Congress Understands The Need To Regulate CBD – Above the Law

The U.S. Senate Appropriation Committee (the Committee) recently released a congressional report in which it recommends incorporating language to the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act of 2022 (the Act) that would regulate hemp-derived cannabinoids, including cannabidiol (CBD).

Under Section 741 of Division A of the report, the Committee directs the FDA to allocate funds and resources to perform its regulatory responsibilities of developing policies for all cannabis derivatives, reviewing product applications, conducting inspections, enforcement, and targeted research for cannabis-derived substances.

If you read this column or keep track of the pulse of the hemp industry, you may recall that regulatory uncertainties have severely hindered economic opportunities for growers and other hemp stakeholders. When Congress enacted the Agriculture Improvement Act of 2018 (the 2018 Farm Bill), it expressly legalized the production of hemp and hemp-derived compounds like CBD. Relying on the legalization language, hemp producers across the nation invested considerable time and money to plant, grow, and market commercial hemp crops, particularly when it comes to the production of hemp-derived CBD and other cannabinoids, given the significant consumer demand.

Unfortunately, these efforts have been negatively impacted by the FDA’s position on CBD. Although the FDA has recognized the significant public interest in the cannabinoid, and despite the reliable scientific studies demonstrating the safety and efficacy of the cannabinoid, the agency has been reluctant to forge a legal pathway for its sale, claiming the Food, Drug and Cosmetic Act (the FDCA) puts the agency in a “stalemate position.”

To fix this impasse, the bill further provides that:

Within 90 days of enactment of this Act, the FDA shall issue a policy of enforcement discretion with regard to certain products containing CBD meeting the definition of hemp as defined by section 297A of the Agricultural Marketing Act of 1964 (7 U.S.C. 1639). Such enforcement discretion shall be in effect until the FDA establishes a process for stakeholders to notify the FDA of use of CBD in products that include safety studies for intended use per product and makes a determination about such product.

The Committee also encourages the FDA to consider existing and ongoing medical research related to CBD to ensure that future regulatory activity does not discourage the development of new drugs and to partner with an academic institution to expand sampling studies of CBD products.

In addition to these cannabinoid- and FDA-related provisions, the report contains other hemp-related language that demonstrates Congress’ commitment to helping fix issues that have plagued the industry.

1. THC Limit Review. Because it is concerned that the level of THC allowed in hemp may be arbitrary and unfairly burden hemp producers, the Committee is directing the USDA to work with other federal agencies to determine a scientific basis for the current limit of 0.3% THC in hemp and suggest alternative levels if necessary.
2. Hemp Cultivar Development. The Committee is allocating $2.5 million in special funding and research partnerships to conduct hemp genetic improvement research and breeding using new techniques.
3. Proposed User Fees. The Committee continues to oppose past proposals from the USDA to implement new user fees to cover the government’s cost for services and urges the USDA to take into account the full impact such fees would have on farmers.
4. Hemp-Based Products. The Committee recognizes the growing necessity for hemp- and CBD-related businesses to have access to capital, calling on federal agencies to work with financial institutions to provide hemp producers access to guaranteed loans.

While the language of this report is nonbinding, it reveals that Congress understands its role in directing the FDA to perform its administrative duties and sends a strong message to the agency and the hemp industry that regulatory changes might be on their way.

Nathalie Bougenies chairs Harris Bricken‘s hemp CBD practice group and focuses her practice on health and wellness, in addition to corporate transactions and regulatory compliance. For the past three years, Nathalie has helped clients navigate the complex regulatory landscape of hemp products intended for human consumption and advises domestic and international clients on the sale, distribution, marketing, labeling, and importation of these products. Nathalie frequently speaks on these issues and has made national media appearances, including on NPR’s “Marketplace.” She also authors a weekly column for “Above the Law” that features content on cannabis policy and regulation and is a regular contributor to her firm’s “Canna Law Blog.” For three consecutive years, Nathalie has been named Rising Star by Super Lawyers.