The Virginia Department of Agriculture and Consumer Services (“VDACS”) Commissioner Jewel Bronaugh sent a letter (the “July Letter”) to all Virginia-registered Industrial Hemp Processors (“Processors”) on July 15, 2019 notifying the Processors that Governor Northam’s office has directed VDACS to “treat hemp-derived extracts intended for human consumption as approved food additives and to place qualifying Registered Industrial Hemp Processors under food safety inspection so that inspected and approved processors may manufacture a hemp-derived extract for human consumption.” The July Letter came as a follow-up to a letter the Department sent to Processors back in May (the “May Letter”) stating that VDACS would not approve the manufacture, distribution, or sale of CBD products intended for human consumption (“CBD food products”), which left Processors and many Virginia retailers confused and frustrated about the status of their businesses.
Who and what does this affect?
In order to process industrial hemp in Virginia (i.e. turn it into a finished product, such as clothing, CBD oil, or a CBD food product), individuals or entities must register with VDACS as an Industrial Hemp Processor. The May and July Letters were sent to all currently registered Processors, and the information in those letters will apply to any future registered processors as well.
CBD Wellness retailers already selling CBD products or businesses infusing food products with CBD that is imported from other states are not directly subject to the letters, but should be aware that the products they are currently using and/or selling may not be lawful under Virginia or federal law. However, now that the VDACS Food Safety Program will be responsible for overseeing the manufacture of CBD food products in Virginia, such companies will likely soon be able to purchase their CBD oil and other CBD products from Virginia-based Processors in compliance with Virginia law.
A 2019 History of Virginia Industrial Hemp Law
On March 21, 2019, Governor Northam signed HB1839, effectively updating Virginia law to comport with the federal 2018 Farm Bill (the “2018 Farm Bill”) and removing restrictions that previously required individuals to be part of a research and/or education program in order to grow or process industrial hemp in Virginia. Similar to the 2018 Farm Bill, which removed CBD from the schedule of controlled substances in the Controlled Substances Act, HB1839 also removed “hemp products,” including CBD food products, from the definition of “marijuana” in the Virginia Criminal Code, making it legal for individuals to possess CBD food products and other lawful hemp products. Following Governor Northam’s signing of HB1839, several individuals and businesses submitted Industrial Hemp Processor applications to VDACS with the intention of processing lawful CBD to manufacture and sell CBD food products and meet the high demand for such products in their communities.
On May 16, 2019, in response to the large volume of Processor applications indicating a desire to manufacture and sell CBD food products to the public, Commissioner Bronaugh sent the May Letter to Processors stating that VDACS could not approve such applications. The May Letter cited the Virginia Food and Drink Laws and regulations, promulgated by VDACS’ Food Safety Program, as the basis for the letter, explaining that those laws are often developed in conjunction with FDA regulations and that the FDA still considers CBD-infused food products to be illegal. The May Letter left Processors confused and unable to reconcile HB1839 with VDACS’ position regarding CBD food products.
Now, two months after the May Letter on July 15, 2019, VDACS sent another letter to Processors notifying them of the directive from Governor Northam’s office and stating that the Food Safety Program will send a subsequent letter providing guidelines to those Processors who wish to manufacture CBD food products. The July letter appears to give Processors somewhat of a “yellow light” to prepare to manufacture CBD food products. In other words, Processors should proceed with caution and keep an eye out for further word from the Food Safety Program.
What does this mean for current and future Virginia Industrial Hemp Processors?
Though the July letter is good news for Processors, it does not change the fact that federal law still considers CBD food products and certain advertising practices illegal. In light of the “Additional Considerations” mentioned below, it is imperative that Processors limit their product offerings to Virginia citizens. Additionally, prior to commencing manufacturing operations, Processors should conduct a thorough review of their website to ensure they are not making unauthorized claims about their products or inadvertently engaging in interstate commerce.
As stated above, the July Letter states that the Food Safety Program will soon provide guidance to Processors interested in manufacturing CBD food products, and Processors should wait to receive that guidance before commencing operations. This means, though, that VDACS will now approve the manufacture, distribution, and/or sale of CBD food products so long as they are manufactured, distributed, and/or sold in compliance with the forthcoming guidance from the Food Safety Program and otherwise in compliance with Virginia law.
In preparation for this guidance, current Processors and individuals interested in manufacturing, distributing, and/or selling CBD food products should familiarize themselves with current Virginia Food & Drink Laws and regulations as well as federal Current Good Manufacturing Practices (“CGMP”), as the guidance is likely to be similar. Current and future Processors should also familiarize themselves with state and federal laws concerning CBD to better understand how they may affect your business. A few important examples are outlined below.
Aside from VDACS and Food Safety, there are some important considerations to keep in mind:
1. The FDA still considers CBD food products illegal. On the FDA’s Cannabis FAQ page, the FDA states that it is illegal under the federal Food, Drug, and Cosmetics Act (the “FD&C Act”) to add CBD to food products that are introduced into interstate commerce. This is because CBD is the active ingredient in Epidiolex, an FDA-approved seizure medication, and the FD&C Act makes it illegal to add a substance which is the active ingredient in an FDA-approved drug to food that is introduced or delivered in interstate commerce without FDA approval. This prohibition applies to products sold across state lines or otherwise introduced into interstate commerce, so for now, Processors manufacturing or selling CBD food products will have to keep their business confined to Virginia.
2. The FDA and the FTC have joined forces against “unsubstantiated health and efficacy claims in advertising.” On April 2, 2019, the Federal Trade Commission (“FTC”) issued a press release announcing that the FTC had joined the FDA in issuing warning letters to CBD companies making unsupported health claims about their products. The warning letters state, in part, that making health claims about a product on a company website classifies the product as a “drug” under the FD&C Act, and drugs cannot be marketed for interstate commerce without FDA approval. The warning letters also state that such claims may constitute “Unsubstantiated Advertising Claims” under the FTC Act if they are not supported by competent and reliable scientific evidence. Both the FD&C and FTC Acts are federal acts that apply only to businesses engaged in interstate commerce, but Virginia has similar laws that may have the same effect on Processors’ marketing and advertising practices.*
*Virginia Processors should be aware that making products available to residents of another state via a website could constitute introduction into interstate commerce. Nixon Law Group can help you avoid this.
Current and future Processors should familiarize themselves with laws and regulations that may affect their business, and Nixon Law Group would love to help! We have developed close relationships with policymakers and industry stakeholders and have an acute understanding of the legal and regulatory framework applicable to CBD wellness companies and medical marijuana businesses. Interested in speaking with one of our attorneys? Contact us!
Want more information on Virginia’s medical cannabis program and/or how Virginia’s Industrial Hemp laws affect your CBD wellness company? Read our previous articles at the links below.