An increasingly unwieldly cannabinoid industry may force Congress to take action on hemp-derived cannabinoid regulation.
It has been five years since the 2018 Farm Bill, more formally called the Agriculture Improvement Act of 2018, de-scheduled hemp as an agricultural commodity and set in motion the proliferation of hemp-derived cannabinoid products. While these products existed prior to the 2018 Farm Bill’s passage, the ability to cultivate and harvest hemp nationwide opened the door for wider adoption. Unfortunately, while the U.S. Department of Agriculture (USDA) oversees the legal cultivation and harvest of hemp, the U.S. Food and Drug Administration (FDA) has taken the position that hemp-derived cannabinoid products cannot be legally marketed in food or dietary supplements. As such, hemp-derived cannabinoid products continue to exist in a regulatory gray area that invites unscrupulous manufacturers and products that further complicate the category in the absence of proper regulation and enforcement. How did we get here, and what does the future hold for hemp-derived cannabinoids?
Prior to and following the passage of the 2018 Farm Bill, it has been FDA’s position that hemp-derived cannabidiol (CBD) is not a dietary ingredient because of drug preclusion, meaning that because a pharmaceutical company, namely GW Pharmaceuticals, has publicly investigated (as an Investigational New Drug, or IND) and subsequently received FDA approval for a CBD drug that treats epilepsy, all forms of CBD do not qualify to be sold as dietary supplements.
The problem with Investigational New Drugs (INDs) is that the companies investigating the drugs are not required to disclose their investigation, leaving supplement makers mulling over what’s considered a drug ingredient versus what’s considered a supplement ingredient. This issue has reared its head more recently with beta-nicotinamide mononucleotide (NMN), an ingredient in dietary supplements.1 FDA rejected new dietary ingredient notifications (NDINs) for NMN ingredients, one of which was a retroactive rejection of an NDIN that the agency had previously acknowledged.
This threat creates what Steve Mister, president and CEO of the Council for Responsible Nutrition (CRN; Washington, DC), refers to as a “race to market” that disincentivizes companies from investing in research. For example, hemp cannabinoids other than CBD may or may not be subject to drug preclusion, so why would a supplement brand invest in the research to submit an NDIN on them when FDA might just reevaluate the notification’s validity in the future and tell the supplement company that the pharmaceutical industry got there first?
Industry stakeholders continue to insist that the existing regulatory pathways for dietary ingredients and food are applicable to hemp-derived cannabinoids. FDA, meanwhile, recently recommended that a separate regulatory pathway needs to be devised to regulate said products.2
In an effort to demonstrate the safety of CBD and other cannabinoid products, a number of brands have invested significant resources into NDINs and Generally Recognized as Safe (GRAS) dossiers. Two of these brands, Irwin Naturals and Charlotte’s Web, submitted NDINs to FDA that were ultimately rejected by the agency, citing drug preclusion, but the agency was also not satisfied with the evidence used in the NDINs and raised concerns about the safety of the ingredient’s use in food and dietary supplements.3 Brands like Hemp Fusion and CV Sciences have also done their due diligence by publishing dossiers for an independent conclusion of GRAS.4,5 In this scenario, brands are not required to submit GRAS dossiers to FDA as long as to the data is shared with the general public. However, FDA in its approach to CBD has seemingly ignored any safety data accumulated to reach these independent conclusions of GRAS.
Instead, FDA’s Office of Food Additive Safety, Center for Food Safety and Applied Nutrition, reviewed the published literature finding that oral CBD consumption resulted in developmental and reproductive toxicity, as well as hepatotoxicity, in animal models.6 However, as industry was quick to point out, the research reviewed was based on doses well outside of the range used in dietary supplements, meaning that the review is more applicable to pharmaceutical applications than supplement applications.
Therefore, the stalemate continues, with each side insisting on the validity of its respective perspective. The decision of what’s legal and what’s not, it seems, may ultimately fall on Congress.
The U.S. House of Representatives has introduced a couple of bills that would exempt CBD and other cannabinoids from drug preclusion and allow the cannabinoids to be regulated under the Federal Food, Drug, and Cosmetics Act. These bills, unfortunately, have not progressed. This means that in the absence of federal regulation and Congressional intervention, states have had to take matters into their own hands, creating a patchwork of state laws that become increasingly burdensome for manufacturers trying to accommodate each new law.
Taken together, the impact on industry has been immense.
