California shoppers are about to see a brand new line of cannabidiol (or CBD)-infused beverages hit supermarket shelves this week, despite the fact such products are still illegal. Even though federal U.S. law now allows for the creation of CBD based products (in the form of tinctures, capsules, lotions and oils, etc.), FDA guidelines restrict CBD food and beverage interstate product sales.
Alternative health food observers can likely tell you that locally made CBD food products have been steadily propping up all across the country for a couple of years now. As functional foods, CBD products have grown in popularity thanks to their relaxing properties, but they won’t produce a ‘high’ as they lack the psychoactive tetrohydrocanabidiol (THC) found in marijuana.
To buy CBD products until now, consumers have typically had to seek out alternative health food stores, neighborhood dispensaries, or mom-and-pop market stalls. Now, the Oki brand is about to change that. With its CBD-infused, flavored water and iced tea lines, Phivida – the premium functional food and beverage manufacturers of the Oki brand – is among the first to mass produce CBD-infused beverages and is poised to make its 360,000 bottles already produced, available in mainstream grocery stores.
But Isn’t the Sale of CBD-Infused Food and Drink Still Illegal in California?
In a word, yes. But the waters (pardon the pun) are muddy. While the 2018 U.S. Farm Bill removed commercial hemp (and hemp-derived CBD with less than 0.3 percent THC content) from the list of U.S. Controlled Substances, the Department of Health continues to follow the (contradictory) Food and Drug Administration (FDA) guidelines. In short, based on section 301 (II) of the Federal Food, Drug and Cosmetic Act, the FDA has prohibited interstate commerce of any food containing THC or CBD. So while the federal bill makes it legal to manufacture CBD products, the Department of Health maintains it is illegal to sell CBD-infused food and drink products outside the state where products are produced.
For Oki, that makes retail business in California problematic. That’s because it’s CBD-infused waters and teas are produced and bottled outside of Dallas, then the Vancouver-based company most likely trucks its product through states like New Mexico (where marijuana remains illegal) before reaching a final Californian retail outlet. The FDA could potentially issue an action letter in this scenario, based on the clear interstate violation of its guidelines.
Why CBD Companies Are Willing to Take the Risk
Sizeable product mark ups, equal big profits. According to the Oki website, a 16-ounce CBD-infused bottle of water will retail for $5; comparatively, a 16.9 ounce bottle of Nestle water retails for about 50 cents. In line with this approximate 900% mark up, and touted product benefits, it’s no surprise that independent market research firm, Brightfield Group, predicts the CBD oil business could grow to a $22 billion market by 2022. With a pie that big, other big players are ready to get into the CBD market, and are likely waiting to see how the Oki products will be dealt with by regulators before diving in. To date, companies have stayed intrastate to abide by the current patchwork of legislation both allowing and restricting cannabis based businesses. It will be interesting to watch what, if any,
FDA Comment and Anticipated Next Moves
Earlier this month, the FDA released a statement noting: “We are aware that there may be some products on the market that add CBD to a food or label CBD as a dietary supplement. Under federal law, it is currently illegal to market CBD this way.” Oki labels do not tout its products as CBD dietary supplements, or make mention of CBD, they do promote their product’s inclusion of an “active hemp extract.” Even if labeling does not come into question, the intended scale of the Oki roll out may be enough to catch the eye of the FDA. Onlookers will be watching intently to see just how the FDA responds to a new, sizeable player in the cannabis-based marketplace, and whether or not its interstate business dealings will push the FDA to expedite a federally uniformed regulatory framework.
All a little complicated? For cannabis and CBD based-businesses needing legal advice navigating this ever changing landscape, Cannabis Law Group can help. Our Los Angeles CBD and hemp business attorneys are ready to help answer any questions you may have.
The Los Angeles CANNABIS LAW Group represents growers, dispensaries, ancillary companies, patients, doctors and those facing marijuana charges. Call us at 714-937-2050.