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Farm Bill Conference Coming Soon: Will Industrial Hemp Make the Cut?

At the end of June, the U.S. Senate passed its version of the 2018 Farm Bill, which included the full text of McConnell’s Hemp Farming Act of 2018. If the Senate version is enacted, hemp and derivatives, extracts, and cannabinoids derived from hemp would be treated as agricultural commodities and removed from the purview of the Controlled Substances Act and the Drug Enforcement Administration. Though this is certainly exciting news, it’s not quite time to pop the CBD-infused champagne just yet. 

Both the Senate and the House have passed their own versions of the Farm Bill.  The Senate included the full text of McConnell’s Hemp Farming Act, but the House version was silent on hemp. The Farm Bill covers a vast range of agricultural issues including subsidies and crop insurance. Now the House and Senate must harmonize their versions of the Bill, including the provisions that relate to industrial hemp.

The House and Senate passed motions to proceed to conference for their respective the Farm Bills. Both chambers will need to agree on which portions of each bill will be included in a conference agreement. U.S. Hemp Roundtable compiled a list of conferees for the House and Senate. The House is represented by 47 conferees and the Senate is represented by 9 conferees.

The 9 Senate conferees show that the both Republicans and Democrats will be represented. The Senate Republicans will include Pat Roberts (Kan.), John Hoeven (N.D.), Joni Ernst (Iowa), John Boozman (Ark.), and Senate Majority Leader Mitch McConnell (Ky.). Senate Democrats Debbie Stabenow (Mich.), Patrick Leahy (Vt.), Sherrod Brown (Ohio). and Heidi Heitkamp (N.D.) will also negotiate on behalf of the Senate.

McConnell’s involvement is important for industrial hemp. McConnell was instrumental in passing the 2014 Farm Bill’s industrial hemp provision and continues to advocate for legalizing hemp. He even recently toured a hemp cultivation facility in Kentucky, as reported by the Lexington Herald Leader. He also happens to be the Senate Majority Leader making him one of the most powerful politicians in the country.

Here’s what McConnell had to say about the 2018 Farm Bill and his decision to sponsor the Hemp Farming Act:

I have proudly served on the Agriculture Committee since my first day in the Senate and know exactly how important this legislation is to agricultural communities across Kentucky, so as Majority Leader, I put myself on the Conference, and we’re ready to get to work to ensure the future of American agriculture. I will advocate for Kentucky’s multi-billion-dollar agriculture industry that supports thousands of good jobs and families in nearly every corner of the Commonwealth. Additionally, I will strongly advocate to legalize industrial hemp. I’m optimistic that my Hemp Farming Act, which I secured in the Senate bill, will be included in the final bill sent to the President for his signature. I am also glad to have the support of Congressman Comer on the Conference for legalizing industrial hemp.

If the House and Senate reach a resolution, they will issue a Conference Report that will be sent back to the House and Senate for final passage. If the passed in both chambers, the Bill would head to the Donald Trump’s desk for signature. For industrial hemp farmers, the sooner this happens, the better.

The 2014 Farm Bill is set to expire on September 30 or at the end of the applicable crop year. Hemp farmers operating under the 2014 Farm Bill will certainly be watching carefully to see whether the 2018 Farm Bill is signed prior to that date. If the 2014 Farm Bill expires, so too will the legal basis for cultivating industrial hemp under federal law. It’s possible that the 2014 Farm Bill will be extended in the event that the 2018 Farm Bill fails to pass. McConnell is hoping that the conference can reach agreement by Labor Day.

source https://www.cannalawblog.com/farm-bill-conference-coming-soon-will-industrial-hemp-make-the-cut/

California Legalizes Prescription Cannabidiol (Epidiolex)

At the end of June, we wrote about the FDA’s approval of GW Pharmaceutical’s drug Epidiolex (containing cannabidiol), an oral solution for treatment of seizures. On July 9, 2018, California Jerry Brown signed legislation approving Epidiolex for use under California law.

California, like many states, has its own version of the Controlled Substances Act. Similar to federal law, the California CSA classifies controlled substances into five schedules, the most restrictive being Schedule I and the least restrictive being Schedule V. Under existing California law, cannabidiol (CBD) is Schedule I because it is a compound contained in cannabis, also a Schedule I drug.

