The global CBD market is expected to exceed a staggering $55 billion in market value by 2028. However, the scramble to regulate this market while meeting the incredible demand for hemp and CBD infused products has led to a myriad of supply chain issues, contaminated products, improperly sourced materials, failed product testing, and dubious claims for miracle health cures.
Leading the way in this market, California’s Governor Gavin Newsome recently enacted Assembly Bill 45 allowing for hemp and CBD products to be sold and consumed within the state. The bill also allows for the infusion of food products, livestock and pet products, as well as cosmetics. This legislative change has poised California to become the nation’s leading importer and producer of hemp and CBD products, receiving materials not only from all over the US, but also internationally.
Cannabis hemp, defined as testing at .3% THC or below, has been federally rescheduled in the 2018 farm bill. As a result, CBD products derived from hemp are now legal, but CBD products derived from Marijuana (>.3%THC) are still federally illegal. To complicate matters, the FDA has refused to approve CBD and CBD products as safe for consumption, and therefore it currently cannot be added to food items. Because of this, any health or medical benefits claimed by CBD products are highly scrutinized and have been the subject of class action lawsuits.
The two main charges in lawsuits against hemp or CBD infused products is that they provide overstated or misleading health claims without sufficient medical research to back such claims, and that the sale of hemp and CBD products is inherently misleading due to its federal illegality.
There are a number of challenges you must overcome following the submission of your application. These includes:
Imported hemp and CBD products are often manufactured in developing markets where standards for GMP and GAP have not been implemented, and the risk for lead, arsenic, mold, or other toxins are threats to US based vendors attempting to use these suppliers.
Contamination from THC, issues with product purity and dosage, as well as heavy metal and pesticide contamination have all been issues found to occur within the legal hemp/CBD market. Appropriate sourcing of genetics, Standard Operating Procedures, and in-house and third-party testing protocols all go a long way to providing a record of compliance when faced with a potential legal suit. The USDA only issued testing guidelines for hemp and CBD products in 2019, and operators must locate appropriately certified labs which will meet these guidelines.
Labeling and marketing can be a big issue given that the FDA has only approved one product containing CBD (Epidiolex for seizures in children.) Any untested or undocumented claims for a product could be a potential subject for legal suit or federal injunction. Basically, any operator within the legal hemp or CBD market must create a transparent supply chain and manufacturing process and follow rigorous standards for production and testing to provide consistent, safe, lab-tested products.
Currently the EPA has not issued thresholds for pesticides on hemp, but this is liable to change very soon. States have pesticide registration programs overseeing application and testing for pesticides for hemp farms within approved uses.
There are also regulations which vary from state-to-state regarding the transportation, cultivation, and manufacturing processes and subsequent licensing requirements for these types of businesses. These include containment and transportation plans, security plans, manufacturing processes, and other state and federal guidelines for this developing market. Agricultural Best Management Practices (BMP) are being implemented in several states to protect environmental resources and groundwater, to help verify nutrient sources and implement usage needs for farms of different scales, and to implement irrigation best strategies to promote water efficiency.
A savvy operator within this market must constantly stay up to date on the latest state and federal regulations as they are made available, and already be prepared with processes and records demonstrating compliance and transparency within operations to prevent legal and regulatory pitfalls. Ultimately the regulatory landscape of hemp and CBD in the US means complying with regulations from the USDA, the FDA, and the FTC as well as state and local regulations and inspection requirements.
It is vital that companies meet these compliance regulations as the industry develops in order to avoid lawsuit, regulatory injunction, or consumer safety issues. Cannaspire is prepared to help your business navigate this continuously evolving landscape in a manner that will ensure your continued success as the market continues to grow. Our compliance team can assist with licensing your business with the state, organic certification for farms, pesticide standards, and best handling practices for cultivators, as well as recommending top-of-the-line laboratory equipment and processing techniques for manufacturers of CBD distillate and isolate.