What’s the Deal With CBD Product Advertising?

Contributors: Brad C. Deutsch, Principal, Foster Garvey, P.C. and Benjamin J. Lambiotte, Principal, Foster Garvey, P.C. 

Ever since December 2018, when the 2018 Farm Bill removed hemp and derivatives containing no more than 0.03% THC from Schedule I of the Controlled Substances Act (“CSA”), it seems that hemp-derived CBD products are everywhere – in grocery stores, pharmacies, online, and even in pet stores and restaurants. Sales and investment growth figures for the CBD industry are staggering and with that a lot of potential advertising revenue. However, any decision to take CBD advertising must be made with an understanding that the legal status of CBD-infused food, beverages, and dietary supplements remains unsettled and confusing. Although hard and fast rules are hard to come by (and probably will be for a while), here’s a summary of where things stand as of October 2019.

Federal Law

 2018 Farm Bill:  Controlled Substances Act “Descheduling”

In “descheduling” hemp containing no more than 0.03% THC (and extracts and cannabinoids of such hemp, including CBD), the 2018 Farm Bill effectively “decriminalized” those substances at the federal level, removing them from the reach of the CSA. Therefore, advertising a CBD product that falls within the 2018 Farm Bill’s definition of legalized hemp is no longer subject to the CSA provision prohibiting advertising of controlled substances and its felony criminal penalties.  And, as a consequence, it’s no longer presents a practical risk of disqualification as an FCC licensee under the FCC’s Character Policy.

USDA & FDA Regulatory Frameworks Still “Under Construction”

But, not so fast!  The 2018 Farm Bill did not fully legalize in all respects the production and sale of “descheduled” hemp and its derivatives.  In fact, under the Farm Bill, it remains unlawful to grow hemp without a state-issued permit under a USDA-approved plan. And, as it turns out, the USDA has yet to approve any such state licensing plans because the USDA has only just (October 29, 2019) issued interim regulations governing the approval process. USDA approval of state plans should begin happening soon, but that is a process that will also take some time.

To make things even more confusing, the CSA and the laws administered by USDA are not the only federal laws applicable to the production, marketing and sale of products containing CBD as an ingredient. In fact, the 2018 Farm Bill expressly preserved the authority of the Food and Drug Administration (FDA) to regulate hemp and CBD under the Food Drug and Cosmetic Act (“FD&CA”).  Specifically, the FDA has jurisdiction under the FD&CA to regulate the production, sale, and marketing of foods, dietary supplements, drugs, and cosmetics, including claims made on labels and marketing materials for such products.

Although the FDA is also currently engaged in public hearings and is soliciting comments in an inquiry designed to create “legal pathways” for marketing of products containing THC and CBD, for now the FDA takes the position that, because CBD was previously approved as an active ingredient of a drug for the treatment of epilepsy (Epidiolex), CBD is a drug that cannot lawfully be used as an ingredient in a human or animal food or beverage, without further regulatory action by FDA.  On top of that, CBD cannot be used lawfully as an ingredient in dietary supplements, at least not without FDA approval.  TO cap things off, for now, the FDA views therapeutic or medical claims in labeling and advertising of any CBD product as inadequately substantiated, unlawful and inherently false and misleading “misbranding” in violation of the FD&CA.

Although it considers many CBD products to be illegal (i.e., ingestible products and products for which therapeutic or medical claims are made), the FDA has yet to initiate any widespread enforcement action, preferring instead to collect public comment and data for now.  But, even as the FDA explores new “legal pathways,” the agency continues to selectively target CBD product manufacturers and vendors who make unsubstantiated therapeutic and medical claims.  As recently as August 21, 2019, the FDA issued warning letters reminding industry representatives that the FDA regards adding CBD to food as an FD&CA violation and that “[t]here is still a significant amount of missing data to better understand the effects on human exposure and the long-term effects of regular consumption.”

On the other hand, the FDA’s position as to use of hemp-derived CBD in cosmetics is different.  For FD&CA purposes, a “cosmetic” is intended to be rubbed, poured, sprinkled, introduced into, or otherwise applied to the body for cleansing, beautifying, promoting attractiveness or altering the appearance (except soap).  The FD&CA regulates cosmetics for which no therapeutic claims are made differently than foods and dietary supplements.  Unlike those “ingestible” products, cosmetic products generally are not subject to premarket approval by the FDA, but packaging and labels must comply with certain rules.  As a result, the considerations for advertising a cosmetic CBD product for which no health or therapeutic claims are made may be different from those involving a CBD food, beverage, or dietary supplement product.

In any event, the FDA generally enforces laws and regulations governing food, supplement, cosmetic and drug branding, labeling and advertising against manufacturers, packers, and distributors of the products advertised, and not against the media outlets who carry their advertising.  Still, because of the FDA’s concerns about “adulteration” and false and misleading health claims (“misbranding”), and the deafening silence of the FCC on the whole subject, many broadcasters are hesitant to take the risk of accepting advertising for a product that may trigger FDA concerns.

States and Localities Regulatory Approaches Remain Inconsistent

As the USDA and the FDA gather data and move slowly toward establishing federal regulatory frameworks, state and local governments have also only recently begun to clarify their positions. Unfortunately, the legal status of “end-use” CBD products at the state level remains unsettled, inconsistent and very much in flux.

Most states have already adopted or are in the process of establishing regulations and licensing programs permitting the production of low-THC hemp, which will then be subject to USDA approval once the USDA adopts the federal hemp regulations now in the works.  Some states have legalized and regulated CBD for at least some medical uses (usually epilepsy), and others have decriminalized low-THC hemp-derived CBD.  State and local authorities in many major markets defer to the FDA’s position on CBD in food, beverages, and dietary supplements, prohibiting its use in such products until the FDA authorizes it.  But some have taken enforcement action to curtail use of CBD as an ingredient in food and beverage products. For example, Washington State’s Agriculture Department recently clarified that CBD cannot lawfully be added to food products under state-issued food processor licenses.  And New York City’s health department has ordered removal of all CBD food products from restaurants and retail establishments until FDA deems CBD safe and legal as a food additive.  On the other hand, a small number of states expressly allow certain CBD in food products.

Conclusion

If you’ve stuck with us this far, we hope you now have a feel for both how complicated and how unstable this area of the law is currently.  So, until things settle down, any hard and fast “go/no go” decision about whether to take CBD advertising will be difficult and will require a nuanced analysis armed with the latest information.  The legal risks for any broadcaster accepting ads for a CBD product will depend on a variety of factors, including the changing posture of the FDA, the nature of the product itself, the claims and statements that the advertiser makes about the product, the regulatory approach of your state and locality and, above all, how your listeners might react to CBD advertising.