Beverage companies are racing new tea products to market despite a haphazard regulatory environment.
Last December the federal government approved the cultivation and production of cannabidiol (CBD). However, the U.S. Food & Drug Administration (FDA) is concerned about how the chemical is marketed and individual states and city health departments are enacting differing regulations and policies.
When the federal government decriminalized cultivation, legislatures in 46 states followed, issuing 16,877 licenses issued to farmers in 34 states and expanding acreage to 511,442.
The flood of new product press releases and news accounts range from a euphoric announcement on The Street of a January IPO by Happy Tea to the cautionary tale of an Oregon nurse practitioner who failed an employment drug test due to CBD.
As the industry was celebrating the opening of the first CBD cafe, in September the FDA sent warning letters to several companies for unapproved drug claims for humans (and animals, too).
Fourteen states have enacted CBD-explicit medical laws. All cannabis products, including marijuana and medical CBD, are illegal in Idaho, South Dakota, and Nebraska.
Washington State, one of the pioneers in the legalization of marijuana and the growing of industrial hemp, recently banned all CBD-infused foods and beverages. The ban does not apply to CBD (cannabidiol) products sold through licensed retailers.
The state’s department of agriculture made it clear that CBD is not allowed as an ingredient. Many states have similar rulings, which has led coffee shops and restaurants to sell CBD in packets that can be added to foods and beverages. Add-ons applied by customers are generally classified as condiments ― not ingredients.
Ohio and North Carolina have also banned CBD. Meanwhile, Maine and Massachusetts relaxed their policies. Food and drinks containing CBD, first introduced in January, were recently banned in New York City
NYC’s Department of Health and Mental Hygiene (DOH) announced it would begin ordering all restaurants and bars in the city to stop selling CBD-infused products, citing an FDA ruling from December saying it is “unlawful to add CBD to food or drink.”
Bushwick’s Caffeine Underground, owned by local DJ Ian Ford, was the first coffee shop in New York City to offer CBD infused beverages. The Flower Power Coffee House in Queens, Oliver Coffee in Chinatown, Bubby’s in Tribeca and Patent Coffee in the Flatiron followed with cold brew and a CBD Arnold Palmer.
The Health Department primarily targeted restaurants serving CBD edibles.
Fat Cat Kitchen owner CJ Holm told the Gothamist that inspectors placed $1,000 worth of CBD products into baggies but did not confiscate the goods. The baggies are dated and tagged as “embargoed.” No citations [fines range from $250 to $800] were issued but violators will be subject to fines after Oct. 1 for selling “adulterated foods.”
Giannis Houmis, who opened the CBD-friendly cafe Buds and Beans in Brooklyn earlier this year, told Gothamist he would stop offering his customers CBD-infused shots with their coffee, but will keep selling individual CBD products on the side for customers to mix into their drinks on their own.
In September the FDA warned Curaleaf, a publicly traded multi-billion-dollar firm based in Canada, that a variety of statements on the company’s website constitute “unapproved human drug claims” and that its products are misbranded. These products include lotions, pain-relief patches, tinctures and vape pen products. The company was told it could not claim that CBD could be used to:
- To treat chronic pain;
- To reduce the symptoms of ADHD, anxiety, depression, PTD, and schizophrenia;
- As a natural alternative to pharmaceutical-grade treatments for depression and anxiety; To address eating disorders;
- To reduce the severity of opioid-related withdrawal;
- To deter heart disease;
- As an effective treatment for Parkinson’s disease and Alzheimer’s;
- To kill breast cancer cells and counteract the spread of cancer
The FDA writes that misbranding is due to labeling “that fails to bear adequate directions under which a layperson can use a drug safely and for the purpose for which it is intended.”
Happy Tea founder Michael Gonzales, who has made a fortune marketing the Fit Detox Tea, is backed by social media celebrity Kylie Jenner who praises his CBD teas. The teas are marketed as anxiety reducing, an affect Gonzales claims to have personally experienced. The company has raised $6 million with a goal of $12 million through year end. Gonzales said he will then consider an overseas IPO. Currently US companies cannot be listed on domestic stock exchanges. Colorado-based Charlotte’s Web Holdings, a major cannabis announced it will switch from the Canadian Securities Exchange to the larger and more prestigious Toronto Stock Exchange (TMX). Cannabis remains federally illegal in the U.S. but Charlotte’s Web makes hemp-derived CBD products, which were legalized with the passage of the farm bill in December, according to the Financial Post.
Meanwhile, Aurora Cannabis and Canopy Growth, the world’s two largest pot companies were ordered to divest their U.S. holdings because cannabis sales are prohibited under U.S. federal law.
Beverage manufacturers are in the forefront of the CBD wave, avoiding claims of medical benefits. Researchers have yet to convincingly demonstrate CBD’s therapeutic relief for anxiety.
The lack of clinical trials will not halt the rush – consumers overwhelming praise CBD for relieving anxiety; they say it provides a good night’s rest for insomniacs and treatment for chronic pain.
Nurse practitioner Suzan Chandler in Portland, Ore. told Fox 6 News that while CBD products are only supposed to have trace amounts of THC, not enough to get someone high, “I learned the hard way” that urine tests for employment show positive.
Chandler said she regularly uses CBD oil for its calming effects. She says she never touched marijuana. “Shocks of all shocks” she tested positive when she applied for a new job.
Renee Barnes, co-owner of the Portland store CBD-lish, said it’s important for consumers to shop at places where they can get educated and read the labels.
“If they’re looking for a tincture, then we normally talk to them about full spectrum versus broad spectrum,” Barnes said.
She said a label that reads full spectrum means it contains THC, although legally it can’t contain more than 0.3%.
Broad spectrum contains no THC, according to Barnes.