing cannabis and cannabis-derived ingredients. Non-FFDCA-compliant products pose potential health and safety risks to consumers through unsubstantiated and misleading claims such as treating a wide-range of life-threatening diseases and conditions; excessive cannabidiol (CBD) concentrations that can result in harmful drug-drug interactions, somnolence, and elevated transaminases or liver toxicity; and the presence of significant levels of intoxicating compounds such as tetrahydrocannabinols (THC).

First, the Committee lays out its concerns over unregulated Hemp-CBD. These concerns echo the FDA’s statements on Hemp-CBD, especially the reference to unsubstantiated and misleading claims about CBD. Second, the Committee focused on the safety of CBD itself. This includes how CBD interacts with other drugs, somnolence (which according to Wikipedia is a fancy way to say sleepiness or drowsiness), and liver toxicity. FDA-approved Epidiolex, the epilepsy medication that contains CBD, includes a warning about liver damage. A recent study conducted and the University of Arkansas and published in Molecules found that large dosages of CBD damaged the livers of mice. Third, the Committee raised the issue of elevated significant levels of THC in products. Though hemp only has 0.3% THC, the Committee seems concerned about hemp-derivatives containing excess amounts of CBD or consumers ingesting large doses of THC. The 0.3% threshold is relative, after all and the Committee might be concerned about intoxicating effects in large doses.

The Committee went on to outline its expectations of the FDA:

The 2018 farm bill expressly preserves FDA’s public health authority to take appropriate actions regarding cannabis, including hemp and its derivatives. The Committee recognizes the FDA is considering a public regulatory process to evaluate the appropriateness, and possible parameters, of a regulatory pathway that would permit CBD in certain foods and dietary supplements. The Committee expects the FDA to assert its commitment to identifying lawful federal regulatory pathways for CBD foods and dietary supplements if such pathways are consistent with protection of the public health. Such pathways may include necessary public health and safety parameters that will protect the public health, such as labeling requirements and limits on CBD or other cannibis-derived ingredients in products, based upon anticipated total exposure levels. The Committee also expects the FDA to preserve the integrity of its drug development and approval processes, which ensures that products marketed for drug uses have undergone a rigorous scientific validation process demonstrating quality, safety and efficacy. It is also imperative that any FDA regulation of foods and dietary supplements containing CBD or other cannibis-derived ingredients preserve incentives to invest in robust clinical study of cannabis, so its therapeutic value can be more fully understood.

The FDA’s marching orders are to figure out a safe way to allow CBD in foods and dietary supplements if that is possible to do while protecting public health. The Committee floats the idea of labeling requirements and limiting cannabinoids based on anticipated exposure levels. Remember that the FDA is a creature of statute. It exists because Congress wanted it to exist. Though the FDA is part of the executive branch, it must operate within the laws passed by Congress. The Committee doesn’t represent the entire legislative body, but it does seem to be in favor of a world where CBD is available in food and dietary supplements. That being said, the Committee also wants CBD in drugs. The FDA must also preserve incentives to research CBD’s health benefits. That research happens when companies go through the FDA’s drug approval process. The Committee doesn’t want to forego the medical benefits that come with CBD being approved for use in drugs.

The FDA has work to do. It recently held a listening session which allowed stakeholders to comment on the FDA’s approach to regulating Hemp-CBD. This latest report from the Committee only reiterates the prevailing expectation that Hemp-CBD will be available both as a drug and as a food/dietary supplement. It remains to be seen how the FDA will get to that point.

For more analysis on this “two-track” theory and the FDA’s position on CBD, check out the following posts:

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Hemp-CBD Laws: Alabama

alabama hemp laws

The Agriculture Improvement Act of 2018 (“2018 Farm Bill”) legalized hemp by removing the crop and its derivatives from the definition of marijuana under the Controlled Substances Act (“CSA”) and by providing a detailed framework for the cultivation of hemp. The 2018 Farm Bill gives the US Department of Agriculture (“USDA”) regulatory authority over hemp cultivation at the federal level. In turn, states have the option to maintain primary regulatory authority over the crop cultivated within their borders by submitting a plan to the USDA. This federal and state interplay has resulted in many legislative and regulatory changes at the state level. Indeed, most states have introduced (and adopted) bills that would authorize the commercial production of hemp within their borders. A smaller but growing number of states also regulate the sale of products derived from hemp.

In light of these legislative changes, we are presenting a 50-state series analyzing how each jurisdiction treats hemp-derived cannabidiol (“Hemp-CBD”). Each Sunday we will summarize a new state in alphabetical order.

Without further ado, we start with Alabama.

