Seyfarth on CBD – February 2020 Update
CBD continues to flourish in the markets despite lack of federal regulations, and we’ve identified some significant events that indicate there’s no sign it’s stopping.
Topical CBD Pain-Relief Receives FDA Product Listing Certification
Elixicure, an over-the-counter (OTC) CBD-infused topical pain-relief cream marketed for treating inflammation, aches, and pains, has received product listing certification from the Food & Drug Administration (FDA). This certification is the first of its kind for a topical OTC drug containing CBD. As Elixicure’s Chief of Business Development, Yaniv Kotler, explained, “[t]his certification requires us to vet our processes, our equipment and systems, our vendors and suppliers, and conduct batch-by-batch testing to ensure quality.”
While the FDA is under immense pressure from the public and Congress to produce a regulatory regime for CBD, it has not stood still with respect to new CBD products. Elixicure’s product listing certification should not, however, be confused with formal FDA approval. The latter requires extensive vetting, including analyses of the underlying target condition and other related available treatments, conducting a cost benefit analysis from clinical data, as well as strategizing on how drug risks may be identified and mitigated. Here, the product listing certification conferred to Honest Globe, the maker of Elixicure, instead allows for the product to be listed in the FDA’s National Drug Code Directory, a database that lists “all drugs manufactured, prepared, propagated, compounded, or processed by it for commercial distribution.” Product listing certification requires manufacturers to ensure, on an annual basis, that its directory listing is updated and accurate. Manufacturers are responsible for certifying records, including all product data, which includes, for example, information on formulation, labeling, and DEA Schedule. Yet despite this momentous event, it must be noted that the only FDA-approved CBD drug product available is Epidiolex.
CBD Class Action Litigation
At the beginning of the new year, a Florida federal judge stayed a proposed class action that alleged Green Roads of Florida LLC misled consumers on the amount of key ingredients in its CBD line. At the core of the suit are CBD products marketed to provide relief from a host of health conditions, including anxiety and pain. Plaintiffs are seeking the return of profits made from sales. While Judge Ursula Ungaro denied Green Road’s motion to dismiss, she granted its motion to stay and explained that because “the rulemaking processes [sic] at the federal level is active,” she would stay the case during the pendency of FDA rulemaking.
Judge Ungaro rejected the plaintiff’s argument that there was an adequate, preexisting regulatory framework for CBD, sufficient to resolve the labeling issue at the core of the case. Instead, she noted that any regulations propounded by the FDA would be highly beneficial in aiding her review of the case. She further added, under these circumstances (i.e., with forthcoming FDA regulation), plaintiffs would not be significantly prejudiced by the stay.
Class actions against CBD companies could potentially threaten the growing CBD industry at its fragile beginning. With Judge Ungaro’s ruling, however, CBD companies faced with similar claims may have some temporary relief while the FDA works to put forth a regulatory framework. Other CBD companies, like CV Sciences Inc., involved in suits with similar claims, have set forth a similar argument: that private class actions alleging non-compliance to the Food, Drug, and Cosmetic Act (FDCA) are necessarily preempted by federal law. In other words, according to CV Sciences, any FDCA enforcement must be brought by the Government, and not private litigants. Still, given the FDA’s inability to produce guidance by the fall of 2019, any potential stay in litigation may last for some time. Still other class lawsuits not involving misleading product claims, like for example those involving violations of Title III of the Americans with Disabilities Act, are being lodged (and going forward) against CBD companies. Both young and more-established CBD purveyors would be wise to invest in good legal counsel.
Collin Peterson Introduces New Legislation Permitting CBD Marketing in Dietary Supplements
On January 13, 2020, the Chairman of the House Committee on Agriculture, Rep. Collin Peterson (MN 7th District), introduced H. R. 5587, legislation that would permit CBD to be marketed in dietary supplements. Rep. Peterson’s bill is another example of Congressional interest in CBD. This bill would amend the Food, Drug, and Cosmetic Act (FDCA) to include CBD within the definition of a dietary supplement. It also requires the US Department of Agriculture to complete a study and report on the regulatory and market barriers for hemp farmers. Rep. Peterson has said the bill would “provid[e] a pathway forward for hemp-derived products. It would also identify barriers to success for hemp farmers, informing growers and policy makers of the challenges facing this new industry.”
Seyfarth will continue to monitor and report on this piece of legislation, along with other CBD developments.