Cannabis is trending in the beauty and wellness industry.\u00a0 More and more companies are infusing hempseed oil and CBD derived from hemp in salves, lotions, creams, oils, extracts, and lip balms, among other products.\u00a0 Although the industry is taking off, the legal framework lags behind the expansion of the industry and broad acceptance of consumers to purchase these products.\u00a0 This primer provides a 101 on the current state of the regulatory agency, applicable laws, and best practices as it relates to the beauty and wellness industry.<\/p>\n
Federal Agencies That Regulate the Beauty and Wellness Industry<\/u><\/strong><\/p>\n The beauty and wellness industry is primarily regulated by the Food and Drug Administration (FDA) and the Federal Trade Commission (FTC).<\/p>\n The FDA is tasked with protecting the public health by ensuring the safety, efficacy, and security of the nation\u2019s food supply, cosmetics, drugs, etc.\u00a0 To date, the FDA has not approved marijuana as a safe and effective drug for any indication.\u00a0 However, the FDA has approved some drugs containing synthetic versions of marijuana substances and cannabis.<\/p>\n The FTC is tasked with the promotion of consumer protection (including regulating advertising and marketing of consumer products) and elimination and prevention of anticompetitive business practices.\u00a0 There is no action on cannabis or its derivatives to date.\u00a0 The FTC has been silent on that issue and has not given any guidance or taken any action as to cannabis consumer products.<\/p>\n Relevant Regulations for Cannabis Products<\/u><\/strong><\/p>\n The Controlled Substances Act (CSA)<\/strong> is a federal law that criminalizes the distribution, sale, possession, and use of marijuana.\u00a0 Marijuana is designated as a Schedule I drug, which incurs the most severe penalties.\u00a0 Recently, there has been an emphasis on de-scheduling marijuana (i.e., taking it out of Schedule I).\u00a0 While marijuana is illegal, extracts and byproducts from the cannabis plant, such as sterilized hempseeds, hempseed oil, and fibers, are legal.<\/p>\n The Agricultural Act of 2014 (the Farm Bill)<\/strong> is a federal law that removed federal restrictions aimed at growing industrial hemp.\u00a0 It provides an explicit definition for industrial hemp:\u00a0 Cannabis sativa L.<\/em>, and any part of such plant, whether growing or not, that has less than 0.3 percent THC concentration on a dry weight basis.\u00a0 The Farm Bill gives states the ability to pass laws permitting hemp cultivation.\u00a0 The Farm Bill also created pilot research programs to study the benefits of cultivating hemp in the United States.\u00a0 In 2017 estimated sales of U.S. hemp reached approximately $600 million in annual sales.\u00a0 Production in 2017 grew to nearly 140% of 2016 production.\u00a0 While the Farm Bill is economically successful, appropriations for the 2014 Farm Bill expired on September 30, 2018.<\/p>\n The Hemp Farming Act (the 2018 Hemp Bill)<\/strong> is part of a larger omnibus farm bill that would legalize hemp and its byproducts by removing Cannabis sativa L.,<\/em> classified as \u201chemp,\u201d from Schedule I controlled substances. \u00a0However, marijuana would remain a Schedule I drug.\u00a0 The 2018 Hemp Bill is supported by Democrats and Republicans.\u00a0 The bill is pending in Congress, and although its passage is likely, it will probably be delayed due to midterm elections.<\/p>\n The Food, Drug, and Cosmetic Act (FDCA) <\/strong>gives the FDA the authority to promote and protect the public health by assuring the safety, effectiveness, and security of human and veterinary drugs, vaccines, and other biological products for human use, and medical devices, among other things.\u00a0 The FDA is also responsible for regulating drugs, food, cosmetics, and dietary supplements.<\/p>\n Only FDA-approved products may make medical claims, and those claims must be consistent with FDA-approved labeling and give fair balance to risk information.\u00a0 The FDA focuses its enforcement on products nationwide making egregious health claims, including products alleged to contain CBD.\u00a0 Because CBD is still a Schedule I drug, it is regulated by the FDA as a drug and must meet strict labeling and advertising requirements.\u00a0 There have been numerous warning letters to companies that are illegally selling products online that contain CBD and claim to prevent, diagnose, treat, or cure cancer, because their claims are unsubstantiated.\u00a0 The FDA\u2019s warning letters for CBD-related products can be found here<\/a>.<\/p>\n However, the FDA has approved three drugs that use synthetic cannabinoids:\u00a0 Marinol and Syndros (which include synthetic THD) to treat anorexia associated with weight loss in patients with AIDS, Cesamet (which includes synthetic nabilone) to treat nausea and vomiting associated with chemotherapy.\u00a0 In June 2018, the FDA approved Epidiolex (which includes naturally extracted CBD) to be used in the treatment of rare forms of epilepsy.\u00a0 The FDA\u2019s approval of Epidiolex marks the first FDA-approved drug that contains a purified drug substance derived from marijuana.\u00a0 The FDA\u2019s press release on Epidiolex can be found here<\/a>.<\/p>\n The Federal Trade Commission Act <\/strong>gives the FTC the authority to regulate and prevent unfair methods of competition and unfair or deceptive business practices in interstate commerce.\u00a0 Consumer products must be properly labeled, and claims related to the benefits of those products must be truthful and clear and conspicuous to the average consumer.\u00a0 However, the FTC has yet to issue any formal guidance on marijuana and related businesses.\u00a0 While the FTC has not issued explicit guidance for health and beauty products containing cannabis derivatives, it is important that the labeling be accurate as to the ingredients, and any claims that are made in connection with the products must be substantiated.<\/p>\n State regulations<\/strong>.\u00a0 States have also legalized the cultivation and use of cannabis and its derivatives.\u00a0 Medical marijuana is legal in at least 29 states and DC, and recreational marijuana is legal in at least 9 states and DC.\u00a0 Hemp cultivation is legal in at least 35 states.\u00a0 CBD derived from marijuana is legal in DC and the states that have also legalized recreational use of marijuana.<\/p>\n Since 2013, the federal government has allowed actions by the states in the legalization of the cultivation and use of marijuana and its related products for all purposes.\u00a0 This has resulted in a lack of clarity in understanding the parameters of what is and is not legal under state and federal regulations.<\/p>\n Best Practices for Companies Selling Cannabis Beauty and Wellness Products<\/u><\/strong><\/p>\n Beauty and wellness products that contain cannabis derivatives that are hemp-based and have no or low amounts of THC can be legally sold.\u00a0 Because regulatory scheme is still in flux, there is a lack of clarity about how regulatory agencies will enforce laws against companies selling CBD-based beauty and wellness products. However, there are some best practices companies can take to avoid regulatory pitfalls:<\/p>\n