Regulation Free? Guess Againfood. Some but not most of the products are known to contain tetrahydrocannabinol (THC), a crystalline compound that is the active hallucinatory ingredient

Planning for your Cannabis Crisis

WHITE PAPER

Regulation Free? Guess Again...

StericycleExpertSolutions.com

F O O D & B E V E R A G E

2

Regulation Free? Guess Again... \ Planning for your Cannabis Crisis

When we consider the regulation of food, drugs, medical devices, auto, and consumer products, we assume careful oversight from one of four government agencies: FDA, USDA, CPSC, or NHTSA.

BACKGROUND

But the fact is, some products don’t fall neatly under the oversight of a specific regulator.

This is especially true with regard to the sudden, rapid growth of the U.S. and Canadian cannabis and cannabidiol market. As growers and processors rush to meet consumer demand, regulators are trying their best to slow things down in the name of consumer safety.

Today’s hottest regulatory topic is the FDA’s pending rulemaking for cannabidiol (CBD) oil products, which are being sold in various forms, from topical treatments to ingestible products, for everything from epileptic seizures and anxiety to sleeplessness and joint inflammation. The formal process includes public hearings and an open-comment period for those who wish to weigh in on the FDA’s regulatory direction.

The FDA has already received more than 3,000 varied comments about the safety and effectiveness of CBD oil, which is already available in cosmetics, supplements, beverages, and even pet food. Some but not most of the products are known to contain tetrahydrocannabinol (THC), a crystalline compound that is the active hallucinatory ingredient of cannabis, but opinions differ on whether they should be classified as drugs.

So far, the FDA has declared that “CBD and THC cannot lawfully be added to a food or marketed as a dietary supplement,” leaving it as a Schedule I substance. By regulatory definition, that means it has no safe medical use, a high risk of abuse or misuse, and are thus illegal under the law. While the FDA can technically create an exception to the rule, that action is highly unlikely given the supercharged opinions on both sides of the human health benefit and risk debate.

Today’s hottest regulatory topic is the FDA’s pending rulemaking for cannabidiol (CBD) oil products.

3


Acting FDA Commissioner Norman Sharpless offered brief comments on the topic during an agency update in May 2019. He noted that while the FDA doesn’t generally require foods to be approved before going to market, new food additives must be approved as safe by the FDA before they enter the food supply. Once the substance is “Generally Recognized As Safe,” or GRAS, everything changes. It was under that framework that, in December 2018, the FDA completed evaluations for three hemp seed ingredients with “no objection to their being marketed in human foods for certain uses without approval, provided they comply with all other requirements.”

But that doesn’t mean the hottest cannabis food products being sold or coming to market are – or will remain – legal in the US.

In this paper, we discuss the state of the regulatory environment and the crises companies need to plan for even when your product isn’t regulated in the traditional way.

Navigating Uncharted Regulatory Territory

Ultimately, the focus of the FDA is consumer protection. Whether the product is a drug, medical device, pet food, or breakfast cereal, the agency wants to make sure it is safe. In the case of CBD, the budding industry is awaiting the FDA’s rulemaking, hoping the agency will eventually approve the compound for use as a drug as well as an additive in food products. But the future is anything but certain.

The FDA must contend not only with the science related to cannabis and CBD products, but also existing federal and state laws, pressure from food and drug companies seeking to sell the products, activists seeking to stop the growth of the industry, parent organizations concerned with childhood safety, and members of Congress with strong views on the issue.

That doesn’t mean the hottest cannabis food products being sold or coming to market are – or will remain – legal in the US.

4


While loyal cannabis users are touting a myriad of benefits, medical professionals, scientists, lawmakers, and others are calling on the FDA to pump the brakes and restrict the legal use of cannabis and its derivative compounds until more is known about the immediate and cumulative risk. Former FDA chief Scott Gottlieb went on record saying that some health claims appear “pretty hokey.”

The risk conversation is further complicated by the fact that the science about CBD is still in its infancy. Significant research didn’t really get underway until hemp production was legalized in the U.S. farm bills Congress passed in 2014 and 2018.

There are real risks associated with both those substances and critical questions remain about the safety of their widespread use in foods and dietary supplements, as well as other consumer products – including cosmetics, which are subject to a separate regulatory framework. For instance, CBD products have been found to occasionally contain THC levels capable of producing psychoactive effects.

According to a study published in the medical journal JAMA, more moms-to-be in the United States are using marijuana, particularly in their first trimester. While the health effects of cannabis on a fetus are still unknown, the US Centers for Disease Control and Prevention warn that they could include developmental problems and low birth weight.

