CAO VI. Public Health, Cannabis Administration, and Trade Practices

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Currently the FDA prohibits marketing of food and dietary supplements containing cannabis. Any drug containing cannabis requires FDA approval. Given cannabis’s potential health benefits and abuse risks there needs to be strong incentives for its research and development for use as a drug. FDA has approved three cannabis-derived drugs, and a fourth that contains CBD. Though the FDA has not approved any drug containing cannabis.

The Federal Alcohol Administration (FAA) Act was enacted after the ratification of the 21st amendment, ending prohibition. The FAA establishes regulations on alcohol producers, importers, distributors. The FAA gives the Treasury Dept. and Alcohol and Tobacco Tax and Trade Bureau (TTB) the dual mandate to:

  1. “Protect the revenue” although the enforcement and collection of taxation.
  2. “Protect the public” by preventing consumer misinformation, enforcing health and safety regulations, and preventing uncompetitive trade practices in the marketplace. 

FAA prohibits unfair competition and unlawful practices including: 

  1. Exclusive sale agreements meant to limit market competition.
  2. Commercial bribery or other monetary inducements meant to limit market competition.
  3. Certain non-monetary inducements meantot limit market competition (such as uncompensated use of business property or non-arm’s-length transactions.

The law prohibits misleading labeling and advertising. The label of any alcohol product imported into the U.S. or sold in interstate commerce must be approved by the Treasury Department through Certification of Label Approval (COLA). Approved COLAs are hosted in a publicly accessible database, and states can require alcohol to have a valid COLA to be sold.

A Memorandum Of Understanding(MOU) between the TTB’s predecessor agency (ATF) and the Food and Drug Administration governs the relationship between the two agencies. The TTB operates as the main contact point with industry members during the product approval process, but defers to FDA findings regarding health and safety.

TTB may also require a producer of alcoholic products to submit a product formula for approval, which includes a description of the product’s ingredients and production process. This information is necessary for TTB’s tax collection function, but may also provide information useful for various other TTB functions. Industry members may also be required to submit a product sample for TTB lab testing.

The proposal would transfer cannabis jurisdiction from the DEA to FDA and TTB. These two agencies would enter into a memorandum of understanding regarding their respective responsibilities.

The FDA would be the primary authority for the manufacture and marketing of cannabis products, minimum product manufacture process, product standards, registration and listing, and labeling information. TTB would be the primary federal agency for the taxation of cannabis. 

A new chapter to the FFDCA would establish the Center for Cannabis Products (CCP) in FDA. CCP would regulate the cannabis aspect of all non-medical products containing cannabis. Such products that make claims regarding treatment or prevention of disease in humans or animals would be regulated by the FDA’s Center for Drug Evaluation and Research or Center for Veterinary Medicine, and would be subject to FDA investigation.

Food and cosmetics containing cannabis would be regulated by the Center for Food Safety and Applied Nutrition as well as the CPP. 

Cannabis products would not be regulated as dietary supplements, but producers would be authorized to make the claims about the benefits of their products in the same way that dietary supplement manufacturers do today. 

  1. These claims are called “structure-function’ claims and can be made about characterizations of the way a substance affects the normal structure or function of the body. 
  2. These claims must be supported by competent and reliable scientific evidence and accompanied by a statement on the label that advises: “These statements have not been evaluated by the Food and Drug Administration. This product is not intended to diagnose, treat, cure, or prevent any disease.”

CPP would be responsible for establishing and implementing requirements related to cannabis products, including those related to establishment registration, product listing, good manufacturing practice, product standards, product labeling, and product distribution and recall. 

Producer/Processors of cannabis would need to register their establishments with FDA upon first engaging in activities and annually thereafter. These entities would need to provide a list of products produced at each establishment. 

FDA would be responsible for issuing regulations preventing cannabis to be sold to minors under the age of 21. It would also set best practices for manufacturing, requirements relating to planting, cultivation, growing, and harvesting cannabis. 

The proposal would prohibit electronic cannabis product delivery systems from containing natural or artificial flavors.

This proposal would clarify that state and local governments and Indian tribes could enact, adopt, promulgate, and enforce any rule, regulation, or other measure with respect to cannabis products that is in addition to, or more stringent than, requirements established by the FDA.

The proposal would add the definition of cannabis and cannabis product to section 201 of the FFDCA. The term cannabis would mean:

“all parts of the plant Cannabis sativa L., whether growing or not, including seeds, resin extracted from any part of such plant, and every compound, manufacture, salt, derivative, mixture, or preparation of such plant, its seeds or resin. The definition of cannabis would exclude hemp. The term “cannabis product” would mean any products made or derived from cannabis that is intended for consumption applied to the body of man or other animals, including any component of such product, but would not include articles that meet the definition of a drug, which in the case of cannabis products, would be articles intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease in man or other animals.”

Amendments to the FFDCA including the addition of several prohibited acts that are intended to prevent sale or distribution of cannabis products to:

  1. Any person younger than 21 years of age.
  2. Prevent single transactions involving the sale of more than 10 ounces of cannabis. 
  3. Prevent the sale of cannabis products that contain alcohol, caffeine, or nicotine. 
  4. It would also be a prohibited act for a manufacturer or distributor of cannabis products to fail to notify the Attorney General and the Secretary of Treasury if they have knowledge of cannabis products used in illicit trade. 

The proposal would establish FDA authority over cannabis products intrastate commerce. This section would subject cannabis product establishments to FDA’s

inspection authority and extend import and export requirements of the FFDCA to cannabis


The proposal would establish a program to expedite the development and review of applications for drugs containing cannabis that are manufactured by a small business owned and controlled by socially and economically disadvantaged individuals that operate in the cannabis industry. 

The proposal would make a legal pathway for CBD usage in dietary supplements, and would remove the restrictions on marketing it as such. Synthetic CBD would still be exempt from usage in dietary supplements. Any CBD supplement would need proper and approved health and safety labeling.

The proposal would establish a federal track and trace regime for cannabis products to prevent diversion as well as federal and state tax evasion. This extends beyond just retailers, meaning producer/processors as well to maintain records related to cannabis transactions, subject to inspection by federal and state agencies.

The proposal would impose prohibitions against commercial bribery and uncompetitive trade practices to cannabis, under rules similar to the rules that apply to alcohol products. Specifically: 

  1. Exclusive sale agreements meant to limit market competition. 
  2. Commercial bribery or other monetary inducement meant to limit market competition.
  3. Certain non-monetary inducements meant to limit market competition. 

These are designed to help maintain access to the market for small and independent cannabis businesses. 

The proposal would establish a process to regulate the lawful delivery of hemp that inadvertently exceeds the permissible THC limitations of hemp to a permitted cannabis enterprise for the proper processing of such products.

Further limits need to be set on:

  1. Reduction of compliance costs for small businesses while staying in compliance with necessary labeling and trade practices.
  2. Rules necessary to prevent uncompetitive practices, and interactions with trade rules administered by other agencies.
  3. Rules to address the transition of cannabis into the marketplace.
  4. The design of track and trace regime that minimizes compliance costs.
  5. How a federal track and trace regime could replace numerous state wide regimes.