Linked In CBD and cannabis: With opportunity comes risk - Sedgwick
Latest Coronavirus updates from Sedgwick Back to business solutions

CBD and cannabis: With opportunity comes risk

An exclusive life sciences webinar hosted recently by Sedgwick’s brand protection experts offered insight into the latest product safety challenges facing medical device, pharmaceutical and life sciences companies, including an insightful discussion on the cannabis and cannabidiol (CBD) industries. We dive deeper into this topic below.

What’s next for CBD and cannabis

“Uncertain” and “risky” are words many companies use to describe their entrance into the CBD and cannabis industries. It’s a promising business, to be sure, but the Food and Drug Administration (FDA) has provided little to no oversight or regulatory guidance, leaving the industry to operate within a patchwork of local and state laws and regulations.

Cannabis is rapidly becoming legal around the country. It’s legal for medicinal and even recreational purposes in many states, creating a mountain of newfound concerns for companies to consider. For one, even if you are not directly “in cannabis,” but operate in a state where it’s legal, you may be indirectly involved if you are supplying any type of equipment or ingredients used in CBD oils or cannabis products. This may lead to several complications involving federal and state regulation.

The current headline for companies and consumers interested in CBD products is that the FDA has not authorized a single product that contains CBD, nor has the agency generally recognized cannabis-derived compounds as safe, despite the fact that those products are available almost everywhere you look.

And while the FDA is currently taking a discretionary approach to oversight, this almost certainly won’t last forever. The FDA is already pursuing companies making egregious product claims, even though the agency simply does not have the bandwidth to broaden enforcement right now.

Similarly, the FDA is starting to sanction companies that publish testimonials in lieu of formal product claims, particularly when those patient stories use terms that treat a product as if it were a drug or medical device. Those sanctions should serve as a warning that stricter regulation is coming.

How to approach entering the CBD and cannabis industries

As we’ve noted, the “Wild West” regulatory environment for CBD and cannabis products cannot continue. Companies are already discovering that there are rules the FDA is beginning to impose. States as well are catching up with new laws and regulations designed to create more order in the industry. This means companies will need professional guidance for both existing regulations and new ones which the FDA and state regulators are starting to promulgate.

Any company entering the CBD or cannabis business needs to study all the existing and expected regulations with the help of regulatory attorneys, insurance experts and commercial advisors who know the landscape and can anticipate expensive problems before they occur.

And all organizations with an eye toward workplace safety and compliance, even those not affiliated with production or distribution of cannabis or CBD oil, should consult with their advisors as legalization forces re-examination of drug testing policies and any number of employment implications, liability concerns and federal and state contracting rules.

To many companies, the profits to be gained from entering the cannabis and CBD oil businesses look too good to be true. And without proper planning and guidance, they probably are.

> Listen to our recent life sciences webinar where Amanda Combs, recall consultant of Sedgwick and Kate Hardey, partner at McGuire Woods share information to help you prepare for the most pressing risks facing the life sciences industry.

Back to Blog
Back to top