In the meantime, CBD sales are skyrocketing despite the fact that they remain in legal limbo. With all the confusion amid the methodical rulemaking process, what’s going to put you in regulatory crosshairs?

CBD sales are skyrocketing despite the fact that they remain in legal limbo.

It’s the classic Benefit versus Risk conundrum.

5


It’s tempting to think that as long as there are no clear regulations, there is no regulatory violation. But take caution. Without set standards and clear expectations, any consumer report or evidence of a product on the market, legally or illegally, that causes consumer harm is likely to draw scrutiny and potentially heavy-hitting response from regulators.

The FDA has for the most part laid its cards on the table, raising several overarching questions before promulgating rules that govern cannabis and products containing derivative compounds such as CBD:

How much is safe to consume in a day? How does it vary depending on what form it’s taken?

Are there drug interactions that need to be monitored?

What are the impacts to special populations, like children, the elderly, and pregnant or lactating women?

What are the risks of long-term exposure?

Then there are other concerns on people’s minds like impaired driving, workplace governance issues, and general liability and product liability insurance and costs.

IF YOU’RE PAYING ATTENTION, THE FDA’S

PLANS SEEM CLEAR.

6


For now, the FDA has opted to communicate about the issue primarily through a series of public statements on its website that strongly urge consumers to exercise caution in the use of any CBD oil. The agency warns that, until its questions are answered by scientific evidence, it cannot vouch for the safety of any CBD products now on the market.

It’s also worth noting that it’s not just the FDA that wants answers to those questions before rules are adopted for the industry. Consumer advocacy organizations such as Consumer Choice Center have come out in support of smart regulation. They want to know about labeling standards that include CBD percentages, about age restrictions, about clearly defined benefits, and about side effects. Ultimately, they want a final determination on whether the FDA will outlaw CBD in food, drinks, and other products that are already being marketed.

U.S. Surgeon General Jerome Adams has expressed serious concerns about marijuana potency, noting that THC, the psychoactive ingredient, can be found at levels up to five times higher in today’s raw strains. That can translate to up to 90-95 percent THC in concentrated products.

“That’s like the difference between you going out and having a glass of wine for dinner and

you drinking a pint of grain alcohol,” Adams told doctors at UC Davis Medical School. “We need to help folks understand this is a fundamentally different product” than it was in years past.

As the FDA’s questions are answered, the agency will begin to draw clearer lines. If the FDA sets an ultra-conservative level of cumulative CBD intake that it considers safe, the ingredient may never be permitted in food. If the level is higher, we recommend you still take a conservative approach to warning consumers of dangers of ingesting or consuming too much. Otherwise you may face enforcement action from the agency, which could also serve as grounds for potential litigation.

In fact, the FDA has already started to regulate. The agency has issued warning letters to some companies it has found to be selling violative products, and many more are expected. Sharpless noted in prepared remarks for the May 2019 public hearing that the “FDA is aware that some companies appear to be marketing products containing cannabis and cannabis-derived compounds in ways that violate the law.”

Sharpless noted in prepared remarks for the May 2019 public hearing that the “FDA is aware that some companies appear to be marketing products containing cannabis and cannabis-derived compounds in ways that violate the law.”

7


But the FDA is not the only regulator you need to worry about.

Don’t forget about the USDA. While their regulations will deal largely with the growing of hemp, there are commercial implications. For instance, the agency will allow hemp seeds to be imported from overseas, and the crop can also be transported across state lines. All that said, hemp farmers face growing restrictions until the USDA releases its guidelines.

Specifically, they must follow the rules established under the research-focused provision of the 2014 Farm Bill. But that doesn’t mean the industry needs to stand by and wait. The department is accepting applications for intellectual property protections for hemp products.

The Federal Trade Commission is also involved. The FDA’s warning letters, regulatory enforcement actions, and product recalls and withdrawals impact thousands of companies every year. But when marketing and product labeling are the reason for these sanctions, you’ll very likely be facing FTC action as well.

In fact, the FTC has already thrown its hat in the ring, having joined the FDA in issuing warning letters to companies selling CBD products they claim treat Alzheimer’s, cancer, and other diseases. These warning letters, and the sanctions that are likely to follow, should serve as a reminder to companies of the high-stake nature of this industry.

Then there are international regulators who are out ahead of the US. Take Health Canada for instance. The agency has an entire section of its website devoted to cannabis recalls, adverse reactions, and reporting. In fact, Canada is so keenly aware of the product safety issues related to cannabis that Health Canada published its own cannabis voluntary recall guide online – a guide likely referenced by the numerous companies involved in 10 cannabis recalls across the country in the first half of 2019 alone.

