I’ve recently had a run of clients face issues with the European Union (EU) over labeling requirements. The issue is not that the EU requirements are particularly onerous (though they are generally stricter than US requirements). It’s that the EU requirements do not connect, or overlap, neatly with the US requirements. A full analysis of the differences between the EU rules and the ones promulgated by the FDA is well beyond the scope of this article. My purpose in this article is to bring the intercontinental labeling issue to light.
For this article let’s take a hypothetical American company, Hemp D-Lux (a name I just made up), that sells personal care products containing hemp extract with CBD into the US market. Currently, on the advice of its lawyer, Hemp D-Lux does not use the term “CBD” in its ingredient list. Instead, it uses the more generic term “concentrated hemp extract”. Also on the advice of counsel it does not refer to its ingestible products (it has both an oral and topical line) as “dietary supplements”. Finally, it does not make any health claims about any of its products. So far, so good. Hemp D-Lux does not ask, or require, permission from the FDA to sell its products. It can also currently assume that the FDA will not send it a dreaded warning letter for non-compliance with the Food, Drug and Cosmetic Act.
The President of Hemp D-Lux attends a cannabis conference and connects with an executive of Euroroxx (another name I made up), a European company looking to distribute quality American hemp products in the EU. The President is excited about Hemp D-Lux becoming an international brand and quickly inks an exclusive EU distribution agreement with Euroroxx.
Hemp D-Lux ships over the first load of product. It sells well. While preparing the second large shipment of product Euroroxx’s Irish subsidiary receives a letter from the Health Service Executive (HSE). The letter states that “hemp oil” is an authorized food under EU regulations; however, “concentrated hemp extract” (CHE) is not. Unless Euroroxx can show evidence of significant use of CHE prior to 1997 then it must withdraw the products since they require pre-market authorization under the EU novel foods regulations.
Soon after the Irish arm of Euroroxx receives its letter from the HSE the Slovenian arm of Euroroxx receives a letter from the Chemicals Office of the Republic of Slovenia (CORS) regarding the Hemp D-Lux topical products. The letter states that CHE is not a recognized ingredient in the International Nomenclature of Cosmetic Ingredients (INCI) database. It must remedy this issue or cease sales of the products. (It must also notify its products in the Cosmetic Products Notification Portal (CPNP), but that’s a different issue.) Euroxx suggests to Hemp D-Lux that it change the ingredient label to “Cannabis Sativa Flower/Leaf/Stem Extract”, which is recognized by the INCI.
What should Hemp D-Lux do? Setting aside the question of whether or not Hemp D-Lux’s products are legal in the EU (I’m focusing on the semantic labeling issue in this article), Euroxx cannot continue selling its products in the EU with the current labels. Hemp D-Lux could create new labels for its EU products. This could work, but it may be expensive to have two separate labeling processes. Or, it could change all of its labels so that they’re the same in both the EU and the US. This could work, too; however, Hemp D-Lux is most comfortable under US law with the wording on the current labels. Under either solution new labels will push back deadlines and add unanticipated costs.
The problem is not insoluble. The thing I want to highlight, using this admittedly simplistic example, is that hemp companies entering the EU market need to consider labeling issues in advance as part of their strategic, and legal, planning.
This article was originally published in the Cannabis Law Report, January 20, 2018. Thanks to Sean Hocking, John Taylor, and the entire CLR group for their excellent journalism about the cannabis industry.