The CBD Market – Enter, But Enter With Caution

The constantly-evolving legal status of cannabis makes an otherwise extremely lucrative market opportunity perplexing for businesses looking to enter that also desire to be legally compliant. The good news is that – at least for cannabidiol (“CBD”) – the federal government seems to finally be coming around and catching up with the states. Nonetheless, our advice to clients is: be thorough with your due diligence and make your decision based on a careful risk-tolerance analysis.

I am a California business attorney and my firm specializes in assisting small businesses with their legal needs. This article is intended to answer some common questions that our firm frequently receives regarding commercial CBD sales.

In the United States, each state has different rules and regulations and although the federal government may ultimately allow CBD derived from a plant with less than .3% THC (industrial hemp), through passage of the 2018 Farm Bill, it is currently still considered an illegal schedule I drug (see below). Therefore, before entering the CBD market it is highly advised to consult an attorney licensed in the desired state and who is familiar with the federal legal landscape.

CBD Medically Prescribed Benefits/Uses

On June 25, 2018, the U.S. Food and Drug Administration (“FDA”) approved a synthetic CBD drug named Epidiolex, for the treatment of seizures associated with two rare and severe forms of epilepsy. CBD is one of the many chemical components of the Cannabis sativa plant (marijuana) called cannabinoids but does not cause intoxication as does its psychoactive cousin, tetrahydrocannabinol (“THC”).

CBD is still considered a schedule I drug (high abuse potential and no accepted medical use) under the Controlled Substances Act (“CSA”), 21 U.S.C. § 811 et seq., because it derives from the cannabis plant. However, on September 27, 2018, the Drug Enforcement Administration (“DEA”) rescheduled Epidiolex to schedule V, which is the least restrictive schedule under the CSA.

In addition to the treatment of epilepsy, CBD is prescribed in countries such as Canada and Sweden to alleviate the pain associated with multiple sclerosis (Sativex) and research is currently being conducted regarding its therapeutic benefit with several neurological disorders.

CBD Commercial Benefits/Uses

CBD is often synthesized in an oil form and ingested as a tincture or through vaporization. At this point, there is likely not a food, beverage, or beauty product that has not been infused with CBD for its purported natural pain-relieving and anti-inflammatory properties. Even Target, Walmart, and Coca-Cola are looking to enter the market.

CBD may also be helpful in smoking abatement, suppressing cancer growth, and treating anxiety disorders, Type I diabetes, Alzheimer’s disease, and insomnia etc.

Just a few of the many products that we have seen include:

  • Coffee and tea;
  • Juices and soda;
  • Beer;
  • Cereal;
  • Gummy bears and other candies;
  • Chocolates;
  • Olive oil;
  • Topical skin lotion and/or patches (used for treatment of chronic pain associated with arthritis and fibromyalgia);
  • Massage oil;
  • Lip balm;
  • Beard balm;
  • Shampoo and conditioners;
  • Bath bombs;
  • Pet medication etc.

The impending CBD commercial market is profitable but one must be cautious and conduct effective research and due diligence prior to entrance. Additionally, all CBD products must be thoroughly tested and any unsubstantiated health claims must be avoided so as not to run afoul with the FDA.

If you are interested in selling your CBD products through a secure e-commerce payment gateway, contact our friends at Tasker Payment Gateways and they can get you set up. If you have any questions about the foregoing information, or have any other business needs, please do not hesitate to contact me.

Disclaimer: The information above is for informational purposes only and should not be construed as legal advice. It is not privileged and does not create any attorney-client relationship.

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