Breweries, distilleries, and wineries with ambitions of infusing or selling their beverages with cannabidiol (“CBD”) and/or tetrahydrocannabinol (“THC”) derived from hemp will have to wait for a change in law by the U.S. Alcohol and Tobacco Tax and Trade Bureau (“TTB”), or a divergent conclusion by the United States Food and Drug Administration (“FDA”) finding that these beverages fall into a legal exemption. On April 25, 2019, the TTB, which regulates the alcohol and tobacco industries in the United States, issued an industry circular as a response to numerous inquiries from the alcohol and hemp/CBD industries about whether CBD or THC can legally be introduced into alcoholic beverages: the TTB made it clear that, at this time, it will not approve formula or label applications for alcoholic beverages containing CBD or THC.
Alcoholic Beverages Infused with CBD or THC: Impermissible
The Agriculture Improvement Act of 2018, more commonly referred to as the 2018 Farm Bill, permitted states and tribal nations to participate in hemp production programs and removed “hemp,” and cannabinoids derived from hemp, such as CBD, from the Controlled Substances Act’s (“CSA”) definition of “marihuana.” See 21 U.S. Code § 802. “Hemp” is now defined as “the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids…with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.” 7 U.S. Code § 1639o. Thus, hemp, and cannabinoids derived from hemp, are no longer controlled substances under the CSA.
However, the 2018 Farm Bill explicitly preserved the FDA’s authority to regulate products containing cannabis or cannabis-derived compounds under the Federal Food, Drug and Cosmetic Act (“FDCA”). The FDA maintains that it is illegal to include CBD and THC products subject to the FDCA, including foods, beverages, and dietary supplements, because the substances were investigated and approved as active drug ingredients. See 21 U.S.C. § 331(ll). The FDA provides that substances intentionally added to foods or beverages that are not considered generally recognized as safe (“GRAS”) by qualified experts, such as CBD or THC, are deemed unsafe and are not permitted to be added to foods or beverages. See 21 U.S.C. §§ 201(s) and 409. Consequently, the TTB, which defers to the FDA’s stance, will not approve formula or label applications for alcoholic beverages subject to the FDCA that contain CBD and/or THC.
Alcoholic Beverages Containing GRAS Hemp Ingredients: Permissible
The TTB has, however, confirmed it will continue to process applications for formulas or labels for alcoholic beverages containing ingredients derived from hemp seeds or hemp seed oil, as these ingredients do not contain, or contain only trace amounts of, CBD and THC and have been evaluated as GRAS by the FDA. Applicants of such formulas or labels must (i) successfully establish, through laboratory analyses of the hemp seeds or hemp seed oil, that these ingredients are not controlled substances under federal law; and (ii) submit a detailed description of the laboratory’s method of analysis. Moreover, for alcohol product labels, alcohol producers must complete and submit the TTB’s Application for Certification/Exemption of Label/Bottle Approval (“COLA”), as well as ensure compliance with all TTB-labeling and advertising regulations. Lastly, labels that include GRAS hemp seeds or hemp seed oil cannot use the term “hemp,” unless it is in an approved statement (e.g., beer brewed with hemp seeds), nor can these labels include any graphics or representations indicating or implying the presence of marijuana or any psychoactive effects.
Although the TTB is currently not approving formula or label applications for alcoholic beverages subject to the FDCA that contain CBD and/or THC, the TTB declared it will closely monitor further FDA guidance on CBD and THC as it continues to review its existing policies. Therefore, companies should await further FDA and TTB guidance before entering the CBD or THC-infused alcoholic beverage market; however, companies can continue to submit formula and label applications to the TTB for alcoholic beverages containing ingredients derived from GRAS hemp seeds or hemp seed oil.
Non-Alcoholic CBD/THC-Infused Beverages: Not Recommended
Many of us have seen certain stores, restaurants, coffee shops, etc., sell CBD/THC-infused foods or beverages, but given the FDA’s stance on the illegality of the inclusion of these substances, how is this possible? Certain states, such as Colorado, Florida, Illinois, Indiana, and Texas, have enacted hemp/CBD regulations that permit companies to manufacture and sell CBD and/or THC-infused consumables (with not more than 0.3% total delta-9 THC) within the individual state’s boundaries. Notably, New York’s pending regulations would permit manufacturers and retailers to process or sell foods and beverages infused with CBD and/or THC in the state of New York if such goods, along with meeting various other requirements, do not contain alcohol or tobacco. As of the date this blog was written, the FDA, the United States Federal Trade Commission (“FTC”), nor any other federal agency, has not challenged these state regulations that are in contradiction with the FDA’s position. Therefore, companies located in such states, or selling compliant CBD/THC-infused goods into such states, often move forward relying on the states’ protections and guidance with the mindset that the reward of greater profits outweighs the risk of potential federal crackdowns. However, states moving forward with favorable regulations are simply not able to override federal law and preempt the FDA’s prohibitions.
Indeed, the FDA and the FTC have sent warning letters to companies in violation of the FDCA for adding CBD or THC to foods or beverages, marketing CBD or THC goods as dietary supplements, and/or making impermissible health claims in the marketing, advertisement, customer comment/review sections, and sale of CBD or THC products. Moreover, in December of 2020, the FTC took action against six CBD companies, along with their corporate officers, for making unsupported health claims in an enforcement sweep called “Operation CBDeceit,” where the FTC imposed its first monetary sanctions against five of the violators who were required to pay settlement amounts ranging from $20,000 to $85,000.
Due to the FDA’s stance and its recent joint enforcement actions with the FTC, it is not advisable to produce a CBD or THC-inclusive alcoholic beverage. Moving forward with a CBD or THC-inclusive alcoholic beverage may subject your company to not only a warning letter, but possible monetary sanctions from the FTC.
Paul Stevenson is an associate attorney with Ritter Spencer PLLC who practices cannabis law and represents clients in all facets of the cannabis and hemp industries, including dispensaries, growers, processors, manufacturers, retailers, and more.