Guidance on regulation of CBD food products – implications for insurers and manufacturers

Date published

28/05/2020

Authors

Emily Brett

Senior Associate (Foreign Qualified Lawyer - Australia)

London

Ed Gibson

Senior Associate

London

Samantha Silver

Partner

London

Rebecca Coates

Associate

London

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On 13 February 2020, the Food Standards Agency (FSA) published guidance on the regulation of products for consumption containing cannabidiol (CBD). Until recently, very little guidance was available regarding the regulation of CBD products and its enforcement, leaving consumers potentially vulnerable and at risk.

The FSA has set a deadline of 31 March 2021 for the producers of existing food products containing CBD to submit valid “novel food authorisation” applications to ensure their CBD food products can remain on the market after that date. Although the FSA’s guidance has brought some welcomed clarity to the market, CBD food products are a relatively new phenomenon. Manufacturers and insurers must therefore be vigilant to the liability risks to consumers and take steps to mitigate such risks.

What is CBD?

CBD is a cannabinoid found in cannabis plants which is claimed to provide a range of health benefits without the intoxicating and psychoactive effects commonly associated with cannabinoids. Clinical research on the utility of CBD includes studies on anxiety, cognition, movement disorder and pain, although there is insufficient evidence at present to support any medical benefits in using CBD to treat these conditions.

CBD products are regulated by the FSA, which, at least until the end of the Brexit transition period, is advised by the European Commission and the European Food Safety Authority (EFSA). In January 2019, CBD was assigned “novel food” status by the FSA, meaning it did not have a history of consumption in the European Union prior to 15 May 1997. Local authorities, including Trading Standards and Environmental Health Officers, are responsible for the enforcement of novel food legislation in the UK.

Until now, the FSA has allowed the CBD food market to grow without clear public guidance on its approach to regulation and enforcement.

The FSA’s guidance

The FSA have advised local authorities that businesses may continue to lawfully sell CBD food products that are already on the market up until 31 March 2021, provided that they are correctly labelled, are not unsafe to eat and do not contain substances that fall foul of drugs legislation. After 31 March 2021, those existing CBD food products will only be allowed to remain on the market if the FSA has received a valid novel food authorisation application. The authorisation process ensures novel foods meet legal standards, including safety and content.

In further guidance issued on 19 March 2020, the FSA stated that no “new” CBD food products (i.e. products that weren’t already on the market at that time) should be sold until a valid novel food authorisation application has been submitted and the necessary authorisation has been obtained.

The FSA’s guidance has no impact on CBD food products making medicinal claims. CBD food products that claim to provide medicinal benefits are considered to be “medicine” by the Medicines and Healthcare Products Regulatory Agency (MHRA) and require a licence in order to be sold, supplied and advertised in the UK, unless exempt. Licenced medical products must also undergo an assessment to ensure safety, quality and efficacy standards to protect public health.

The “novel food authorisation” process

The novel food authorisation process requires a dossier of information to be submitted to the European Commission via an electronic portal. Such information includes the composition of the novel food, scientific evidence that it does not pose a safety risk to human health, and proposals for specific labelling requirements which do not mislead the consumer. These requirements are set out in Article 10 of the new Novel Food Regulation (EU) 2015/2283.

If the novel food is liable to have an effect on human health, the European Commission will request the EFSA to carry out a risk assessment. An EFSA risk assessment can take up to nine months if further information about the novel food is not required. If a novel food passes the risk assessment, the European Commission then has a further seven months in which to authorise the food and add it to the EU’s list of authorised “novel foods”.

Once a CBD product is authorised, that authorisation applies only to that product. This means using the same detailed production methods, for the exact same uses as described within the authorisation, and using the same safety evidence.

During the Brexit transition period, all novel food products sold in the UK must comply with EU Regulations. This will not immediately change at the end of the transition period on 1 January 2021, as existing European legislation will move into UK law after the transition period. The FSA has advised that they will provide independent advice and recommendations should the rules change for food safety.

What does the FSA’s guidance mean for manufacturers and insurers?

CBD is one of a relatively new and fast growing type of product known as nutraceuticals. The nutraceutical market is worth US$220 billion and has been projected to reach US$312 billion by 2025. CBD is expected to make up around US$10 billion of that market. Clearly, this presents many opportunities for manufacturers and their insurers but also concomitant risks.

Labelling

Manufacturers and insurers should be alive to the considerations around labelling regarding the benefits and risks of using CBD and other nutraceutical products, and the correct concentrations of the active ingredients in the products.

This is especially important where there are known high-risk potential users, for example those who are pregnant, breast-feeding and taking other medication. These groups have been advised by the FSA not to use CBD products. Healthy adults are advised to take no more than 70mg of CBD a day unless under medical direction due to the possible adverse reactions (including liver injury, drug on drug interactions somnolence, gastro-intestinal issues, decreased weight, transaminase elevations, fatigue, malaise, asthenia, rash, insomnia, sleep disorder/poor quality sleep and infections).

This guidance comes from the FSA and has been approved by the government’s Committee on Toxicity. Businesses are susceptible to product liability claims if they are currently producing, importing into the EU or selling CBD products which are incorrectly labelled, unsafe or contain illegal substances. This is especially true of CBD products which claim certain medical benefits while not being licensed as a medicine.

Evidence of compliance

Prior to the requirement to submit novel food authorisation applications by 31 March 2021, insurers may be wise to insist that producers of existing CBD products provide evidence that their product complies with the requirements of the novel food authorisation process before offering coverage, or to set higher premiums where that information is not available.

Given the FSA’s advice on 19 March 2020 that no new CBD products should be sold without a valid authorisation, insurers should also confirm that any unauthorised products they are being asked to insure were already on the market before that date when offering cover.

Application deadlines

Businesses which fail to submit an application for authorisation for their CBD products by the 31 March 2021 deadline may be at greater risk of product liability claims and product recall if they continue to sell the products, as their products will no longer be deemed safe to remain on shelves. Insurers should consider their wordings to ensure that such products will no longer be covered under their policies.

Rejected applications

Businesses whose applications for authorisation for their CBD products are made by the 31 March 2021 deadline but are subsequently rejected, may find their products targeted by claimant law firms looking to act for consumers who may have suffered ill-effects.

The rejection of the authorisation, but more importantly the reason(s) for the rejection, may be one important aspect in establishing whether the products met the relevant level of safety required to defend any such claims. Manufacturers who do not take steps to address any reasons for the rejection of authorisation and continue to market the product may find themselves the subject of claims, as well as regulatory intervention.

Comment

The requirements of a valid novel food application are burdensome and, as noted above, require preparation and submission of a dossier of scientific, and other, information. The process can be lengthy. Manufacturers of existing CBD products should currently be preparing their applications to ensure submission by the 31 March 2021 deadline. Whilst this detailed process will provide reassurance to customers and engender faith in the safety of both new and existing CBD products, it may be prohibitively expensive, complicated and time consuming for smaller manufacturers of CBD products and lead to a narrowing of the market.

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