CBD is *technically* legal, but the industry still operates in some major gray areas

December 20, 2018 was a day for the wellness history books: The 2018 Farm Bill was signed into law. Among other things, this long-awaited document removed industrial hemp from the Schedule 1 controlled substances list, allowing licensed farmers to grow the plant more freely and removing restrictions around selling, possessing, and transporting hemp-based products. Experts (and Well+Good!) predicted a potentially unprecedented boom in the budding CBD industry.

In a lot of ways, that’s exactly what’s played out over the past seven months. The market’s been flooded with a deluge of new products containing CBD—a non-intoxicating compound found in cannabis sativa plants, including hemp, that’s credited with numerous potential health benefits. Specialty CBD retailers such as Standard Dose and Fleur Marché have debuted both online and IRL storefronts, providing stylishly curated assortments of CBD skin-care products, food, and supplements. Drugstores including CVS are bringing CBD topicals to hundreds of stores nationwide, while big food brands such as Ben & Jerry’s have stated their intentions to feature the ingredient in future products.

Joel Stanley, co-founder and chairman of long-established CBD brand Charlotte’s Web, confirms that this is a high time (no pun intended) for the industry. “When you consider the obstacles we’ve faced, the Farm Bill was a celebration that allows us to scale our agricultural operations in new ways,” he says. “More and more people are looking to hemp as a safe, natural option for health, and we’ve ramped up our operations to meet demand.”

But along with all the excitement, there’s still an air of confusion and uncertainty swirling around the CBD industry. For one thing, there are still no regulations governing the labeling and testing of CBD products. This means consumers can’t really be sure that the products they’re buying are as safe and potent as their manufacturers claim. The legal nuances surrounding CBD still vary widely from state to state. Perhaps the biggest head-scratcher of all is that many of the CBD-infused products on the market today—namely, food and drinks—actually aren’t legal at all under federal law (and they may not even be that helpful).

The government’s well aware that consumers and brands are waiting on it to create clear rules around CBD products, and it addressed the delay on the Food and Drug Administration website on July 17. “The U.S. Food and Drug Administration (FDA) recognizes the significant public interest in cannabis and cannabis-derived compounds, particularly CBD,” read the statement. “However, there are many unanswered questions about the science, safety, and quality of products containing CBD.”

As the FDA points out, there’s been very little research on the cumulative exposure of CBD over time, particularly when it comes to the elderly, children, pregnant and breastfeeding women, and animals. Since CBD is the active ingredient in a pharmaceutical drug—the anti-seizure medication Epidiolex, which received FDA approval last year—the agency is looking at it more closely than it would a typical dietary supplement. “There’s a good argument to be made that if it’s been added to a federally regulated drug, it also has to go through clinical trials to be consumed,” says Allison Margolin, a Los Angeles-based lawyer specializing in cannabis licensing and law.

The FDA has indeed started its investigation into CBD: Between April and July, more than 4,000 people and organizations shared their experiences and opinions about the compound on a public docket, and another 100 spoke at the agency’s first public hearing about CBD on May 31. Just last week, the FDA’s acting chief information officer, Amy Abernathy, tweeted that the agency would be expediting its regulatory framework for CBD, and that it would issue a progress report in early fall.

Those regulations can’t come too soon for CBD insiders. “We’re seeing the FDA is trying to move quickly on this, but moving quickly in their terms is very different than the terms of the industry,” says Anna Symonds, director of education and head of the CBD Certified program at Oregon-based cannabis farm East Fork Cultivars. “Like most people, we’re in wait-and-see mode and hoping to be able to adjust to whatever the new regulations are. It takes a toll not knowing the rules.”

Here are a few reasons why the wait hasn’t been easy—and how the industry is taking it upon itself to create its own rules in the interim.

