Associate, David Hardstaff and Partner, John Binns at BCL Solicitors LLP, explain here how cannabis wonder child takes a knock in light of the European Commission’s ‘pause’ on CBD novel food applications mean for this booming industry
The global cannabis industry can be broadly divided into three categories – the first and second of which are medicinal and recreational, and the third being a ‘middle’ category of products that are associated with wellness and lifestyle. Cannabidiol, or CBD, is almost solely responsible for the exponential growth of the middle category in recent years.
CBD is one of the 144 identified cannabinoids found in the cannabis plant. Unlike its more controversial sibling, Tetrahydrocannabinol (THC), CBD is generally not considered to be intoxicating or to have a psychoactive effect, and there is no evidence of risk to health through moderate use.
CBD’s regulatory status
In the UK, as in most countries, CBD is not classified as a controlled drug (unless the product also contains measurable THC or cannabis flower). That does not mean that it is not regulated, however: increasingly found in a wide range of consumer goods, CBD products potentially fall under a range of regulatory systems, including as medicines and cosmetics, but more commonly, as foodstuffs.
It is probably as a much-lauded food supplement that most people will have read about CBD in recent years. In the EU, however, that industry was dealt a damaging blow in January 2019, when it was announced that CBD would be added to the European Commission’s ‘novel food catalogue’ (with the effect, broadly speaking, that authorisation would be required for products containing it to be sold within the EU).
‘Novel food’ status in the UK
At the time, there was widespread concern throughout CBD and industrial hemp communities that regulation as a novel food would stifle the industry. In the UK, despite Brexit looming, the UK Food Standards Agency set a deadline of 31 March 2021 for businesses to provide more information about CBD products and their contents. After this date, only products which have submitted a valid novel food authorisation application will be allowed to remain on the market; or at least, that was the case until July of this year.
The Commission’s decision to ‘pause’ applications
As with most things in 2020, the CBD industry’s position has become even more precarious, with July’s announcement by the European Commission that it is pausing all pending applications by CBD products for novel food authorisation. The basis for this sudden hiatus is that the European Commission now considers CBD may constitute an ‘extract of cannabis’, and it may, therefore, be a ‘drug’, as defined by the UN Single Convention on Narcotic Drugs, 1961 (‘the 1961 Convention’).
The move has caught the industry by surprise, and seems at odds with the 2019 finding of the World Health Organization Expert Committee on Drug Dependence (ECDD) that CBD has no psychoactive properties, no potential for abuse, no potential to produce dependence, and in short, “no significant ill-effects.”
What does the 1961 Convention say?
The 1961 Convention imposes a wide range of obligations on its signatories, including the UK. Under Article 4(c), parties are obliged to “limit exclusively to medical and scientific purposes the production, manufacture, export, import, distribution of, trade in, use and possession of drugs”, while Article 33 provides that “the parties shall not permit the possession of drugs except under legal authority”.
Article 36(1)(a) goes on to create a specific obligation to impose penal sanctions for a wide range of activities involving drugs, including cultivation, production, purchase, sale, delivery, brokerage, dispatch, importation and exportation. Needless to say, the list encompasses most activities central to the running of a consumer products business, whether that may be the supply of the finest quality Afghan heroin, or your favourite influencer’s new £100 pack of CBD gummies.
Consequences of the Commission’s stance – in the EU…
This must all sound quite alarming to anyone in Europe with an interest in the CBD industry. The fact that the ECDD recommends that the 1961 Convention be amended, to effectively exempt CBD, is cold comfort; such an amendment would not be easily passed.
In the meantime, what are the consequences of the European Commission’s stance? CBD has not been added to the 1961 Convention schedules; the issue is the European Commission’s interpretation of the schedules as they currently stand. In the absence of an amendment to the 1961 Convention’s schedules, it will remain up to the countries that are parties to it whether, as something extracted from cannabis, CBD must also be considered a ‘drug’, or whether there is sufficient flexibility to treat it as a distinct substance.
…And in the UK
On the basis that the UK’s Misuse of Drugs regime relies (at least in principle) on the toxicity, or harmfulness, of a substance in determining its controlled status, it seems unlikely that pure CBD will be designated as a controlled drug. A more likely outcome is that, through the UK’s adherence to the European Commission’s novel food rules – and, post-Brexit, corresponding domestic regulations – CBD products will face considerably tighter regulation than at present.
A new opportunity?
Alternatively, and on the basis of a less restrictive approach being adopted, the UK could establish itself as a safe place for the CBD industry to thrive, in a way that may no longer be possible in the EU. To make the most of this opportunity, a relaxation of law preventing the use of cannabis flowers and leaves under industrial hemp licences would also be necessary, to enable UK farmers to produce CBD on a commercially viable scale not presently possible.
The UK may now represent an unlikely beacon of hope for this still booming business, as the EU risks becoming an increasingly hostile place for the industry to flourish. The coming months with be crucial as businesses decide how to react. As with most of us, however, CBD is no doubt just looking forward to getting 2020 out of the way, hopeful for the opportunities that 2021 may bring.