Over the past few months, federal courts throughout the country have stayed litigation challenging the labeling of products infused or made with cannabidiol, better known as CBD. These courts, acknowledging that labeling and product quality requirements for CBD products remain unclear, have cited the need to permit the U.S. Food and Drug Administration (“FDA”) to promulgate uniform rules or regulations focused on CBD, which the agency has indicated are forthcoming in a series of recent administrative actions and public statements. Staying these cases affords FDA room to fashion a comprehensive regulatory framework in this still-novel industry, rather than allowing plaintiffs to usurp that role via the judicial process.
In the past year, we have covered the profusion of false advertising lawsuits against manufacturers of CBD products. CBD is one of many active chemical compounds in the cannabis plant, and is now found in a wide array of products, including oil, gummies, capsules, topical creams, and syrups. The lawsuits, often brought as class actions, generally come in one of two strands: some allege that the labeling and/or advertising of the defendant’s product misrepresents the amount of CBD the product contains, and others allege that the product is touted as a “drug” or “supplement” in violation of the federal Food, Drug and Cosmetic Act (“FDCA”) and state consumer protection laws.
As we’ve written, one of the stronger defenses available to CBD product manufacturers sued on these theories is primary jurisdiction. Primary jurisdiction is a prudential doctrine that permits a court to dismiss or stay a case pending agency review when it presents a novel or complex issue that implicates the specialized or technical expertise of a regulatory agency. The theory underpinning the doctrine is that the state or federal agency charged with regulating the field should be permitted to consider the issue in the first instance before the judicial branch weighs in. Courts most often invoke primary jurisdiction when an agency is actively investigating a technical issue raised in the litigation and has indicated that rulemaking or further regulatory guidance on the issue is forthcoming. Thus, unlike federal preemption, primary jurisdiction typically applies not when a federal statutory or regulatory regime is already in place, but when agency rulemaking on the subject is likely on the horizon.
Such describes the current regulatory landscape in the market for CBD and CBD products. To date, FDA has not promulgated any rules or regulations specific to CBD products. But over the past sixteen months, there have been several concrete steps taken signaling FDA’s move toward formal regulation of these products:
- In May 2019, FDA held a “public hearing to obtain scientific data and information about the safety, manufacturing, product quality, marketing, labeling, and sale of products containing cannabis or cannabis-derived compounds.” 84 Fed. Reg. 28822. The agency also created a public docket for comments, which is currently still open and has received over 4,000 comments.[1]
- In December 2019, Congress passed the Fiscal Year 2020 Appropriations Act, which appropriates $2 million to the FDA for “research, policy evaluation, market surveillance, issuance of an enforcement discretionary policy, and appropriate regulatory activities with respect to products under the jurisdiction of the FDA which contain CBD.”[2] The Act further directs FDA to “perform a sampling study of the current CBD marketplace to determine the extent to which products are mislabeled or adulterated.”
- In January 2020, in a hearing before the House Committee on Energy and Commerce, the Deputy Director of FDA’s Center for Drug Evaluation and Research testified that FDA was “actively working to learn more about the safety of CBD and CBD products.”[3] This includes “questions related to good manufacturing practices for CBD products and potential labeling that might be appropriate for these products to address any potential risks to consumers” and “how legal pathways might be established to allow the safe marketing of certain dietary supplements and/or food products containing CBD.” He stressed that “FDA had made it a priority to address these questions, and we are working diligently to do so.”
- In July 2020, FDA submitted to Congress its sampling study of the CBD marketplace as required by the 2020 Appropriations Act.[4] The “preliminary” study randomly selected 200 CBD products across seven product-type categories. Among other things, the study found that 94% of the products contained CBD, and of those products that specified the amount of CBD in the product, just 45% contained an amount of CBD within 20% of the amount indicated on the label. FDA also laid out plans for a “long-term study” to capture more retail sources and products.
