Month: December 2019

CBD ALERT: Criminal Charges Dropped Against NY CBD Manufacturer; Lessons Learned

Posted on December 17, 2019 by - Pharmacy

By: Dae Y. Lee, Pharm.D., Esq., CPBS

Recent events signal the need for CBD manufacturers to have a clear game plan to address legal uncertainty and confusion by law enforcement and prosecutors. New York prosecutors recently dropped felony marijuana possession charges against a New York-based CBD manufacturer. The manufacturer was arrested in November for allegedly receiving 106 pounds of marijuana. However, the shipment contained hemp plants. Notably concerning, the shipment included documents verifying that the hemp contained 0.06% THC, which is lower than the 0.3% threshold set forth by the Agriculture Improvement Act of 2018 (2018 Farm Bill). Of note, any cannabis plant that contains more than 0.3 % THC would be considered non-hemp cannabis under federal law and would thus face no legal protection under the 2018 Farm Bill.

Law enforcement’s wrongful seizure demonstrates a lack of knowledge and understanding of CBD, which may lead to business interruption and financial loss. Stakeholders should make sure they have a Plan of Action to address wrongful seizure and surrounding criminal issues, as well as appropriate commercial insurance coverage to mitigate the economic risks.

New York is clearly making efforts to address uncertainty through legislation. New York Governor Cuomo signed a comprehensive hemp bill this month that allows and sets up a regulatory framework for the growth, sale, distribution, transportation, and processing of industrial hemp and hemp extracts including CBD in the state. Stakeholders should understand the contours of this new law.

Regulation of hemp and its derivative products remains mired in a jumble of conflicting state and federal law. Stakeholders, ranging from manufacturers to retailers, must remain compliant. If your company handles hemp and its derivatives, contact Frier Levitt today to speak to an attorney.

New York State Passes New Law Establishing Regulatory Framework for Hemp and Hemp Extracts, Including CBD

Posted on December 16, 2019 by - Pharmacy

By: Adam S. Bloom, Esq.

On December 9, 2019, New York Governor Andrew Cuomo signed legislation that impacts the state’s cannabidiol (CBD) businesses. The law establishes a regulatory framework for the growth, sale, distribution, transportation, and processing of industrial hemp and hemp extracts, including CBD, with a THC concentration of not more than 0.3 percent on a dry weight basis. The law establishes licensing, good manufacturing practice standards, testing, and labeling requirements for the industry. Governor Cuomo also announced that New York State will host a hemp summit in January 2020 to further develop industry policies.

Under the law, retailers, wholesalers, manufacturers, and extractors of products derived from hemp extract – including CBD – must apply for a license from the New York Department of Agriculture and Markets. The Department will establish regulations governing this process as well as regulations covering the labeling and advertising of such products.

In addition, among other requirements, hemp extract products must be sold or delivered in containers with labels as may be required by the state, must be extracted and manufactured in accordance with good manufacturing processes pursuant to FDA good manufacturing practices, and every cannabinoid manufacturer and extractor must contract with an independent laboratory to test their hemp extract products.

While countless businesses await legal clarity regarding their ability to add CBD to foods, drinks, and dietary supplements, the New York law defers decision-making on this issue until a later date. The State appears to be waiting to see whether the Federal Food and Drug Administration (FDA) establishes regulations allowing for the marketing of CBD in foods and beverages and likely will follow FDA’s lead at that time.

Federal and state laws regarding hemp, CBD, and other cannabis-derived products are rapidly evolving and there are many potential pitfalls for operating in these markets without a thorough understanding of the complex regulatory environment. If you need assistance navigating the regulatory environment for hemp, CBD or other cannabis-derived products, contact Frier Levitt today to speak with an attorney.

CBD ALERT: Class Action Lawsuits Filed Against CBD Manufacturers

Posted on December 9, 2019 by - Government Affairs

By: Dae Y. Lee, Pharm.D., Esq., CPBS

Six class action lawsuits have been filed against cannabidiol (CBD) manufacturers immediately following the November 25, 2019 warning letters issued by the United States Food & Drug Administration (FDA). These warning letters were sent to 15 companies for selling products containing CBD. The FDA maintains that food and dietary supplements are not allowed, under the Food, Drug, and Cosmetic Act (FD&C Act), to contain any level of CBD. The FD&C Act makes it clear that any product intended to treat a disease or otherwise have a therapeutic or medical use, and any product (other than food) that is intended to affect the structure or function of the body of humans or animals, is a drug. The FDA has not approved any CBD products other than Epidiolex for the treatment of seizures associated with two rare and severe forms of epilepsy. The FDA has sent numerous warning letters to companies that sell CBD products in interstate commerce that claimed to prevent, diagnose, mitigate, treat or cure serious diseases. However, the FDA has not launched a judicial action against a CBD manufacturer.

