ENFORCEMENT DISCRETION — A CLOSER LOOK
Enforcement Discretion for certain CBD products is de facto national legalization
In essence, the FDA would announce that they will permit national sales of CBD products as long as these products avoid making health claims and follow interim regulations
Technically speaking, CBD products would remain federally illegal, but the FDA would formally declare that they would only enforce the law if health claims were being made — practically speaking, this should greenlight national sales and open up banking, as the FDA-related legal risks of interstate commerce are largely erased and the fear of a federal crackdown on these products is removed
A declared FDA policy of formal enforcement discretion would have a number of positive effects on the national CBD industry, chief among them:
The distribution of CBD products would spread across the country in medical offices and retail stores
Financing for CBD businesses would open up
Investment in the CBD industry would increase
It sounds like a strange situation, but the FDA regularly applies the policy of enforcement discretion in situations like the current CBD conundrum, when more time is needed to create regulations around a product or device before it can legally enter the marketplace, but there is a need or demand for that product/device in the marketplace now — it’s basically a form of conditional legalization — “We will allow you to manufacture, distribute and sell these products as long as you follow these rules (interim regulations) and do not make health claims.”
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So in terms of CBD products, we now know that a formal policy of Enforcement Discretion is expected to be declared in the FDA’s upcoming published report on CBD or in response to Mitch McConnell’s legislation
Here are what I believe to be the 2 most likely outcomes:
1) The Dr. Gottlieb Way — Pure CBD products only (No THC, No CBG/CBN/CBC)
FDA isn’t ready to federally legalize any CBD products yet, but creates interim regulations around Pure CBD products including specific formulation cutoffs for purity, potency and concentration, and announces a policy of enforcement discretion around these regulations
2) The McConnell Method — Only Pure CBD products are likely, but cannot completely rule out other options
If the FDA doesn’t announce enforcement discretion when they publish their report this Fall, Mitch has tied the FDA’s hands and forced them to announce a policy of enforcement discretion on at least one formulation of CBD products by January 2020
The most likely outcome here is The Gottlieb Way — interim regulations around Pure CBD products, including cutoffs for purity, potency, and concentration, with a formal policy of enforcement discretion
Another possible outcome is enforcement discretion for Pure CBD products with interim regulations but without specific cutoffs for purity, potency and concentration — “Enforcement discretion is for purified CBD products only — No THC and CBG/CBN/CBC allowed”
There is an outside chance that the FDA completely buckles to political pressure and declares blanket enforcement discretion for all CBD-based products, including those that contain up to .3% THC — in this scenario, there would probably not be any interim regulations around formulation criteria (potency, purity, concentration, etc) — this doesn’t make very much sense, because it really doesn’t move the process forward — it would also call into question why the FDA didn’t announce this policy right away in January 2019
In the most likely scenario where only Pure CBD products are given the green light, I don’t necessarily believe Full Spectrum and Broad Spectrum products will disappear
The FDA may very well continue to declare that CBD products with THC and/or CBG/CBN/CBC remain federally illegal and not offer any interim regulations or the protection of enforcement discretion for these products — if so, they could still announce a hands-off policy with respect to intrastate activity and allow states to create their own regulations around Full Spectrum products — national sales would remain prohibited
That would be the best case scenario for Full Spectrum and Broad Spectrum under a formal policy of Enforcement Discretion for Pure CBD products only
The worst case scenario for non-pure CBD products is a federal crackdown
That’s why Pure CBD Oil products are the highest reward/lowest risk proposition in the CBD Oil sector
CANB is the only publicly traded CBD Oil company in America making a full line of these Pure CBD Oil products, so it has tremendous potential for upside once this FDA Enforcement Discretion policy is announced
Sleek
