United States: Cosmetics, Hemp, And CBD: Legislative And Regulatory Update

Last Updated: November 7 2019
Article by Tonya M. Esposito and Renee B. Appel

Seyfarth Synopsis: Through a reintroduced House bill, Congress is taking strides to push for cosmetic regulation reform and, separately, through the SAFE Act, it is seeking to establish a safe harbor for financial institutions to support the burgeoning cannabis industry. Plus, the USDA just issued an interim rule for hemp production.

USDA Issues Proposed Rule for Hemp Production

The 2018 Farm Bill, which federally legalized hemp (formerly a Schedule I drug like its close cousin, marijuana), opened the gates for mass hemp production—well, almost. While the law set the record straight between hemp and marijuana, it also tasked the US Department of Agriculture (USDA) with promulgating regulations and guidelines to establish and administer a program for the production of hemp in the US. On October 29, 2019, the USDA issued its proposed rule for hemp production. Publication in the Federal Register is expected later this week. As noted by the USDA, “[t]he effective date of the interim final rule is, and the comment period will not begin until, the date of publication in the Federal Register.”

The proposed rule creates a process by which States and Indian Tribes can submit plans to monitor hemp production in their respective territories. The plans must incorporate procedures for sample and testing hemp to ensure that the cannabis grown and harvested does not exceed the acceptable hemp THC level. In addition, the plans must include procedures for the disposal of non-compliant plants (i.e. those with THC levels above 0.3%). Other plan requirements include establishing information sharing procedures and obtaining a certification of resources. Alternatively, the rule establishes a Federal plan for producers in States or territories of Indian tribes that do not have their own USDA-approved plan.

Exercising its authority from the 2018 Farm Bill, the USDA sets forth in the rule the process by which producers can apply for and be issued a license for hemp production by the USDA. USDA has also established specific compliance requirements for USDA licensees, including the USDA’s ability to conduct random audits and issue corrective action plans for producers’ negligent violations. Actions deemed violatory could result in a suspension or revocation of a USDA license. The rule further provides an appeal procedure for applicants who are denied a license.

Within the announcement of the rule, the USDA cautions that “hemp production in the US has seen a massive resurgence in the last five years; however, it remains unclear whether consumer demand will meet supply.” This consideration will likely be influenced by how quickly the federal government mends the patchwork of rules and regulations both at the state and federal level governing the legality of marijuana and CBD. Until then, the USDA seeks to add some clarity to the conversation so that States, Indian Tribes, and cannabis producers can plan accordingly.

Schakowsky Re-Introduces Consumer Protection Bill

On September 12, 2019, Illinois Representative Jan Schakowsky introduced H.R. 4296, the Safe Cosmetics and Personal Care Products Act of 2019, which aims to set guidelines for cosmetics and personal care products labeling. As characterized by Congresswoman Schakowsky, the bill “will provide cosmetics safety that consumers and workers want and deserve; address the over-exposure to toxic chemicals that communities of color and professional salon workers experience every day; and hold companies accountable for the safety of ingredients in their products.” While this bill bears many similarities to its previous iterations, there are several new aspects of this bill that are worth considering.

To begin, the bill places greater accountability on the cosmetics industry. Cosmetics and personal care products brands would have to register with the Department of Health and Human Services (HHS), providing their name, location, list of cosmetic products, their function, and their gross sales receipts. Brands would be required to update this information annually for display on the Food and Drug Administration (FDA) website, as well as, disclose the ingredients used in a product (both professional and retail). Additionally, the manufacturer would be required to publish the product’s ingredient list on its website if the product can be purchased online. They would also have to provide the ingredient list for any products sold online, along with any products sold on third-party vendor’s websites.

The bill, if passed, would also give the HHS and the FDA expanded regulatory authority and a number of new responsibilities. Under H.R. 4296, the Secretary would have the ability to issue several different kinds of recalls for products in violation of the bill under certain circumstances and make public notice of these recalls. The bill also prompts the HHS Secretary to place ingredients on one of four lists: (1) Prohibited; (2) Restricted; (3) Safe Without Limits; or (4) Priority Assessment. The bill requires a number of ingredients—proven to be toxic—to be immediately added to the Prohibited list and outlines a roadmap for populating the other three lists with ingredients. This provision of the bill varies from the Personal Care Products Safety Act (S. 726), a similar bill introduced in the Senate by US Senators Dianne Feinstein and Susan Collins. The Senate bill would require the FDA to review a minimum of five ingredients a year to determine their safety. H.R. 4296 instead requires 20 ingredients to be placed on a Priority Assessment List within the first year of enactment, and the Secretary must then evaluate a minimum of 10 additional agreements a year (until all ingredients actively being used in cosmetics and personal care products have been categorized). H.R. 4296 seemingly seeks to move fast right out of the gate and aims to keep up that momentum in the years following its enactment.

