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.