The possession, distribution, and use of cannabis remains illegal under federal law. Consequently, in isolation, employers may believe that enforcing their zero-tolerance policies for drug use (as referenced here, zero-tolerance refers to policies that prohibit any on-duty or off-duty use of unlawful cannabis products) remains a defensible position, including in response to employee complaints that such policies restrict employees’ otherwise permissible use of cannabis products. But how does state legalization of recreational and medical cannabis use fit into the mix? As states become increasingly tolerant of cannabis use, employers may need to reconsider whether their anti-drug and drug-testing policies are compliant with applicable law in order to minimize the risk of discrimination or failure-to-accommodate claims resulting from the employer’s restrictions on the purportedly lawful use of cannabis products. Continue Reading Zero Tolerance for Zero-Tolerance Policies? The Impact of Cannabis Legalization on Workplace Drug Policies
A new rule from the U.S. Drug Enforcement Agency (DEA) has caused considerable concern within the cannabidiol (CBD) industry. The rule relates to the distinction made in the 2018 Farm Bill that removed certain cannabis products, such as industrial hemp and those containing hemp-derived CBD, with levels of THC not exceeding 0.3% by weight from the federal controlled substances list. THC is the psychoactive substances most associated with a marijuana “high.” DEA’s interim final rule appears straightforward at first glance: cannabis products containing more than 0.3% by weight are subject to DEA enforcement as controlled substances. The rule appears to mean, however, that THC levels can never exceed 0.3% at any point during the product’s manufacturing process, even if the final product offered for sale had THC at appropriate levels. Continue Reading New DEA Rule May Threaten CBD Manufacturing
On July 28, 2020, the U.S. Securities and Exchange Commission (SEC) accused six individuals and their companies with securities fraud in connection with two cannabis-related businesses in California that raised $25 million in an unregistered securities offering. The SEC’s complaint was filed in the Central District of California and seeks permanent injunctions, disgorgement of ill-gotten gains plus prejudgment interest, and civil penalties. Read the full article on our sister blog White Collar Briefly.
On July 22, 2020, the U.S. Food and Drug Administration (FDA) submitted draft enforcement guidance for cannabidiol (CBD) industry for review by the White House’s Office of Management and Budget (OMB). The draft guidance is not yet available. No date or proposed deadline for producing a final policy, but this submission indicates that the FDA is making some progress towards long-awaited guidelines for the industry.
Perkins Coie attorneys have monitored the FDA’s ongoing efforts to regulate the CBD product market, including its public hearing last year, issuance of warning letters, and series of reports to Congress (here and here). Former FDA Commissioner Scott Gottlieb called for the agency to adopt an expedited process for legally selling CBD in food and beverage products.
Perkins Coie attorneys will continue to track this latest development and provide insights to the industry when the draft enforcement policy is available to the public.
Kern County’s ordinance banning marijuana dispensaries was validly reenacted because a “material change in circumstances” had occurred since the County previously repealed a similar ordinance in response to a referendum petition. County of Kern v. Alta Sierra Holistic Exchange Service, No. F077887 (5th Dist., March 6, 2020).
In 2011, the County adopted an ordinance banning medical marijuana dispensaries. Opponents of the ban presented a valid referendum petition to the County. In response, the County Board of Supervisors repealed the 2011 ordinance. Read the full post on our sister blog, California Land Use & Development Law Report.
Yesterday, the FDA belatedly released a report in its progress towards CBD enforcement, as required by Congress.
Although the report repeats the FDA’s concerns regarding CBD safety, and fails to offer a useful timeline for a reasonable regulatory pathway for the CBD market, it also affirms a desire for a nuanced “risk-based” approach to CBD enforcement.
Read the full article for a review of the report and insights on what CBD businesses need to know.
Perkins Coie’s Food Litigation 2019 Year in Review assessed key legal issues facing the food and beverage industry. Among these topics was cannabis, and especially hemp-derived CBD, in food and beverage products. The 2018 Farm Bill ushered in a new era for cannabis and cannabidiol (CBD). Following the law’s passage, products containing CBD have continued to proliferate throughout the country. In late 2019, the FDA revised its Consumer Update concerning products containing CBD, particularly food and drink items. Per the FDA, “It is currently illegal to market CBD by adding it to a food or labeling it as a dietary supplement.” The FDA also issued more than a dozen warning letters to manufacturers of CBD products.
Numerous class action lawsuits were launched against CBD product manufacturers in the wake of state and federal action surrounding CBD. As one article put it, “The CBD lawsuit floodgates are opening.”
Please see the full Food Litigation 2019 Year in Review report for more detail about cannabis.
On the heels of the U.S. Food and Drug Administration’s (FDA) recent declarations regarding the safety of products containing cannabidiol (CBD), several companies have been hit with class action lawsuits alleging that that the company’s CBD-containing products are mislabeled and falsely advertised in violation of state law. Further class action litigation is expected given the language of the FDA’s recent pronouncements and the widespread availability of CBD-containing products. Companies should prepare for the possibility of litigation and actively seek to mitigate the risks of unwanted attention by FDA or putative class action plaintiffs. Read More
Late last month, the U.S. House of Representatives passed H.R. 595, the Secure and Fair Enforcement Banking Act of 2019 (the “SAFE Banking Act”). The stated purpose of the SAFE Banking Act is to “increase public safety by ensuring access to financial services to cannabis-related legitimate businesses and service providers and reducing the amount of cash at such businesses.”
In particular, the bill would provide safe harbor and other protections under federal law to financial institutions and insurers that provide services to cannabis-related legitimate businesses. Under the proposed bill, such insurers and financial service providers would not be subject to liability under federal law solely for providing such services to, or investing the income derived from, cannabis-related legitimate businesses. Continue Reading SAFE Banking Act Passes House, Aims to Increase Access of Cannabis-Related Businesses to Banking Services
On July 31, Dr. Scott Gottlieb, the outgoing FDA commissioner, published an editorial in which he proposed how the FDA could expedite approval of food and beverage products that contain cannabidiol (CBD).
In the full article on PerkinsCoie.com, we review Dr. Gottlieb’s proposal which highlights areas of concern for business involved in the CBD industry, such as labeling and deceptive marketing.