The New York City Department of Health and Mental Hygiene (NYCDOH) announced a ban in February 2019 on the sale of any food products containing cannabidiol (CBD) in New York City bars and restaurants, stating “[t]he Health Department takes seriously its responsibility to protect New Yorkers’ health. Until [CBD] is deemed safe as a food additive, the Department is ordering restaurants not to offer products containing CBD.” Causing a great deal of media attention, it appears NYCDOH plans on enforcing the ban by embargoing CBD products from select establishments beginning in July of 2019 and threatening fines and points affecting letter grades if retailers are not compliant by October of 2019.

NYCDOH’s announcement comes on the heels of the Agriculture Improvement Act of 2018 (commonly referred to as the “Farm Bill”), signed into federal law on December 20, 2018, which de-classified hemp as a controlled substance. The law is anticipated to enhance the industry by opening new investment channels, markets, and research opportunities, but there are key elements to note.  First, the Farm Bill only removed hemp (defined as “the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts or isomers, whether growing or not, with a delta-9 tetrahydrocannabinol [THC] concentration of not more than 0.3% on a dry weight basis”), from the Controlled Substances Act.  Therefore, CBD derived from the marijuana variety of cannabis plant, which contains high levels of THC, remains an illegal controlled substance.  Second, and the apparent basis behind NYCDOH’s ban, is that notwithstanding the Farm Bill, it is the FDA’s position that it is still technically unlawful to introduce into interstate commerce any food or dietary supplement containing CBD under the Food, Drug, & Cosmetic Act.  CBD is an active ingredient in various FDA-approved drugs and according to FDA Commissioner Scott Gottlieb, “[u]nder the FD&C Act, it’s illegal to introduce drug ingredients like these into the food supply, or to market them as dietary supplements.” Despite this position, it appears that the FDA is not aggressively enforcing it, but rather prioritizing its actions only against companies marketing CBD products in connection with impermissible disease claims.  Perhaps an indication of a future change in the FDA’s current position, the Commissioner has indicated that “pathways remain available for the FDA to consider whether there are circumstances in which certain cannabis-derived compounds might be permitted in a food or dietary supplement.”

However, like NYCDOH, certain states and municipalities are taking a more aggressive approach. For example, California, Maine, Ohio, and North Carolina have all banned food products containing CBD from various retailers, citing the FD&C Act’s prohibition of introducing drug ingredients into food.  More stringently, in Tarrant County, Texas, the District Attorney declared possession of CBD oil to be legal only for those who suffer from intractable epilepsy, and that all others buying and selling CBD in any form are doing so unlawfully under the Texas Controlled Substance Act, punishable by felony if the CBD contains any amount of THC and misdemeanor if it does not.  Other counties in Texas, meanwhile, are choosing not to prosecute CBD cases.

In 2015, and later expanded in 2017, New York State launched the Hemp Research Pilot Program, allowing educational institutions, farmers, and businesses to obtain licenses to grow and research industrial hemp, subject to guidelines contained in a Research Partner Agreement between New York State and the entity. New York also banned the use of CBD in food, but the NYS Department of Agriculture and Markets specified that dietary supplements containing CBD may be sold for human consumption provided that two standards are met: (1) the item is produced under the dietary-supplement standards described in the Research Partner Agreement; and (2) the item is properly labeled and packaged for sale pursuant to FDA regulations for dietary supplements.  However, the FDA’s current position that CBD may not be marketed as a dietary supplement, from a practical effect makes this authorization moot.

The CBD regulatory framework continues to evolve at a rapid pace on both the federal and state levels. Before proceeding with the development of any food, beverage, or supplement products, you should consult with counsel so you best understand the current regulatory landscape.