Hemp Marketers Remain Bullish on CBD Following FDA Approval of Drug

Hemp advocates remain bullish about the market for CBD following FDA approval of a drug to treat seizures associated with rare and severe forms of epilepsy. But a regulatory attorney maintained “FDA has painted itself into a corner and must enforce.”

Josh Long, Associate editorial director, Natural Products Insider

July 10, 2018

12 Min Read
Hemp Marketers Remain Bullish on CBD Following FDA Approval of Drug

U.S. marketers of hemp-based cannabidiol (CBD) remain optimistic over their livelihood even after FDA approved a medicine that some regulatory and legal experts predict will spur FDA to take additional enforcement actions against companies selling the compound in dietary supplements.

In interviews, several hemp advocates said they remained bullish about the market for CBD following FDA approval of a drug to treat seizures associated with rare and severe forms of epilepsy.

Stuart Tomc is vice president of human nutrition with CV Sciences Inc., the national distributor of PlusCBD Oil, which is sold at health retail stores across the United States. He congratulated GW Pharmaceuticals plc and said he was excited FDA concluded CBD has medicinal benefits.

Many hemp leaders feel CBD can thrive in different product categories.

“We think that this is the evidence, the proof, the data, that the phytocannabinoids in hemp do have profound benefit,” Tomc said, commenting on FDA approval of GW Pharmaceuticals’ medicine, “and hopefully now we can have a more sober, adult conversation about which product, which market, which customer.”

Added Tomc: “Our hope is with this drug approval process that we’ll be able to see these clear lines that will be delineated: the pharma products, the health food store products (and) the farmer’s market products. They’re all different markets, different customers, and hopefully we’ll come to that realization.”

Commenting on FDA approval of Epidiolex, Bluebird Botanicals founder and CEO Brandon Beatty noted the hemp industry had for years anticipated the decision. “It doesn’t fundamentally affect us at all legally,” he said. He also suggested his operations aren’t impacted.

FDA ‘Must Enforce’

But regulatory attorney Todd Harrison maintained “FDA has painted itself into a corner and must enforce.”

If FDA doesn’t enforce, it will make “a farce” of its “interpretation of the Federal, Food, Drug & Cosmetic Act,” opined Harrison, a partner in the nation’s capital with Venable LLP, “and at some point, the agency has to be true to its word.”

Beginning in 2015—largely in reliance on clinical investigations conducted by GW Pharmaceuticals related to Epidiolex and another drug (Sativex)—FDA asserted on its website and in subsequent warning letters that CBD is excluded from the definition of a dietary supplement.

In a Q&A on its website updated last month, FDA also stated CBD can’t be sold in food and supplements for another reason under federal law—the compound has been approved as a drug.

If FDA took enforcement action, Harrison predicted the agency would move beyond a warning letter, such as seizing CBD-containing products.

The U.S. Hemp Roundtable, a coalition of hemp companies, retained a law firm, Amin Talati Upadhye LLP, largely to take legal action if FDA attempted to prevent the sale of CBD in products like supplements and food, Beatty said. Bluebird is a member of the U.S. Hemp Roundtable’s board of directors.

“We believe it [CBD] should be permissible in pretty much all FDA categories, including pharmaceutical,” he added.

When Was CBD Marketed?

The hemp industry has contested FDA’s position that CBD can’t be lawfully sold in a supplement. Companies have argued, for instance, that the compound was marketed in a supplement before GW’s clinical investigations commenced and were publicized.

“What came first, the drug or the food?” asked Steven Shapiro, of counsel to New York-based Rivkin Radler LLP, who is well versed on dietary supplement regulations.

The marketing of “hemp” in a supplement isn’t the relevant inquiry in making the above determination, the lawyer pointed out.

“When was the first product marketed that had the word ‘cannabidiol’ or ‘CBD’ on it?” Shapiro asked. “That is the article, not the hemp [but] the CBD.”