Hemp farmers face growing restrictions until the USDA releases its guidelines.

8


Then there’s the state-by-state issue.

Adding to the confusion is the patchwork quilt of existing state laws. As the FDA has noted, “some jurisdictions have eliminated certain prohibitions on cannabis or cannabis-derived compounds.” In fact, 17 states have their own laws regarding CBD, including specific laws permitting a CBD extract. It’s imperative that you’re not just monitoring and engaging with the FDA, but also any state where you do business because those environments are rapidly evolving. While some states like Illinois are trying to establish themselves as a marijuana hub, others are struggling to reach consensus on the legality of cannabis or any CBD products.

Still other states have already taken action against cannabis brands that were found to distribute products contaminated with pesticides and mold. Colorado departments of Agriculture and Public Health and Environment and the state Marijuana Enforcement Division together announced two separate recalls, one for mold contamination and another due to pesticide contamination.

California’s Bureau of Cannabis Control also investigated cases where pesticide-contaminated products made it to market, only to be recalled. Lawyers and regulators following the California case gained insight into yet another challenge: Even as new rules are promulgated and go into effect, there are no standardized methodologies for testing products and analyzing the results.

But all this state action will likely become irrelevant. Regardless of where each state ends up, when the FDA makes its ultimate ruling, it will trump nearly all state-based legislation because of the regulatory principle of federal pre-emption.

The web of influence around federal and state rulemaking is far-reaching, consisting not only of lawmakers and politicians, but also medical professionals and organizations, consumer advocacy groups, cannabis users, and the makers and marketers of CBD products. The countless opinions are hard to keep track of, and with everyone trying to place their stake in the ground, it’s even harder to know whose voices will have the greatest impact on the FDA.

For all these reasons, planning for the worst is critical to ensuring you survive what is sure to be a turbulent future for the cannabis industry.

9


Whether you are one of the select few the FDA tries to make an example out of with early warning letters and sanctions, or you manage to tow the regulatory line until facing safety or efficacy allegations that result in a product recall, the day will almost certainly come when your reputation is on the line.

So how do you prepare for that challenge when so many questions remain unanswered?

The answer is as simple as it is complex: conduct a complete risk assessment and follow it up with scenario-specific crisis planning.

Now is the time to think critically about all the directions your business could go and what challenges you may face on each path. And let us give you a hint, in any case where you have a product on the market – whether a drug, topical, OTC product, or edible – there’s a good chance of a recall. In fact, despite the lack of federal regulation and oversight, we’ve already seen the first recalls initiated by state regulators.

Recalls and related product safety and quality issues are some of the most challenging situations any company faces. There are many factors to consider, including the expectations of regulatory agencies and consumers.

To the average person, it may sound simple enough: recall at the first sign of trouble. But with cannabis, we don’t yet have definitions of “trouble” because the interpretation changes when you think about pharmaceutical products your doctor prescribes, the OTC medicine you take when you have a headache, or that box of cookies you indulge in as a treat.

The certain way to mitigate these risks for products containing cannabis and its derivative compounds is two-fold. If a company knows, or even suspects, that one of its products has the potential to have a short- or long-term impact on the individual consuming it, the risks should be clearly established on any product label. If a new risk is identified, or there is a quality or contamination issue, that product should be recalled quickly and effectively, regardless of whether it technically violates any regulations. We will ultimately get to a point where regulators require it. But in the meantime, the public expects it because it is the right thing to do. While some may see this as an unnecessary headache, it may in fact be what saves your reputation down the road.

Regardless of where all the legislation and regulation falls, one thing is certain: your cannabis crisis is coming.

PREPARING FOR YOUR CANNABIS CRIS IS

10


Partnering with Stericycle Expert Solutions allows companies to focus on running and growing their business with the knowledge that they have a team of experts to manage even the most complicated of product safety-related events.

If managed poorly, product safety issues can have devastating consequences on a company’s reputation, market share, and bottom line. But with the proper planning and systems in place, safety issues and even a recall event can be effectively managed to mitigate financial and legal risk, increase customer loyalty, and prevent irreparable brand damage.

With so much at stake, companies need a trusted partner to navigate the current regulatory environment and complex recall landscape.

StericycleExpertSolutions.comContact us to learn more \ 1.888.732.3901

Documents

Regulation Free? Guess Againfood. Some but not most of the products are known to contain tetrahydrocannabinol (THC), a crystalline compound that is the active hallucinatory ingredient