David Oxenford - Color

David Oxenford

By: David Oxenford, Wilkinson Barker Knauer LLP

In the last few months, we probably have had more questions about advertising for CBD products than any other topic. At this point, CBD products seem to be sold in nearly every state in the country, and discussions about CBD’s effectiveness seem to be staples on national and local television talk programs. Broadcasters naturally ask whether they can advertise these seemingly ubiquitous products. Unfortunately, the state of the law on CBD at the current time is particularly confusing, as discussed in this article.

First, a primer on terminology. CBD, short for cannabidiol, is a derivative of the Cannabis sativa plant. Industrial hemp is produced from portions of a strain of the same plant containing low concentrations of the psychoactive chemical known as THC, or tetrahydrocannabinol, and hemp can also be used to produce CBD. In contrast, recreational and medical cannabis, derived from the dried flowers, leaves, and stems of the female Cannabis plant (which we’ll call marijuana to distinguish it from hemp), contains higher concentrations of THC and lower concentrations of CBD. Preliminary clinical research has shown the potential benefits of using CBD to treat anxiety, cognition, movement disorders, and pain, and certainly these properties are attributed to the substance in popular culture. But is it legal?

Although recreational marijuana use is now legal in 10 states and the District of Columbia, and medical marijuana is legal in 33 states, it remains an illegal Schedule I drug under the federal Controlled Substances Act. Possession and distribution is a felony under federal law, as is the use of radio, TV or the Internet to facilitate that distribution. Because marijuana is still illegal under federal law, we have written repeatedly that it remains a product that broadcasters are taking significant risks in advertising – even if it is legal in a particular state for medical or recreational purposes (see, for instance, our articles here and here). But now CBD is in a different category, at least if it is hemp-derived CBD with low levels of THC.

The Farm Act, passed in late 2018, removed hemp (and thus hemp-derived CBD) from Schedule I, so its possession is no longer illegal under federal law as long as the THC level is less than 0.3%. But CBD derived from marijuana remains an illegal Schedule I drug, so it is important to know how the CBD is being produced, as it helps determine whether the CBD is legal or illegal. Making the law surrounding CBD even more confusing is that, while there is no longer a federal ban on the possession of hemp-derived CBD, there is not yet a legal mechanism for widespread commercial production of CBD, except in limited circumstances, and whether the production fits under these limited circumstances is difficult to discern when a broadcaster is approached to advertise a CBD product. Moreover, other issues must be weighed in any advertising decision.

The 2018 Farm Act sets out a process for the legalization of the production of hemp products, including CBD. But, under the Act, any industrial manufacture of CBD products can only be done through state plans to regulate the sale and distribution of these products, or pursuant to a federal plan to be adopted by the US Department of Agriculture. The state plans also must be approved by the USDA before production begins. At least two states have filed requests with the USDA for approval of their state plans. Unfortunately, the USDA has not yet adopted rules for approving these programs. It held a “listening session” earlier this month on proposed rules for processing requests for approval of state plans (see the transcript of the listening session here), but it does not seem likely that rules will be adopted until much later this year, as there was much discussion during the session of trying to have the rules ready for the 2020 growing season. But there were also calls for quicker action, and more clarity on the current state of the law, including one from a representative of a trade association for supermarkets and drug stores, which face the same issues as do broadcasters – is it really legal to sell the CBD products that are already on the market?

Until the USDA has adopted rules for processing state plans, and has approved some of those plans (as well as a federal plan for states that do not act), the only manufacturing of CBD that is permitted is production authorized under a prior Farm Act from 2014. The 2014 Act only permitted hemp production projects authorized by a state or a university as part of a research program, and no widespread commercial exploitation of CBD under the 2014 Act was supposed to happen except under pilot programs as part of a research project. From some of the testimony given at the recent USDA listening session, it appears that some of the state plans for production on an experimental basis allowed for some serious operations – one company representative talking about how it had over 200 employees producing legal hemp products pursuant to one of these supposedly experimental state projects. While federal authorities may not have envisioned such large commercial production under the 2014 Act, it does not appear that there have been any federal efforts to reign in these producers.