Another argument: the clinical investigations referenced by FDA in warning letters were not “substantial,” and consequently the drug-related exclusionary clause in the Dietary Supplement Health and Education Act (DSHEA) doesn’t apply to CBD.

In a letter in April to the Texas Department of State Health Services, the U.S. Hemp Roundtable expressed disagreement that GW’s clinical trials referenced by FDA “are in fact ‘substantial,’ as the trials were extremely limited in scope, and funding and the publication of these trials has been limited.”

Targeting Disease Claims

In a recent statement and during a conference call with reporters to discuss FDA approval of Epidiolex, FDA officials suggested they are going to continue to focus their enforcement efforts on companies that pose health risks to the public, such as marketers of products claiming to treat diseases like cancer and epilepsy.

“We’ll continue to take action when we see the illegal marketing of CBD-containing products with unproven medical claims,” FDA Commissioner Scott Gottlieb, M.D., said in a statement. “We’re especially concerned when these products are marketed for serious or life-threatening diseases, where the illegal promotion of an unproven compound could discourage a patient from seeking other therapies that have proven benefits.”

Regulatory attorney Rend Al-Mondhiry said FDA and its commissioner made clear that from the standpoint of enforcement, FDA is focused on CBD products that put consumers “at risk.”

“To the extent that companies are making disease claims, it appears that those would be a high enforcement priority for FDA, even outside the CBD context,” said Al-Mondhiry, senior counsel to Amin Talati Upadhye.

The lawyer added, “I don’t know that this is a signal that there’s going to be a new wave of enforcement action. I think that remains to be seen, and FDA will decide based on its resources.”

Impact of DEA Scheduling Decision

Potentially complicating matters for the natural products industry is the need for a scheduling action by the Drug Enforcement Administration (DEA) before Epidiolex can be prescribed by doctors and dispensed at pharmacies.

In its news release announcing FDA approval of Epidiolex, FDA described CBD as a “Schedule I substance because it is a chemical component of the cannabis plant.” During the conference call with reporters, an FDA official, Douglas Throckmorton, M.D., confirmed DEA will need to reschedule CBD into one of the schedules other than Schedule I under the Controlled Substances Act.

Schedule I drugs are defined as drugs with a high potential for abuse and no accepted medical use.

“This rescheduling decision, however, is unlikely to impact the legal status of dietary supplements containing CBD for three reasons,” said Paul Rubin, a corporate partner in Washington and member of the Healthcare Group with the law firm Debevoise & Plimpton LLP, in an emailed statement. “First, from an FDA perspective, controlled substance scheduling does not impact the DSHEA ‘exclusionary clause.’ Second, Epidiolex—and CBD—will remain a controlled substance. Third, based upon DEA precedent, CBD when used in dietary supplements may remain in Schedule I; DEA could limit the rescheduling decision to the drug product, Epidiolex, rather than CBD.”

Daniel Fabricant, Ph.D., previously led FDA’s Division (now an office) of Dietary Supplement Programs. He predicted future warning letters from FDA would advise marketers of CBD that they are selling an unapproved drug and Schedule I controlled substance.

Said Fabricant, president and CEO of the Natural Products Association (NPA): “Now, they’re not going to say, ‘We think you’re an unapproved drug. Given that that you’re not GW Pharma, you are an unapproved drug and you’re a Schedule I substance, so get the hell out of the pool.’”

Others contest the premise that CBD is a Schedule I substance, so long as it’s sourced from hemp cultivated pursuant to the 2014 farm bill (otherwise known as Section 7606 of the Agricultural Act) or comes from parts of the plant like the mature stalk exempt from the definition of marijuana under federal law.

“As long as hemp is compliant with the (2014) farm bill, it is 100 percent exempt from the CSA (Controlled Substances Act),” Beatty of Bluebird Botanicals said.

