Bottles of hemp-derived oils sit behind glass, under lock and key, at Alfalfa’s natural foods store in Boulder, Colo.
Some 2,000 miles away from cannabis-friendly Colorado, a Naples, Fla., Lucky’s Market displays nearly a dozen brands of CBD-rich extracts, powders and salves.
These traditional retailers either could be offering a glimpse into the future where CBD products are sold like fish oil, or they could be enjoying a fleeting moment in the course of history for the non-psychoactive cannabis compound.
As health food grocers such as Alfalfa’s and Lucky’s stock CBD products on store shelves, a novel cannabis-based pharmaceutical product that could upend the cottage industry is chugging through the U.S. Food and Drug Administration approval pipeline.
But it’s not just the FDA that will decide how hemp-derived, cannabinoid-rich products should be classified and whether they can be legally sold.
Battles for the cannabis compound’s future wage on Capitol Hill, where the legislative churn includes provisions that could strengthen or threaten CBD’s legality; in the federal courts, where semantics reign supreme as definitions of hemp, marijuana and their chemical components hang in the balance; and at the United Nations’ World Health Organization, where a brain trust examines all facets of cannabis and its chemical components.
“Any number of levers could change (CBD’s legal status) dramatically, and they’re all coming to a head,” said Rod Kight, an Asheville, N.C.-based corporate and bankruptcy attorney who also represents cannabis businesses. Kight also authors the “Kight on Cannabis” blog covering cannabis legal topics, including the confusion swelling around hemp-derived products.
The future of hemp-derived CBD may be a hodgepodge of court battles, regulations and laws, but at the foundation for potential change is the status of the marketplace now, he said.
“We’re at a place also where I think the commercial applications and the evolution of the marketplace is driving policy,” he said.
Selling Alfalfa’s executives on the value of stocking hemp extracts in their two Boulder County stores wasn’t difficult, said Sarah Shebanek, the company’s wellness buyer.
The natural grocer has a history of ushering in new and innovative products.
From Alfalfa’s first iteration in the 1980s and ’90s to its resurrection in 2011, the grocer often served as a brick-and-mortar launching pad for local entrepreneurs and fledgling producers.
But CBD came with some added wrinkles.
“It was definitely, ‘Proceed with Caution,'” Shebanek said.
Alfalfa’s officials did their due diligence by striking up conversations with attorneys as well as local and state health officials before taking the leap, she said.
Today, Alfalfa’s sells 14 brands of hemp extracts, a nearly fivefold increase from when Shebanek came on board in April 2016. All but one of the brands sold are grown and processed in Colorado, she said.
Daring to carry these items added a rebellious element to Alfalfa’s reputation — and generated a lot of business in the process, she said.
Growth has been “exponential,” Shebanek said, noting that hemp extracts are consistently among the store’s top-selling items.
“I feel like this is going to grow like no other category we’ve seen,” she said.
National sales projections for hemp CBD products have been equally lofty.
The Brightfield Group, a Chicago-based cannabis market analytics firm, pegs the hemp CBD market at about $174 million for 2016. Their crystal ball gaze sees sales skyrocketing to $1.6 billion by 2021.
“Growth is continuing from a relatively small base, and there is still much room to grow for hemp CBD,” Bethany Gomez, Brightfield Group’s director of research, said in an emailed statement.
“In a recent survey,” she said, “We found that of the general population, 92 percent of people were in favor of the legalization of medical marijuana, but only 28 percent would be willing to take it themselves. On the other hand, 72 percent were open to taking CBD or non-psychoactive medical marijuana products to alleviate their conditions, either minor or major.
“Education levels are still low about these products, but the word is getting out at a rapid clip, and this is where the bulk of demand will come from moving forward.”
Special Report: CBD, TBD
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For some retailers and producers, engaging in the CBD trade can be dubious, if not downright scary.
In September, discount retailer Target Corp.’s website briefly carried a selection of CBD-rich extracts made by Colorado’s CW Hemp. Target pulled the oils just hours after The Cannabist reported on the development — a move that legal and drug policy experts said would be groundbreaking but also possibly illegal.
In October, producers within the artisan hemp extract market were smacked with a stark reminder from the U.S. Food and Drug Administration that their operations stand on unstable ground.
The agency warned CW Hemp and three other producers of CBD extracts of illegally marketing their products. The firms made baseless health claims that their products could cure cancer and a myriad other ailments, officials said.
