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October 15, 2021

California Breaks With the FDA, Poised to Legalize Hemp Cannabinoids in Food and Beverage Products

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The California Legislature has passed a bill that will allow California consumers to purchase food, beverage, dietary supplements, and cosmetics manufactured with hemp-derived cannabinoids such as cannabidiol (CBD). Assembly Bill 45 (AB45), which is expected to be signed into law before Oct. 7, will fundamentally alter the CBD market in California and will create the nation's largest intra-state market for CBD-infused foods and beverages.  

Currently, California has a regulatory framework that permits CBD derived from cannabis to be added to food products and sold to adults, but only through licensed cannabis dispensaries. Outside of this framework, any product added to food is regulated by the California Department of Public Health's (CDPH's) Food and Drug Branch under the Sherman Law - the state version of the Federal Food, Drug, and Cosmetic Act (FD&C Act). Since 2018, the CDPH has followed FDA guidance that CBD may not be introduced to food products or dietary supplements sold in interstate commerce.  

Despite this prohibition, an illicit retail market for foods and beverages infused with CBD has cropped up in California, largely in small markets and cafes. But consumers who buy products in this unregulated CBD market have no access to data showing the actual CBD and THC content of these products and have no way to determine whether these products are free of adulterants.  

AB45 is designed to address these consumer protection problems and create the nation's largest intra-state hemp CMB market.  

Some background as to why there is no interstate market for industrial hemp CBD food and beverage products is in order. In 2018, Congress passed the 2018 federal Farm Bill that removed hemp, defined as cannabis and derivatives of cannabis with extremely low concentrations of THC (no more than 0.3% on a dry weight basis), from the definition of marijuana in the Controlled Substances Act (CSA). The 2018 Farm Bill, however, explicitly preserved FDA's authority over hemp products. Therefore, hemp products must meet any applicable FDA requirements and standards, just like any other FDA-regulated product. The hemp industry was hopeful that hemp cannabinoids - first and foremost, CBD - would soon be introduced to food, beverages, and dietary supplements.

No dice, said the FDA. The agency concluded that it was unlawful under the FD&C Act to introduce CBD into interstate commerce in foods and dietary supplements. This is true because CBD is a substance that is an active ingredient in an approved drug product or a substance for which substantial clinical investigations have been instituted, and the existence of such investigations has been made public. See FD&C Act Section 301(ll) and Section 201(ff)(3)(B).  Specifically, the FDA approved the drug Epidiolex in June 2018 for the treatment of pediatric seizures; this drug uses a highly concentrated form of CBD as an active ingredient. Based on both the approval of this drug, as well as previous substantial clinical investigations of CBD, the FDA held that CBD cannot be marketed as a dietary supplement, and foods to which CBD has been added cannot be introduced into interstate commerce under the FD&C Act. The CDPH reached the same conclusion in 2018, as well.  

Hemp industry groups disagree with the FDA's interpretation of the FD&C Act. They claim the type of CBD found in consumer food and beverage products bears little resemblance to the ultra-concentrated version of the cannabinoid which serves as an active ingredient in Epidiolex. The FDA's response? Take it up with Congress.  

With no luck in Congress, the hemp industry set its sights on the biggest intrastate prize in the CBD market - California. These efforts culminated in the passage of AB45, which establishes a detailed and rigorous regulatory framework for the manufacture, distribution, and retail sale of industrial hemp products. 

Below are the key aspects of AB45 that manufacturers, distributors, retailers, and consumers should be aware of. 

Registration and Submission to Cal. Department of Public Health Jurisdiction and Oversight 

AB45 prohibits an industrial hemp product (defined as a cosmetic, food, food additive, dietary supplement, or herb for human or animal consumption that contains industrial hemp) from being distributed or sold in the state unless it has documentation that it was produced from industrial hemp grown regulated by the California Department of Food and Agriculture if sourced within California, or licensed in accordance with the US Department of Agriculture requirements if sourced from outside the state.  

Hemp manufacturers, in addition to any other regulations, "shall obtain an industrial hemp enrollment and oversight authorization" from the California Department of Public Health which must be renewed annually. The CDPH is required to assess a fee to cover the costs of the regulatory program. 

