AMARILLO, TX – As I mentioned in last week’s Part One, this may seem like a strange article to write for DME suppliers. However, an increasing number of DME suppliers (like pharmacies, health food stores, and others) are looking at the potential of selling CBD. And so I thought I would write a two part series of articles that provide a primer on CBD.

The acronym (“CBD” has inserted itself into the national discussion. Some consider CBD to be a miracle drug that cures, or alleviates the symptoms of, multiple medical ailments. Others consider CBD to be no more effective than the “magic elixirs” sold from the backs of wagons in the 1800s. Nevertheless, there is a growing body of opinion that CBD does have tangible medical benefits for its users.

And then there is the debate as to whether the sale of … and the use of … CBD are legal. One school of thought is that federal law prohibits the sale/use of CBD while state laws allow such sale/use. Another school of thought is that if CBD has no hallucinogenic effects, then it is legal across the board. As is often the case, the correct answer is not so “black and white.”

Part One of this two part series (i) presented an overview of what CBD is and (ii) compared CBD to THC and marijuana. This Part Two discusses what federal and state law say about the sale and use of CBD.

Federal Law: The 2018 Farm Bill
The Agriculture Improvement Act of 2018 (“Farm Bill”) was passed in December 2018. It established a new category of cannabis: hemp, defined as cannabis containing 0.3% or less of THC. The Act also noted that marijuana (a Schedule 1 illegal substance), as defined in the Controlled Substance Act (“CSA”), does not include hemp. This does not make all CBD products legal under federal law. The Farm Bill provides that state governments may create regulatory frameworks for industrial production of hemp.

What can and cannot be done under federal law?
The Farm Bill only legalized products derived from hemp that are produced in accordance with the Farm Bill, which requires that hemp be grown by licensed producers pursuant to state or federal regulations. The FDA Commissioner stated that the Farm Bill “explicitly preserved the FDA’s current authority to regulate products containing cannabis or cannabis-derived compounds under the Federal Food, Drug and Cosmetic Act and Section 351 of the Public Health Service Act.” So, what does this mean? If the CBD is derived from hemp produced in accordance with the Farm Bill, it may be legal under federal law, depending on the purpose for which it is grown. To date, with the exception of Epidiolex, no product containing cannabis or cannabis-derived compounds has been approved as safe and effective for use in any patient population.

Federal Pitfalls
CBD cannot be sold as a dietary supplement or food additive, according to the FDA, because CBD is the active ingredient in an FDA-approved drug, Epidiolex. Until the FDA approves CBD as a supplement or food additive, there are legal risks involved with selling these types of CBD products. Unless it is required under state law, the CBD products currently on the market are not regulated and are often the subject of poor quality control. They may also have more THC than is legal or no CBD at all. Some CBD sellers and manufacturers have made egregious, unproven claims about CBD products. The FDA has issued numerous warning letters. Lessons can be derived from these letters:

• Avoid CBD products with over-the-top therapeutic claims, such as that a CBD product may cure cancer, arthritis, Alzheimer’s, bipolar disorder, or opioid addiction.
• Avoid CBD products that make “drug-like” claims that they prevent, treat, or cure pain, anxiety, inflammation, etc.
• Be aware that claims on social media are also being monitored and referenced in warning letters.

The Bottom Line Under Federal Law
At first glance, the Farm Bill appears to throw open the CBD door. Proceed with caution, however, because it becomes readily apparent that the wide open door is largely an illusion. Consider the carve outs:

• No products with THC over 0.3%.
• No unapproved health products, dietary supplements, or food (which means literally almost everything but the one drug approved by the FDA and possibly some topical items).

The FDA can pursue these violations, but it has limited staff for enforcement and only warning letters have been issued to date.

What about state law?
While federal law results in some confusion, state laws and regulations add another layer of complexity that DME suppliers must wade through in evaluating whether or not to enter the CBD arena. The answer to almost every question under state law is, “It depends.” Adding in state law leads to a point where activities are sometimes legal under federal law but prohibited under state law or prohibited under federal law but legal under state law. Further, many states have statutes that legalize CBD products derived from marijuana, with varying degrees of carve outs and regulations.

State Law Limitations
Each state’s law is different. State law often specifies who can grow, manufacture, or sell a CBD or THC product, or the statute may designate a process for licensure. In Kentucky, for example, there is not a limitation on who can have a CBD product derived from industrial hemp…but CBD derived from marijuana is only excepted when “transferred, dispensed, or administered” pursuant to the order of a physician practicing at a hospital or clinic associated with a Kentucky public university or medical school.

Many state laws dictate when CBD can be dispensed by limiting its use to certain medical conditions or modifying the amount of THC a product can contain to be safe from prosecution. Most states are expanding the allowed use of hemp-based CBD, particularly after the Farm Bill.

Who can buy CBD products?
Can a minor buy CBD? Possibly, depending on the product and jurisdiction. While the Farm Bill paved the way for hemp-derived CBD products to be widely available, there are other factors that should be considered. Vaping or Juuling is not permitted for minors. Depending on the type of CBD product, a minor may not be able to buy or legally possess it. Local law enforcement branches have differing views on whether an individual under 21, and certainly under 18, can possess CBD. As the law continues to develop on CBD, more definitive rules will likely come forth regarding what CBD products minors of different ages can purchase and possess. State laws govern what is required for an individual to obtain CBD, and this is further controlled by the type of CBD product, amount of THC in the product, etc. Some states require a physician prescription or recommendation for certain products, while many do not.

To CBD or Not to CBD?
Scenario 1: DME Supplier A is located in State A that allows the sale of CBD to any individual with no restrictions. Can the supplier sell a customer a CBD-infused drink? A CBD-infused moisturizer?

• Under the law of State A, the supplier could sell both, but federal law would prohibit the sale of the CBD-infused drink. The legality of the moisturizer would depend on the THC content and whether any health claims are being made.

Scenario 2: DME Supplier A is located in State A where the sale of industrial hemp and CBD is prohibited.

• Question: Can DME Supplier A sell CBD-infused moisturizer to a resident of State A? Answer: No. Even though the moisturizer might be legal under federal law, it is prohibited under state law.
• Question: DME Supplier A is also licensed in a State B where all CBD is legal. Can DME Supplier A sell CBD products to residents of State B? Answer: Maybe. This would require an in-depth analysis of the state laws of both states.

Is This the Twilight Zone?
The CBD arena potentially puts sellers in situations in which an action may be illegal under federal law but legal under state law. Although CBD can be seen in stores around the country, this does not mean that the products are being legally sold under both federal and state law. DME suppliers, in particular, should exercise caution as they must operate properly under both federal and state law and pursuant to payor contract provisions. Before entering the CBD arena, DME suppliers would be wise to seek a legal opinion on what products they can legally sell to be in compliance with both federal law and that of the states in which they intend to sell CBD.

Jeffrey S. Baird, JD, is chairman of the Health Care Group at Brown & Fortunato, PC, a law firm based in Amarillo, Texas. He represents pharmacies, infusion companies, HME companies and other health care providers throughout the United States. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization, and can be reached at (806) 345-6320 or [email protected].