“The FDA has issued several warning letters for similar violations in 2015 and 2016, and will continue to monitor and take swift action against companies that egregiously promise and sell unproven treatments,” Michael Felberbaum, an FDA spokesman, wrote via email to The Cannabist. “When a product is in violation of the FD&C (Federal Food Drug & Cosmetic) Act, the FDA considers many factors in deciding whether or not to issue warning letters.
“Those factors include, among other things, agency resources and the threat to the public health.”
The missives are par for the course for the FDA, said Bob Hoban, a Denver-based attorney specializing in cannabis business matters. Hoban’s firm also is representing hemp industry groups in two separate federal appeals court challenges of DEA positions.
“If there was really something behind this, I think you would have seen actual enforcement,” Hoban said.
Hoban said he doesn’t “disagree for a second” with the FDA’s stance about unsubstantiated health claims.
“There’s a difference between cannabis-based medicine and what we see in the marketplace,” Hoban said. “(These hemp extract producers) are always going to operate in the food and supplement space.”
And in that space, medical claims are a giant no-no.
But whether that space is even a plausible shelter for CBD extracts remains unclear. The FDA has been openly sour on the idea of CBD as a dietary supplement, and three of the four recent warning letters included friendly reminders that CBD-rich hemp extracts could not and should not be classified as dietary supplements.
What defines a dietary supplement is rooted in the FDA’s legal framework, the Federal Food, Drug and Cosmetic Act. Under the Act, a substance is excluded from the dietary supplement definition if it’s an active ingredient in an approved drug product or authorized for investigation as a new drug for which clinical investigations are under way and made public, according to the FDA.
An exception to those rules is if the substance was marketed as a dietary supplement or conventional food prior to the drug’s approval or before the new drug investigations were authorized.
The FDA’s basis for excluding CBD from supplement consideration is that the agency considers the compound an active ingredient in two investigational pharmaceutical drugs: Sativex, a THC-CBD oral spray formulation for the treatment of muscle stiffness and spasms associated with Multiple Sclerosis, and Epidiolex, an oral solution formulation of plant-derived CBD for treating symptoms of rare seizure disorders.
“Based on available evidence,” the exception doesn’t apply for CBD, FDA officials say.
As recent as last year, the FDA has rebuffed challenges from proprietors or attorneys who have claim that certain hemp extracts should qualify for that exception, according to The Cannabist’s review of FDA correspondence obtained via a Freedom of Information Act request.
In response to a letter claiming that Dixie X Hemp CBD Wellness Products were marketed on or before Sept. 13, 2012, FDA officials chimed back with two key dates: the Nov. 26, 2007, press release announcing the start of clinical trials for Sativex and the May 7, 2014, press release announcing the opening of the Investigational New Drug application for Epidiolex.
Separately, the FDA has given similarly worded denials to companies and individuals that tried to submit hemp-based CBD extracts as new dietary ingredients, according to filings available at regulations.gov.
Both Sativex and Epidiolex were developed by GW Pharmaceuticals plc, a London-based biopharma company that operates in the United States as Greenwich Biosciences.
Sativex, which has received regulatory approval in 30 countries, has not been approved for use in the United States, and no American-based studies are planned at this time, GW officials told The Cannabist.
Epidiolex, however, is nearing FDA approval.
The concept of a CBD-based drug has caused much hand-wringing among proponents of hemp extracts. Some fear approval could lay the framework for the pharmaceutical industry gaining full control of the cannabis plant and its slew of potentially medicinally beneficial compounds.
GW officials have repeatedly said their firm is focused on the sole objective of developing FDA-approved cannabinoid medicines for doctors and patients seeking additional options beyond what’s available in the market today.
“We’re not really interested in curtailing the activities of the artisanal world or of the dispensary world,” said Steve Schultz, GW’s director of investor relations. “What we’re interested in doing is making a medicine available that we believe is in demand. In speaking with physicians, in speaking with patients and patient advocacy groups, we hear over and over again that there is substantial demand for an FDA-approved medicine that has the hallmarks of a modern medicine.
“We’re not looking to involve ourselves in trying to curtail activity outside of our focus. We’re just looking to do the best job possible for the objective that we have at hand.”
Not all hemp advocates, however, are heading down the worst-case-scenario route.
“We really see a two-track future,” said Jonathan Miller, general counsel for the U.S. Hemp Roundtable, a Lexington, Ky.-based 501(c)(4) nonprofit organization lobbying for the passage of the Industrial Hemp Farming Act of 2017.
On one end of the spectrum would be CBD-based pharmaceutical formulations approved for certain medical conditions, allowed to make medical claims and eligible for insurance reimbursement, Miller speculated.
On the other end would be CBD-rich extract products available akin to how fish oil supplements are sold.
