Now that the 2018 Farm Bill is fresh with the president’s signature, hemp and derivatives are legal once again in the U.S. for the first time since WWII. The low-THC element of the cannabis plant (the other being marijuana) is highly versatile for use in products from lotions to clothing, as well as in medical tinctures. Los Angeles hemp product attorneys know there are still a host of regulatory and legal concerns as hemp farmers, product makers and distributors gear to launch or ramp up sales.
The Hemp Business Journal estimates that among all hemp product categories, the annual five-year growth rate is expected to be somewhere just north of 18 percent, growing from a $390 million market this year to one that surpasses $1.3 billion by 2022.
These legal pitfalls could be especially tricky for the food and beverage industry, which already must adhere to stringent standards and oversight for food production, packaging, labeling, marketing and distribution. In some ways, our Los Angeles hemp product attorneys see this as a plus; those companies are already familiar with how these bureaucratic processes work. On the other hand, the marriage between hemp and food brings with it a whole new layer of regulation. Our cannabis attorneys can help.
Many hemp derivative products are already used by food and beverage industry, and Food Business News magazine reports indicate there will be a surge of investors exploring hemp investment opportunities in that arena specifically. The president of one hemp product company in Colorado said there is wide acceptance of the notion that there is likely to be a sharp uptick in the products that fuse hemp with functional foods and beverages. Some examples include:
- Ready-to-drink coffee
- Sports drinks
- Energy bars
- Protein shakes
- Infused tea and water
- Burgers
- Mixed/ dried fruit and nut products
- Frozen desserts
Most in the hemp food and beverage industry know the bulk of these sales involve products made with CBD oil, also known as cannabidiol, a non-intoxicating chemical compound extract from either hemp or marijuana buds – with a host of uses. CBD oil was already legal in states where marijuana is legal for medicine or recreation, but the 2018 Farm Bill, signed by President Donald Trump this month, removes it from the Controlled Substances Act, allowing hemp farmers to obtain insurance, seek write-offs for the business on their taxes and avoid criminal sanctions with the Controlled Substances Act.
However, that doesn’t necessarily those wading into the hemp industry (food and beverage distributors in particular) are free and clear of potential legal trouble.
Hemp Food and Beverage Product Makers Must Mind Their Labels
The main source of concern for many are the parameters of the U.S. Food, Drug and Cosmetic Act, U.S. Code Title 21. Historically, most hemp products were imported from Canada, Europe and China. Now the U.S. is poised to led the pack. The big wild card in that, however, is how the FDA is going to see it. Technically, the regulations of the Dietary Supplement Health and Education Law of 1994 imposes tight restrictions on hemp CBD oil – the product most-used by the food and beverage industry.
Makers or distributors of hemp-based or hemp-derived food and beverage products in California are going to want to be incredibly meticulous in how they label their products. As our Los Angeles hemp product attorneys can explain, a mistake on a label can cost a company millions in federal fines and civil lawsuits – including class action false marketing lawsuits, which have been known to top $100 million when the plaintiff(s) win. If a food or beverage company is proven to have been intentionally untruthful about a hemp product label, it can be considered a felony punishable by prison.
To avoid this, one of the first things we usually recommend (and it will depend based on where your company is in the process) is to determine why you are selling a food or drink item that contains hemp. Is it the nutritional value? The taste? The way it smells? Focus on that. As a seller of food and beverage products infused with hemp, something you must NEVER do is claim that has any ability to diagnose, treat or cure a disease. It’s true that CBD oil (the same stuff you’re using in your desserts and sports drinks) has been found to contain some medicinal properties. But you’re not selling a drug. You’re selling energy bars.
Anyone selling a product claiming to be infused with hemp needs to also be sure the concentration of tetrahydrocannabinol (THC) is lower than 0.3 percent. Otherwise, it’s considered marijuana and labeling it CBD or hemp could also run afoul of regulations.
A little legal compliance consulting from an experienced California marijuana lawyer can significantly reduce your risk of liability.
The Los Angeles CANNABIS LAW Group represents growers, dispensaries, collectives, patients and those facing marijuana charges. Call us at 949-375-4734.
Additional Resources:
Farm Bill Effect: Impact on U.S. and Global Hemp Markets, December 2018, Hemp Business Journal
More Blog Entries:
More California Marijuana Products Passing Stringent Safety Tests, Dec. 16, 2018, Los Angeles Hemp Lawyer Blog