Episode 25: State Regulations and CBD



Joe: On this episode of the "CBD University Podcast," we are going around the United States virtually, of course, state by state. The laws regarding the use of CBD can vary but why is this and how do some of the laws vary? Where are some of the most stringent laws and what could be on the horizon? We'll answer all those questions and more on this episode of the "CBD University Podcast" and it starts right now.

I'm Joe Agostinelli, the host of the "CBD University Podcast." If you are a returning listener, thanks for tuning in, and if you are a new listener, we are glad you found us on your podcast platform of choice. Don't forget, you can also watch full video episodes of the "CBD University Podcast" on our YouTube channel that's the Global Widget YouTube channel and the YouTube channels of our brands of premium hemp-derived CBD products depending on where you are listening or watching from. The laws regarding the use of CBD products can be different than someone else listening or watching in a different state. To sort this out and what it means for you, I welcome back our Chief Compliance Officer, Margaret Richardson, back to the podcast. Hi, Margaret.

Margaret: Hi. Great to see you. Long time.

Joe: I know it's been a couple of episodes ago, we had you here in studio and Rod Kight was remote as we continue to get through this a pandemic. We hope you're all staying safe and healthy. And, Margaret, let's first start off with this, is there any type of universal law regarding the use of CBD that is consistent across the United States?

Margaret: Certainly not in the U.S. The 2018 Farm Bill really focused primarily on the growing and cultivation of industrial hemp, that was really the focus of it. It did talk about extracts, which we take to be CBD or the isolate extracts that you get out of industrial hemp. But A, not all states have actually adopted the 2018 Farm Bill. It required that each state put in a plan that was then approved by the USDA. So at least three states don't have an approved plan right now. So in those three states, it's illegal not only to use CBD but also to even grow industrial hemp. The other states have adopted the 2018 Farm Bill and have approved plans, but, you know, where they fall on the spectrum really varies.

Joe: And then technically not permitted in food, beverage, and ingestible products, is that correct from what I have researched?

Margaret: That's correct under the FDA. So just to do a step back, of course, The Food and Drug Administration has the right to regulate any foods that people ingest. And then, of course, all the drug, OTC, you know, skincare products, etc. And the FDA has said, at least in guidance and letters. So they haven't put out a specific regulatory statement but they've said that CBD as an ingestible product is not approved as generally safe and effective. That is the magic words or people think of it is grass generally regarded as safe and effective, as what you can put into a food ingredient.

They have not yet listed CBD as a grass ingredient. So from their perspective, you know, they kind of take regulatory discretion. They know that products are out there. They often send warning letters. They've obviously visited a variety of different manufacturers and given them 483s, which is kind of a warning about what you're doing wrong.

But in contrast, some of the states actually positively allow CBD to be added to food. So for instance, we manufacture our products in Florida and Florida put into place last year, July of last year, the Florida food hemp statute which affirmatively allows you to put CBD in food. They regulate it similar to the FDA under GMP 117 but they say as long as you follow their rules in the state of Florida, you can add it to food. So it really does vary from not only the federal level but also state by state.

Joe: And which is a great transition to the next question. And we talk about that variation from state by state and that goes right back to the FDA and awaiting any type of official regulations, correct?

Margaret: Yes. Everyone is, you know, basically waiting on pins and needles, hoping, crossing their fingers. You know, given kind of where we are right now with all the other things that the FDA and everybody has to worry about, it's unlikely that this is something they're gonna get to right away which of course I understand prioritization purposes. We continue to actively monitor.

The FDA did come out with a recent report to Congress. One of the things that they did ask about specifically was additional safety data or any type of adverse event data that companies had collected. We are one of the few companies that actually hire third parties to monitor our pharmacovigilance or adverse event data. So we are actually in discussions with the FDA to how to get them that information because as we get them more information they can then make an informed decision about how to treat CBD under the current guidance.

Joe: And from state to state are there maybe different ways to categorize how different states classify CBD?

Margaret: Yes. I mean, you can kind of put it in four buckets. I mean, again, there's, you know, slight gray variations but there are clearly some states that say you can't do it, right? So South Dakota, Idaho, and Iowa are pretty clear about, they're not happy about it. We know that they will definitely take product off the shelves if they see it. They will call you and tell you, you know, we found your product.

Now, interestingly, South Dakota is looking at potentially adopting something. So again, one of the key issues that you as a distributor or a wholesaler have or a retail partner is making sure that your manufacturer is paying attention because literally, you know, the rules change all the time. So making sure that they're staying up with things. And then there's, of course, you know, a certain set of states that said, "Yeah, hey, it's legal here." And a lot of those states they will basically just have a statute that says kind of hemp and its extracts are okay. They may not go into a lot of detail but you also know you can look on their websites, they'll give you an idea of whether or not, or what enforcement actions they're taking. A lot of those states will also say that they don't allow it in food but it's okay for topicals, for instance. So again, that variation.

There's a large set of a third group of states that not only have they made it legal but they've given you a lot of rules to follow. So as I said, we're in Florida, the Florida food hemp permit was, you know, put into place. They have a large set of rules to follow so you can spend a lot of time reading them. There are a lot of other states that have done that. Colorado has done it, Washington has done it. You see some states coming online this year. So Virginia will be adopting a new set of labeling rules, New York will be adopting a new set of labeling rules, Texas will.