Under Assembly Bill 710, the California Legislature made the following findings:

The Legislature finds and declares that both children and adults with epilepsy are in desperate need of new treatment options and that cannabidiol has shown potential as an effective treatment option. If federal laws prohibiting the prescription of medications composed of cannabidiol are repealed or if an exception from the general prohibition is enacted permitting the prescription of drugs composed of cannabidiol, patients should have rapid access to this treatment option. The availability of this new prescription medication is intended to augment, not to restrict or otherwise amend, other cannabinoid treatment modalities including, but not limited to, industrial hemp products and derivatives containing cannabidiol, currently available under state law.

Section 3 of A.B. 710 then adds statutory language that harmonizes federal and California state law on cannabidiol:

if cannabidiol is excluded from Schedule I of the federal Controlled Substances Act and placed on a schedule of the act other than Schedule I, or if a product composed of cannabidiol is approved by the federal Food and Drug Administration and either placed on a schedule of the act other than Schedule I, or exempted from one or more provisions of the act, so as to permit a physician, pharmacist, or other authorized healing arts licensee acting within his or her scope of practice, to prescribe, furnish, or dispense that product, the physician, pharmacist, or other authorized healing arts licensee who prescribes, furnishes, or dispenses that product in accordance with federal law shall be deemed to be in compliance with state law governing those acts.

Essentially, this language provides that once CBD can legally be prescribed under federal law, any authorized health care professional who complies with federal law will be deemed to comply with California state law. A.B. 710 goes on to provide that this harmonization does not apply to a CBD-containing product that is made or derived from industrial hemp, as regulated by existing California law.

Finally, the Legislature provides that “in order to ensure that patients are able to obtain access to a new treatment modality as soon as federal law makes it available,” A.B. 710 is an “urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the California Constitution and shall go into immediate effect.”

The story of A.B. 710 shows that federalism concerns will continue to arise even once cannabis is federally legal. Because the states are permitted to pass their own controlled substances acts and food and drug statutes, it is possible that federal legalization will not lead to universal availability, just as the repeal of prohibition did not prevent localities from opting out. But we expect that similar laws harmonizing state and federal policy on CBD will be forthcoming, at least in states where cannabis is legal for medical use.

source https://www.cannalawblog.com/california-legalizes-prescription-cannabidiol/

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Start Your Engines for California Cannabis Recalls

Now that the MAUCRSA transition period is over and full cannabis testing is in the works, we can fully expect California marijuana companies to start engaging in recalls of certain products for a variety of reasons. In fact, a voluntary recall has already been initiated by The Bloom Brand where an impermissible pesticide (Myclobutanil) was present in one of its product batches that made it to retailers. Recalls like this are going to continue to increase, and we have to applaud The Bloom Brand for being conservative when it comes to consumer protection. Hopefully, other companies will follow suit and not try to cut corners where the resulting consequence is undoubtedly litigation, reputational disaster, and even dissolution if not fixed and fixed immediately.

So, what do you do in California if you find yourself inching up towards a recall?

First, you start with the readopted emergency regulations, which lay the field for what has to go down in the event of a recall. The California Department of Public Health-Manufactured Cannabis Safety Branch oversees licensing and enforcement for all manufacturers, and recall protocol is found at section 40268 of the emergency regulations. CDPH is the only agency right now with recall protocol codified in the emergency rules. Specifically, as a condition of licensure, you have to have a recall plan in place. That plan has to include:

(a) Factors which necessitate a recall;
(b) Personnel responsible for implementing the recall procedures; and
(c) Notification protocols, including: (1) A mechanism to notify all customers that have, or could have, obtained the product, including communication and outreach via media, as necessary and appropriate; (2) A mechanism to notify any licensees that supplied or received the recalled product; (3) Instructions to the general public and/or other licensees for the return and/or destruction of recalled product.

Procedures for the collection and destruction of any recalled product also have to meet the following requirements:

(1) All recalled products that are intended to be destroyed must be quarantined for a minimum of 72 hours. The licensee must also affix to the recalled products any bills of lading, shipping manifests, or other similar documents with product information and weight; and

(2) Following the quarantine period, the licensee has to render all recalled cannabis product unusable and unrecognizable and dispose of it in accordance with the rules and law, and that destruction has to take place on video surveillance.

And there are additional waste, destruction, disposal, track and trace and reporting requirements for the recalled product.

