Industry Trembles After FDA Cracks The Whip

By Steve Schain

Powered by a $6.1 billion annual budget and prosecutorial alliance with the Federal Trade Commission (“FTC”), last month the U.S. Food and Drug Administration (“FDA”) simultaneously charged three cannabidiol (“CBD”) companies with violating the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. 301, et seq. (“FDA Act”) and Federal Trade Commission Act, 15 U.S.C. §§ 41-58 (“FTC Act”) by: (1) placing “‘unapproved’ and ‘misbranded’ human drugs and adulterants” and “unapproved and unsafe animal drugs” into interstate commerce; and (2) making false or unsubstantiated health claims.

A wildly popular nutritional supplement and food additive, oil-based hemp derived products like CBD racked up $1.1 billion in 2018 domestic sales and, after the Agriculture Improvement Act of 2018 (“Farm Bill”) removed them from the Controlled Substance Act, 21 U.S.C. §§ 801, Et. Seq (1970) and Drug Enforcement Administration’s (“DEA”) clutches, 2019 hemp production and sales exploded.

With the FDA “locked and loaded”, and billions of annual sales and “deal flow capital” hanging in the balance, the cannabis and hemp industries are questioning whether their products can be manufactured, sold and marketed without vending “adulterated” or “misbranded” food, drugs and cosmetics, or making “false or unsubstantiated” health claims.