Although hemp is now federally legal, as a result of the enactment of the Agriculture Improvement Act of 2018 (the 2018 Farm Bill) late last year, the Alcohol and Tobacco Tax and Trade Bureau (TTB) recently declared that adding hemp-derived cannabidiol (CBD) to alcohol beverages is impermissible.
By way of background, and as we discussed previously, on December 20, 2018, President Trump signed into law the 2018 Farm Bill. Among other things, the 2018 Farm Bill removed hemp from the definition of “marihuana” (marijuana) in the Controlled Substances Act (CSA), thus taking it out of Schedule I. The Agricultural Act of 2014 (P.L. 113-79) (2014 Farm Bill) authorized states to establish agricultural pilot programs or other agricultural or academic research programs to study the growth, cultivation, or marketing of “industrial hemp.” The 2014 Farm Bill defined industrial hemp as “the plant Cannabis sativa L. and any part of such plant, whether growing or not, with a delta-9 tetrahydrocannabinol [THC] concentration of not more than 0.3 percent on a dry weight basis.” Despite the 2014 Farm Bill’s authorization to states to establish hemp pilot programs, the legislation did not specifically address the Schedule I status of hemp. In contrast, the 2018 Farm Bill amended the CSA to state that the term marijuana does not include hemp. In addition, the 2018 law also amends the definition of hemp in the Agricultural Marketing Act of 1946, with the result being an expansion of the definition referenced in the 2014 Farm Bill. It is now clear that hemp is no longer federally illegal under the CSA, but it is also clear that the phrase “any part of the plant” includes “the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers.” This definition expansion is significant, given its inclusion of hemp-derived cannabinoids (e.g., cannabidiol (CBD)), and given the already explosive growth of the CBD-infused products market, a trend which will no doubt continue now that hemp is legal.
Despite the federal legality of hemp, however, there continue to be restrictions on what can be done with hemp and hemp derivatives (e.g., hemp-derived CBD). This is especially true when it comes to the addition of CBD or THC to a product regulated by the U.S. Food and Drug Administration (FDA or the Agency) and TTB. In response to the 2018 Farm Bill being signed into law, now-former FDA Commissioner Scott Gottlieb, M.D., was quick to remind the public about what the legislation did not change: The Agency’s authority to regulate products containing cannabis or cannabis-derived compounds under the Federal Food, Drug, and Cosmetic Act (FD&C Act or the Act) and section 351 of the Public Health Service Act. Per FDA, it is unlawful under the FD&C Act to introduce food containing added CBD or THC into interstate commerce, or to market CBD or THC products as, or in, dietary supplements, regardless of whether the substances are hemp-derived. This is because both CBD and THC are active ingredients in FDA-approved drugs and were the subject of substantial clinical investigations before they were marketed as foods or dietary supplements. Under the Act, it is illegal to introduce drug ingredients like these into the food supply, or to market them as dietary supplements.
Following FDA’s lead, the TTB recently announced in an April 25, 2019 industry circular that it will follow the Agency’s lead in determining which hemp ingredients can be added to alcohol beverages. The TTB will only allow industry members to include specific hemp ingredients in alcohol beverages that have received a “favorable” determination from the FDA. The TTB will therefore continue to allow the use of hemp seeds and hemp seed oils in alcohol beverages. All other hemp ingredients, including CBD, will require favorable FDA review before they can be added to alcohol beverages.
From a practical standpoint, that means the TTB intends to return all formula applications that contain hemp ingredients other than hemp seeds and hemp seed oils. Applicants can resubmit their applications if/when FDA approves the specific hemp ingredient(s) at issue. The TTB will continue to process applications involving hemp seeds and hemp seed oils. According to the circular, the TTB also intends to update its guidance on hemp ingredients. Given the TTB’s deference to FDA, this update will probably happen sometime after FDA’s May 31, 2019 public hearing, which we discussed previously.
We are continuing to monitor developments in this area, and will attend the Agency’s May 31st hearing. In the meantime, if you have questions regarding an issue raised in this post, please contact the authors or the attorney at the firm with whom you are regularly in contact.