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US/UK Regulatory Warning to the Hemp Industry: Learn to Pivot

On March 5th, the Food and Drug Administration released their most recent commentary on cannabidiol regulation, with a stated focus on protecting public health and providing market clarity. Arriving more than a month after its expected delivery date, the congressional report offered little in the way of material guidance for an industry frustrated by its unending purgatorial wait. Now, with little to work against in terms of timelines or anticipated regulatory requirements, the industry is left staring across international and industry borders to attempt to define its future.

A Cautionary Approach Industrial hemp plants have been used in food and fiber for thousands of years, however with consumer demand for hemp-based products exploding, the FDA has predictably arrived with stated concerns about the possible long-term health effects of the plant’s concentrated oils. The agency has stated that it’s primary concerns are driven by a lack of research, and that it intends to regulate production and marketing claims, however to the frustration of the industry and consumers alike, officials are yet to release clear guidance on forthcoming regulations. This lingering uncertainty has sidelined significant capital and intellectual capacity, and leaves industry leaders nervous, and looking to other regulated markets and to pharmaceutical and nutraceutical manufacturing for indications of likely future table stakes. FDA’s Mandatory Update Report In December 2018, the US Farm Bill became the cornerstone for federal hemp regulation in the US, legalizing cultivation of the plant on American soil. The arrival of the bill was broadly celebrated, however the document failed to address what happens after the plant is harvested, leaving a large grey area for current makers and retailers. In Dec 2019, the Further Consolidated Appropriations Act was funded to aid in patching these holes and the Joint Explanatory Statement that was formed, directing the FDA to provide an update on the Agency’s evaluation of potential regulatory pathways for CBD products and efforts to gather data to support evaluation of a policy of enforcement discretion” within 60 days.