Big business isn’t making it easy for brands to sell CBD

Not every heavy-hitting company is eager to jump head-first into the burgeoning CBD industry. For one thing, many brands are discovering it’s still hard to find financial institutions that are willing to process payments for them. “It is a huge challenge for every CBD brand in the space,” says Laurel Angelica Myers, co-founder and chief operations officer of hemp wellness brand and educational platform Prima.

Joshua Bareket, founder of online CBD retailer Bushl, believes the banks’ hesitation is tied to the current lack of testing requirements that ensure CBD products are within the federal threshold of 0.3 percent THC. “It’s about confirming that you’re not selling [marijuana] through their system,” he says (which, regardless of state laws, is still illegal at the federal level). Bareket adds that small businesses are at a disadvantage because many payment processors charge exorbitant fees for CBD companies, making it difficult for a new business to afford their services. But that may be about to change, as next-generation credit card processing company Square has started a pilot program for a small group of CBD brands. “Square coming into this space is a fantastic signal,” says Myers. “It’s only a matter of time before other banks and processors begin to reconsider their positions.”

It’s also proving harder than expected for CBD brands to spread the word about their products online. “Facebook has restrictions around advertising CBD products, so it’s been really difficult to build an audience on these traditional social platforms,” says Jessica Assaf, co-founder and chief education officer at Prima. “We’ve had to get really creative about what we’re able to feature, since you can’t use the word ‘CBD.’ You have to use the word ‘hemp’ as the umbrella. But consumers are looking for CBD, and there’s still an awareness gap that keeps people from understanding that hemp could mean CBD as well.” However, there’s also a light at the end of this tunnel: Facebook relaxed its policy slightly at the end of June, allowing brands to run ads for topical hemp products. Ingestible products and the word “CBD”, however, are still off limits.

Edible CBD products are still illegal from coast to coast (but brands are selling them anyway)

This is quite possibly the biggest paradox on the CBD landscape today. CBD-infused coffees, cocktails, and donuts are appearing on menus nationwide, but it’s not actually legal to include the compound in ingestible items, per the FDA. “A lot of people just think they can do anything with CBD because of its prevalence, even though that violates the Food and Drug Administration law,” says Margolin.

That said, the government isn’t intervening in most cases where the law is being violated—and that’s also the case for some state governments that have banned CBD edibles, including New York and California. But if the FDA’s “no-CBD edibles” stance doesn’t change once more detailed regulatory frameworks are in place, the authorities may start cracking down on offenders.

CBD legal nuances still vary dramatically from state to state

Another source of confusion is that, although hemp is now federally legal, each state has its own laws pertaining to CBD. “You have to look at the FDA law and the state law,” says Margolin. “My biggest challenge is staying informed on a daily basis and just explaining the myriad laws [to clients], especially with the combined issue of enforcement and what people see [on the market.]”

This is particularly challenging to navigate as an online retailer catering to multiple states, says Baraket. For instance, in most states, CBD products can contain up to 0.3 percent THC, a cannabinoid that gets a person high. But in Idaho, CBD products can’t contain any THC, which excludes many popular hemp-based items from being sold there. And, in Baraket’s opinion, this regulatory patchwork isn’t likely to change any time soon. “Because the cannabis industry has been built on this state-by-state model, each state will [likely] continue to govern what’s okay and what’s not okay within their own borders,” he says. At least, until the FDA weighs in.

There’s a big push for transparency, given the lack of CBD regulation

One of the biggest buzzwords in the CBD industry right now (and one that Well+Good heard over and over at ExpoWest, the world’s largest natural products convention) is transparency. “The scariest thing right now is that anybody can sell anything and say it’s CBD,” says Baraket. “It’s not like regulators are coming in and testing [products]. It’s so easy to put those three letters on any bottle and sell it… it can be complete garbage and no one will even know.”

Given the lack of government standards, a growing number of CBD brands—including Prima, Feals, and Populum—are being ultra-transparent about their hemp sourcing and third-party lab results to differentiate themselves from the pack and build consumer confidence in the quality of their products. These brands are essentially setting their own quality standards based on existing standards in other industries. “The FDA is still in active pursuit of a definition of how they will manage and oversee the category,” says Christopher Gavigan, Prima’s co-founder and CEO.  “We’re leaning towards the category that the FDA oversees—which is nutritional supplements—and are committing to those sets of criteria.”

