CBD 101

The Legal Landscape of CBD in the United States: Federal and State Regulations You Need to Know

The Legal Landscape of CBD in the United States: Federal and State Regulations You Need to Know

The therapeutic benefits of full spectrum vs. broad spectrum cannabidiol (CBD), a compound derived from the cannabis plant, have received significant attention in recent years. As a result, CBD's popularity has skyrocketed, with countless products flooding the market and consumers seeking its potential benefits. 

However, navigating the complex legal landscape of CBD in the United States can be daunting for those involved in the booming CBD industry and those simply considering using it for personal wellness.

That's why the primary focus of this article is to explore the federal and state regulations surrounding CBD in the United States. Understanding these nuances is crucial as the legality of this natural compound and the products containing it varies depending on several factors. 

This comprehensive guide will equip you with the knowledge you need to stay informed and compliant. Read as we delve into the complexities of CBD's legal status and ensure you're making well-informed decisions when it comes to this fascinating gift of nature. 

Key Takeaways

  • CBD legality varies between federal and state levels; understanding both is essential for both users and CBD businesses.
  • The 2018 Farm Bill legalized hemp-derived CBD federally, but states maintain varying laws.
  • Three federal agencies — FDA, DEA, USDA — oversee different aspects of CBD regulation.
  • Marketing and labeling of CBD products must align with FDA regulations and state-specific rules.
  • Operating a CBD business involves legal challenges like licensing, compliance, zoning, taxes, and interstate commerce laws.

Understanding CBD: The Basics and Its Sources

Cannabidiol (CBD) is a non-intoxicating compound found in cannabis plants, including marijuana and hemp. It is one of over a hundred naturally occurring cannabinoids in these plants. 

Unlike its more famous "cousin," delta 9 tetrahydrocannabinol (THC), nano CBD does not produce the "high" associated with marijuana use. Instead, it has gained recognition for its potential therapeutic properties, which range from supporting a good night's sleep to helping relieve physical discomfort and promoting overall wellness.

The source of CBD is essential when considering its legal status. While both marijuana and hemp plants contain full spectrum CBD, they differ significantly in their THC content. Marijuana typically has a high concentration of THC, whereas CBD derived from hemp contains only trace amounts (usually less than 0.3%) delta 9 gummies. This distinction plays a crucial role in determining the legality of CBD products at both federal and state levels.

Federal Regulations Governing CBD: The Role of the FDA, DEA, and USDA

At the federal level, three main agencies oversee the regulation of CBD products

  • Food and Drug Administration (FDA), 
  • Drug Enforcement Administration (DEA),
  • United States Department of Agriculture (USDA).

The FDA is responsible for regulating food, drugs, cosmetics, and dietary supplements containing broad spectrum CBD. Currently, the FDA does not consider CBD a dietary supplement or approve it as an ingredient in food or beverages. Still, it's important to note that the agency has approved one CBD-based drug called Epidiolex for treating certain forms of epilepsy.

FDA approved CBD

Image Source: https://www.epidiolex.com/fda-approved-cbd

On the other hand, the DEA classifies substances based on their potential for abuse and medical value. While it still lists marijuana as a Schedule I controlled substance (meaning it has a high potential for abuse), it no longer considers hemp-derived CBD to be a controlled substance following the passage of the 2018 Farm Bill.

Lastly, the USDA oversees hemp cultivation and production regulations. Under the 2018 Farm Bill, the USDA established a national regulatory framework for hemp production, allowing states to submit their own plans for approval.

USDA performs the approval and authentication process, which aims to ensure that products, especially food and agricultural goods, meet specific quality standards and regulations set by the department.

When a certain CBD product is USDA Organic CBD certified, it means that it meets all the requirements of organic production, including the non-use of synthetic fertilizers, pesticides, and genetically modified organisms, among other requirements.

The 2018 Farm Bill: A Turning Point for Hemp-Derived CBD

The Agriculture Improvement Act of 2018, commonly known as the 2018 Farm Bill, was a landmark piece of legislation that dramatically altered the legal landscape for hemp-derived full spectrum vs. broad spectrum CBD in the United States. 

This legislation removed hemp and its derivatives, including CBD, from the Controlled Substances Act's definition of marijuana, effectively declassifying them as Schedule I substances.

The bill, signed into law by then-president Donald Trump, also established a legal distinction between hemp and marijuana based on THC content. To qualify as hemp, a cannabis plant must contain no more than 0.3% THC by dry weight. According to federal law, a cannabis plant that contains more than 0.3% THC would be considered non-hemp cannabis — or marijuana — and, as a result, wouldn't face legal protection under the Farm Bill.

