CBD – When it stands for Cannot Be Denied

Many retailers have been sitting on the fence regarding an entry into the cannabidiol (CBD) market. The confusion is understandable.

The market for CBD was emerging long before December 2018 when President Trump signed into law the Agricultural Improvement Act of 2018 (commonly referred to as the 2018 Farm Bill). The Farm Bill removed hemp and its derivatives such as CBD from the Controlled Substances Act. Prior to the passage of the 2018 Farm Bill, the Drug Enforcement Agency (DEA) placed CBD as a schedule I controlled substance.

The FDA has struggled to stay in front of the issue with official statements, multiple Warning Letters and an upcoming Public Hearing May 31. The then-outgoing FDA Commissioner, Scott Gottlieb, M.D., has recommended that legislators deal with the CBD question. Dr. Gottlieb stated that a FDA Rule, through the standard rule-making process, would take in excess of 3 years. The passage of the Farm Bill indicates Congress is in favor of the declassification of CBD but the market remains unclear as to what the Class change specifically requires from the marketers. Hemp-based CBD contains less than 0.3% tetrahydrocannabinol (THC), the main psychoactive component in marijuana.

Recent legislation supports the trend towards acceptance of marijuana. CBD oil with limited THC content has been “legalized” nationwide. Over half the states in the U.S. have legalized recreational or medical marijuana.

The CBD and hemp conversation is extremely confusing right now, and perhaps nowhere more so than in a dialogue with e-tailing giant Amazon.

Amazon has taken an apparently clear position regarding CBD. Inconsistently with that position though, CBD might not be in the name, but it might be in the product.

Amazon has stated no products are allowed to contain “CBD” (Amazon Seller Central):

Supplements must not contain controlled substances, such as:

However, it is recognized that some Hemp Oil products or even more likely, “Full Spectrum Hemp Oil” may be, in actuality, CBD oil. Conducting a search for “Hemp Oil Supplement” currently results in over 600 items ranging from books to capsules. Despite the apparent Amazon “ban” on CBD in its print position, a recent chat dialogue indicated that some of Amazon’s own people do understand and are communicating that hemp oil and CBD oil are the same despite the reality that no company has been allowed to say that except Amazon themselves. (More on that chat dialogue here.)

Another example of the confusion of the rules and regulations can be found by examining a certain pet supplement offering: the Amazon offering for Amazon Honest Paws differs from the branding on the company’s website HonestPaws.com. It would seem this is special ‘made for Amazon’ packaging to get around the CBD rules. The only difference on the front or back of the package is the interchangeable phrase “Hemp Oil” versus “CBD Oil.” There is no indication of how much CBD is included on either packaging. In another unusual twist, the product costs less as a CBD oil than a Hemp Oil and the product costs less on the brand website than on Amazon. Honest Paws confirmed in an email that the two formulas were identical, and each contained 5mg of CBD.

Is this skirting the transparency line?

The market for CBD is expanding faster than almost anyone can fathom. Forbes recently reported the expected size of the CBD market in the United States to be $16B by 2025. A search for Hemp Oil on Amazon in the Health and Household Department identified 1,209 brands representing 5,520 SKUs.

The typically nimble Amazon has now been eclipsed on this subject of CBD named products by long standing traditional retailers such as CVS, Walgreen’s, Rite-Aid and Vitamin Shoppe. All have publicly stated they will start carrying CBD-infused products. The retailers are taking a state by state approach. The large pharmacy chains have verified they will maintain their CBD offerings to topical products. Vitamin Shoppe has gone a step further and has announced plans to provide Irwin Naturals soft gel capsules, Garden of Life CBD Extract soft gels and liquid drops. Vitamin Shoppe will initially launch this product line in 14 States plus the District of Columbia and Puerto Rico.

Another emerging aspect of the CBD issue is occurring in restaurants and coffee shops across the country. Many marketers believed the 2018 Farm Bill opened the door for the introduction of CBD to an array of products including foods and beverages. The FDA has not been supportive of this concept in their statements but no action has been taken as everything from donuts to IKEA Swedish Meatballs are entering the marketplace.

The continuation of gaming Amazon.com carries through to the edible CBD market. One example, out of many, of language change on Amazon is a coffee stirrer in the shape of a lollipop that provides 10mg of Hemp CBD. On Amazon, Cannastir is only referenced as a hemp product but a decidedly different message displays on thecannastir.com, where CBD is highlighted.

