Kelley Drye & Warren: CBD and Hemp Legal and Regulatory Roundup – August 2021

Welcome to our weekly roundup of CBD and hemp-related legal and regulatory news:


Radicle Science study will evaluate effectiveness of various CBD products

Radicle Science, a healthtech B-corp that validates natural products, launched the Radicle ACES (Advancing CBD Education and Science) study. The study will utilize Radicle Science’s data analytics platform and a virtual, direct-to-consumer model to deliver objective health outcome data across diverse populations and conditions. This randomized controlled trial will collect data on 13 U.S. CBD brands: Altwell, Charlotte’s Web, Columbia Care, Healer, Lord Jones, Maven Hemp, MD Farma, Peels, Prospect Farms, Puraura Naturals from Enhanced Botanicals, Rae Wellness, Trokie and Verséa Wellness. The four-week Institutional Review Board-approved study will evaluate the effectiveness of CBD on well-being, quality of life, pain, sleep disturbance and anxiety across nearly 3,000 participants throughout the U.S. Participants will be randomized to receive one of the 13 brands at the start of the study or be assigned to a control arm. In addition, Radicle will send a random sample of each CBD product used in the study to the same accredited third-party testing lab to be analyzed for active ingredients such as cannabinoids and terpenes, as well as contaminants such as pesticides, residual solvents, heavy metals, mycotoxins, pathogens and foreign materials. Nutritional Outlook

Research finds labels of edible products may not contain accurate information

According to research by the CBD & Cannabinoid Industry Association (CBDIA), most edible CBD products don’t contain the correct amount of CBD. Only 11 of 40 (27.5%) of the tested edible products contained CBD levels that were within 10% of the amount stated on the label, the association’s Edibles Market Report noted. Of the remaining three quarters, labels were off by as much as 11% to 177%. Most (63%) of the products reviewed contained more CBD than advertised. Twelve (30%) received the worst rating, for containing 30% more or less CBD than claimed. The results weren’t unexpected, said the association, noting edible CBD products are more difficult to formulate than oils and contain much smaller amounts of CBD per piece. Thus, variations of even a few milligrams can have a significant effect. Interestingly, most of the brands that received the best rating for accuracy in labeling were relatively small or new companies, the association added, while more established brands earned lower scores. CStore Decisions


Farm Credit, USDA actions on lending have hemp industry concerned

memo from the Farm Credit Administration to farm credit banks and associations on hemp financing has The National Industrial Hemp Council concerned that growers could have difficulty obtaining loans to expand their operations. FCA, however, says the informational memo, from FCA Director of Regulatory Policy Kevin Kramp, is merely meant to provide guidance to institutions thinking about lending to hemp operations. The council, which represents growers, processors and other entities in the hemp supply chain, says the FCA is essentially advising its four banks and 67 associations not to lend to hemp growers unless they’re in states with USDA-approved plans. But the NIHC says that leaves out growers licensed under state plans authorized by the pilot program for hemp established in the 2014 farm bill. A spokesman for the Farm Credit Council, the trade association representing farm credit institutions, said a handful of member institutions it contacted said the memo had not raised any concerns about lending to producers in states operating under the pilot program. Agri Pulse

Texas court overturns ban on distribution, sales of smokable hemp products

judgement by the Texas Court of Appeals overturned a policy by the Texas Department of State Health Services to ban the distribution and retail sales of smokable hemp products. Four Texas companies sued to overturn the ban, warning it would shut Texas companies out of a multibillion-dollar industry and lead to inaccurately labeled products on store shelves. The ruling determined regulators may enforce a ban on the processing and manufacture of products intended for smoking or vaping, but it can’t prevent such products made elsewhere from being sold in the state. Informed Texas

Texas panel upholds sale of smokable hemp products – Law 360 (sub. req.)

Mont. hemp growers awarded $65M for ‘deceptive’ deal which highlights volatility, growing pains of CBD market

Hemp is central to one of the largest civil awards in Mont.’s history. A jury awarded 25 eastern Mont. farmers $65 million in compensatory and punitive damages, finding that some Canadian and American businessmen had committed negligence, fraud and deceit in failing to fulfill contracts, leaving the crops unpaid for and languishing in fields. Ross Johnson, an attorney who represented 25 plaintiffs in a lawsuit against the AWOL purchasers and their Canadian and American executives, said USA Biofuels was a shell company without assets or a bank account, and that the businessmen involved in the deal were hoping to cash in on America’s emerging market for CBD by securing a large supply of hemp and building out processing and distribution capabilities before taking the business public. Some of the defendants named in the lawsuit stood to make hundreds of millions of dollars if the venture resulted in a successful IPO, Johnson said, but “the whole house of cards would have tumbled right off the bat if they let the farmers sell their crop [to someone else].” So the crop sat, Johnson said, turning into a “rotting pile of biomass” that months earlier Vitality had valued at between $350 million to $400 million when applying for a commodity dealers’ license from the Mont. Department of Agriculture. Though at least one of the farmers was able to secure another buyer for the product long after it was harvested nearly three years on, many of the hemp bales grown for USA Biofuels are still in the fields where they were grown. Montana Free Press

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