MAUCRSA itself empowers CDPH to mandate a recall when:

“the [CDPH] has evidence that a cannabis product is adulterated or misbranded, the department shall notify the manufacturer. [CDPH] may order a manufacturer to immediately cease distribution of a cannabis product and recall the product if [CDPH] determines both of the following: (1) The manufacture, distribution, or sale of the cannabis product creates or poses an immediate and serious threat to human life or health.(2) Other procedures available to [CDPH] to remedy or prevent the occurrence of the situation would result in an unreasonable delay.”

“A peace officer,” including any peace officers from the Bureau of Cannabis Control or CDPH, can also seize product under recall “by any licensing authority” pursuant to MAUCRSA. However, at this point, California’s actual cannabis recall standards are paltry and they’re mostly on a voluntarily basis, which is downright scary given some of the operators in the field.

Every single licensee should, for its own sake and liability mitigation, have concrete standards for recall procedures where products liability means strict liability for everyone in the chain who passed on the dangerous or defective product. Here are some tips of what should go into any reliable recall plan:

1. Create an overall recall strategy that’s going to actually work for the company dependent upon resources and manpower.

2. As part of your recall plan, create definitions and standards for classes of recall and the depth and scope of any given recall. If your state or local laws do not provide basic recall standards for marijuana businesses, check out the FDA’s website under Guidance for Industry: Product Recalls, Including Removals and Corrections.

3. Appoint a recall committee within your company, to be led by experienced personnel capable of evaluating and investigating product complaints to determine if a recall is warranted. This also entails your developing a product complaint form that will be utilized by customers. It is better to learn about product problems early.

4. Develop a complaint receipt and evaluation method to ensure that your product complaint processing and investigations are logical, efficient, and comprehensive. There are few things worse than receiving product safety complaints and then ignoring them until the situation is out of control.

5. Truly ponder what your product complaint investigation will entail. What facts should the recall committee be seeking to determine if a complaint is valid or if a recall is warranted. What should your recall look like, as based on the facts and circumstances and the threat the product poses to consumers and vendors.

6. Create a distribution list so that your recall committee can quickly and easily identify all affected products and product lots for disposition and potentially destruction. The distribution list should also include the names of all affected consumers and vendors, their contact information, and the dates on which the products were sold to them or consumed by them, and it should also include any side effects, injuries, or illnesses resulting from product use. Time is of the essence here.

EXAMPLE: My law firm had a regional food client that inadvertently failed to issue a recall notice to one of many supermarket chains to which it sold its food. This supermarket chain was so angry about having been kept out of the loop that it refused ever to purchase our client’s product again. Then other supermarket chains learned of our client’s mistake and they too ceased all of their purchasing. Needless to say, our client company no longer exists. Don’t let this sort of thing happen to you.

7. Institute a method of stock recovery so all tainted product in inventory is effectively quarantined from sale and distribution.

8. Generate your recall notice and be very careful with your wording in how you alert vendors and consumers to the recall. You want to effectively communicate that a product has been affected and how to deal with that, but you also want to minimize whatever liability your product problems may create for the company. On a case by case basis, consideration should also be given to drafting a press release to help the company’s PR. Regular readers know that we seldom state that attorney help is required, but for this, attorney assistance is absolutely required!

9. Make sure to as quickly as possible (preferably in advance) to alert your outside advisors (your lawyers, your insurance broker, etc.) regarding your recall.

10. Set out in your recall plan your options for product disposition. Will you destroy a product? Cleanse and then repurpose it? Lay out your options in your plan now so that you are not scrambling to try to figure out your possible options later, when you have no time to do so.

11. Record everything you do. Document every effort you make and record all your communications with consumers and vendors. If there is a legal action later, you will want to be able to show the court that you took all reasonable steps to ensure consumer safety.

In addition to formulating a solid and reliable recall plan, you also might want to consider conducting a mock recall to ensure your recall systems will work when the real deal occurs. Compliance audits can also be a big help in shoring up loose ends on a recall.

In the world of cannabis product recall, especially in California, licensees need to be very proactive in order to protect themselves. Relying on the state’s thin recall standards isn’t likely enough to protect licensees against an overwhelming liability exposure.

source https://www.cannalawblog.com/start-your-engines-for-california-cannabis-recalls/