LAS VEGAS — Using hemp extracts as ingredients may sound promising, as well as problematic, for food manufacturers. Regulatory issues surrounding hemp extracts may sound familiar: adhering to the U.S. Federal Food, Drug, and Cosmetic Act and avoiding class-action lawsuits.
Lawyers knowledgeable on hemp’s legal issues and executives of companies that offer hemp-based products spoke in a SupplySide West presentation Nov. 7 in Las Vegas.
The Hemp Business Journal forecasts hemp-based product sales in the United States to reach $1.9 billion by 2022 with food accounting for 11% and supplements accounting for 3%.
“We are already talking to institutional investors,” said Stuart Tomc, vice-president of human nutrition for San Diego-based CV Sciences, which markets and sells C.B.D. products. People may seek cannabidiol (C.B.D.), which is found in hemp, to help ease problems such as anxiety, depression, severe/chronic pain, insomnia and nausea.
Investors, in no small part because of regulatory concerns, still may view hemp as a high-risk ingredient, Mr. Tomc said. Hemp and marijuana both are forms of cannabis, a plant species. The percentage of T.H.C. (tetrahydrocannabinol), the chemical responsible for most of cannabis’ psychological effects, distinguishes marijuana from hemp promoted for C.B.D. content. Anything with over 0.3% T.H.C. content is marijuana.
The U.S. hemp-based C.B.D. market could reach $500 million by 2020 while the global market could reach $2 billion, said Tim Gordon, president of CBDRx, L.L.C., Boulder, Colo. He said functional foods are a growth opportunity for hemp-based products.
“I see functional foods and hemp-based products interlocking in the future where you’ll have hemp-infused honeys,” Mr. Gordon said.
Beverages, including coffee and sports drinks, are another opportunity for hemp inclusion, he said, adding the U.S. regulatory framework for hemp could become clearer over the next 18 months.
“The industry wants to be regulated,” said Robert T. Hoban, managing partner for Hoban Law Group, Denver.
Cannabis could fall into three categories. One category could be cannabis prescribed as a drug. Another category could be cannabis ingredients, like hemp extracts, in foods and supplements. The third category would be cannabis sold over the counter like marijuana is sold legally in Colorado.
Mr. Hoban said the 2018 farm bill, when passed, could contain hemp regulations and bring debate over who should govern hemp, be it the Food and Drug Administration, which is part of the U.S. Department of Health and Human Services, or the Drug Enforcement Agency, which is part of the U.S. Department of Justice.
Hemp may fall under the Food, Drug, and Cosmetic Act governed by the F.D.A., said James R. Prochnow, a shareholder for Greenberg Traurig, L.L.P., Denver.
“The biggest challenge that I see for this industry is you have to comply with the Federal Food, Drug, and Cosmetic Act or it could lead to some bad consequences for you,” he said.
The product must be labeled correctly.
“You have to be very accurate what you say,” he said. “It’s a felony, a violation of federal law, to be untruthful about what’s in the product.”
Companies need to know why they are selling a product containing hemp. The purpose might be for taste, aroma or nutritional value, Mr. Prochnow said. If it is a food or beverage, the product cannot be said to treat, cure or diagnose a disease. Claims on hemp must be true and backed up by science.
Class-action lawyers may be on the lookout for impermissible claims or the marketing of ingredients not approved by the F.D.A., said Todd A. Harrison, an attorney for Venable L.L.P., Washington.
“They are scary because they are not going to stop at $10,000 or $50,000,” he said of the lawyers.
A lawsuit settlement or a lawsuit verdict could reach $100 million.
He said that other than preventing epileptic seizures, not many scientific studies support C.B.D. It has shown anti-inflammatory benefits.