As the U.S. market for CBD continues to skyrocket and companies competing in the cannabis space become more developed, they are being held back by the slow federal regulatory response at the Food and Drug Administration.
On Monday, July 22, the U.S. Food and Drug Administration sent a letter to Curaleaf Holdings CEO Joseph Lusardi warning that the company’s products were misbranded as having specific health benefits. The letter accused Curaleaf of “illegally selling unapproved products containing cannabidiol (CBD) online with unsubstantiated claims that the products treat cancer, Alzheimer’s disease, opioid withdrawal, pain and pet anxiety, among other conditions or diseases.” Curaleaf is the first multistate CBD company to receive such a notice from the FDA.
The CBD industry has not slowed despite the regulatory headaches that come with selling the products. A report from the Brightfield Group predicts $23.7 billion is U.S. CBD sales by 2023. CBD is being widely recognized for its versatile health benefits, and many companies have capitalized on this flourishing market. But the FDA’s requirements have not kept up with CBD’s popularity, and its lack of clarification on CBD products has created uncertainty and confusion.
As of right now, the only cannabis-based medication officially recognized by the FDA is the CBD oral solution Epidiolex, which is used to treat two rare forms of childhood-onset epilepsy. Outside of this narrow designation, companies cannot make claims that their cannabis products have medical benefits, particularly if they are being advertised as supplements or additives to food or beverages.
While cannabis operators navigate the shifting legal requirements surrounding their businesses, companies have had little choice but to move forward with sales and advertising without clear instruction from the FDA. The agency’s letter to Curaleaf sends a clear message to the industry that the FDA’s labeling requirements will still be strictly enforced, at least for the time being.
The FDA is currently in the process of reviewing CBD and plans to release a report on the progress around the fall of 2019. While the agency has taken a large step in formally recognizing CBD products as medically beneficial through the approval of Epidiolex, it may take time to complete the studies necessary to allow companies to advertise them as such. Until that time, CBD products will continue to sell at a rapid rate, but the industry will be hindered by the snail’s pace at which the FDA is reviewing its policies surrounding the sale and marketing of cannabis-related products.
After receiving the letter, Curaleaf scrubbed its website and social media of the health claims it made about its CBD products, saying that they completed “an extensive review of its website and social media platforms to remove all statements that FDA identified as non-compliant.”
I receive dozens of calls every day from potential clients wanting to get into the massively lucrative CBD industry. The overwhelming number of questions relate to how the market can be flooded with CBD products when the FDA does not currently allow the same. Most clients are disappointed with my advice of having to wait for the FDA to issue regulations in regard to CBD products, but now that the FDA has made a public example out of Curaleaf, I expect more to do just that.
Charles Feldmann is a Founding Partner and Head of International Cannabis at the law firm Feldmann Nagel Cantafio, PLLC and Gateway Proven Strategies (GPS.Global). You can read his full bio at: MJBusinessAttorneys.com.