Cities and States are incorporating their own laws to address and confuse the situation even more. The Ohio Board of Pharmacy initially took a hard line on CBD edibles in Ohio. Stores were ordered to remove CBD products. The Ohio Senate has since unanimously voted to approve the sale of Hemp and related products including CBD items. The measure is headed to the Ohio House of Representatives where it is expected to pass the legislation and confirm the ability of retailers in Ohio to legally sell CBD products. In California, where recreational marijuana is legal, CBD edibles are not legal. Texas has one of the most restrictive marijuana laws in the United States. Police in Fort Worth, Texas raided two retailers and confiscated CBD products following a ruling by the local District Attorney. The States of Ohio, Texas and California all have current bipartisan legislative support to overturn regulations that are being used to block the sale of CBD products in their respective States.

The FDA has oversight of CBD because it is the active ingredient in an approved prescription drug to treat two rare seizure disorders. The agency says CBD can’t be added to food or sold as a dietary supplement because officials haven’t determined if it’s safe or effective for other conditions. The FDA recently reinforced its position that CBD is an illegal ingredient within a dietary supplement. The statement is included in the FDA Agency Website re: CBD as well as recently presented at an industry trade association event.  Steven Tave, FDA’s Director of the Office of Dietary Supplement Programs (ODSP), simply stated “Anyone who thinks it (CBD) is lawful is mistaken.” The FDA is planning to conduct an interactive public forum on May 31, 2019 for stakeholders to share their experiences and challenges with products containing cannabis and cannabis-derived compounds, including information and views related to the safety of such products, as well as to solicit input relevant to the agency’s regulatory strategy related to existing products. As of this writing, only 704 comments have been received to the FDA open docket for the general public to provide their viewpoints.

With rapid growth of an ingredient as popular as CBD, comes quality and safety concerns. Marcel Bonn-Miller, Ph.D., a Penn Medicine researcher, conducted a study on behalf of the Institute for Research on Cannabinoids (IROC) to analyze CBD products. 84 products from 31 different online companies were analyzed for assay against label claim. Only 30% of CBD products purchased contained an actual CBD content that was within 10% of the amount listed on the product label. While studies have not shown that too much CBD can be harmful, products containing either much less or much more CBD than labeled could negate potential clinical benefit to patients. Further, the variability across products may make it troublesome for patients to get a reliable effect.

“People are using this as medicine for many conditions—anxiety, inflammation, pain, epilepsy,” Bonn-Miller explained. “The biggest implication is that many of these patients may not be getting the proper dosage; they’re either not getting enough for it to be effective or they’re getting too much.”

According to Bonn-Miller, a number of products also contained a significant amount of THC—the chemical compound in cannabis responsible for making a person feel “high”—which has been shown cause cognitive impairment and other adverse health effects. “This is a medication that is often used for children with epilepsy, so parents could be giving their child THC without even knowing it,” he said.

Legal cases are developing to further confuse the marketplace. A Pennsylvania woman, Bianca Thurston, is suing Koi CBD LLC for mislabeling the CBD-Vape product she purchased with assurances of being THC-free. Thurston claims her company conducted regular random drug tests and she passed them until she consumed the Koi CBD product. She failed the drug test which indicated a positive result for unacceptable cannabinoids despite the fact she did not use marijuana. Thurston was subsequently terminated from her job at Diversified Well Logging LLC.

The bottom line is that the market place seems as confused as ever and even the retailers with a formal stance on the subject do not seem to have a firm grasp of what they are dealing with. Companies are taking creative approaches to get into the game and marketplace, often by being tricky and even opaque. Legislation affecting the marketplace is changing by the month. Consumer growth demand for all things CBD is not wavering. Despite the complexities and confusion, major retailers are forging ahead. Online retailers are numerous and diverse in their quality standards. We at Trust Transparency Center will keep trying to sort through both the confusion and the misdirection to provide you the transparency you deserve to make informed decisions.

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Scott Steinford, Managing Partner, Trust Transparency Center
Scott Steinford has built a career of leading, learning and mentoring. Through immersion in many aspects of the supplement and pharmaceutical industry Scott has worked to redefine and improve business practices within the healthcare industry with an emphasis on transparency. His experience ranges from entry level to CEO and positions include organizations representing ingredient supplier, ingredient manufacturer, retail brand, private equity, M&A due diligence expert and trade organizations. Scott has a Pre-Law Bachelor’s Degree from the University of Texas at Arlington and a Master’s of Science Degree in Law from Champlain College. Scott currently is Executive Director for the CoQ10 Association and President of the Natural Algae Astaxanthin Association (NAXA) and Managing Partner of Trust Transparency Center; a boutique consulting organization dedicated to assisting companies seeking to improve both their internal and external trust transparency. Scott’s prior experience includes CEO of Doctor’s Best and maintained a pivotal role with a variety of ingredient manufacturers including Eisai, Kaneka and was a founder of ZMC-USA.

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