Other noteworthy provisions of the bill include banning the use of animal testing, in favor of non-animal testing alternatives and monitoring any adverse health effects related to the use of nanotechnology in cosmetics. The FDA already has several programs in place researching and monitoring the use of nanotechnology in FDA products. Under this bill, the HHS Secretary would (1) monitor developments in scientific understanding from any adverse health effects related to the use of nanotechnology and (2) consider the scale-specific hazard properties of ingredients when reviewing and evaluating the safety of cosmetics and ingredients.

Beyond the above-described highlights, the bill further breaks new ground through research and development initiatives. For example, the bill creates a new grant program administered by the FDA in coordination with the Environmental Protection Agency to support the creation of safer alternatives to dangerous chemicals in both the professional use of products and products marketed to women of color. Another grant program, created within the National Institute of Environmental Health Sciences, will focus on supporting research and public outreach on marketing, sale, and use of harmful cosmetics by women of color.

Overall, this bill seeks to significantly increase the amount of regulation in the cosmetics industry, and would likely result in many manufacturers having to modify their operations to meet the new safety standards. Nevertheless, beyond the enforcement mechanisms present in the bill, the creation of grant programs intended to fund research on safer alternatives means cosmetics companies will not be entirely alone in navigating this new regulatory landscape.

In summary, here are the important takeaways from the bill, should it get passed as proposed:

  • Cosmetics brands would have to disclose and annually update information about their companies, products, and ingredients for display on the FDA’s website.
  • The HHS Secretary would begin actively monitoring, restricting, and prohibiting ingredients for use in cosmetics, placing each ingredient on one of the four aforementioned lists.
  • The HHS Secretary could enforce these new provisions by issuing product recalls and making public notice of the recalls.
  • Animal testing would be prohibited provided there is a viable, non-animal testing alternative.
  • Nanotechnology would be monitored with the same attention as it is with other FDA-regulated products.
  • Research grants focusing on finding safer alternatives to certain ingredients could help mitigate enforcement activity. This research would also pay special attention to how the cosmetics industry disproportionately harms communities of color.

Backed by 16 Representatives alongside Rep. Schakowsky and over 50 NGOS and safe cosmetics companies, the bill has been referred to House Committees on Energy and Commerce and Education and Labor.

The SAFE Banking Act May Help CBD Industry

Because cannabis at the federal level is considered an illegal substance, most banks are not servicing cannabis businesses. In addition, there is major confusion surrounding the legalization of marijuana and CBD with growing state laws addressing these topics. In one attempt to manage this conflict, on September 25, 2019, the House passed the Secure and Fair Enforcement (or SAFE) Banking Act of 2019, and it is now with the Senate for consideration.

The SAFE Act was introduced in March 2019, by Colorado Representative Ed Perlmutter, seeking to prohibit the penalization of depository institutions for providing banking services to legitimate cannabis-related businesses by creating a safe harbor. Under the SAFE Act, a federal banking regulator may not (1) terminate or limit the deposit insurance or share insurance of a depository institution solely because the institution provides financial services to a legitimate cannabis-related business; (2) prohibit or otherwise discourage a depository institution from offering financial services to such a business; (3) recommend, incentivize, or encourage a depository institution not to offer financial services to an account holder solely because the account holder is affiliated with such a business; (4) take any adverse or corrective supervisory action on a loan made to a person solely because the person either owns such a business or owns real estate or equipment leased or sold to such a business; or (5) penalize a depository institution for processing or collecting payments for such a business. Importantly, Section 3 of the bill makes proceeds from cannabis-related legitimate businesses or service providers exempt from federal money laundering laws.

Despite the large strides made by this bill, it is not a guaranteed path to funding for cannabis companies. Section 5 of the bill explicitly states that there is no requirement for depository institutions to provide financial services or to associate with these companies. While institutional support for the bill exists, not all depository institutions can be expected to engage with the cannabis industry.

Even though there is no requirement for depository institutions to provide funding to cannabis-related companies, the SAFE Banking Act still has the capacity to make a significant change in the cannabis industry by giving businesses added legitimacy, which in turn, can help companies secure requisite financing. Seyfarth Shaw’s Cannabis Law Practice Group and Consumer Financial Services Practice Group continue to monitor this space and are ready to assist both current and prospective clients with navigating this complicated and dynamic regulatory regime.


1 Applies to foreign and domestic brand owners that receive more than $1 million in gross receipts. The HHS Secretary would also establish a registration fee system for brands that receive over $10 million in sales.

2  Nanotechnology is utilized in a wide array of products including foods, cosmetics, drugs, devices, veterinary products, and tobacco products. Nanotechnology allows scientists to work with materials measured in nanometers, opening up a wide array of new possibilities. Given that these materials can have different chemical, physical, and biological properties from their larger counterparts, the FDA monitors the development and use of these materials in order to safeguard public health.

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.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
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.


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.


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