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The Cannabis Industry: Compliance and Enforcement in an Ever-Changing Regulatory Environment

Joseph Cassella
January 8, 2022

The cannabis industry is experiencing significant and accelerated growth in many countries.

With this growth comes a responsibility to regulate the industry in a way that ensures its long-term viability and protects public safety. The availability of products containing CBD (Cannabidiol) such as oils, sprays, patches, etc. (even for pet use) has outpaced the Food and Drug Administration as well as individual states’ ability to adapt adequately. However, this is no reason to assume that the FDA is falling behind. As the chart below indicates, the FDA is catching up quickly. This chart shows the number of warning letters issued to Cannabis companies that manufacture or distribute products containing CBD. There is an apparent upward trend as the FDA ramps up.

The FDA is primarily focusing on the following issues with these warning letters:

Unapproved New Drug
Misbranded Drug (classifications of “Dietary Supplement”)
Inadequate labeling/directions for use

And specifically, under the Federal Food, Drug and Cosmetic Act:

Section 201(g)(1)(B)
Section 201(ff)(3)(B)(ii)
Section 502(f)(1)
Section 505(a)
Section 301(d)

The common themes in these warning letters are that the FDA is deeming these products to be “New Drugs” based on claims made by the companies themselves. And as with any new drug, they may not be legally introduced or delivered into interstate commerce without prior FDA approval. Further, the FDA also calls out, in most of these letters, that as new drug products, they are misbranded, and they are failing labeling requirements as the labels do not provide adequate directions for use.

Some companies have claimed that their product(s) are Dietary Supplements, which is also inaccurate. The FDA has concluded that since CBD containing products are designated as new drugs, they fall outside the definition of a dietary supplement.

Also, state legislation plays an essential role in the regulation of the industry. New York has announced new licensing requirements for growers, processors, and sellers that outlines requirements for purity, contaminant levels, etc. However, California has gone the furthest with their licensing requirements. California has currently developed 21 licensing requirements, each based on the part of the industry a company or person is classified. From small/large cultivators; indoor/outdoor cultivators; manufacturing with and without solvents; testing laboratories; or Cannabis event organizers.

But the real authority lies with the FDA. Specific information about how the FDA regulates CBD can be found here.

USDM works closely with emerging cannabis and cannabinoid companies, and we follow the global regulatory agencies to stay on top of the evolving regulations. We also realize the cannabis and hemp industries will have many regional impacts and considerations. The earlier on your road to commercialization that you align your compliance and technology strategies with both federal and state requirements, the more competitive market advantage you will have in the industry.

Contact USDM to learn more about how we can help support your emerging business. We can help guide your journey to commercialization and your compliance strategy.

Some of the services we offer cannabis companies are below:

About the Author
Joseph Cassella is the Director of Regulatory Compliance at USDM Life Sciences. With over 25 years of experience in the pharmaceutical, biotech, and medical device industries, Joe’s background is both broad and deep in Information Technology, Laboratory and Analytical Applications, and Quality Systems. He has led many projects inclusive of IT Infrastructure, Research & Development, QA/QC, Manufacturing, Compliance, and Sales and Marketing.