A Tale of Two States: Texas and Indiana Take Opposite CBD Paths

In addition to offering some practical information regarding CBD developments in Indiana and Texas, today’s post should serve as a stark example of the rapid evolution (and devolution) of cannabidiol (CBD) law in the United States. I’ll start with the practical information: Indiana just passed a CBD friendly law. Meanwhile, CBD may soon be banned in Texas.

Here’s the good news from Indiana: On March 21, 2018, Governor Eric Holcomb signed into law a bill legalizing the sale and use of CBD oil. Specifically, he signed Senate Bill 52, making “low THC hemp extract” (Hemp Extract) lawful if it is derived from industrial hemp (Hemp) grown under Indiana’s pilot program or the pilot program of another state, has delta-9 THC concentrations that do not exceed 0.3% (including precursors), and “contains no other controlled substance”. Unlike the so-called “CBD” laws of a number of other states, which are usually nothing more than watered down low-THC medical marijuana laws, Indiana’s Hemp Extract law explicitly legalizes what has become known as “CBD Oil” for anyone, with no need for a physician’s recommendation. (Nevermind that this was already lawful.)

Under Indiana’s law, stringent new labeling requirements for Hemp Extract will go into effect on July 1. Anyone not abiding by the labeling requirements can be found guilty of a Class B infraction. Hemp Extract products must be distributed in packaging that contains the following information:

1. A scannable bar code or QR code linked to a document that contains information with respect to the manufacture of the low THC hemp extract, including the: (A) batch identification number; (B) product name; (C) batch date; (D) expiration date, which must be not more than two (2) years from the date of manufacture; (E) batch size; (F) total quantity produced; (G) ingredients used, including the: (i) ingredient name; (ii) name of the company that manufactured the ingredient; (iii) company or product identification number or code, if applicable; and (iv) ingredient lot number; and (H) download link for a certificate of analysis for the low THC hemp extract.

2. The batch number.

3. The Internet address of a web site to obtain batch information.

4. The expiration date.

5. The number of milligrams of low THC hemp extract.

6. The manufacturer.

7. The fact that the product contains not more than three-tenths percent (0.3%) total delta-9-tetrahydrocannabinol (THC), including precursors, by weight.

Now for the bad news in Texas: In an undated open letter Commissioner John Hellerstedt of the Department of Health and Human Services (DHHS) indicated that products containing more than trace amounts of CBD (or THC) may be removed from shelves. According to the letter and the DHHS website, Commissioner Hellerstedt has given the public until April 16, 2018 to provide comments regarding this proposal. After April 16 DSHS will decide whether to begin enforcing Hellerstedt’s proposed “Inspection Protocol”. As pointed out in a response by the Texas Cannabis Industry Association, Commissioner Hellerstedt’s letter is based on two flawed premises: (1) that the FDA has determined CBD to be an “adulterant”, and (2) that CBD is a controlled substance under the federal Controlled Substances Act. Neither is true. However, as we’ve seen, acts (and even statements) by politicians can radically affect the CBD industry, regardless of whether their legal positions are accurate or not. I encourage all Texans who are interested in CBD to write a vigorous letter in support of it before the April 16 deadline. You can do this by email: [email protected]

A lesson to be learned from these two events is how quickly things can both evolve and devolve in the hemp/ CBD “space”. A mere four months ago Indiana’s Attorney General, Curtis Hill, made outlandish and unsupported remarks about CBD, stating “No one in Indiana is authorized to sell cannabidiol under Federal or State law, and therefore, any retail establishment selling anything that contains cannabidiol is in violation of the law.” Despite its flaws, this statement immediately placed Indiana on the “do not sell” shortlist of states in which it was unwise to conduct CBD business. However, it also immediately put Hill at odds with his boss, Governor Eric Holcomb, and with the citizens of Indiana who use CBD products. The fact that Indiana went from being a CBD pariah to a CBD haven in a mere four months is an encouraging reminder that public input can make a difference.

On the other hand, developments in Texas are also a reminder about how quickly things can change in the opposite direction. Despite not being generally known as a CBD friendly state, particularly since it is one of the few remaining states without an industrial hemp pilot program, Texas has nurtured a growing industry. In 2016 four People’s Pharmacy shops in Austin were raided. Eventually, enforcement action against People’s was dropped: “Given certain ambiguities regarding the status of CBD under the Texas Controlled Substances Act (CSA), the [Texas Department of Public Safety], after consulting with prosecutors, does not intend to pursue enforcement action based on the tested substance[.]” Notwithstanding occasional raids in Texas communities, the People’s incident seemed to foster and support an emerging CBD industry. Without a robust industrial hemp law in place this incident has always been a flimsy nail on which to hang a legal hat. Commissioner Hellerstedt’s letter and proposed protocol shows just how flimsy that nail really is, not to mention underscoring how quickly things can change in the world of hemp/ CBD.

Finally, these developments should be an example of how important it is to stay abreast of legal (and quasi-legal) changes regarding hemp/ CBD. I, and a handful of other lawyers in the country, work hard to stay on top of these changes while actively promoting evolution in the laws based on education and information. I hope that you’ll feel comfortable reaching out if you have any questions.

Rod Kight is a lawyer based in Asheville, NC. He is licensed in North Carolina and Oregon and represents legal cannabis businesses. You can contact him by clicking here.