- Since the beginning of 2019, FDA has sent dozens of warning letters to companies that allegedly overstate the amount of CBD in their products and/or improperly market their products as drugs or supplements within the meaning of the FDCA.[5]
- On its official website, FDA has posted informal guidance on CBD and CBD products. The website notes FDA is “evaluating the regulatory frameworks that apply to certain cannabis-derived products that are intended for non-drug uses, including whether and/or how the FDA might consider updating its regulations, as well as whether potential legislation might be appropriate.”[6]
Relying on this recent spate of legislative and agency action, since January 2020, at least six federal district courts have stayed false advertising cases involving CBD products at the pleading stage on primary jurisdiction grounds.[7] As these courts have explained, resolving the claims at issue in both CBD “underfill” and “drug” cases requires “consistent guidance” from the FDA on whether “some or all CBD products are food additives, supplements, or nutrients that can be safely marketed to the public and, if nutrients, whether the labelling standards and requirements for CBD products will be different or the same as for other nutrients.” Snyder, 2020 U.S. Dist. LEXIS 1145, at *19. FDA’s recent steps to study the CBD market and its public statements have been viewed as evidence the agency has “an active interest in regulating the manufacture and marketing of CBD products.” Id. at *20. These courts have therefore elected to pause litigation challenging CBD-product advertising “until the FDA completes its rulemaking regarding the marketing, including labeling, of hemp-derived ingestible products.” Id. at *22. This approach, in our view, comports with one of the principal justifications for primary jurisdiction—i.e., to permit agencies to promulgate rules for courts to apply uniformly across the country, rather than invite a patchwork of judicial holdings.
We expect that courts will continue to follow this trend for as long as Congress and FDA continue to signal their interest in making CBD regulation a priority. The uncharted terrain of CBD labeling and marketing, in many ways, epitomizes the raison d’etre for primary jurisdiction: in such a new and rapidly growing arena, ensuring that consistent, clear rules emanate from the responsible agency benefits consumers and manufacturers alike, and is a far superior alternative to protracted lawsuits that may yield disparate rulings in the face of a murky regulatory scheme. Happily, moreover, Snyder and its ilk mark a welcome mini-revival of sorts for the primary jurisdiction doctrine in the context of food and beverage labeling. Over the past several years, courts had often rejected primary jurisdiction defenses raised by manufacturers of “natural” consumables because the FDA’s decades-old promise to develop “natural” food labeling guidance had yet to materialize. That courts have not lost sight of the wisdom behind primary jurisdiction bodes well for manufacturers in labeling cases to argue that regulatory issues of first impression are better resolved at the agency level ab initio.
We will continue to monitor and post on future developments in both the regulatory and litigation fronts for CBD and CBD products.
[1] The public docket is available at https://beta.regulations.gov/docket/FDA-2019-N-1482
[2] See Explanatory Statement Submitted by Mrs. Lowey, Chairwoman of the House Committee on Appropriations Regarding H.R. 1865, at 267, available at https://www.appropriations.senate.gov/imo/media/doc/HR%201865%20-%20SOM%20FY20.pdf
[3] Testimony of Douglas Throckmorton, Cannabis Policies for the New Decade, available at https://www.fda.gov/news-events/congressional-testimony/cannabis-policies-new-decade-01152020
[4] Report to the U.S. House Committee on Appropriations and the U.S. Senate Committee on Appropriations, Sampling Study of the Current Cannabidiol Marketplace to Determine the Extent that Products are Mislabeled or Adulterated, available at https://files.constantcontact.com/0ac3ac29601/07fb4b7e-2a70-4190-ba6b-9bb8f9f2264c.pdf
[5] FDA, Warning Letters and Test Results for Cannabidiol-Related Products, available at https://www.fda.gov/news-events/public-health-focus/warning-letters-and-test-results-cannabidiol-related-products
[6] FDA, What you need to know (and what we’re working to find out) about products containing cannabis or cannabis-derived compounds, including CBD, available at https://www.fda.gov/consumers/consumer-updates/what-you-need-know-and-what-were-working-find-out-about-products-containing-cannabis-or-cannabis
[7] See Snyder v. Green Rds. of Fla. LLC, No. 19 cv 62342, 2020 U.S. Dist. LEXIS 1145, at *2 (S.D. Fla. Jan. 3, 2020); Potter v. Potnetwork Holdings, Inc., 2020 U.S. Dist. LEXIS 57166 (S.D. Fla. Mar. 30, 2020); Colette v. CV Scis., Inc., 2020 U.S. Dist. LEXIS 93553 (C.D. Cal. May 22, 2020); Glass v. Global Widget, LLC, 2020 U.S. Dist. LEXIS 104400 (E.D. Cal. June 15, 2020); Pfister v. Charlotte’s Web Holdings, Inc., No. 20 cv 418, Dkt. No. 43 (N.D. Ill. Aug. 11, 2020); Ahumada v. Global Widget LLC, No. 19 cv 12005, Dkt. No. 34 (D. Mass. Aug. 11, 2020)