Assaf adds that the Prima co-founders have drawn on their experience in the clean products industry—Gavigan and Myers are alumni of Honest, while Assaf used to head up a clean skin-care brand—and implementing third-party certifications from other sectors. For instance, the brand’s Night Magic facial oil is Made Safe certified, which indicates that it’s free from potentially harmful ingredients like pesticides and hormone disruptors. Prima’s entire product line has also been certified glyphosate-free, cruelty-free, and vegan. “It’s about creating the industry-defining standards that we want other brands to follow,” she says.

Baraket also worked with third-party certification agencies when it came to creating the standards for brands sold on Bushl. “Organic farming, regenerative farming, sustainable practices, ethical business, fair trade—those terms that exist in other industries, these are the organizations that are coming together to create standards for [hemp],” he says. Bushl looks at lab results for every product the site carries, confirming that they’re free from heavy metals, pesticides, and other potential toxins. It also checks to ensure that each product contains the amount of CBD listed on the package and conducts site visits to the farms and manufacturing facilities that make each item. “Hemp is an incredible bioaccumulator so it will absorb anything that’s in the soil or in its surroundings,” he explains. “That’s why it’s so important to know where these products actually come from.”

There are many different views of what regulation could look like, but most insiders agree consumer protection is key

Not everyone in the hemp industry agrees on how much say the government should have in regulation—some feel that it should play a big role, while others feel that those directly involved in the business should take the lead. Yet pretty much all of the major players feel that clear guidelines needs to be outlined in some form.

“For us it’s about creating a safer marketplace for the consumer, and that’s where the regulatory framework is needed,” says Myers. “It’s going to be absolutely critical to establishing this category. Ultimately, what we’re looking for are strong regulations that help protect consumers and ensure there’s safe, quality product on the shelves.” In her opinion, this should involve federal standards around labeling, testing, quality, purity, and potency of hemp-based CBD products.

Symonds and others in the space feel that the FDA should create an entirely new regulatory category for CBD products. “Nobody in the industry, except for pharmaceutically minded companies, wants to see CBD be regulated as a pharmaceutical,” she says. (That would result in far stricter rules for labeling, formulation, and marketing compared to what’s required for other types of products.) That said, she also thinks hemp CBD should be regulated more strongly than a traditional dietary supplement. “The only rule is that you can’t make particular claims about [dietary supplements]. But other than that, they’re not really tested. We know there are a lot of bad CBD products out there—things either contaminated with harmful substances or they are not accurate on their labels about things like potency—and I think consumers should have a [greater] level of protection.”

Symonds supports a proposal by Zoe Sigman, program director at Project CBD, which supports classifying hemp CBD products as “plant medicine.” “There are other countries that regulate herbal medicine through its own pathway,” she says. “For me, ideally that would be the case—you have protection for consumers and you also don’t have the government overly restricting something that is very safe. I think it’s doable, but the question is whether there would be a will to create that pathway.”

Either way, everyone I spoke to underscored the need for collaboration between FDA regulators and the hemp industry. “In an ideal world, the government would work with industry experts to prioritize public health and safety while opening up doors for innovation,” says Stanley. “What I hope we will see, far more than anything, is expansive research into hemp. We have to remember that as long as the DEA considered hemp and CBD a controlled substance, our research institutions were effectively denied access to study the plant. This research will inform the future of agricultural and manufacturing practices, and certainly lend to newly validated uses and product formulations.”

No matter what happens on this front, it’s safe to say that the CBD industry momentum is only going to keep ramping up despite the challenges it faces. “There is an eagerness and a desire [among CBD consumers] and that is building and growing,” says Gavigan. In other words, there are many more historic moments left to come.

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