Episode 56: 2021 Regulatory Predictions



Joe: On this episode of the "CBD University Podcast," we continue our look into the year ahead. What does 2021 have in store on the regulatory and compliance side of the CBD industry? Predictions from some of the changes retailers and consumers may see when it comes to CBD products, this is the "CBD University Podcast," and it starts right now.

I'm Joe Agostinelli, host of the "CBD University Podcast." If you are a returning listener, welcome back to our podcast. If you are a new listener, we are glad you found us on your favorite platform of choice. Don't forget, full video episodes of the "CBD University Podcast" available on the Global Widget YouTube channel and the YouTube channels of our brands -- Hemp Bombs and Nature's Script.

On a previous episode not too long ago, we talked about some predictions for 2021 with "Hemp Industry Daily," actually the previous episode, the first one for 2021. Now, we welcome back to our podcast in a brand-new location in Mexico, we welcome back industry advocate and attorney Rod Kight. Ironically, this is now the second podcast that we've done with somebody in Mexico, but Happy New Year and welcome back to the podcast.

Rod: Yeah, thanks, Joe. It's always good to be here. I'm excited about talking about 2021 and CBD. That's for sure.

Joe: Now, a year ago, we hedged on our predictions, so for 2020, and in all fairness, I don't think anybody in the world predicted 2020 accurately.

Rod: That's true.

Joe: We can certainly push that aside. But before we get into our top predictions, I think I've got one prediction for you. 2021, you're going to be a very busy person and, all kidding aside, 2021 is shaping up to be a very busy year in regulatory and compliance, when it comes to CBD, is it not?

Rod: It absolutely is. I think everyone in the CBD...really busy this year. Yeah, exactly. 2020 was the year that just took a left turn, COVID and everything else. 2021 is definitely gonna be the year that things get back on track, and I think really expand, for sure.

Joe: When we talk about some of the happenings in 2021, obviously, when we talk about regulatory and compliance, it all starts at the top, and that's with the FDA and the USDA, correct?

Rod: That is correct. Yes, the federal agencies that regulate... I want to talk about one more agency here in a moment, but the FDA and the USDA right now are the two primary agencies concerned with regulating hemp and CBD products. And to be clear, the USDA actually regulates hemp production, not the products. Once it's harvested and moves into the second stage of production on the supply chain, the USDA says, "Our jurisdiction is out," it moves into the FDA and other federal and regulatory agencies' jurisdiction and purview.

Joe: You know, this is a very good point to make, Rod. In addition to the FDA, the USDA, those are the two organizations, I think, most people are familiar with because they're always in the news, but back in December, another organization made some headlines with some warning letters that we've seen from time to time. What organization is that?

Rod: That's the FTC, the Federal Trade Commission. The FTC issued several letters to CBD manufacturers, warning them, and also sanctioning them, about medical and health claims that they have made. The FTC has previously, to that, signed on with the FDA about its warning letters, but this is the first time we've seen the FTC act on it. And notably, it not only called out several different companies by name and talked about the claims that they made, they were unfounded, but it also identified the specific corporate officers themselves and their individual capacities, and it's sanctioned most of the companies monetarily, fines going from $20,000 to $85,000 in one case.

Joe: We talked about making claims in the industry back on some podcast episodes in 2020. Obviously, the big story for the last year was the pandemic, and hopefully, as we emerge from that in 2021, what are some regulatory and compliance headlines and maybe predictions that folks should be on the lookout for in the year ahead? And ironically, we talked about Mexico, that's one of the areas where things could be changing as we get into the new year.

Rod: Mexico is poised to legalize cannabis in a very big way, and that's gonna include legalizing hemp products and CBD products. As we speak right now, we don't know what those regulations are gonna look like. What we do know is that they're coming and they're coming fast.

Additionally, there had been some important changes in Europe with respect to CBD. It is no longer deemed to be a narcotic, very important case coming out of the EU from France, and the novel food applications are starting forward. Again, all these are topics that we've discussed or that topics that stand on their own, but we're gonna begin to see CBD products more in Europe, and that's just gonna expand around the world. So I think the international piece is gonna be big.