2014 Farm Bill Industrial Hemp Program. In 2016, Alabama enacted the Alabama Industrial Hemp research Program Act, (“Act”), which gave the Alabama Department of Agriculture and Industries (“ADAI”) the authority over the production of industrial hemp and hemp products. In Alabama, industrial hemp is defined as “[a]ll parts and varieties of the plant Cannabis sativa, cultivated or possessed by a licensed grower, whether growing or not, that contain a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.” The term “industrial hemp” excludes marijuana. “Hemp products” are “[a]ny and all products made from industrial hemp, including, but not limited to, cloth, cordage, fiber, food, fuel, paint, paper, particleboard, plastics, seed, seed meal and seed oil for consumption, and seed for cultivation if the seeds originate from industrial hemp varieties.” (Emphasis added).

ADAI rules do not explicitly address hemp processing or issue hemp processor licenses. Therefore, it is unclear whether a license or a permit is required to manufacture and sell Hemp-CBD products. The rules are also silent on the sale of Hemp-CBD products manufactured in Alabama or elsewhere.

However, shortly before the enactment of the 2018 Farm Bill, Alabama’s Attorney General issued a Public Notice stating that “CBD derived from industrial hemp, with a THC concentration of not more than 0.3% on a dry weight basis, can be legally produced, sold, and possessed in the State of Alabama.” Accordingly, there seems to be no direct limitation regarding the sale and possession of Hemp-CBD products in the state, so long as the products contain no more than 0.3 percent THC on a dry weight basis.

2018 Farm Bill Plan. On May 30, 2019, state lawmakers passed SB 225, which tasked ADAI with developing a plan to monitor and regulate the commercial production of hemp under the 2018 Farm Bill. ADAI will need to review and amend its existing rules, adopted pursuant to the Act , to comply with the requirements of the 2018 Farm Bill. In addition, ADAI will need to promulgate rules that account for the commercial sale of Hemp-CBD products. According to its FAQs, ADAI anticipates releasing these rules within a year.

Bottom Line. This may come as a shock due to Alabama’s general hostility towards cannabis in the past, but when it comes to policy, it is one of the most hemp-friendly states in the country. The state Attorney General has expressly allowed the production, sale and possession of Hemp-CBD products and under Alabama’s new legislation, the ADAI will oversee these commercial activities. The future looks bright for hemp in Alabama.

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Oregon Hemp Litigation: Bad Contract = Big Federal Court Claims

One-page MOU for $7.5 million deal?!?

We frequently write on hemp litigation and the ways farmers and purchasers can mitigate the risks inherent in this new industry. Along with others, we have stressed the importance of strategic and careful thinking before entering before entering into a hemp-related contract. Our cannabis lawyers frequently write and speak on these and related topics.

A couple of my recent posts have highlighted litigation arising after harvest. This post discusses a federal lawsuit filed last week in the District of Oregon, Jupiter Pharma, LLC et al. v. Lafayette Land Company, LLC, et al. that arises from a pre-harvest dispute between the parties. (Feel free to email me if you’d like a copy of the complaint.)

The lead plaintiff (Jupiter) is a Delaware limited liability company building a “Soil to Oil” industrial hemp/CBD operation in Oregon that includes the cultivation, processing and marketing of industrial hemp. The lead defendant (Lafayette) is a farmer residing in Oregon.

The parties entered into a contract in March 2019 to farm and cultivate industrial hemp for the 2019 season that included, at Jupiter’s option, the 2020 and 2021 seasons. Lafayette agreed to farm and cultivate approximately 950 acres of hemp and agreed to assign to plaintiffs its interests in two specific parcels of land to be used for cultivating industrial hemp. In exchange, Jupiter agreed to pay defendants $7.5 million for delivery of at least 2 million pounds of biomass and to transfer to Lafayette farming equipment purchased by the plaintiffs, which equipment would be credited against the $7.5 million payment obligation. Jupiter also agreed to pay Lafayette certain incentives based on hemp production and a monthly stipend during the growing season.

After entering the contract, Lafayette allegedly failed to provide the required documentation concerning the assignment of interests for the two parcels of land. Jupiter then made several trips to the farm to discuss the project and operations. During these visits, Lafayette allegedly made representations that he would provide the land and farm it for plaintiffs. Meanwhile, Jupiter has allegedly entered into contracts with third parties worth $15 million to build a CBD processing facility and purchase equipment per the contract as well as invested over $1 million into the project.

The gravamen of the complaint is that Lafayette repudiated the alleged hemp production contract in late May 2019 and in early June 2019 began planting hemp seed for a third party in violation of the contract with Jupiter. The complaint is quick to note that the Oregon hemp growing season begins in June and if not planted, Jupiter’s season will be lost. The complaint alleges this will cause Jupiter to lose its significant investments in the project and that Jupiter cannot secure alternative farm lands for the 2019 season.

The complaint seeks declaratory relief (a ruling that the contract is enforceable) as well as injunctive relief and specific performance (forcing Lafeyette to assign the rights in the land). In the alternative, Jupiter alleges Lafayette defrauded it by inducing it to enter a contract for the production of hemp and seeks no less than $1 million in damages.

