Series of high-profile lawsuits challenging legal status of CBD products are stayed or voluntarily dismissed
As many attorneys predicted, several judges have decided that the doctrine of primary jurisdiction applies to such cases, concluding that it would be unwise for courts to make local determinations now as the relevant federal agency (the FDA) is actively exploring a regulatory path forward for ingestible CBD products.
In a May 22 order staying one such case against PlusCBD oil maker CV Sciences (which was accused of selling ‘illegal’ CBD-infused products) Virginia A. Phillips, chief judge of the US District Court for the Central District of California, noted that regardless of what it says in warning letters, “the fact remains that the FDA has not formally established its position.”
She added: “The number of CBD class actions currently pending in the federal district courts makes clear the danger of inconsistent adjudications. Congress has committed regulation of CBD products to the FDA and expects the agency to publish guidance as soon as possible…Accordingly, the case will be stayed until the FDA completes its rulemaking regarding the marketing, including labeling, of CBD ingestible products.
“The Court dismisses plaintiff’s request for declaratory relief and stays the remaining causes of action.”
Judge: ‘The case will be stayed until the FDA completes its rulemaking’
A similar case vs Green Roads of Florida was also stayed in January with the judge noting that the FDA is “actively considering” how to regulate the CBD marketplace; while lawsuits vs Charlotte’s Web and Elixinol were voluntarily dismissed by the plaintiffs on March 20 and May 7, respectively. A lawsuit vs Infinite Product Co is still progressing through the courts.
While some defendants have argued that their full or broad spectrum hemp extracts are legal dietary ingredients because they are a different article to the isolated CBD used in drug trials (a case recently made by Diamond CBD and something CV Sciences execs have argued in other settings), this legal theory has not yet been tested in the courts.
“The FDA is under considerable pressure from Congress and the industry to expedite the publication of regulations and policy guidance regarding CBD products,” Virginia A. Phillips, chief judge, US District Court, Central District of California
Legal limbo?
So, where does this leave CBD brands?
Between a rock and a hard place, according to Justin Singer, founder and CEO at CBD brand Caliper Foods, who says brands are stuck in legal limbo thanks to the FDA’s equivocation.
While some commentators argue that brands who dived into the market before regulations were in place only have themselves to blame if they are hit with lawsuits, Singer says the FDA’s decision to send out warning letters to firms making egregious health claims, but not to engage in widespread enforcement action, had sent out mixed messages and left the industry in a state of “purgatory.”
Right now, for example, most major retailers will not carry CBD-infused food & beverages until the FDA lays out a regulatory framework for these products. The FDA, meanwhile, says adding CBD to foods or supplements and introducing them to interstate commerce is not legal, but at the same time FDA commissioner Dr Stephen Hahn says trying to shut the market down would be a "fool’s game."
Attorney: The CBD market is likely not a priority for the FDA right now
Brands waiting for the FDA to weigh in may be waiting for some time, however, as CBD is likely not top of the agency's priority list right now as it attempts to deal with a global pandemic, Eversheds Sutherland partner Greg Kaufman told us earlier this month.
“I’m not sure there is much bandwidth or motivation to tackle the regulation of cannabinoids right now. The CBD market is just not a priority and will likely remain in its current state for some time.”
Speaking at our ‘Where next for hemp and CBD?’ webinar last week, Kaufman added: “What we’ve heard from the FDA back in March is that they are still looking for data on safety; unfortunately a lot of what progress was being made has been stymied by COVID-19.
“At the beginning of the year they announced a public meeting to be held May 31, and that never made it onto the calendar. They do have a Congressional mandate to produce a report on adulteration and contamination in sampling of CBD products and that’s due June 17, but I suspect it will be delayed.”
CV Sciences: 'FDA has the data they need to proceed'
Duffy MacKay, SVP at CV Sciences, however, noted that hemp/CBD safety data "continues to build in the peer-reviewed literature."
He added: "CV Sciences recently published an analysis of two years of post market safety data and a human randomized controlled trial that includes assessment of liver enzymes and other biomarkers of safety.
"Other CBD companies have published pre-clinical toxicology. Australian and UK regulators have completed CBD risk assessments. All evidence supports the safety of lower levels (around 70 mg) of hemp derived-CBD as a non-prescription consumer product. FDA has the data they need to proceed."
Plummeting prices
His comments came as the US Hemp Roundtable wrote to the USDA noting that prices for hemp and hemp-derived products have plummeted and urging officials to make hemp farmers eligible for government support.
"Given the clear data demonstrating significant price drops during the COVID-19 crisis — far greater than the agency's benchmark of 5% — we urge the USDA to supplement the commodities currently listed in the CFAP regulation by including hemp.
"PanXchangeTM data demonstrates that prices for processed hemp flower fell between 21-32% between January 2020 and April 2020. As an example, the average prices for Colorado winterized crude oil extracted from hemp flower fell from $550/kg in January to $375/kg in April, a 32% decline."
The CFAP aid program offers farmers of certain crops direct relief from bailout funds provided in the CARES Act.
*The cases are: Michelene Colette et al vs CV Sciences Inc- 2:19-cv-10227; McCarthy v. Charlotte’s Web Holdings, Inc., N.D. Cal., No. 5:19-cv-07836, filed 11/30/19. Dasilva v. Infinite Product Co., C.D. Cal., No. 2:19-cv-10148, filed 11/27/19; Snyder et al v Green Roads of Florida LLC 0:19-cv-62342.
"...Ultimately brands are going to win in this market; the biggest caffeine companies in the world don’t market caffeine, they market Starbucks or Red Bull or Coca Cola, they market the feeling and the use case..." Ben Witte, founder and CEO, Recess
Missed our 'Where next for hemp and CBD?' webinar? Get the highlights HERE.
