On July 1, 2019, the New York City Department of Health and Mental Hygiene's (Department of Health) ban on the sale of food and beverages containing cannabidiol (CBD) officially went into effect, sending retailers and restaurants that market CBD food products scrambling. Before the ban, bodegas and coffee shops throughout the city had success marketing lattes, teas, gummies, and other products containing CBD. But in December 2018, the federal Food and Drug Administration (FDA) released a statement explaining that despite the passage of the 2018 Farm Bill and legalization of hemp, the addition of CBD to food and drinks products remains illegal. The FDA has undertaken a review of the status of CBD and held a public comment hearing in May 2019 as an initial step to developing regulations regarding the addition of CBD to food products. But the FDA regulations may not be released for years, and some local authorities like the New York City Department of Health are not waiting and have begun to crack down on the sale of food and beverages containing CBD.

CBD is one of the many compounds found in both hemp and marijuana. The CBD products being sold on the market today claim to be largely derived from hemp, which was removed from the Controlled Substances Act as a Schedule I substance in December 2018 as part of the passage of the 2018 Farm Bill. Although CBD is not psychoactive and does not produce a high, it continues to occupy an uncertain legal space despite the legalization of hemp. Many tout the therapeutic health benefits of CBD in treating anxiety, pain, inflammation, and other conditions, which can still be purchased in tinctures or lotions throughout New York City. But until CBD is deemed safe for human consumption as a food additive, the city's health department has announced that restaurants and retailers are prohibited from selling food or drink products containing CBD. News outlets are reporting that inspectors from the New York City Department of Health have been embargoing products that contain CBD and advising restaurants to cease selling products that contain it. Fortunately, for retailers, the agency will not issue violations or fines to those establishments offering food or drink containing CBD until Oct. 1, 2019. But many establishments are stuck with inventory of CBD products that they no longer can legally sell.

Not all of the city's lawmakers are on board with the ban. Some New York City Councilmembers, including City Council Speaker Corey Johnson, have sent a letter to the Department of Health requesting an official explanation of its stance on CBD, a detailed accounting of how the agency reached its decision, and an explanation of why the decision was made without any public hearing. The Health Department has said simply that it was abiding by federal government guidelines, citing the FDA's explanation that it is unlawful to add CBD to food or drink. Notwithstanding the New York City ban, on June 20, 2019 the New York state legislature passed legislation concerning the growth of industrial hemp and the regulation of hemp extract. The legislation has not been signed by the Governor and is yet to take effect. The bill specifically addresses the addition of CBD to beverages, but does not explicitly address the sale of CBD-infused foods within the state.

New York is not the only state seeing local action on CBD. The Massachusetts Department of Agricultural Resources recently released a policy statement banning the sale of some hemp products, including foods infused with CBD and dietary supplements. It also outlawed the sale of hemp products that tout therapeutic or medicinal benefits and the sale of unprocessed or raw hemp to consumers, much to the chagrin of the state's hemp farmers. As with the New York City Department of Health, Massachusetts says its policy follows guidance from the FDA prohibiting the addition of CBD into food products.

Authorities in Ohio and Maine have taken similar steps to remove food products containing CBD from retailer's shelves. In Ohio, officials have embargoed CBD products that are not being sold at one of the state's 56 licensed dispensaries in accordance with the state's medical marijuana program. The Ohio Department of Agriculture is working alongside health departments and police agencies to embargo products containing CBD being sold at non-licensed retailers, which allows the retailers to keep the products on-site so long as they are not displayed or offered for sale.

In January 2019, Maine's health department took similar action and ordered CBD foods off shelves around the state. But the ban was not well-received by Maine residents and state authorities vowed to correct the problem. The state legislature quickly changed state law to allow the sale of CBD foods in a bill that passed overwhelmingly less than three months after the ban took effect.

The FDA is currently reviewing the therapeutic benefits of CBD and has showcased its understanding of the importance of promulgating a meaningful regulatory framework while also noting the importance of its rigorous science-based approach. In a detailed statement released on July 17, Principal Deputy Commissioner Amy Abernathy and Principal Associate Commissioner for Policy Lowell Schiller recognized the public interest in CBD products while explaining, "there are many unanswered questions about the science, safety, and quality of many of these products." In a later tweet on July 23, Deputy Commissioner Abernathy noted the FDA's plan "to report our progress by early this fall as [the FDA] expedite[s] … work related to CBD products … ." again emphasizing its science-based approach.

On that same day, the FDA issued a warning letter to Curaleaf Inc., of Wakefield, Massachusetts, for illegally selling unapproved CBD products online with unsubstantiated claims that the products treat cancer, Alzheimer's disease, opioid withdrawal, pain and pet anxiety, among other conditions or diseases. The letter highlights the FDA's current enforcement approach focused on unsubstantiated therapeutic claims and emphasized its efforts to espouse an "agency-wide, integrated, and collaborative approach to addressing the regulation of products made from CBD that fall under its jurisdiction."

While the FDA appears to be cognizant of and attuned to the public interest in the need for a robust regulatory framework, it will necessarily take some time before this framework is created. In the interim, state and local governments are in a challenging position: abide by federal law and close off CBD sales in their jurisdiction or continue to allow sales of CBD food and beverage products in the face of FDA statements about its potential risks. The resultant emerging patchwork of state and local regulation around these issues have sown confusion among retailers and consumers alike.

Until more definitive FDA guidance is released or adult-use legalization is passed in New York and other affected states, other local authorities, particularly in large metropolitan areas, will likely continue to step in and regulate the sale of food and beverages that contain CBD further complicating the legal landscape facing cannabis industry participants.

Meghana Shah is a partner and Melissa L. Fox is an associate at Eversheds Sutherland (US).