The class action lawsuits are identical to each other and each complaint mimics the FDA’s concerns over illegal sale of the CBD products. Four cases, DaSilva v. Infinite Product Co. LLC, Davis v. Green Roads of Florida, LLC, McCarthy v. Charlotte’s Web Holdings, Inc., and Colette v. CV Sciences, Inc., alleging that the manufacturers’ CBD products were mislabeled as dietary supplements. Two cases, McCarthy v. Elixinol, LLC, and Fausett v. KOI CBD, LLC, note that the defendants sold CBD products as dietary supplements as well as animal foods. KOI CBD, LLC is among the 15 companies that received the most recent FDA warning letters. Prior to these lawsuits, there have been several lawsuits that have been filed against CBD manufacturers including a shareholder class action lawsuit filed against Curaleaf Inc. when the company’s stock fell abruptly after it received a warning letter from the FDA.

The recent lawsuits suggest a new wave of litigation in the CBD industry given that the FD&C Act does not provide for a private right of action under which members of the public can commence a civil action to enforce the FD&C Act. The putative classes assert, instead of arguing that the use of CBD in products violates the FD&C Act, that the CBD products are mislabeled and falsely advertised under state consumer protection laws. More specifically, the plaintiffs allege that the defendants manufactured and sold CBD products in violation of California and Arizona state laws including, but not limited to, California’s Unfair Competition Law, False Advertising Law, and Consumer Legal Remedies Act, and Arizona’s Consumer Fraud Act.

Many future lawsuits are expected to focus on allegations of mislabeling, accusing the companies of falsely representing the CBD content of their products. The lawsuits will likely involve not only the manufacturers but also other stakeholders in the supply chain including extraction and remediation companies. CBD stakeholders should prepare for the possibility of litigation and actively seek to mitigate the risks of unwanted attention by FDA or civil lawsuits. It is likely that more issues will surface given the ever-evolving regulations in the CBD industry. Frier Levitt helps CBD companies and manufacturers navigate complex issues, including many services based on flat fees. Contact Frier Levitt today to speak to an attorney.

FDA Issues 15 New Warning Letters to CBD Companies and Publishes Consumer Update

Posted on December 2, 2019 by - Government Affairs

By: Adam S. Bloom, Esq. and John E. Morrone, Esq.

On November 25, 2019, the Food and Drug Administration (FDA) issued warning letters to 15 companies selling cannabidiol (CBD) and published a revised Consumer Update broadly detailing its safety concerns regarding CBD products. In addition, the FDA said it intends to provide an update “in the coming weeks” on its progress towards developing a regulatory approach to CBD products.

Each of the companies that received warning letters sold their products online in “interstate commerce.”  The products sold include a wide range of CBD products including oils, creams, tinctures, capsules, dietary supplements, human foods (such as gummies and chocolates) and animal foods. As has been the case in each of their previous CBD-related warning letters, the FDA focused its attention on companies that market CBD products with claims that the products cure, mitigate, treat or prevent diseases such as cancer, diabetes, opioid addiction, schizophrenia, multiple sclerosis, autism, Crohn’s disease, depression, and arthritis.

Although each of the targeted companies made illegal disease claims, the FDA made it a point to emphasize that the CBD foods (including animal foods) and dietary supplement products were in further violation of the Food, Drug and Cosmetic Act (FDCA). The FDA stated it is illegal to introduce into interstate commerce human or animal food containing CBD because CBD is an unapproved food additive – it is not Generally Recognized as Safe (GRAS) among qualified experts, and no food additive regulation authorizes its use in foods. The FDA also noted that CBD cannot be marketed as a dietary supplement because it does not meet the definition of a dietary supplement under the FDCA.

Additionally, the FDA emphasized its concern with the marketing of CBD products to children. For example, they called out a CBD product named “Asteroid Gummies” which was advertised with the claim that consumers can give the product “as a treat to your kid[.]”

Significantly, in the revised Consumer Update, the FDA conveyed its belief that there are many unanswered questions and data gaps about CBD safety and that the limited data it has seen regarding CBD point to “real risks.” The FDA’s safety concerns regarding CBD include potential liver injury, the effect of interactions with other drugs, drowsiness, diarrhea, changes in mood, effects on male reproductive health, impact on vulnerable populations such as children and pregnant or breast-feeding women, and the cumulative effects of CBD use.

In an FDA press release issued in conjunction with the warning letters and the revised Consumer Update, the FDA Principal Deputy Commissioner Amy Abernathy, M.D., Ph.D., emphasized that they are monitoring the CBD marketplace and will take action against companies that “violate the law in ways that raise a variety of health concerns.” She added that FDA believes there are “knowledge gaps” about the science, safety, and quality of many CBD products and that the FDA is concerned that people wrongly believe many CBD products have been evaluated by the FDA and determined to be safe or that trying CBD “can’t hurt.”

By issuing 15 new warning letters and articulating its concerns regarding CBD safety, FDA has reiterated its commitment to overseeing the CBD industry and demonstrated the risks of marketing CBD products without a thorough understanding of the unsettled and complex CBD regulatory environment. If you need assistance navigating the regulatory environment for CBD or other cannabis-derived products, contact Frier Levitt today to speak with an attorney.