November 29, 2020

Volume X, Number 334


4 Things Hemp Lawyers Want You to Know Before You Sell CBD Products

You’ve probably heard this by now, but hemp and hemp-derived cannabidiol (“CBD”) were previously classified as Schedule I controlled substances under the Controlled Substances Act of 1972.

That changed with the passage of the Agriculture Improvement Act of 2018 (the “2018 Farm Bill”) which, among other things, decriminalized hemp and hemp-derived CBD. Now, consumer demand for products containing hemp-derived CBD is at an all-time high, and retailers of all types and sizes are rushing to incorporate CBD products in their consumer good offerings. But before you offer and sell CBD products in your store, keep these thoughts in mind. 

Hemp-Derived CBD is Legal, but That’s Not the End of the Story.

The 2018 Farm Bill ushered in a new era for the domestic production, transportation, and sale of hemp and CBD products. But, it did not fully resolve all legal and regulatory questions for the industry. On the contrary, CBD and CBD products are now subject to a host of new laws and regulations. The Food and Drug Administration (“FDA”) has clearly stated its position that it is unlawful to introduce food containing added CBD or THC into interstate commerce or to market CBD or THC products as, or in, dietary supplements, regardless of whether the substances are hemp-derived. Both the FDA and the Federal Trade Commission have issued warning letters to producers and sellers of CBD retail products. And, many state-level regulators have decided to follow the FDA’s lead on this issue.

It’s Important to Know the Law.

The CBD industry is new. We’ve had less than one year of growth and development under the current regulatory regime. The laws and regulations are evolving, and it is extremely important that you have an understanding of those laws and how they impact your operations. It is not just federal law that matters. Individual states across the U.S. are adopting and implementing state-level hemp laws and regulations to govern the industry and the production and sale of CBD products within their borders. If you are not familiar with the legal requirements for the industry, and you’re not willing to invest the time to stay abreast of changes and updates, it may be best to stay out of the market.

Don’t Sell CBD Products to Minors.

Your state may not yet have adopted a legal age for the sale, possession, or use of CBD products. But, the industry as a whole needs to self-regulate in this regard. Nothing good can come from the sale of CBD to minors, so just don’t do it.

Don’t Sell Bad Products.

Doing so will hurt your business, your customers, and the industry as a whole. There are all kinds of bad products on the market. Make sure you are producing, buying, and re-selling legally compliant, safe products that have been tested for more than just the delta-9 THC content. Products – especially those intended for human use – should also be tested for heavy metals, mold, mycotoxins, pesticides, and a number of other potentially harmful substances. Your wholesaler should be able to produce full panel lab results on request. If they cannot or will not share those results with you, you should probably avoid selling those products and doing business with that company. 


© 2020 Ward and Smith, P.A.. All Rights Reserved.National Law Review, Volume IX, Number 355



About this Author

Tyler Russell, Bankruptcy Attorney, Creditors Rights, Raleigh, North Carolina, Ward and Smith Law Firm
Business and Creditor's Rights Attorney

Tyler's creditors' rights practice encompasses bankruptcy, collections, and lender liability issues.  He concentrates his practice on the representation of creditors in bankruptcy cases and state court litigation, including workouts, reorganizations, Uniform Commercial Code security agreement enforcement, collections cases, and other contested matters.  Tyler has represented national and community lenders, trade creditors, equipment manufacturers, agricultural companies, community associations, contractors, and leasing companies in various reorganization and litigation proceedings. His...

Allen N. Trask III, Litigation Attorney, Ward Smith, Wilmington, North Carolina, business, civil, commercial litigation
Litigation Attorney

Allen focuses his practice on assisting those who own, manage, and invest in real estate and common interest communities.  He regularly works with real estate developers and the residential and commercial community associations that they create to handle all manner of issues, including the preparation, amendment, interpretation, and enforcement of restrictive covenants and governing corporate documents, declarant control transition and disputes, community management, insurance claims and disputes, and collections.  He also frequently represents Real Estate Investment...