“You wouldn’t be able to use your insurance, wouldn’t be able to make medicinal claims,” Miller said. “But just like fish oil today, people who view these products as good for their health and wellness will be able to go to the store and buy them.”
The U.S. Hemp Roundtable has taken the position that existing law and court opinions favor the legality of hemp extracts. The passage of the Industrial Hemp Farming Act would eliminate any confusion by removing hemp from the purview of the Controlled Substances Act, Miller said.
In an opinion statement issued Oct. 2, 2017, Miller stated that the sale of hemp-derived CBD is legitimized by decisions out of the Ninth U.S. Circuit Court of Appeals and the language of the federal Agricultural Act of 2014, or Farm Bill.
Miller envisions appropriate levels of standards for the over-the-counter hemp extracts. The roundtable is establishing the architecture of a self-regulated organization to help define guidelines, practices and protocols for hemp-derived products such as CBD-rich extracts.
“The consumer will have a level of comfort about what they’re buying is safe and effective,” he said.
The FDA’s position on the matter stands at odds with the 2014 Farm Act and the provisions of the pilot programs of many hemp-producing states, Kight claimed. That also means that the FDA does not enforce food safety standards — known as Good Manufacturing Practices — with respect to hemp foods and supplements, he added.
In the absence of official oversight, some companies have voluntarily complied with federal GMP standards and some states have started developing food safety policies that address hemp-derived products, cannabis attorney Kight said.
Colorado is one such state. This summer, state officials established a new policy for regulating hemp foods.
“I see this as a trend that will be picked up by other states,” Kight said.
Colorado regulators sought to solve a problem: Colorado law allows for the production of industrial hemp; however state law — which mirrors federal law — prohibits the use of hemp stalk and flower in food, primarily because of the presence of unapproved food ingredients, in particular cannabidiol.
“This is an innovative, novel industry,” said Jeff Lawrence, director of the Colorado Division of Environmental Health and Sustainability. “It’s brand new to us. The processes that they go through aren’t, but the commodity is.”
State regulators worked closely with hemp industry leaders during the 2017 legislative session, he said. The policy was looked at as a “first, best step” with all parties leaving the door open for future legislation.
The Colorado Department of Public Health & Environment this summer released a set of Good Manufacturing Practice guidelines for industrial hemp in food. The conditions outline aspects such as utilizing hemp plant parts from a state or country with an approved industrial hemp program; meeting the “standard of identity” of no more than 0.3 percent of THC; labeling hemp and CBD; including a statement that the “FDA has not evaluated this product for safety or efficacy”; ensuring no health claims are made.
The policy also makes it clear that the guidelines are for use within the bounds of Colorado and are not meant to “establish or infer conformance” with federal laws.
The “FDA looks at the CBD in a little different light than us, and that’s where we have a little bit of divergence,” Lawrence said.
With the feds and the nascent industry apparently dancing to different tunes, the finale of the cannabis compound’s convoluted regulatory dance seems destined for the courtroom, industry analysts say.
Were the feds to crack down tomorrow, the CBD industry won’t just bow out, said Tami Wahl, a principal of the Washington, D.C.-based Liaison Group, a federal cannabis lobbying firm. Wahl previously served as a regulatory attorney specializing in the pathways to market for natural products and dietary supplement.
Rather than just stand as wallflowers while the FDA makes its moves, Wahl suggested industry members get on the floor and dance.
Businesses should take a proactive approach and form a working group, coalesce and present a blueprint for CBD’s position in the marketplace, she said.
“Do you want to continue on the status quo right now … or do you want to take the lead on how you want this to look in five to 10 years,” she said.
Wahl cautioned that sellers of CBD-rich products should pay meticulous attention to meeting or exceeding compliance requirements of their respective regulatory pathway — be that food, dietary supplement, beverage or other substances authorized under state law.
Accelerants for enforcement could include unsafe products or threats to public safety, she said.
The FDA, akin to fellow government agencies, has limited resources, she said. If public safety is not at risk, Wahl envisions ample opportunity for the pharmaceutical and alternative options to coexist, “As long as people are being responsible and playing by the rules,” she said.
Epidiolex’s approval could force the federal government to lay down its hand, Kight said.
Kight imagines that “full-spectrum” hemp products — including the host of cannabinoids, terpenes and phytonutrients from the plant — may have more legal standing than CBD isolate products.
“We’re at the point of the evolution of hemp and cannabinoid-based health products that I think we do need to start talking isolate versus full-spectrum extract and that type of thing, which has been in the market,” he said. “And I think the FDA again will recognize that at some point in the future.
“Who knows when, but I think it will draw that distinction.”