Additionally, I think we're gonna see a lot more action with the FDA. The FDA's been sitting on its hands. At least, from our perspective, with respect to regulating CBD and really providing some industry guidance, I think 2021 is the year we're finally gonna see the FDA come out in earnest and regulate CBD. And that may come directly from the agency itself or may come from Congress passing a bill into law that mandates that the FDA treat CBD in certain ways. So I think that's gonna be a biggie.

Also, another biggie, and I'm not sure if it's gonna happen, but I think it has more of a chance than it ever has, we may see the THC levels in hemp being increased from 0.3% to 1%. Rand Paul from Kentucky passed a bill at the end of the term of 2020, or submitted a bill, I should say, that would increase the THC levels and make some important changes with respect to testing and some other components of hemp production. That bill is not gonna be able to pass, just it was more of a symbolic type of a gesture, but we certainly have hope that that bill or a similar bill will be resubmitted in the 2021 session and passed by Congress. It's a much needed change.

So lots of interesting and exciting things happening in the hemp and CBD industry for sure this year.

Joe: On some of the regulatory and compliance-type changes and different...either it's new guidance, new regulations, different guidelines, what effect does that have on the industry as a whole, and we've talked about this, the thousands of companies who have entered the industry?

Rod: Well, I think the effect that it has is that it's going to keep out some of the rogue players, the companies that don't want to play by the rules. They're in it for a fast buck. And it's also going to increase the quality of the products, because you have the participants in the industry who know how to abide by the regulations, who put out quality product, and who are in it for the long term, those companies are going to put out quality products that consumers can trust, and they're gonna be in it for the long haul.

So I think, you know, a lot of times, you hear in the industry, "Oh, more regulation, more regulation, that's the last thing we need." But if you think about all sorts of products, whether they be food products on the shelf, dietary supplements, topical products, they're all subject to the FTC, they're all subject to FDA, and any number of other federal regulatory agencies, and that's why we can trust them. So certainly, over-regulation is something that we do not want. But in the CBD space, we would really like some better guidance than we've got to date, for sure.

Joe: Anything else folks or even retailers should be on the look out for as we get into 2021 from what may be coming up in the industry?

Rod: Yeah, i just want to circle back around and talk about the FTC and these claims. You know, making medical and health claims has been sort of a bane of the CBD industry for the last four or five years now. And I've blogged about it and talked about it. You've talked about it. It's been a big piece of the industry, but it continues unabated. And so I think that we're gonna continue to see the FDA crack down on companies that are making unwarranted health claims, and the FTC is gonna do the same thing.

And to be clear, CBD does appear to have all sorts of health and medical benefits. You can read all sorts of peer-reviewed studies that CBD does this, it mitigates that, so on and so forth. But that's not the point. When it comes to the FDA and the FTC, there has to be some real substantial evidence and some hoops that you have to jump through in order to make those types of claims. And unless you've done that, just don't make them.

And so if you see a company out there that's making medical claims, maybe that's one to stay away from because they might be doing other things that are not proper as well.

Joe: You know, does a story like that come up...does it become more prevalent at a time where we're at now where so many people, and even just outside of CBD, so many people have come out with products that cures this, it cures that, and maybe the FDA and the FTC are trying to get ahead of this in the CBD landscape?

Rod: Yeah, I think so. You know, a lot of products that are geared towards health, particularly natural products, the FDA and the FTC see this type of thing all the time. But CBD has been such a big product category. It has risen from being almost unknown to everyone's grandmother knows what CBD is now in a very short amount of time, and so I think you're exactly right. The FDA and the FTC want to stay ahead of this and try to reign it in as much as possible.

Joe: Well, Rod, I know you're busy down in Mexico. We wish you continued success throughout 2021. I have no doubt we'll be getting together soon for another podcast episode and hopefully, not too much further down the road, maybe in person rather than another remote one.

Rod: I would love that. It's always good to talk with you, Joe.

Joe: Rod Kight, industry advocate and attorney, my guest on this episode of the "CBD University Podcast."

And I thank you for tuning into this episode of the "CBD University Podcast." If you have not yet done so, hit that Subscribe button on your favorite podcast platform of choice or on our YouTube channel, that's the Global Widget YouTube channel, or the YouTube channels of our brands -- Hemp Bombs and Nature's Script. No matter where you hit the Subscribe button, notifications each week when new episodes are published.

I'm Joe Agostinelli, the host of the "CBD University Podcast." Thanks for tuning in.

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