FDA Struggles to Regulate Flood of New CBD Products

May 03, 2019

Regulators’ heads continue to spin as the number of products containing cannabidiol (CBD), including lotions, drinks, hair conditioner, and more, continues to flood the market.

Ever since the 2018 farm bill legalized hemp under certain conditions and allowed CBD products to be shipped interstate with limitations, regulators have been trying to get a handle on the industry.

Advocates consider the bill’s passage the step in the right direction, while others complain that the law did nothing but blur the line between drugs and dietary supplements.

Almost immediately after the farm bill was signed into law in December, the U.S. Food and Drug Administration (FDA) said it had the authority to regulate these products because it had approved the CBD-based epilepsy medicine, Epidiolex. The FDA stated it would treat other CBD products the same, meaning it could put each item through its rigid review process before it could be legally sold. Dietary supplements, however, do not face as much monitoring. Unfortunately, the agency is now left trying to figure out how it will review CBD products, if at all.

This has left both merchants and lawmakers scratching their heads because of the confusion the FDA created. It also triggered individual states to interpret the laws in their own ways. For instance, New York banned the sale of edible CBD products.

What Lawmakers Want

In January, several lawmakers asked the FDA to clarify its stance on interstate sales. However, there has been no resolution, and it could be years before there is one.

For now, the agency is picking and choosing the products with the most questionable medical claims, such as “kill cancer cells,” to go after.

Former FDA commissioner, Scott Gottlieb had promised to set the country on a specific path as it pertains to the sale of CBD, but he left office in April before he held the hearing that he had promised manufacturers and merchants.

At the time, Gottlieb had floated the idea of making products with high-doses or pure CBD to go to the drug approval process and allow lower-dose items to be treated as dietary supplements, which can be bought without prescriptions.

It’s very rare for there to be both medicines and dietary supplements with the same ingredients, but the FDA set precedent last year when it approved a fish oil-based medicine. Fish oil has been available on store shelves for years.

If the FDA determines a product is violating any of policies, the agency has the right to remove products from shelves, fine companies, or shut down businesses.

Other Issues Facing the CBD Industry

Hemp and its derivatives are now legal; marijuana, essentially the same plant but with psychoactive ingredients, is a controlled substance. However, CBD is found in both, so government need to make some better distinctions.

Also, there is still very little research about CBD and why it helps some conditions. This makes it difficult to back up any product with marketing claims.

Finally, advocates are pushing for the FDA to issue a formal statement of no enforcement as it develops a national framework. However, they are not optimistic due to acting FDA commissioner Ned Sharpless’s background. He has a background in cancer research and doesn’t have much experience in nutraceuticals or food regulation.

In Conclusion

As states and the federal government continue to navigate the rules surrounding the industry, individual business owners need to proceed with caution. Thy need to check the rules where they live and plan to sell accordingly.

Merchants that need CBD merchant accounts, so they can accept and process credit and debit card payments should contact eMerchantBroker.com. It works with high-risk merchants, including those in the CBD industry.

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

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A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

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