One month past their mandated deadline, this update was finally released, describing plans for research, testing, and a call to stakeholders, scientists, and industry insiders for input before making any further decisions. The overall tone of the filing was pragmatic, and translated the FDA’s cautionary approach, as their goal has always been to ensure that manufacturers under their jurisdiction are functioning ethically, and with public safety as their main concern. They have duly noted the warnings from the drug company GW Pharmaceuticals, who are the leaders in phytocannabinoid research based treatment. GW Pharmaceuticals: Medicine or Supplement? Having gone through the arduous process of gaining CBD drug approval by the FDA (the only company to do so) GW has shown obvious concern for “self-treating serious and life-threatening ailments with unproven, inadequately regulated, and unapproved cannabis and cannabis-derived products”. Current law states that a drug previously approved by the FDA can not be used as a dietary supplement, as they’re not subject to the same rigorous testing protocols. The FDA is considering an unprecedented move to make an exception for Cannabis Sativa derived products, a privilege granted by the Dietary Supplement Health and Education Act of 1994 (DSHEA). This would put tremendous pressure on business owners to work with companies like Vanguard Scientific in creating lab grade quality products to ensure that the FDA doesn’t reconsider their already contradictory stance. The Report The US Food and Drug Administration’s mandated report details how they plan to proceed with regulating products derived from Cannabis Sativa L. containing cannabinol. The report addresses what is already understood, which is limited due to previous drug laws, as CBD was a Schedule 1 narcotic until the bill passed. This is clearly illustrated in page 6 of the report, which lists “key questions” the FDA will need help answering, including the effects of daily usage, high intake levels, different types of delivery methods (such as topical and oral use), drug interactions, the risk of product contamination, as well as any potential dangers to the developing brain, pregnant women, male fertility, and even pets. They categorize specific types of popular items on the market into separate sections and include a statement on how they’ll judge if products are outside of their jurisdiction. There is a final section on enforcement, where they reiterate their commitment to monitoring the market for products that could threaten public safety. Current Hemp Industry Enforcement In November 2019 the FDA issued a crackdown on 15 current producers and retailers for various violations of the Food Drug and Cosmetics (F D & C Act) including inferior products. They do plan to continue enforcing against anyone claiming health benefits. They also plan to quickly develop a system where companies send their products in to be clinically tested for ingredients that contain pesticide residuals, heavy metals and other toxins that come along with poor equipment and a lack of standard operating procedures. Plant Physiology and Drug Bureaucracy Hemp has both a male and female plant (as well as hermaphroditism). Just like it’s psychoactive sibling: hemp can also be harvested for seed and/or flower. The female hemp plant produces flower that secretes resin containing terpenoids and cannabinoids. The stalks and other byproduct can be processed to make fabric and rope. The extracted flower oil creates a drug, by the Federal definition. It generally has a higher potency of broad spectrum cannabinoids (produced naturally in the plant that are not psychoactive but work in synergy, also known as ‘the entourage effect’) than hemp oil and seed, which are made from industrial bred hemp plants, with (usually) only trace amounts of non-psychoactive cannabinoids. These plants, which are mostly male, are used to make stronger fabric and rope than the female stalk pulp. Hemp derived products in the FDA’s newest report are categorized as either Human Drugs, Animal Drugs, Dietary Supplements, Foods, Cosmetics, or Vaping Products. With CBD products having very little oversight, it’s difficult to assume what products are high quality. The FDA understands all cannabinoids are drugs. According to their own report “Under the FD&C Act, any product, including CBD, that is intended to diagnose, mitigate, treat, cure, or prevent disease is a drug.” Intention is the key word there. New UK Hemp Licensing Restrictions The current US pharmaceutical laws prohibit drugs to be manufactured and sold without going through a vigorous FDA approval process, one that would be close to impossible to achieve for most businesses currently, potentially forcing more than 30% of companies out of the market. The United Kingdom’s Food Standards Industry (FSA) announced last month new sweeping regulations demanding that all CBD manufacturers must apply for a Novel Food license, or face their products being taken off the shelves by March 2021. This involves a dossier of scientific research like the FDA’s drug approval process that will leave some of the smaller companies at a huge disadvantage. It will also require sophisticated equipment and a team of industry professionals who are subject matter experts to create extracts to be approved for human consumption. This will not be impossible for the most proactive business owners, as UK makers are being given a full year to comply, but the US hemp industry could be headed in the same direction. UK companies are now being watched by sophisticated hemp companies in the US who want to avoid learning how to pivot through reactive measures. The Fools Game of Regulation While addressing the National Association of State Departments of Agriculture at its winter policy conference in Arlington, Virginia last week, FDA Commissioner Stephen Hahn acknowledged that it would be a “fools game” to try and ban CBD at this point. This leaves them with one of a few outcomes. First, they could state they have no jurisdiction over products, leaving the industry in further limbo. Or, they could require all CBD manufacturers to go through the same process GW Pharmaceuticals did for Epidiolex, leaving most business owners facing the same woes as their UK colleagues. The other option is to develop new regulations to monitor the manufacturing of CBD products as dietary supplements, which also carries a tedious application process. Hemp and Public Safety This is not just a game of juggling bureaucracy with a damaged pharmaceutical industry product approval process that has been begging for its own regulatory revisions for years. They’re also genuinely concerned about the safety of consumers, which is the most important fact for business owners to take with them after reading the report. Because of Cannabinol’s lengthy Schedule 1 status before the Farm Bill, reliable research on the drug has been scarce. But there was enough data on CBD’s medical efficacy for GW Pharmaceuticals to get Epidiolex approved, a drug that treats 2 severe seizure disorders Lennox-Gastaut syndrome and Dravet syndrome. The report points to some unknown dangers associated with it that were unearthed by GW during their process, such as “drug interactions, liver injury, and male fertility toxicity”. Additionally, there are concerns about pesticides and soil/water additives the plant may be exposed to. Also, poor extraction processes dangerous for human consumption are sometimes overlooked by state enforcers overwhelmed with developing their own regulatory framework. If there was one thing they were absolutely clear about: public health and safety is of the utmost importance while developing FDA regulation pathways. Hemp and Vanguard Scientific It’s impossible to ignore that this is a cautionary time for an industry who has been pacing in a longstanding grey area for almost a century, patiently waiting for change. The FDA’s report should come as somewhat of a relief to business owners, as it gives them the advantage of what to expect while they are expecting new rules. It also gives them the opportunity to pivot toward adopting a proactive, analytical approach to developing strong cultivation and lab scale extraction and research based processing methodologies. Vanguard Scientific has assembled a synergy of talent, technology, and industry experience to cultivate performance solutions for hemp companies founded on science, data, compliance and passion for delivering customers the highest value products with the most cost effective approach. The FDA report shows concerns about the safety of consumers, while not declaring any plans to stifle this burgeoning US based industry with incredible potential for growth. But only those with strong business acumen and an impeccable entry approach will learn to read between the lines and succeed in an industry covered in red tape. Vanguard is honored to guide licensed hemp product companies proactively and professionally through the nuanced bureaucracy of the botanical extraction industry with foresight.


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