Bob Hoban is a Denver-based attorney who sued the DEA on behalf of the Hemp Industries Association and other petitioners to invalidate a new drug code for marijuana extract. Although a three-judge panel of the U.S. Court of Appeals for the Ninth Circuit denied the petition on April 30, 2018, Hoban characterized the ruling as a “homerun” in hindsight.

Cannabinoids like CBD, he said, have never been scheduled. Moreover, he referenced language from the Ninth Circuit’s decision in which the court observed, “The Agricultural Act contemplates potential conflict between the Controlled Substances Act and preempts it.”

“That makes it very clear that hemp-derived products—including cannabinoids—are not controlled substances at all,” asserted Hoban, a managing partner at Hoban Law Group, a firm focused on cannabis business issues.

The lawyer added, “Even though it’s a Ninth Circuit decision, it’s … binding on the DEA, and if the DEA comes out and says that hemp or hemp-derived cannabinoids are controlled substances, then there’s a great opportunity to pursue contempt against the DEA because they’re not respecting the court’s order that they failed to appeal.”

The Ninth Circuit denied the hemp industry’s petition largely based on principles of administrative law. For the most part, it did not examine the substantive issues raised by the petitioners challenging DEA’s marijuana extract rule.

The U.S. Hemp Roundtable acknowledged CBD sourced from marijuana would be deemed a Schedule I controlled substance. But in its letter to Texas authorities, the U.S. Hemp Roundtable said that “CBD derived from source material other than marijuana would not fall under the CSA.

“Therefore, synthetic CBD, CBD derived from industrial hemp, and CBD found anywhere else in nature (i.e., flaxseeds) are not subject to the CSA,” added the letter, which was signed by Brian Furnish, president of the U.S. Hemp Roundtable, and two attorneys, including Al-Mondhiry and Jonathan Miller of Frost Brown Todd LLC.

The Epidiolex-related issue before DEA, Hoban said, “presents a new topic for brand new scheduling, or because it’s derived from marijuana, it’s already scheduled.”

A DEA spokeswoman did not respond to requests for comment related to Epidiolex and CBD.

GW’s Patents

FDA approval of Epidiolex, Hoban said, “eliminates any philosophical or foundational argument that somehow, someway cannabis doesn’t have medicinal benefits, so in that respect it’s a good thing.”

But, Hoban added, “It remains to be seen how this is going to impact, if at all, the industrial hemp industry.”

He noted GW Pharmaceuticals has patents on Epidiolex.

“Now, for the first time, GW is close to selling this product,” Hoban said. The lawyer anticipated patent litigation if the company doesn’t realize its projected sales and if a company is infringing on its patents by “creating the exact same formula.”

GW Pharmaceuticals has told media outlets—including The Cannabist—it doesn’t intend to interfere with other hemp and marijuana businesses selling CBD, but some people are skeptical of the biopharmaceutical company’s intentions.

“Who invests that kind of money in patents and doesn’t expect to enforce them?” asked Veronica Carpio, founder of Grow Hemp Colorado, which describes itself as an “open source educational industrial hemp” organization.

Naturally Occurring Levels of CBD

Many distributors of CBD-containing supplements claim their hemp extracts contain a full spectrum of cannabinoids sourced from hemp, distinguishing them from GW’s medicine.

“What the FDA approved was a specific formulation,” Hoban remarked. “It’s not about CBD. It’s about the specific formulation for the specific purpose from a patent and drug approval perspective.”

However, increasing the CBD content in supplements beyond naturally occurring levels in the hemp plant would raise a red flag for FDA, some regulatory experts said.

Red yeast rice, they observed, contains low naturally occurring levels of a pharmaceutical ingredient: monocolin K, which is chemically identical to lovastatin, the active ingredient in the drug Mevacor. FDA was immersed in years of litigation, and ultimately prevailed, in a case over whether the manufacturer of a red yeast rice supplement was selling an unapproved new drug.

“With red yeast rice, if it’s at the effective dose, it’s very easy for FDA to take an enforcement action and say, ‘Look, this is an effective dose of a known drug,’” Fabricant observed.

