New State Hemp Laws Will Challenge Expansion of National CBD Brands

The 2018 Farm Bill was expected to open the CBD market and provide legal certainty that CBD was not cannabis. The victory was short. The state’s implementation of the 2018 Farm Bill and the FDA’s stance on CBD has increased the regulatory risk associated with the inter and intrastate sale of CBD products.

The 2018 Farm Bill and the FDA left it to the states to figure it out the next steps in developing a retail CBD market. This state-by-state approach has made a complicated situation even more complicated.

As each state enacts legislation to implement the 2018 Farm Bill, the state regulators and law enforcement agencies are left to struggle with how CBD should be classified and regulated. The good news is that the states are affirmatively asserting positions with regards to the legal sale of CBD oil. The bad news is that the answers vary greatly with little uniformity from state-to-state. The end result is a patchwork that prevents a national approach to the manufacture and distribution of CBD products.

We have analyzed each state’s requirements with regards to the retail sale of CBD products. Some states treat CBD as cannabis, as they have assumed the FDA’s position that it is a drug, and require the products to be sold through dispensaries. Other states require that the retail stores selling CBD and the products be registered with the state. Finally, some states permit the legal sale of CBD products without restrictions.

It is clear that CBD manufacturers and retailers will soon be subject to numerous additional regulations related to manufacturing standards, testing and packaging, and labeling. This next year will be a challenge for national brands that are aggressively seeking market share.

We have provided summaries below of how 9 different states are currently regulating the retail sale of CBD products.

California: California assumes the FDA position on CBD, which legislation is expected to change during this legislative session. CBD may only be purchased from a cannabis dispensary and may not be added to food or beverages.

Texas: There are significant limitations on the importation, manufacture, and sale of consumable hemp products including CBD. Texas will not permit CBD to be manufactured in the state until the hemp plan is approved by the USDA. Retail stores may continue to sell CBD that was in its inventory prior to the effective date of the Department of Health’s rules. Imported CBD must be manufactured in accordance with the state’s hemp plan that has yet to be approved by the USDA

Kentucky: Hemp-derived CBD products are legal in Kentucky pursuant to 40 KRS 218A.010(27)

Louisiana: Retailers must register with the Louisiana Office of Alcohol and Tobacco Control and comply with packaging and labeling requirements.

Maine: Maine enacted legislation that allows CBD to be added to food and beverages in the state.

Nebraska: The Nebraska Hemp Farming Act removed hemp extracts from the state’s Controlled Substance Act. The state’s attorney general has not updated prior opinions. The state is still analyzing the impact of the new legislation on the retail sale of CBD oil.

North Carolina: The sale of smokable hemp is prohibited as it is considered to be marijuana. The state sent a letter to manufacturers and retailers in February indicating that it assumes the FDA’s position on CBD and considers it a drug that may not be added to human food or animal feed.

Ohio: The possession of CBD oil is illegal unless purchased from a medical marijuana dispensary. Retail sales are limited to medical marijuana dispensaries.

South Carolina: Attorney General issued an opinion that questions the retail sale of CBD. Stores are pulling CBD products due to raids as a result of AG’s opinion.