By Courtney A. Hunter and Jessalyn H. Zeigler

Demand for cannabidiol (CBD) products continues to climb, and the market has risen to the occasion. There is now a robust array of foods, oils, lotions, capsules and cosmetics containing CBD for consumer use. But with this wide selection also comes the concern that not all of the products in the market are of comparable quality, and the risk that certain bad actors could inhibit good faith distributors and manufacturers’ ability to operate successfully.  Further, while early research and consumer reports claiming that CBD can help consumers manage chronic pain and anxiety continue to support the strong market demand for these products, not everyone is as optimistic about CBD’s potential to be an effective supplement for consumers. This uncertainty in the market has led many to call for a more comprehensive regulatory scheme for CBD products.

Benefits of Federal CBD Regulations

Manufacturers and distributors would benefit from a comprehensive federal regulatory scheme, as the absence of such a regulatory scheme increases their legal exposure. For example, without clear regulations on labeling requirements for CBD products, it becomes more difficult to defend certain consumer tort claims. If a clear federal standard was in place outlining labeling requirements, manufacturers and distributors could reduce the risk of these lawsuits by simply complying with the articulated standard and relying on this compliance to defeat plaintiffs’ claims. Without such a standard, however, there is ambiguity in the law that can lead to lawsuits. In fact, in 2020, many CBD manufacturers faced lawsuits premised on allegedly inadequate labels. At the time, courts stayed these cases pending regulatory action by the Food and Drug Administration (FDA). But the FDA’s continued inaction risks courts permitting the revival of these actions.

The lack of a clear regulatory scheme and the confusion inherent in attempting to comply with multiple states’ regulatory schemes has also led to lawsuits featuring plaintiffs who claim they were misled regarding the legality of the CBD product they purchased. This increased risk of litigation is another reason why industry leaders should continue to urge the federal government to implement a comprehensive regulatory scheme to govern CBD products. Everyone, from consumers to distributors to manufacturers, would face more safety and efficiency if there are clear, uniform guidelines to govern the manufacturing, labeling, distribution, and use of such products.

Federal Inactivity Leaves CBD Industry in Limbo

Unfortunately, calls for comprehensive federal regulation have remained unanswered. In January 2023, the FDA announced that it would not release CBD regulations and would instead leave the task to Congress with FDA input. There was a glimmer of hope in the summer of 2023 that Congress might act, or direct the FDA to act, as ranking members of both the Senate Health, Education, Labor and Pensions Committee and the House Energy and Commerce Committee (E&C) requested information from stakeholders on the FDA’s regulation of CBD. Months passed, however, and neither committee issued statements to follow up on the progress of a comprehensive regulatory plan. In January 2024, a coalition of over two dozen hemp industry organizations wrote a public letter to the ranking members of the E&C to request a hearing specifically addressing the FDA’s inaction. As of the time of this writing, however, the FDA has still not provided any indication that it will issue any regulations of CBD products.

This lack of a clear path forward may be the result of tension among federal agencies on how to address cannabis products more broadly, including marijuana. The Secretary of the United States Department of Health and Human Services (HHS) has faced pressure from the Biden administration to reconsider the classification of marijuana as a Schedule I drug under the Controlled Substances Act (CSA) for years. Yet marijuana continues to be a Schedule I drug, and it remains unclear how the regulatory framework for CBD would be impacted if marijuana were to shift to a Schedule III drug.

The only agency that presently seems intent on regulating CBD is the Drug Enforcement Administration (DEA).

According to a letter from the DEA issued in February 2023, two prevalent synthetically derived CBD subtypes, Delta-8-THC and Delta-9-THC, are considered controlled substances under the CSA and are illegal for recreational use, even though naturally derived Delta-8 is not a controlled substance under the CSA. This letter did not clarify whether or how the DEA will begin enforcing this interpretation of the CSA. It also stands in stark contrast to President Biden’s prior requests for the Secretary of HHS and the Attorney General to review marijuana’s classification as a Schedule I drug under the CSA, as well as his decision to pardon thousands of people convicted of marijuana-related crimes that occurred on federal land.

State CBD Regulations

As is often the case in the face of federal inaction, the states have stepped in and implemented their own legislation to regulate the CBD industry. While these efforts do set some standards for the industry, they also lead to a patchwork regulatory scheme, making it more difficult for industry leaders to ensure that they comply with the law in every jurisdiction in which they operate. The emergence of a varied regulatory scheme across multiple states also requires distributors and manufacturers to carefully track legislation as it proceeds in numerous jurisdictions to ensure that they protect their interests in a continuously evolving regulatory landscape. For example, in the last year, numerous states, including Tennessee, passed legislation curtailing how distributors can sell CBD and who can purchase it. On the other hand, other states, including Maryland, have moved toward legalizing marijuana more generally, signaling a broader acceptance of all cannabis products, including, presumably, hemp-derived CBD products.

Unless and until the federal government implements a comprehensive regulatory scheme, it will continue to be imperative for industry stakeholders to pay close attention to how each state approaches regulation.

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About the C0-Author

Jessalyn H. Zeigler is a member at Bass, Berry & Sims PLC where she Chairs the Product Liability and Torts Practice Group and works closely with clients facing claims related to products liability, crisis management, environmental, health & safety, or general business litigation. Jessie  has successfully defended class action claims, multi-district litigation (MDL), and single-action claims for various types of product and mass tort cases across the country. She can be reached at [email protected].