So is there an enforceable contract? The contract is titled a “Memorandum of Understanding” (MOU). This could be better for Jupiter—one Oregon appellate decision, citing Farnsworth’s treatise, notes: “On the problem of determining whether contracting parties intend to bind themselves either in the presence or absence of terms such as ‘letter of intent’ and ‘memorandum of understanding,’ it has been said, ‘It would be difficult to find a less predictable area of contract law.’” The title of the document does not control, however, the ultimate question being whether there was a meeting of the minds as to the terms of the deal supported by consideration. In this regard, the MOU seems reasonably definite. But litigation sure is an expensive way to get an answer to the question of enforceability.

A few other comments on the MOU. It is a short, one-page document for a purported $7.5 million deal with kickers for a biomass harvest exceeding 2 million pounds. (Maybe the defendants believed they found a better deal elsewhere?) The MOU says nothing about THC content or CBD content of the hemp. Nothing about the risk of the USDA deciding not to approve Oregon’s hemp production plan. Nothing about state record-keeping requirements or who is responsible for testing of hemp for human consumption – presumably the goal of this Seed-to-(CBD)Oil business or about the chain-of-custody of documentation to ensure nothing is seized during shipment or what happens if Oregon suspends or revokes Lafayette’s license to grow hemp. Notably, the MOU contains no express deadline by which Lafayette must deliver evidence of the purported assignments of agricultural land. I hate to be too critical of the MOU, but there seems much here that could have been done differently and, perhaps, better.

Stay tuned for updates.

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5 CBD Secrets

Hemp plant in front of the sunset in a yellow sky.

Cannabidiol and CBD oil seem to be everywhere these days, despite the confusing legal status of this prolific compound. But how much do we actually know about CBD?

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Washington CBD Webinar June 19: Hemp-Derived CBD Locally and Nationwide

washington cbd hemp fda

On June 19, 2019, at 1:30 PST, the Washington State Bar Association’s Cannabis Law Section will be presenting an online CLE on hemp. I’ll be joined by my esteemed colleagues to shed some light on hemp laws both nationally and here in the Evergreen State. You can register to join us here.

We’ll cover a host of topics, but will start with the 2014 Farm Bill, which first allowed for the legal cultivation of industrial hemp for research purposes. Under the 2014 Farm Bill, state departments of agriculture and universities could undertake agricultural pilot programs to permit the cultivation of hemp. Some states also license the processing of hemp. The hemp industry as we know it is the result of this piece of legislation.

For more on the 2014 Farm Bill, take a look at the following:

We’ll then turn to the 2018 Farm Bill, which does not immediately repeal the 2014 Farm Bill. The 2014 Farm Bill will remain in place for at least a year after the U.S. Department of Agriculture (USDA) issues regulations under the 2018 Farm Bill. The 2018 Farm Bill’s main focus when it comes to hemp is cultivation. It provides detailed guidelines for states to create their own plans to regulate the cultivation of hemp. It also allows the USDA to set federal standards for hemp cultivation to be used in states that do not have an approved plan but also have not prohibited hemp cultivation under state law. The 2018 Farm Bill also removed hemp from the Controlled Substances Act, clarifying that hemp is a regulated agricultural commodity, not a controlled substance like marijuana.

Here is some additional reading on the 2018 Farm Bill:

At this point, we’ll talk about Washington State, where lawmakers have just overhauled the entire hemp program. The Washington State Department of Agriculture (WSDA) oversaw hemp under the 2014 Farm Bill and will continue to do so under the 2018 Farm Bill. We’ll talk about how this new legislation allows for broader commercial activities and provide insights as to how the WSDA plans to regulate the industry going forward. We’ll also cover how Washington stands to fare in the hemp-derived CBD market under this new law.

For more on Washington hemp, check out the following:

No hemp presentation would be complete without some talk about the Food and Drug Administration (FDA). The FDA regulates food, drugs, dietary supplements, cosmetics, and a whole host of other consumable goods. The FDA’s position with hemp and more specifically Hemp-CBD is. . . complicated. The FDA has said that Hemp-CBD can’t be added to food or dietary supplements and that it can only be marketed as a drug if investigated and approved as a new drug. The FDA has approved of Epidiolex, which contains CBD, for treating epilepsy. It has also determined that three hemp seed ingredients are generally regarded as safe for use in foods. Other than that, the FDA’s relationship with other CBD products has been hostile though it has not yet passed any final rules on the topic.

More on FDA is available here:

We’ll wrap up our conversation by providing some tips on how to advise businesses in this complicated space. We’ll even touch on distributing Hemp-CBD products across state lines. Our program will be focused on attorneys, who can receive CLE credits for attending, but the information that we cover is applicable for anyone operating in this market.

For some examples, take a look at the following:

Speaking on behalf of the Cannabis Law Section’s executive board, I sincerely hope you can join us! Feel free to comment below with questions you would like addressed and we’ll do our best to answer them in our presentation.

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Hemp Testing

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