Food Industry High on Edibles

Shortly after the Farm Bill became law, FDA Commissioner Scott Gottlieb (who is scheduled to resign in April) released a statement affirming that “While products containing cannabis and cannabis-derived compounds remain subject to the FDA’s authorities and requirements, there are pathways available for those who seek to lawfully introduce these products into interstate commerce. The FDA will continue to take steps to make the pathways for the lawful marketing of these products more efficient.”

Other parts of the hemp plant, including hulled hemp seeds, hemp seed protein, and hemp seed oil, have been deemed safe by FDA. Therefore, these products may be legally marketed in human foods without food additive approval, provided they comply with all other rules and regulations.

Marijuana, on the other hand, remains classified as a Schedule I substance under the Controlled Substances Act. Schedule I substances are deemed to have a high potential for dependency and no accepted medical use. The effect of that designation, from both a legal and economic standpoint, is profound. Among other things, Schedule I substances may not be transported through interstate commerce, banks are barred from transacting business with legitimate marijuana businesses, medical providers are not allowed to prescribe marijuana, and federally funded institutions cannot conduct marijuana research, etc. (Medical providers sometimes circumvent prescription prohibitions by giving “recommendations” in states that allow medical marijuana use.)

It appears increasingly likely that many of the federal hurdles will soon clear, giving rise to yet another boom for the cannabis industry. Among the proposed legislation being circulated by Congress are bills that de-schedule marijuana, address tax fairness for cannabis businesses, and remove barriers to banking and scientific research. These would ostensibly lay the groundwork for a broader bill to end federal cannabis prohibition outright, which some analysts expect by the end of the year. Whether any such bills will pass is unclear, but the momentum is indisputably trending toward legalization.

Irrespective of marijuana’s Schedule I status, states are charging ahead with legalization initiatives, and legal cannabis sales have surged into the billions of dollars annually. As the legality and social acceptance of cannabis use have grown, so too have the opportunities available to businesses willing to enter the cannabis market. Meanwhile, many other businesses have adopted a wait-and-see approach, reluctant to enter the market because of the legal ambiguity, lack of regulation, cost-prohibitive taxation, banking obstacles, and longstanding misconceptions about cannabis itself.

Food for Thought

One of the fastest growing cannabis sectors, projected to exceed $4 billion in annual sales by 2021, is cannabis-infused edibles. Many cannabis consumers prefer to attain the therapeutic or intoxicating effects of cannabis through the consumption of edibles, as opposed to inhalation through smoking or other means. The diversity of edible cannabis products is striking, and includes butter, honey, chocolates, olive oil, lemon cakes, and even pizza sauce. Chefs across the country are incorporating cannabis into elaborate culinary presentations.

The remarkable growth and success of the cannabis edibles industry is attributable to many factors, including sophisticated marketing and product development strategies. But perhaps more importantly, the edible industry has done a remarkable job of innovating and self-regulating to ensure the safety and quality of their products. Despite the lack of regulation, edible producers have demonstrated ingenuity and discipline in adopting responsible policies and procedures to ensure and enhance product safety.

Cannabis edibles present both common and unique safety and quality challenges for businesses, regulators, and policy makers. The safety of cannabis products, like any food, is dependent on many things, including traceability, supply chain integrity, proper lab testing for potency, pathogens, pesticides, heavy metals, etc. But there are additional safety considerations unique to cannabis and do not necessarily apply to other types of foods. These include secure childproof packaging, proper dosing (tolerance levels vary significantly between users), and consumer education. Edible producers, state regulators, and manufacturers are innovating and successfully developing the policies and procedures to address these risks.