CALIFORNIA HEMP & CBD UPDATE

This article is a companion post to our prior update on CBD’s federal legal status.

California Continues to Restrict CBD

The California Department of Public Health has made it clear that CBD is not allowed in food products within California: the Department of Public Health issued a memo in July 2018 confirming that CBD products are not allowed in any food products in the state (unless the products are regulated as commercial cannabis edibles, which by definition contain THC levels of at least 0.3%). Thus, under state law, CBD products are allowed to be sold and ingested as long as they include THC, and are banned in food if they come from industrial hemp with little or no THC. The reason CBD products with no THC are banned by state law is that California incorporates federal law regarding food additives, dietary use products, food labeling, and good manufacturing practices for food.

The Department of Public Health has cited the Sherman Law as the authority allowing it to restrict the production and sale of CBD products. The Sherman Law regulates food, drugs, and cosmetics in California.  “Drug” is defined in section 109925 of the state law as follows:

“Drug” means any of the following:
(a) Any article recognized in an official compendium.
(b) Any article used or intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease in human beings or any other animal.
(c) Any article other than food, that is used or intended to affect the structure or any function of the body of human beings or any other animal.
(d) Any article used or intended for use as a component of any article designated in subdivision (a), (b), or (c) of this section.

Further, “Food” is defined under section 109935 of the state law as “[a]ny article used or intended for use for food, drink, confection, condiment, or chewing gum by man or other animal.”  This definition of food includes pet food, but does not include products containing cannabis with at least 0.3% THC (which are, as described above, cannabis edibles). California law incorporates the federal laws prohibiting the addition of CBD or THC to food products.

CDPH: Topicals and Vape Pens Are Illegal, Even if Not Marketed with Health Claims

The California Department of Public Health’s position on CBD in food is set forth in a clear written policy – it is not allowed.  Some have asked, however, whether CBD might be lawfully produced and sold in California in non-food products – such as vape pens or other smokable products or creams or other topical treatments.  While there may be legitimate arguments that this is at least a gray area in the law, representatives of the Department of Public Health are currently informing members of the public that CBD-based vape pens and topicals are prohibited under state law (specifically the Sherman law).

The CDPH’s position is that any vape pens or topicals containing CBD, but no THC, are considered illegal by the State of CA – even though the products are not foods or dietary supplements, and even if they are not marketed with any health claims, they are still considered “unapproved drugs” because they contain the same active ingredient (CBD) as is found in an FDA-approved drug.

While CDPH representatives maintain that CBD-based topicals and vape pens are all unlawful under state law, there is no clear written policy or statement from California authorities on the issue of CBD in non-food products, and this area of law seems to be in a state of flux.

Non-Food CBD and Hemp in California

For the moment, non-food CBD and hemp products, such as creams, topicals, and cosmetics, seem to be in a legal gray area. The CDFA recommends that manufacturers and sellers check with their local health agencies about any products they plan to make or sell – since enforcement currently seems to be taking place almost entirely at the local level, this is probably the best way to find out whether a particular product is allowed.

According to the CDFA, California law does not currently provide any requirements or issue any licenses for the manufacturing, processing, or selling of non-food industrial hemp or hemp products. Neither the CDPH nor federal agencies have released any guidelines or restrictions describing the allowable uses of non-food hemp or hemp-derived CBD products.

Local environmental health agencies are responsible for enforcing the state guidelines, but, according to the LA Times, local enforcement of restrictions on CBD and hemp products can vary significantly. Likewise, although the FDA has cracked down on CBD businesses that make unsubstantiated or false claims about their products, indicating that they plan to regulate CBD products to some degree, they’re less clear about the future legal status of hemp-derived CBD and non-edible hemp derivatives in general.

Penalties

In California, adulterated or misbranded food, drugs, and cosmetics are penalized under CDPH’s Food, Drug, and Cosmetic Law. All products are considered to be misbranded if they misstate their ingredients or make unproven medical claims, while food products are considered to be adulterated if they contain CBD.

Violations are punishable by imprisonment for not more than one year in the county jail or a fine of not more than one thousand dollars ($1,000), or both the imprisonment and fine. If the violation is committed after a previous conviction under the same code that has become final, or if the violation is committed with intent to defraud or mislead, or if the violation was intentional / intended to cause injury, the person who committed the violation will be subject to imprisonment for not more than one year in the county jail, imprisonment in the state prison, or a fine of not more than ten thousand dollars ($10,000), or both the imprisonment and fine.

The FDA also has the right to enforce federal food, drug, and cosmetic laws, where the fines range from up to $100,000 (for a misdemeanor by an individual that does not result in death) to up to $200,000 (for a misdemeanor by a corporation that does not result in death). The maximum imprisonment for a misdemeanor remains a year for each offense.

Local health authorities may also enforce their own restrictions on hemp and CBD. For instance, food operators in LA County found to be selling products adulterated with hemp will be cited with a violation on their health inspection reports.

Los Angeles Continues to Issue and Promote Tax Registration Certificates to Sell CBD Products

The City of Los Angeles offers a form on the website of the Department of Cannabis Regulation that is to be used for businesses seeking a Business Tax Registration Certificate (BTRC) to engage in commercial activities related to industrial hemp and/or cannabidiol (CBD) derived from industrial hemp in the City of Los Angeles (City). The Department of Cannabis Regulation (DCR) does not regulate the sale of CBD oil, CBD products or hemp products if they are derived from industrial hemp, as defined in Section 11018.5 of the Cal. Health and Safety Code. No cannabis-specific City license is required to sell those products. Therefore, to receive a BTRC and engage in commercial activities related to industrial hemp, you must attest that the products you intend to sell are derived from industrial hemp.

Registration for this tax certificate does not authorize any business to violate state or local law.  It signifies, however, that the government anticipates a continuing market in CBD-based products, and that the government may be preparing to openly allow and regulate these products.

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