By John Schroyer
When the U.S. Food and Drug Administration stepped in – again – to warn CBD companies in multiple states to quit making medicinal claims about their products, attorney Robert Hoban authored an opinion on the issue that quickly made the rounds on the Internet.
The piece was posted all over social media and various cannabis-oriented websites as an analysis offering both hope and notes of warning, especially for those in the hemp trade, since many of the companies put on notice by the FDA use CBD dervied from hemp rather than marijuana.
Marijuana Business Daily spoke to Hoban, who works with hemp and CBD producers across the country, about his thoughts on the federal government’s approach to the issue and what it means for the business community.
What kind of effect will the FDA’s warning to CBD producers have on the industry at large?
Number one, it hopefully causes a lot of these CBD producers, suppliers and cultivators to realize that they can’t just go out and do business without paying attention to all of these consumer safeguards that are in place, because far too many companies begin operating without paying attention to these things.
Number two, hopefully it makes policymakers realize that there are agencies out there that are protecting consumers that consume hemp-derived products. There’s a lot of talk about legislation that might happen here in Colorado about putting CBD and cannabinoids under the state Marijuana Enforcement Division, and it’s a terrible mistake. So hopefully it makes policy advisers and then politicians recognize there are already safeguards in place.
Third, and perhaps most importantly, the immediate effect is you’ve got people that are all-in on CBD, people that are trying to establish some market share as this begins to develop. And there’s a big reason CBD is a big cash product right now: it’s because the infrastructure isn’t there yet to develop more profitable products from the hemp plant.
So it’s going to hurt a lot of people and their expansion plans and their immediate profit plans, which is not good for business and the development of the hemp industry as a whole. We need money from CBD products to build infrastructure and to build more sophisticated hemp operations so that all the other far more important materials that come from hemp can be produced and succeed. CBD is only one of those things.
Will there be ripples felt in the marijuana world, or will it only hit hemp producers and retailers?
At the end of the day, this will reinforce the point that hemp-derived products are a different thing than something that can get you high.
You are of the opinion that the federal government is attempting to “chill” the CBD marketplace, is that right? Can you explain why you think so, and what the ramifications of that could be?
I think each agency has taken a position regarding CBD because they don’t understand it. They don’t understand industrial hemp. They don’t understand that CBD is not psychoactive, and that it actually helps lots and lots of people as a food or a dietary supplement, not as a drug. It doesn’t have the effects of a drug.
They don’t get any guidance from the top down on this, so I think individual agencies have taken pretty extreme measures because they’re frustrated with the lack of clarity that they’re given over what CBD is and whether it’s illegal or not. They’re frustrated over the clarity they’re given about whether this is safe for human consumption, and they’re frustrated that Congress hasn’t acted.
That’s the ripple effect: You’re stifling the industrial hemp industry, which has such tremendous promise.
What are the primary laws CBD companies should be concerned with as far as compliance? State or federal? Why?
We spend our days dealing with a lot of folks, entities that produce CBD. They want to look at the federal analysis: If we produce CBD from the stalks, fibers and root of a plant, is that legal? And you look at the federal statute, and render an opinion on that. By all indications, it would not be an illegal substance in that case.
However, that ignores the fact that Wisconsin, for example, may have a Controlled Substance Act that differs from the federal Controlled Substances Act. Oklahoma might. Massachusetts might.
So each state might have a law that either identifies CBD as being a controlled substance, where it differs from the federal government, or it might have a medical marijuana law that says, ‘Any substance that comes from a marijuana plant, period, is subject to our regulatory system, and if it’s not sold through it, it’s illegal,’ or third, they might have some sort of archaic criminal law that says, ‘Any derivative from any marijuana plant is illegal,’ and those are things that are so often overlooked.
What do you think the future holds for the CBD industry, as far as the FDA and the rest of the federal government?
I think the future is very, very bright. I hope that the actors in the industry take heed, and follow very, very closely and strictly the FDA and the FTC rules governing this product, and that they keep it pesticide-free and make it clean.
Hopefully this is a wakeup call that you can’t just go out and sell products and make representations without taking into account all the complex issues of federal law that govern this issue. The CBD market is huge around the world.
Most of the CBD producers that we represent and work with have found international markets where you get upwards of $60,000 per kilogram of quality CBD products. In the U.S., the highest it’s ever been is $25,000 per kilogram. So this is not going anywhere.
This interview has been edited for length and clarity.
John Schroyer can be reached at [email protected]