Similarly, FDA could take enforcement action against CBD supplements and hemp extracts, he added.

“I think with CBD, what remains to be seen is what that level’s going to be,” Fabricant said. “Is it going to be the effective dose, or is it going to be lower because it’s a Schedule I substance?”

Recommended the former FDA supplement official: “Your (specifications) better be as close to zero as you can get for THC [the psychoactive compound in marijuana] or CBD in the product.”

Asked about steps companies can take to mitigate their risks of FDA enforcement action, Venable’s Harrison recommended companies “truly sell a broad-spectrum hemp” product whose quantity of CBD doesn’t exceed the naturally occurring amount found in hemp.

In an interview earlier this year, Martin Lee, co-founder and director of the nonprofit Project CBD, suggested hemp plants grown in Colorado, Kentucky and Oregon contain between 8 and 12 percent CBD.

Carpio, who said she was one of the first hemp farmers in the state of Colorado since the end of prohibition on the crop, believes FDA could set limits on the amount of CBD that could be sold in a natural product.

“We’re in unknown, uncharted territory at this point,” she said. “Pandora’s box has been opened. It cannot be closed.”

Litigation, Safety Considerations

If the industry does eventually find itself in court with FDA, Beatty noted the legal battle could endure for several years; and it’s possible CBD would continue to be sold in products like food and dietary supplements while the case worked its way through the judicial branch of government.

“Hundreds, if not thousands (of companies), could potentially be involved in this,” he said. “We ultimately think we would win the case, and that CBD would be determined a permissible ingredient in court.”

Meantime, Tomc of CV Sciences stressed companies should be focused on proving CBD is safe for human consumption.

More than three years ago, CV Sciences began the process to establish that its ingredient is GRAS, or generally recognized as safe, he said. While the company has not completed the process of an independent GRAS conclusion, its toxicology work on its raw base material to make PlusCBD Oil was recently published in the Journal of Toxicology.

“We think that what we’ve done … and what everyone else needs to do is to spend the money to take this ingredient that we’re debating and prove that it’s safe in the way that we’re using it,” Tomc said. “And that needs to be the full focus of the entire industry right now because we’re waiting for someone on high to come here to make a decision in the most nuanced, vexing, complicated regulatory conversation in the history of nutrition.”

About the Author(s)

Josh Long

Associate editorial director, Natural Products Insider, Informa Markets Health and Nutrition

Josh Long directs the online news, feature and op-ed coverage at Natural Products Insider, which targets the health and wellness industry. He has been reporting on developments in the dietary supplement industry for over a decade, with a focus on regulatory issues, including at the Food and Drug Administration.

He has moderated and/or presented at industry trade shows, including SupplySide East, SupplySide West, Natural Products Expo West, NBJ Summit and the annual Dietary Supplement Regulatory Summit.

Connect with Josh on LinkedIn and ping him with story ideas at [email protected]

Education and previous experience

Josh majored in journalism and graduated from Arizona State University the same year "Jake the Snake" Plummer led the Sun Devils to the Rose Bowl against the Ohio State Buckeyes. He also holds a J.D. from the University of Wyoming College of Law, was admitted in 2008 to practice law in the state of Colorado and spent a year clerking for a state district court judge.

Over more than a quarter century, he’s written on various topics for newspapers and business-to-business publications – from the Yavapai in Arizona and a controversial plan for a nuclear-waste incinerator in Idaho to nuanced issues, including FDA enforcement of the Dietary Supplement Health and Education Act of 1994 (DSHEA).

Since the late 1990s, his articles have been published in a variety of media, including but not limited to, the Cape Cod Times (in Massachusetts), Sedona Red Rock News (in Arizona), Denver Post (in Colorado), Casper Star-Tribune (in Wyoming), now-defunct Jackson Hole Guide (in Wyoming), Colorado Lawyer (published by the Colorado Bar Association) and Nutrition Business Journal.

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