Impact on Industry
The hemp-derived cannabinoid category has experienced a proverbial roller coaster ride. According to Nutritional Outlook’s 2019 Ingredients to Watch coverage, which cited figures from market researcher SPINS (Chicago), in 2018 sales of CBD grew 382% to $40,393,188 from just $8,377,750 the previous year.7 When the COVID-19 pandemic happened, demand essentially screeched to a halt. In subsequent years, CBD sales saw a decline, but CBD products remained rather popular. For example, data from SPINS indicate that in 2022, CBD was among the top-25 bestselling ingredients in the U.S. natural supplements channel, with $34 million in sales, even as it experienced a 15% decline in sales from the year before.8
Experts have agreed that the triple-digit growth CBD saw in earlier years was unsustainable. They also agree that despite the declines in sales, the category has become a mainstay of the natural products marketplace. However, sales trends and the success of finished product brands is not all that’s required to paint a full picture, says Jonathan Miller, general counsel of hemp-advocacy group U.S. Hemp Roundtable. Miller says that FDA’s lack of regulatory oversight and opinion that CBD cannot be regulated as a dietary supplement has had a profoundly negative impact on hemp farmers.
“When the 2018 Farm Bill passed, there was tremendous excitement and engagement, and there were record amounts of farmers getting into the hemp space,” says Miller. “Unfortunately, right about the same time the FDA started to ramp up its public commentary, arguing that it was illegal to sell CBD as an ingestible product.”
Miller expresses frustration that despite the agency’s position, FDA did not take any kind of substantial enforcement action on questionable CBD companies already on the market. Instead, FDA limited its response to sending warning letters to brands making illegal claims. While this allowed brands to continue selling products if they refrained from making illegal and unsubstantiated claims, there remained a great deal of trepidation from retailers, particularly big-box stores, who refused to stock ingestible hemp-derived CBD products. As a result, these products were mostly sold directly to consumers either through independent retailers or e-commerce websites. Major consumer packaged goods brands also refrained from adopting cannabinoid ingredients in their products.
Says Miller: “As a result, the price crashed by more than 90% for hemp [between April 2019 and April 2023]. A lot of bankruptcies ensued, and a lot of farmers were left holding the bag, and so it really has had a devastating effect on the industry.” He adds: “It had a particularly devastating effect on farmers of color and minority-owned businesses. There was a real effort to have CBD and hemp be a great transition for farmers in the tobacco belt to transition to a new crop, and a lot of farmers that have tried that have gotten burned.”
Therefore, while the pandemic certainly did not help, FDA’s position on CBD and its lack of enforcement has had far-reaching consequences. These consequences are being felt today with delta-8 tetrahydrocannabinol (delta-8 THC) products. Farmers and extractors stuck with cheap CBD biomass they could not sell were forced to find other avenues to make money. Converting this biomass into delta-8 THC and other cannabinoids became a way to get some of their money back.
The addition of delta-8 THC to the market has added another layer of complexity in that delta-8 THC can be intoxicating to users. Because it is delta-8 THC and not delta-9 THC, which is limited to 0.3% by dry weight, manufacturers of these product argue that the products can be sold legally. In turn, some states are now adding laws to their books that place restrictions on the sale of delta-8 THC. Kentucky, for example, passed a law that makes it illegal to sell delta-8 THC to consumers under the age of 21.9
This is on top of an existing patchwork of state laws with inconsistent labeling requirements that continue to evolve as states have to contend with new challenges posed by emerging cannabinoid products. For example, there are hemp-derived cannabinoid products coming to market that seemingly comply with the 0.3% delta-9 THC limit but that have relatively high levels of delta-9 THC compared to the hemp-derived cannabinoid products that have historically been sold in the space. These can range from 5 mg of delta-9 THC to 30 mg, which raises alarms for the potential of intoxication. At the same time, many states have competing interests in the form of the recreational and medical marijuana industry. As a result, a number of states have introduced proposals that would set limits on delta-9 THC in hemp-derived cannabinoid products.
A California proposal would have limited hemp-based products to five servings per package and total THC levels to 0.001 mg/g.10 This measure has been defeated, but it may be reintroduced in the new year, according to the U.S. Hemp Roundtable. In New York, the state’s Office of Cannabis Management issued emergency regulations that would limit THC in hemp-based products to 1 mg per serving and 10 mg per package.11
Limits such as these would be extremely hard to meet and could force manufacturers out of these markets. As such, a federal solution is crucial to create a consistent and reputable marketplace for hemp-derived CBD.
Ultimately, everyone is turning their heads and looking to Congress to make things happen. And Congress may be frustrated enough to act. On July 27, 2023, the House Oversight and Accountability Committee’s Subcommittee on Health Care and Financial Services held a public hearing titled “Hemp in the Modern World: The Yearslong Wait for FDA Action.” This marked the first time that Congress has formally scrutinized the hemp-derived cannabinoid market. Following this hearing, Congress issued a Request for Information (RFI) asking industry stakeholders specific questions. Many answered the call, offering their opinions of what impact FDA inaction has had on the hemp-derived cannabinoid industry.
The fact that Congress has taken this step may be a positive sign. “It’s very clear that [Congress] want[s] to take action,” says Miller. “We’re quite optimistic that Congress is working on this in a bipartisan basis and that we’ll have some progress.”