And again, every time they come up with that, then you gotta make sure like what are the rules? Are we following them? What do we have to change? So asking your partner, are you doing that? Do you have somebody that's actually read these things? How are you guys, you know, gonna keep up with it? And then, unfortunately, have a good group of states about 28 or so that it's kind of gray. They've adopted the 2018 Farm Bill, so they clearly want their farmers to grow hemp. The issue is you gotta have a market for it. And the market for the textile uses, which is kind of what most people envision is not that big and really the end-use these extracts are where the largest market sits. And so those groups, a lot of them, they don't have anything official on record but they will allow you to sell product in their state.

Joe: And we touched on it a little bit earlier around waiting on the FDA and obviously with everything else they have going on right now, we know that it's probably gonna be a little bit. Is there anything though on the near horizon, and we talked about some of the states that may be changing or whether it's, you know, making it more strict or less strict for consumers to get CBD products?

Margaret: I think you're definitely gonna see more regulation. What's kind of happened is, you know, CBD, originally in terms of approval and labeling rules really got started kind of out on the west coast. And what they did is they really adopted a lot of the medical marijuana labeling regs and kind of cut and paste those into CBD. And then as you've seen the different states kind of take on those labeling rules it's basically a very similar approach. We want all of this additional information so the consumer can really be aware of what it is that they're getting, they can understand, you know, how much CBD is in there, they understand, you know, what the THC level is, those kinds of things.

So we really see it getting stricter over time, not less strict. You actually have some states now requiring testing of food products to show shelf stability so that they know that the food will be safe. You know, if you eat the gummy in six months from now it's still the same kind of gummy that it was when we first made it. Makes sense, it's like any other food product, it should be shelf-stable. The consumer should know that when they buy the product that it's safe, that it's not gonna make them sick and, you know, what the nutrition facts labels are that people are actually doing the work to support that.

So I think you're gonna see it be stricter. If you look outside the U.S. just as a contrast, Canada has just implemented countrywide labeling guidelines that go into effect. And you'll see their labeling rules it's probably about 200 pages long of rules to how you have to label your products. They'll let you sell them but you got to do the work to support the label and whatever claims you're making on it. You also saw European groups use the Novel Foods Act and say, "Okay. You can sell CBD products, but it's a novel food. These are all the rules that you have to follow."

So again, I think as we look outside the U.S. everybody's going in that direction. It's being regulated under the existing guidance that exists for all those countries. So I think that's what the FDA is gonna do. They're gonna look outside and say, "Well, these other people are doing it. We can. You just have to follow all these rules."

Joe: And last point, as you were answering, I was just thinking on that with the labeling requirements. So products that are already out there, I mean, obviously consumers can get our products direct from us on our website or they may find us in one of, you know, over 25,000 retail locations nationwide. What happens when there are new labeling requirements? Do we have to go back and redo packaging? How does that, maybe talk a little bit about that process?

Margaret: Sure. So we definitely have to redo packaging. Typically the states give you a little bit of a grace period to get the new packaging out into the supply chain. We also work with our partners to do some additional kind of onsite label changes so that the label is compliant while it's still there on the shelf. In some cases, depending on if you can't do that we've definitely taken product back and replaced it, you know, with the updated labeling. But for the most part, the states do give you a period of time to adopt the labeling.

Again, the key is if you're gonna be a retailer that's carrying these products, you need to ask your manufacturer, do you have somebody in place that's constantly monitoring this? Because if I know like most states adopt rules for implementation in July, July 1 is the standard state implementation period. If I know that and I'm studying those rules like Florida is changing the rules, they've already published what the updated rules are gonna be. So I have from now until July 1st to make those changes. If I'm not paying attention, you're not gonna be compliant. And they let you know what those changes were gonna be. That's true with all the states. They all have that requirement.

So you have to ask your manufacturer, do you have somebody that knows about labeling and regulatory issues? Understands compliance? Are they actively monitoring? Do they have a program to update labels that are on the shelf? Do you have a way to make those changes effectively so that you're not stuck with non-compliant product at the retail level?

Joe: Sounds like we have a topic for a couple of episodes down the road as we talk about new labeling. So, perfect. I appreciate all the information on that. Well, Margaret, thanks for taking time as always to be a frequent guest on our podcast, but some great information for our customers.

Margaret: Great. I enjoyed it. Hope everyone is safe.

Joe: And once again, that's Margaret Richardson, our chief compliance officer here at Global Widget as we discuss the state by state laws regarding the use of CBD and how they may vary depending on where you are listening to this podcast from or watching this podcast from. That also serves as reminder and a cheap plug that if you have not yet done so, please subscribe to our podcast on your favorite podcast app of choice. You can also leave us a review if you would like to. We always enjoy reading our reviews good and bad, there's always room for improvement, but we want to hear what we're doing well and how you would like to see us improve.

Also, if you have your questions that we can answer on future episodes of the "CBD University Podcast" I invite you to email us at podcast@globalwidget.com. Once again, I'm Joe Agostinelli, the host of the "CBD University Podcast." Thanks for tuning in.

These statements have not been evaluated by the Food and Drug Administration. CBD products are unintended to treat, cure, or prevent any disease or condition. Always consult your personal physician about CBD and using CBD products. CBD should never be used by anyone under the age of 18. This podcast is not intended to provide legal advice regarding the legal status of CBD and CBD products.