' Who Will Drive Innovation in CBD Products? | MTTLR

Who Will Drive Innovation in CBD Products?

Cannabidiol (CBD) has the potential to be big business. Since the descheduling of hemp-derived CBD, large corporations have been exploring how they might capitalize on CBD’s hold on the public’s attention. CVS and Walgreens announced their rollout of CBD products in thousands of stores. The creator of Jelly Belly plans to make CBD jellies. CBD’s potential marketability stretches across diverse industries and target markets. But the regulatory uncertainty around CBD products puts all of these actions in a legal gray area. And although large companies might be willing to test the waters with low risk investments, capital-intensive research and development (R&D) is likely on hold until the FDA or Congress clarifies CBD’s regulatory future. And it is precisely this type of research that is needed to bring products to the market that can offer something more novel than the small-batch CBD products that have been available in some states for years.


The passage of the 2018 Farm Bill removed hemp and its derivatives from the Controlled Substances Act. CBD’s new status allows companies greater flexibility to use CBD in R&D. But the complex web of FDA regulations, combined with the ready availability of locally-made CBD products, may disincentivize companies from delving too deep into CBD’s therapeutic potential. The FDA considers any product with a therapeutic “intended use” a drug. Once a product is classified as a drug, it is subject to the extensive–and expensive–process by which the FDA approves new drugs for the market. Drug companies rely on market exclusivity to recoup the costs of pre-market approval. Companies interested in developing CBD-based therapies are in the unique position of facing possible competition from locally-manufactured CBD products. Because FDA jurisdiction is limited to products that have traveled in interstate commerce, the FDA cannot regulate CBD products made wholly within a single state. If patients perceive locally-manufactured CBD products as alternatives to pharmaceutical products, the generally more expensive pharmaceuticals may have a hard time competing.


FDA regulation of food and cosmetics raises questions as to the legality of “CBD jellybeans” or “CBD salves” that travel in interstate commerce. Because CBD is an active ingredient in an FDA-approved drug[1], it cannot be added to a food product (and then be regulated as food). It’s not clear whether cosmetic products containing CBD will also be deemed drugs just because they contain CBD. If a company makes any therapeutic claim about its product (like labeling a CBD balm as “pain-relieving”), the FDA will consider the product a drug. But even if the product labeling or marketing does not contain such claims, the agency might deem the product a drug anyway. In the past, the agency has issued warning letters based on the “intended use” of a product even if the seller made no therapeutic claims. This means that the companies rolling out CBD-based products that have traveled in interstate commerce are testing the FDA’s discretion.


CBD’s significant success alleviating the symptoms of severe epilepsy sparked great interest in its therapeutic potential. At the same time, anecdotes and pop culture tout CBD as a miracle compound: able to relieve pain and anxiety, curb inflammation, and nourish the skin. But CBD currently finds itself in a murky regulatory scheme and it’s far from obvious what kind of framework will best serve patients and consumers. FDA recently indicated its willingness to consider carving out exceptions from its default regulations for CBD products. How it will balance the various interests at play remains to be seen.

[1] Epidiolex was approved in 2018 for the treatment of seizures associated with two rare forms of epilepsy.

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