“It’s certainly uncommon, but I think it’s a really good sign because it says to me that Congress is not just going to write FDA a blank check with this request that the FDA has made to create a new center [to regulate hemp-derived cannabinoids],” says CRN’s Mister. “That is, I think, a sweeping decision that should Congress decide to just create a new center around a single plant, it’s not only unprecedented; it’s not a good use of the agency’s resources.”
Mister uses the analogy of having an office that regulates potatoes. This is a vegetable that is consumed as food but is also used as distillation, but our current regulatory framework regulates food and alcohol made from potato through different agencies. Why should hemp be any different, Mister argues. He explains that what FDA has in mind is akin to the agency’s Center for Tobacco Products, a separate entity from the food and drug program that would regulate all aspects of hemp.
FDA argues that the agency does not have sufficient information about the safety of CBD and other cannabinoids, such as how much can be safely consumed and for how long. While industry has made an effort to provide this kind of information, stakeholders also argue that FDA itself does have the authority under DSHEA to set a maximum allowable safe level for cannabinoids. For intoxicating cannabinoid products such as delta-8 THC, Miller states that other agencies such as the Alcohol and Tobacco Tax and Trade Bureau would be well equipped to regulate such products.
While products like delta-8 THC and high-milligram THC hemp-derived cannabinoid products are pushing the boundaries of what’s acceptable, they’re forcing industry, regulators, and lawmakers to address really important questions. Questions like: how much delta-9 THC should be allowed in a hemp-derived cannabinoid product, assuming it meets the threshold of 0.3% THC by dry weight? The U.S. Hemp Roundtable has put together a white paper arguing that 5 mg of delta-9 THC should be the limit for hemp-derived cannabinoid products. This level, the group argues, does not pose a significant risk of impairment and would be analogous to the limit of 0.5% alcohol by volume before a product is classified as alcohol or considered adulterated food. Additionally, given the small serving size of dietary supplements, the Roundtable says that discrete upper-milligram limits are preferable to limits to percent by weight or volume.
There is also the issue that the legal threshold of 0.3% THC by dry weight set by USDA for hemp products may not be an entirely reasonable limit for farmers to meet. The American Herbal Products Association (AHPA; Silver Spring, MD) recently encouraged Congress to raise the threshold in the 2023 Farm Bill to 1% delta-9 THC by dry weight.12 This is because environmental factors such as high temperature and lack of water can cause the plants to have higher levels of THC. Initial processing of the plant may also temporarily raise levels above 0.3% THC, which can be remedied upon further processing. As of now, companies must destroy any plants that exceed these limits. There is no opportunity for remediation.
A report from February 25, 2022, by News Channel 5 Nashville says that 42% of hemp crops in Tennessee were found to be noncompliant with the threshold limit, citing the state’s Department of Agriculture.13 This, of course, is a huge burden on farmers who are forced to destroy the noncompliant biomass, hurting their income. Raising the threshold could therefore be incredibly beneficial for them. But what would that mean for finished products? Well, potentially nothing.
“AHPA is advocating for raising the limit for delta-9 THC to 1% for hemp biomass only, and not for finished products manufactured using that biomass,” explained Jane Wilson, director of program development, and staff liaison to the AHPA Cannabis Committee. “Raising the compliance limit for hemp plant production can be separate from the current hemp compliance limit of not more than 0.3% by dry weight of delta-9 THC, which is presently being applied to both the hemp biomass and to finished products. Hemp processors can utilize appropriate extraction techniques to achieve compliance with the current 0.3% limit for delta-9 THC in the hemp-derived cannabinoid finished products.”
That said, while the Farm Bill addresses agriculture, it offers an opportunity to take action on hemp-derived cannabinoid products. The Cannabis Regulators Association (CANNRA), for example, has called on Congress to make modifications to the Farm Bill that would address hemp-derived cannabinoid products.14 This would include defining hemp-derived cannabinoid products and changing the threshold of 0.3% THC to include both delta-9 THC and THCa, a precursor of the former. The group is also demanding that Congress “identify, authorize, and fund a federal regulator with a background in public health and consumer protection to regulate cannabinoids and cannabinoid hemp products,” within a short and specified timeframe and without preempting states’ authority to go beyond federal policies.
The demands for federal regulation are certainly in line with what industry wants, but because CANNRA represents the interests of state regulators of medical and recreational marijuana, the threat of state patchwork continues to exist. It’s unknown to what extent legislators will choose to address hemp-derived cannabinoid products in the 2023 Farm Bill, if at all. At the time of this writing, there has yet to be a published draft of the Bill, which needed to pass by September 30, 2023. It’s difficult to say whether there is sufficient political will to tackle the issue of regulating hemp-derived cannabinoids, but the level of public discussion taking place on this issue is a positive sign.