The CDPH will have the power to tag and bring condemnation proceedings with respect to any industrial hemp product that is alleged to be adulterated, misbranded, falsely advertised. 

Testing and Labeling

AB45 imposes rigorous testing requirements, consistent with the current requirements for testing for cannabis under state law. Hemp manufacturers must meet all the following testing requirements:  

(a) industrial hemp to be tested in raw extract final form, to allow its use as an ingredient, prior to being incorporated into a product;  

(b) testing to be completed by an independent testing laboratory, as defined; and,  

(c) hemp extract in its final form may not exceed THC concentration of an amount determined allowable by CDPH in regulation, or the mass of the industrial hemp extract used in the final form product from exceeding THC concentration of 0.3%. 

Before any hemp product may be distributed or sold in California, it must have a certificate of analysis from an independent testing laboratory that confirms all the following:  

(a) the raw hemp product is the product of a batch of industrial hemp that was tested by the independent testing laboratory;  

(b) a tested representative sample of the batch of industrial hemp contained a total THC concentration that did not exceed 0.3% on a dry-weight basis; and,  

(c) the tested sample of the batch did not contain unsafe contaminants. 

Further, all industrial hemp products must be sold with packaging and labeling that includes a link to the certificate of analysis from the independent testing laboratory, the product expiration date, and a statement that the FDA has not evaluated the product for safety or efficacy. 

In addition, AB45 includes testing requirements for contaminant levels to initially be the same as those for cannabis, as specified in existing law, but permits CDPH to adjust the specific contaminant levels for industrial hemp by regulation. 

Marketing and Advertising 

Hemp manufacturers are barred from directly target advertising or marketing to children or to persons who are pregnant or breastfeeding, and limits advertising or marketing to only be displayed where at least 70% of the audience is reasonably expected to be 18 years of age or older. 

AB45 also prohibits a manufacturer, distributor, or seller of an industrial hemp product from including on the label of the product, or publish or disseminate in advertising or marketing, any health-related statement that is untrue in any particular manner as to the health effects of consuming products containing industrial hemp or cannabinoids, extracts, or derivatives from industrial hemp. 

The bill does not define "untrue" health-related statements, but we expect the standard will come from FDA-published guidance and enforcement proceedings that FDA has brought against CBD manufacturers.  

Consumer Protection Regulations and Other Restrictions 

The Legislature has delegated significant rule-making authority to the California Department of Public Health. The bill:  

  • Permits CDPH to adopt regulations imposing an age requirement for the sale of certain industrial hemp products upon a finding of a threat to public health. 
  • Unless explicitly approved by the federal FDA, precludes industrial hemp from being included in medical devices or prescription drugs, any product containing nicotine or tobacco, or alcoholic beverages. 
  • Permits CDPH to prohibit the inclusion of industrial hemp in other products when it poses a risk to human or animal health through regulation. 
  • Permits CDPH, through regulation, to determine maximum serving sizes, active cannabinoid concentration per serving size and number of servings per container, and any other requirements for foods and beverages. 
  • Permits CDPH to adopt emergency regulations to implement this bill, and to readopt any emergency regulation that is the same as, or substantially equivalent to, an emergency regulation previously adopted, limited to one readoption for each regulation. 

In addition, the bill exempts initial regulations regarding industrial hemp from the requirements of the Administrative Procedures Act, with the exception of a 30-day public comment period. However, any regulations to impose an age requirement on the sale of industrial hemp products, or to determine maximum serving sizes must still comply with the Administrative Procedures Act. 

Conclusion

While AB45 will become effective immediately when signed into law, California consumers will have to wait for the California Department of Public Health to develop regulations before CBD food, beverage, dietary supplements, and cosmetics hit shelves. This may take several months. If California is able to meet the goals of AB45, however, consumers should expect to have easy access to a robust selection of safe and pure CBD consumer products at retail stores throughout the state.  

The views and opinions expressed in the article represent the view of the author and not necessarily the official view of Clark Hill PLC. Nothing in this article constitutes professional legal advice nor is intended to be a substitute for professional legal advice. 

ALM expressly disclaims any express or implied warranty regarding the OnPractice Content, including any implied warranty that the OnPractice Content is accurate, has been corrected or is otherwise free from errors.

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