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 & Song, PLLC and Gateway Proven Strategies
(GPS.Global). You can read his full bio at: MJBusinessAttorneys.com.