The 2018 Farm Bill has opened the door for legal production and distribution of hemp-derived CBD products across the country, albeit with certain restrictions and regulations still in place.

State-by-State Regulations: A Patchwork of Laws 

Despite the federal legalization of hemp-derived CBD, state laws regulating its sale and use can still vary significantly. Laws vary from state to state because the U.S. operates under a federal system of government where power is divided between the national government and state governments. 

This allows each state to enact laws that cater to the specific needs, values, and circumstances of its own constituents, leading to variations in law across the country. Because of this, some states can fully embrace the federal guidelines stated in the 2018 Farm Bill, while others are free to maintain stricter regulations or even prohibit CBD entirely.

For example, some states require CBD products to be derived exclusively from hemp, while others allow higher concentrations of Delta 9 THC in CBD products for medicinal purposes. Additionally, individual states may have specific labeling requirements or restrictions on product types (e.g., prohibiting CBD-infused food or beverages).

It is crucial for businesses and consumers to familiarize themselves with their state's specific regulations to ensure compliance and avoid potential legal repercussions.

Which States Is CBD Legal In?

Federal law recognizes the legality of CBD derived from hemp, but consuming or owning any cannabis product is still illegal in several states. In January 2023, the list of states where CBD was fully legal included eighteen states:

  • Alaska,
  • Arizona,
  • California,
  • Colorado,
  • Connecticut,
  • District of Columbia,
  • Illinois,
  • Maine,
  • Massachusetts,
  • Michigan,
  • Montana,
  • Nevada,
  • New Jersey,
  • New York,
  • Oregon,
  • Vermont,
  • Virginia,
  • Washington.

Where in the US CBD Is "Conditionally Legal?"

"Conditionally legal" means that CBD is not unrestrictedly legal, but its legality depends upon certain conditions being met. These conditions can vary by state and often refer to the specific type of CBD product, its THC content, the medical condition it's being used for, or the necessity of having a medical cannabis license.

For a complete list of reasons behind the "conditionally legal" status in particular states, please refer to this article by Forbes.

CBD legal states

Image Source: https://worldpopulationreview.com/state-rankings/cbd-legal-states

Navigating Marketing Claims and Labeling Requirements for CBD Products

As the market for CBD products expands rapidly, so does the importance of accurate marketing claims and proper labeling. The FDA has already issued warning letters to numerous companies making unsubstantiated health claims about their CBD products, emphasizing that such claims must be supported by scientific evidence.

Additionally, CBD product labels should include information such as the source of CBD (hemp or marijuana), THC content, and dosage recommendations. Some states have even stricter labeling requirements, requiring businesses to stay informed about local regulations to ensure compliance.

Legal Challenges: Licenses, Permits, and Compliance

Operating a business in the CBD industry can indeed be complex due to the many legal challenges, which stem from both federal and state levels as well as international considerations if applicable.

Licenses and Permits

Operating a CBD business requires obtaining the proper licenses and permits. These might include a retail license for selling CBD products, a cultivation license if growing hemp, a manufacturer’s license if creating CBD products, be it tinctures, gummies, or topicals, and a permit for transporting CBD across state lines. The specific licenses and permits required will vary by state and depend on the type of CBD business being operated.

Compliance with Laws Governing Production, Distribution, and Marketing

CBD businesses must adhere to specific laws and guidelines related to the production, distribution, and marketing of their products. This includes adhering to FDA regulations regarding health claims about nano CBD, using proper labeling and packaging, and ensuring product quality and safety. 

Compliance extends to marketing efforts as well, requiring businesses to be truthful in their advertising and avoid making unsubstantiated health claims about their products.

Zoning Restrictions

Zoning restrictions can pose a challenge for CBD businesses, particularly those with a physical storefront. Businesses must ensure they are in areas zoned for their type of business and need to also consider any local ordinances regarding the sale of CBD products.

Tax Implications

CBD businesses face unique tax implications. For instance, while most businesses can deduct expenses when filing their taxes, businesses in the cannabis industry are often restricted from doing so due to federal laws, leading to higher effective tax rates.

Interstate Commerce Laws 

The interstate sale and shipment of CBD can be particularly challenging. Even though hemp-derived CBD is legal at the federal level, individual state laws can complicate interstate commerce, as some states have stricter regulations than others. Businesses must be aware of the legalities of shipping their products across state lines.

In Conclusion

The legal landscape surrounding CBD in the United States is constantly evolving, with new regulations and guidelines being introduced frequently. It is crucial for businesses and consumers alike to remain informed about these changes to stay compliant and make informed decisions regarding CBD use.

By staying up-to-date on federal and state laws governing CBD products, industry participants can better navigate this rapidly changing market while continuing to enjoy the benefits of this remarkable compound.

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