These are unexplored, exciting times for those who want to (legally!) Do business in marijuana and hemp products. As laws evolve across the country, customers need expert advice to navigate a haze of federal and state regulations.
Lawyers interested in working in this area have a solid resource in PLI Press’s Legal Guide to Doing Business with Marijuana: Cannabis, Hemp, and CBD Regulation. Co-authors James T. O’Reilly, professor of public health policy at the University of Cincinnati College of Medicine and author of leading references in food and drug law, and Edgar J. Asebey, founding partner of Keller Asebey Life Science Law and an attorney for Life sciences with over twenty years of experience spoke of the paper.
What makes the marijuana business legal guide?
Edgar Asebey: While state regulations for marijuana and federal regulations for hemp and its derivatives like CBD are relatively new, it is not the authorities that drafted and enforced these regulations. Our professional experiences give Professor O’Reilly and I a unique perspective.
Jim has practiced law for over 40 years and has been cited as an expert by the US Supreme Court. My work with therapeutics based on natural products (i.e. plants, microbes, and fungi) began in 1992 at the National Cancer Institute of the National Institutes of Health, where I worked with the natural product scientists responsible for discovering new therapeutics.
Today’s customers are facing some of the same science, herbal therapeutics, and regulation issues that we pondered decades ago. This realization enables us to share valuable context with readers.
Jim O’Reilly: The book is also distinguished by its structure. We free ourselves from the rigidity of classic legal texts and offer practical insights into how regulatory controls can be satisfied with minimal bureaucratic effort. The appendix lists the segments of state law that readers actually need.
What problems might attorneys starting in this area overlook?
Jim O’Reilly: Criminal marijuana activity on TV may grab your attention, but these days it’s a distraction from the legal cannabis business. The focus must be on the actual restrictions on doing business; Indeed, it is a laudable business initiative to legitimately serve the needs of cannabis users.
Edgar Asebey: The biggest problem I see is the persistent misunderstanding about how hemp and its derivatives are regulated. The framework for regulating these products is already in place, as indicated in the annual warning letter sent to hemp and CBD companies by both the Federal Trade Commission and the Food and Drug Administration. It’s great to advocate for new, better rules specifically tailored for hemp and its derivatives. If a customer puts their hemp or CBD product on the trade stream, that product is subject to FDA, FTC and relevant state laws. When advising clients, it is important that you understand these regulations.
What is your advice to small law firms and individual practitioners interested in developing a cannabis practice?
Edgar Asebey: As the regulations evolve, practitioners must become familiar with the Food, Drugs, and Cosmetics Acts, as well as the Federal Trade Commission Act. With regard to hemp / CBD in particular, too many inexperienced lawyers believe that regulation of these products will look like cannabis regulation – i.e. at the state level. CBD products are de facto regulated (albeit not approved) like diet supplements and OTC drugs. By understanding the legal framework of the FDA and FTC, attorneys can better advise their clients.
Marijuana has been named the “clear winner” in the 2020 election. Voters in several states approved ownership and cultivation measures. What trends do you observe at the state and federal level?
Edgar Asebey: Regarding hemp and CBD, the FDA has not yet released any highly anticipated guidance addressing some of the gray areas such as THC limits, toxicity test requirements, and claims that can be made on products containing CBD made from hemp. Some states have closed this loophole by adopting their own rules for hemp and products containing CBD, including foods. Obviously, these will be replaced by federal legislation when it occurs. After all, both the federal states and the federal government have to deal with the regulation of newly popular hemp derivatives.
Jim O’Reilly: The shift in attitudes toward marijuana is remarkable, but for a major hurdle, just follow the money. The 50-year-old Controlled Substances Act of 1970 prevents nationwide insured banks from meeting the legitimate business requirements of legitimate cannabis dealers. While Americans have gained more culturally acceptance, political fear of being challenged as “pro-drugs” has deterred lawmakers from ending the extremist “Schedule 1” view of cannabis. We will continue to monitor these issues and expect to cover major changes in additional issues in the years to come.
The Practicing Law Institute is a non-profit learning organization dedicated to keeping lawyers and other professionals at the forefront of knowledge and expertise. PLI was chartered by the regents of the University of New York State and founded in 1933 by Harold P. Seligson. The organization offers high quality, accredited, ongoing legal and professional education programs in a variety of formats offered by more than 4,000 voluntary faculties including prominent lawyers, judges, investment bankers, accountants, business consultants, and US and international government regulators. PLI publishes a comprehensive library of papers, course manuals, answer books and journals, which are also available on the PLI PLUS online platform. The essence of PLI’s mission is commitment to the pro bono community. Watch the upcoming live webcasts from PLI here.