With the ink on the president’s signature barely dry, the commissioner of the U.S. Food and Drug Administration (FDA) – Dr. Scott Gottlieb – issued a statement letting everyone know that the agency is aware of the implications of the Agriculture Improvement Act of 2018 (a/k/a the Farm Bill). As we reported last month, CBD derived from hemp may not be “marijuana” any longer, but the laws that the FDA enforces continue to prohibit (at least, in the FDA’s view) the manufacture and distribution of foods and dietary supplements containing CBD. Dr. Gottlieb took this opportunity to reiterate the agency’s position, noting that “it’s unlawful under the [Federal Food, Drug and Cosmetic Act] to introduce food containing CBD or THC into interstate commerce, or to market CBD or THC products as, or in, dietary supplements, regardless of whether the substances are hemp-derived.”

The commissioner also indicated, however, that the agency will initiate a process for reexamining current policy, stating:

In addition, pathways remain available for the FDA to consider whether there are circumstances in which certain cannabis-derived compounds might be permitted in a food or dietary supplement. Although such products are generally prohibited to be introduced in interstate commerce, the FDA has authority to issue a regulation allowing the use of a pharmaceutical ingredient in a food or dietary supplement. We are taking new steps to evaluate whether we should pursue such a process. However, the FDA would only consider doing so if the agency were able to determine that all other requirements in the FD&C Act are met, including those required for food additives or new dietary ingredients.

Is significant change imminent? Although some have suggested that it is, we think the answer is hazy. Dr. Gottlieb’s statement noted only that the agency would hold a public meeting at which stakeholders could share their experiences and challenges with CBD-containing products. Neither a timetable nor any further actions were described. In the meantime, the FDA will continue to initiate enforcement actions based upon previously stated enforcement priorities. Any change in the near future seems unlikely.

What does this mean for banks and payment processors? Our previous recommendations still hold true. Confirm the legality of your customer’s business, conduct thorough due diligence in accordance with best practices followed for managing higher-risk customers, and maintain heightened monitoring requirements. For further details, please review our initial posting on the Farm Bill.

© 2019 Venable LLP. Using, distributing, possessing, and/or selling marijuana is illegal under existing federal law. Compliance with state law does not guarantee or constitute compliance with federal law. This informational overview is not intended to provide any legal advice or any guidance or assistance in violating federal law.

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Todd A. Harrison

Todd Harrison, co-chair of Venable’s FDA Group, guides clients through the myriad government regulations associated with food and drug labeling and marketing. Working extensively in the areas of food and dietary supplement safety, labeling, and advertising claims, Todd helps clients in the consumer…

Todd Harrison, co-chair of Venable’s FDA Group, guides clients through the myriad government regulations associated with food and drug labeling and marketing. Working extensively in the areas of food and dietary supplement safety, labeling, and advertising claims, Todd helps clients in the consumer products, drug and medical device, and dietary products industries comply with government regulations. He regularly achieves favorable results in defending clients against Federal Trade Commission (FTC) advertising complaints, enforcement actions, and prosecutions, and overcoming competitor challenges in courts and other fora.

Andrew E. Bigart

Andrew Bigart focuses his practice on helping bank and non-bank financial institutions navigate the federal and state regulatory environment governing payments, lending, and consumer financial services. Andrew provides regulatory and business counseling advice to clients across a variety of industries, including banks, payments…

Andrew Bigart focuses his practice on helping bank and non-bank financial institutions navigate the federal and state regulatory environment governing payments, lending, and consumer financial services. Andrew provides regulatory and business counseling advice to clients across a variety of industries, including banks, payments companies, money transmitters, broker-dealers, lenders, and trade associations. He counsels clients on regulatory compliance matters, contract negotiations, due diligence, federal and state examinations, and civil investigations and litigation before federal and state banking and financial institution regulators. Andrew has been recognized by Legal 500 and named to the Electronic Transactions Association’s Forty under 40 list.