Wendel Rosen Business & Legal Updates

Look Before You Leap – FDA Issues Warning Letters to Four Cannabis-Based Businesses Over Unlawful Product Claims

Photo of a penguin leaping into water, while at the same time, a whale came out of the water with its mouth open

“Talk About Look Before You Leap!” by Rikki’s Refuge/flickr.com (CC-BY-2.0)

While the phrase “Green Rush” has been applied to the recent relaxation of state and local laws pertaining to the sale of medicinal and recreational marijuana, perhaps a more apt phrase is: “Check yourself before you wreck yourself.”

On October 31, 2017, the Food and Drug Administration (FDA) issued warning letters to four companies for various violations of the Food, Drug & Cosmetic Act (Act).  The FDA asserted that Greenroads Health, Natural Alchemist, That’s Natural! Marketing and Consulting, and Stanley Brothers Social Enterprise LLC are accused of illegally selling unapproved new drugs, misbranded drugs, and making unsubstantiated claims about their effectiveness. (Copies of these letters can be found here.)

For those who are not familiar with such documentation, warning letters are issued only for violations of regulatory significance.  They are designed to obtain voluntary compliance with the Act.  However, other enforcement options that the FDA can employ include recall, seizure, injunction, monetary penalties – and (in egregious cases), prosecution.  Misdemeanor convictions, which do not require proof of intent to violate the Act, can result in fines and/or imprisonment up to one year. Felony convictions, which apply in the case of a second violation or intent to defraud or mislead, can result in fines and/or imprisonment up to three years.

Cannabidiol Products Are Illegal Under Federal Law

The products in question are all made with cannabidiol.  Cannabidiol (CBD) is a non-psychoactive cannabis compound that is deemed illegal by the U.S. Drug Enforcement Agency because it is found in parts of the cannabis plant that fall within the Controlled Substances Act definition of marijuana.  Greater clarification of the DEA’s position can be found here.

The FDA, however, did not rely upon the DEA’s viewpoint in reaching its conclusion regarding the CBD products at issue.  Instead, the FDA based its warnings on the express provisions of the Act, which the FDA alone is in charge of enforcing.

The FDA has concluded that CBD products are excluded from the dietary supplement definition under Section 201(ff)(3)(B)(ii) of the Act [21 U.S.C. § 321(ff)(3)(B)(ii)].  Under that provision, absent prior marketing as a dietary supplement or conventional food, if an article (such as CBD) has been authorized for investigation as a new drug for which substantial clinical investigations have been instituted and for which the existence of such investigations has been made public, then products containing that substance are outside the definition of a dietary supplement.  C BD has been the subject of clinical investigations, and there are no recognized “grandfather” exceptions for any prior marketing of CBD products.

The FDA also advised – in these warning letters and previously – that CBD products are not generally recognized as safe and effective for various health claims and, therefore, are considered “new drugs” under Section 201(p) of the Act [21 U.S.C. § 321(p)].  Yet, new drugs may not be legally introduced or placed into interstate commerce without prior approval of the FDA, which the FDA has yet to provide.

Only Fools Rush In

While cannabis companies may be eager to get products to market, a key takeaway from these warning letters should be that regulatory compliance – even in jurisdictions with medical or recreational cannabis laws – is not optional.  As explained by the FDA:

Unlike drugs approved by the FDA, the manufacture of these products has not been subject to FDA review as part of the drug approval process and there has been no FDA evaluation of whether they work, what the proper dosage is, how they could interact with other drugs, or whether they have dangerous side effects or other safety concerns. The FDA has requested responses from the companies stating how the violations will be corrected. Failure to correct the violations promptly may result in legal action, including product seizure and injunction.

https://www.fda.gov/newsevents/newsroom/pressannouncements/ucm583295.htm

Unfortunately, to date, the FDA has not approved a marketing application for a drug product containing or derived from botanical marijuana and has not found any such product to be safe and effective for any indication.  Similarly, the FDA has concluded that it is a prohibited act to introduce or deliver for introduction into interstate commerce any food (including any animal food or feed) to which CBD has been added.

Prudent Steps You Can Take

Whether you like it or not, extreme caution should be your guide while the regulators work to understand the safety and effectiveness of CBD products.  To this end, avoid making medical claims about the benefits of or particular uses for your product.  Also, do not market CBD products as dietary supplements. Last, but certainly not least, work with experienced advisors who can help you understand applicable state and federal laws, as well as FDA regulations, to determine how your products can be marketed (or, at the very least, help you understand the risks involved in the sale of CBD products).

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