The reason for regulatory oversight of hemp production by the USDA and the states appears to be to make sure that consumers are actually getting what they think they are buying, and also to make sure that producers take steps to reduce the risk that marijuana products (or hemp products with greater than .3% THC) become available for public consumption. See the USDA statement of principles here. In recent years, there have been numerous articles and statements from regulators suggesting that CBD products are often not what they claim to be – some allegedly having more THC than advertised, others having little or no actual CBD. The FDA is supposed to hold hearings in April about its authority over CBD, and part of that process seems to be geared toward gathering evidence as to what products are safe and what limits to put on the purity and potency of such products, and the disclosure of their contents.

Some broadcasters, after (1) discussion with their counsel, (2) investigation with the advertiser, and (3) some degree of reasonableness (avoiding sales that are done in some dark garage or from the back of a truck on one hand, to possibly being more comfortable with products sold at a big national retailer where there is some expectation that the advertiser has done some of its own due diligence), may be able to satisfy themselves about the question of whether the CBD product that they are being asked to advertise was legally produced and is otherwise lawful. After all, there are plenty of products being advertised on the radio where the broadcaster has never thought to inquire as to whether the product was legally manufactured. But that does not end the broadcaster’s consideration as to whether to run a CBD ad. In fact, there may be far more serious questions to consider, given that a particular type of CBD may be illegal under federal law.

Even though the USDA is moving to implement the provisions of the Farm Act that legalize the production and commercial distribution of hemp products with low THC levels, the FDA retains jurisdiction to prohibit uses of any cannabis product as a pharmaceutical product or food additive. Under this authority, the FDA has made clear that it still prohibits the sale of CBD (hemp-derived or otherwise) as a food additive or oral supplement (see its statement here, issued after the adoption of the 2018 Farm Act). In fact, this year, after the adoption of the Farm Act, the FDA has raided stores selling CBD as a food additive, and health authorities in several states have followed suit. As noted above, the head of the FDA announced in recent Congressional testimony that it would hold hearings on CBD, but he soon thereafter announced his resignation, leaving that timetable up in the air. Edibles and dietary supplements containing CBD will likely be a principal topic that will be considered at the FDA hearing whenever it is finally held.

Until the FDA acts, and regardless of what the USDA does with respect to hemp production, it seems to still be a federal offense to sell any CBD product that is to be ingested – whether it is as a dietary supplement or as an additive to foods and beverages – unless the FDA has approved those products. Late last year, the FDA approved the use of a CDB-based product (sold under the brand name Epidiolex) as a drug to control epilepsy seizures, but that is a very limited exception at this point. Note, again adding to the confusion, the FDA has also approved the use of certain hemp products in food, but only where they have negligible levels of CBD and THC (see, e.g. the FDA notice here). The approval of hemp as an addition to foods confuses many in the public, as hemp is often seen as the equivalent of CBD (or marijuana) so, when they see it advertised in foods or beverages, they believe it to the be the same as CBD. The FDA, however, sees these products as legally different.

Similarly, both federal and state authorities warn about making unproven health claims about any of these substances. The FDA and FTC have informally suggested that they may be concerned about any health claims made for any CBD products not backed by academic studies. With these warnings from government agencies about CBD products that make health claims or which can be ingested, and the broadcaster’s status as a federal licensee, it would seem as if steering clear of the promotion of products that are still prohibited under federal law would make sense.

But even if a broadcaster can satisfy itself that the CBD comes from legal sources, is not to be ingested, and does not make unverifiable health claims, this does not end the inquiry. The various states have differing laws on hemp products generally and CBD specifically. Some states still have not liberalized their laws along the lines of the 2018 Farm Act, and thus are still taking a hard line on any sales of hemp or CBD. Others, even including some states that have legalized recreational or medical marijuana, have rules that appear more restrictive of hemp and CBD products than of “legal” marijuana. Others have already amended their laws to effectively legalize these products. Even then, most states restrict sales to minors (and some specifically address advertising restrictions), so it would make sense for stations to observe the same kinds of rules that they do for alcohol advertisements, by keeping ads out of programming where a high percentage of the audience may be under the legal age (see our articles here and here). Stations need to do a thorough check of their state’s laws and the regulations of their state agencies to see what other rules might apply to these sales.

After all that, we are back to where we began. There are no clear answers on CBD advertising yet. Consider these factors, consult with your own attorney and give some careful thought as to whether or not to accept CBD advertising on your station, and watch for developments as they occur in the coming months.

David Oxenford is MAB’s Washington Legal Counsel and provides members with answers to their legal questions with the MAB Legal Hotline. Access information here. (Members only access).

There are no additional costs for the call; the advice is free as part of your MAB membership.