United States: The ABCs Of CBD: 5 Big Questions Businesses Should Ask Before Entering The CBD Market

Last Updated: August 19 2019
Article by William A. Garvin and Travis W. Bliss

The popularity of products containing cannabidiol, more widely known as CBD, has exploded. Manufacturers are touting benefits of the hemp compound ranging from treating seizures, neurological conditions and gut disorders to curbing anxiety and improving complexion. Today, there are CBD liquids, capsules, oils, creams, lollipops – even CBD gummy bears.

Just last week, the FDA held a public hearing to obtain scientific data and information about products containing cannabis or cannabis-derived compounds. In it, they wasted no time in acknowledging the challenges they face in regulating CBD products. Acting FDA Commissioner Ned Sharpless even went so far as to admit that the agency really doesn't know all that much about the full health effects of CBD, including how much CBD can be safely consumed in a day, the length of time it should be used, pregnancy risks, risks to children, and how it interacts with drugs and prescription medicines. At this point, what they (and everyone else) do know is that it's a heavily discussed – and growing – market.

With the CBD industry projected to grow to $22 billion by 2022, many organizations are understandably eager to enter the world of CBD. However, despite the enthusiasm around CBD's potential growth, there are significant uncertainties around how regulations and evolving scientific studies will impact the industry. These shifting trends can be particularly challenging to navigate for organizations without a lot of familiarity with the CBD space – and let's face it, few businesses have any kind of deep experience with CBD at this point in its lifecycle.

Long before the spotlight on CBD, our team at Buchanan had worked extensively in the cannabis space. In fact, our cannabis practice was ranked Band 1, Nationwide in the Chambers USA 2019 guide, the preeminent ranking of the top lawyers and law firms across the entire U.S. Just this year, our attorneys helped advise a national retail consumer chain on bringing CBD products to its shelves in more than two dozen states. This experience gives us a much-needed perspective on an industry with a potentially profitable – yet uncertain – future.

For companies looking to enter the CBD space, here are five critical questions to consider before making the move.

  1. How are current regulations different at the federal, state and local levels?
    Following the passage of the Farm Bill late last year, the FDA has continued its process toward taking an official stance on CBD products. Yet many states have already staked out a position – some in favor, some opposed. At the same time, organizations may face challenges from local law enforcement that do not recognize the difference between hemp-derived CBD and marijuana products and substances.
  2. How do laws regarding various CBD products (e.g., ingestible vs. topical applications) differ?
    Despite misconceptions, most of the CBD products gaining popularity are not impacted by the passage of medical or recreational marijuana state laws – or lack thereof. Products that do include more THC will fall under these marijuana laws. And different products will invite different levels of risk (e.g., vape pens vs. topical applications). Thus, it is imperative to know how your product will be regulated under federal and state laws and the particular legal risks for your products.
  3. Will new research into the effectiveness of CBD products affect businesses that sell it?
    Organizations must pay close attention to any new research on CBD and its effect on consumers. Any early indicators that there are dangers associated with CBD use would change the risk profile considerably.
  4. How will regulations change in the coming months and years?
    Currently, the FDA is facing a lot of pressure from business and the public to permit CBD product sales. If this intense consumer interest dies down or the public begins to question the effectiveness or safety of CBD products, then the regulatory environment could change quickly.
  5. How does investment in CBD affect an organization's relationship with banks, investors and other entities?
    Because the federal government still classifies marijuana as a "Schedule 1" drug, banks that handle money earned through marijuana sales can be charged with money laundering. This presents a unique challenge for organizations selling marijuana products legally in states where permitted, and also a number of issues for businesses selling hemp products that can get inadvertently and unfairly mixed up in this issue as well.

Companies interested in entering the CBD industry are advised to seek experienced legal counsel. The attorneys on Buchanan's Cannabis Industry Team are prepared to assist as you consider entering this challenging, exciting – and potentially rewarding – market.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions