CBD companies cautiously optimistic in absence of regulatory guidance

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CBD companies cautiously optimistic in absence of regulatory guidance

By Nora Caley - 08/29/2019
To play by the rules, it helps to have a rule book.

For those manufacturers and, now, retailers operating in the hemp and CBD space, that rule book still does not exist, at least in official form.

It is not like suppliers in the category are not asking for one. For at least the last three years, many vendors in the community literally have been begging the Food and Drug Administration and other federal government agencies to provide a template for the marketplace. Suppliers have said that the government needs to establish the rules on such issues as manufacturing, labeling and sales in this booming category in order to set standards for the industry.

The FDA is working on it, but, in the meantime, companies are being forced to innovate and launch products designed to promote well-being and support various health issues on their own. “It is the wild, wild west out there,” one supplier said. “And, it will not calm down until the government sets legitimate guidelines that will separate the real players in the field from the companies looking to make a quick buck, with no concerns about the consumer or the retailer they are doing business with.”

On May 31, the FDA conducted a public hearing to gather information about the safety, quality, marketing and other factors related to the sale of products containing cannabis or cannabis-derived compounds. At the hearing, speakers representing manufacturers, consultants, trade associations and others spoke about the regulatory ambiguity they are facing as they introduce products in this emerging space. After the all-day hearing, people were allowed to submit comments until July 2.

Although the production of hemp, the nonintoxicating variety of the cannabis plant, became legal with the 2018 Agriculture Improvement Act, or the Farm Bill, the FDA still maintains that CBD, a compound derived from the cannabis plant, cannot be added to food, drink or dietary supplements and be sold legally. The cannabis plant family, which includes hemp and marijuana, contains such compounds as CBD, which is not psychoactive, and the psychoactive chemical THC.

Currently, such topical items as lotions and sprays with CBD are available at many retailers nationwide. Walgreens, CVS Pharmacy, Rite-Aid and Kroger announced in recent months that they would sell topicals. The FDA has not said whether it will create a pathway for such ingestible items as gummies, capsules and tinctures to be sold legally, or when new guidelines might be announced.

Waiting for the FDA
While the FDA hearing provided no new information regarding future policies or guidelines for manufacturing hemp-derived CBD products, manufacturers said the day offered clues as to how to proceed in this uncertain arena.

“Since the hearing, FDA officials have reiterated there is little data to guide dosage levels, expiration dates and manufacturing protocols, and consumers should be wary of manufacturers making alleged health claims that lack rigorous scientific proof reviewed and/or approved by the FDA,” David Chadwick, CEO of Henderson, Nev.-based Leading Edge Pharms, said. “Now may be a good opportunity for manufacturers to re-evaluate the interstate versus intrastate commerce opportunity and seek legal counsel that is actively involved in federal and/or state regulatory and legislative advocacy to assist in strategic planning.”

Manufacturers need to think long-term and develop a business strategy that conforms to the current ambiguous regulatory framework, Chadwick said, and is flexible enough to adapt to changing rules and policies.

Some change has been made. In 2018, the FDA approved prescription CBD Epidiolex as a treatment for seizures related to two rare and severe forms of epilepsy. That approval hints at future FDA approvals of CBD for certain indications.

“What direction the FDA will pursue is not clear,” Murdoc Khaleghi, a physician and senior medical advisor at Telford, Pa.-based Elevate Hemp, said. “But what has become clear is that with CBD sales increasing 200% in just the last few years, and it not having psychoactive effects, it will not be going away.”

Khaleghi also said that CBD’s therapeutic usages would become validated more progressively. “Therefore, there’s no suggestion that manufacturers should have to worry about any strict prohibitions in CBD,” he said. “What is possible is greater regulation of cannabis-derived CBD, as opposed to hemp-derived, as well as possible regulation of CBD’s addition to food and beverages.”

Matt Wolf, CEO of Contract Pharmacal, or CPC, which manufactures Uleva full-spectrum hemp supplements in Hauppauge, N.Y., and Denver-based Uleva Products, said the takeaway from the meeting is that the FDA does want to find a way to make CBD legal in food and dietary supplements.

“The FDA is taking unprecedented action to find a way to do it,” he said. “The solution is not going to come overnight because there are cumbersome regulatory processes involved, which the government is currently considering.”

Ahead of the Game
Many manufacturers welcome possible regulation. “The FDA should regulate the industry, but not too much,” Rod Deraney, managing partner at Newtown, Conn.-based New Leaf Pharmaceuticals, said. “It should be fair to build and develop a business within this industry.”

Others said they have been using high quality standards anyway. “That FDA hearing did not change very much for Green Roads,” Laura Fuentes, CEO and co-founder of the Deerfield Beach, Fla.-based company, said “The organization remained reserved about CBD and directed consumers toward brands that provide test results and other markers of quality control, which we do.”

One reason for manufacturers’ optimism about possible regulations, and their vocal support of them, is that they think rules will help them stand out as safe, superior producers of CBD products. Companies said they already have implemented quality control in manufacturing and labeling, and new guidelines only can help the industry.

Courtney Roundy, founder and director of business development and brand management at Salt Lake City-based Harmony Hemp, said he hopes FDA guidelines will be strict. “We want them to regulate us, absolutely,” he said. “Tell us what lane to stay in, and we’re glad to do it. There are far too many companies clouding the space that seem to be ill-intentioned.”

Others agreed that they are the ones that are abiding by high standards, and that any rules from the FDA will affect a few players. “The hearing made a few things clear,” Sebastien Hebbelinck, CEO and president at Boulder, Colo.-based APAX Group, said. “Traceability is key, labels need to match what is inside the product, claims need to be addressed, and poor manufacturing practices need to be addressed.”

Hebbelinck said not all companies in this space operate with quality, consistency and honesty. It is important for retailers to know certain information about the companies that supply CBD products. He recommended asking suppliers for third-party analysis to confirm quality and label compliance. Also, suppliers must be able to keep products in stock. “These products are derived from a crop, after all,” he said. “Without sufficient supply, it may be extremely difficult to keep your customers

Retailers Should Find out More
To satisfy consumers looking for CBD products, retailers need to vet their suppliers, and manufacturers are eager to serve as a resource in this regard.

“The amount of companies entering the market can be extremely overwhelming to retail,” Courtney Schmidt, director of national accounts at Boulder, Colo.-based Charlotte’s Web, said.

Charlotte’s Web recommended that retailers ask manufacturers questions during the vetting process. The questions should cover the type of quality control practices in place, where the hemp is sourced, the type of testing to ensure safety and efficacy,