JO U R N A L O F

INTERNETLAW EDITED BY DLA PIPER

VOLUME 23

NUMBER 1

J U LY 2 0 1 9

The Marketing and Sale of

Products Containing Hemp and
CBD over the Internet
By Alex Malyshev and Ted McDonough

I
f you have not taken a stroll down main street or
the aisles of your local Walgreens or CVS in the
last 12 months, you may be surprised to learn that
hemp and cannabidiol (or “CBD” as it is com-
monly known) are seemingly in everything. If this,
in turn, prompts you to go looking for hemp or CBD
products for sale on the Internet, you will see an
almost unending array of products offered for sale.
In this article, we will provide some background
information on what hemp and CBD are (and why
the industry has seemingly exploded overnight)
and address some of the shorter term and longer
term issues that are specific to this industry and the
sale of these products over the Internet.
W H AT E X AC T LY I S H E M P
AND CBD AND WHY ARE WE
SEEING THESE PRODUCTS ON
( V I RT UA L ) S H E LV E S N OW ?
Hemp is a strain of cannabis, or the less
clinically sounding marijuana or pot, specifically
Continued on page 20
THE MARKETING AND SALE OF PRODUCTS
CONTAINING HEMP AND CBD OVER THE
INTERNET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
By Alex Malyshev and Ted McDonough

CYBERSECURITY COMPLIANCE AND THE FALSE

CLAIMS ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
By Douglas W. Baruch, Jennifer M.Wollenberg,
Kayla Stachniak Kaplan

Alex Malyshev is Counsel at Carter Ledyard & Milburn LLP, a REGULATORY UPDATE . . . . . . . . . . . . . . . . . . . . . . 9
member of the Meritas Law Firms Worldwide international legal
network, and the co-chair of its Cannabis, Hemp, & CBD Industry IN BRIEF: INTERNET LAW IN THE COURTS . . . 12
Practice. Alex is actively involved in the Meritas U.S.-Canada By Evan Brown
and Latin America-Canada cannabis practice groups and is the
Chairman Elect of the Young Lawyers’ Advisory Board at Meritas.
Ted McDonough is Counsel at Carter Ledyard & Milburn and
a member of the Cannabis, Hemp, & CBD Industry Practice. He
is also member of the Meritas Intellectual Property Section.
 J O U R N A L O F I N T E R N E T L AW July 2019
The Marketing and Sale
from page 1
Cannabis sativa L., which contains only trace amounts
(less than 0.3% on a dry weight basis) of delta-9 tet-
rahydrocannabinol (THC), the intoxicating ingredi-
ent found in cannabis. THC and CBD are the two
best-known compounds found in cannabis, with the
latter considered nonintoxicating.1 In short, hemp is
pot that won’t get you high.
Since the 1970’s, cannabis has been listed as a
Schedule I controlled substance under the United
States Federal Controlled Substances Act (CSA) of
1970.2 A Schedule I controlled substance is a drug
which (a) has a high potential for abuse, (b) has no
currently accepted medical use in treatment in the
United States, and (c) lacks safety in use under medi-
cal supervision. Thus, notwithstanding any current
consensus in the medical community, as far as U.S.
Federal law is concerned, cannabis (or marihuana as
it is called in the statute) is no different than heroin,
LSD, GHB, or MDMA (but not cocaine, which has
an accepted medical use, and is therefore listed on
Schedule II). There is a long list of Federal (and some
state) penalties, including significant jail time, that
attach to the cultivation, manufacture, sale, and pos-
session of Schedule I substances and their derivatives
(as well as the aiding and abetting thereof). Those
penalties, as well as the limited protections afforded
to cannabis, due to the choice of most states to allow
its medical and recreational use, are beyond the scope
of this article.3
Traditionally, the Federal government did not dis-
tinguish between hemp and other strains of cannabis,
and therefore most products containing hemp, and all
products containing CBD, were presumptively illegal
under U.S. law.4 This began to change in 2014, with
the passage of the Agricultural Act of 2014 (the “2014
Farm Bill”),5 which carved hemp out from the general
definition of cannabis based on THC content, and
allowed for its lawful cultivation in connection with
industrial research programs. The process was com-
pleted on December 20, 2018, when President Trump
signed the Agriculture Improvement Act of 2018 (the
“2018 Farm Bill”) into law,6 thereby (a) removing
hemp (known in the bill as “industrial hemp”) and
its derivatives from Schedule I, (b) laying out how
hemp may be legally cultivated in accordance with a
plan adopted or approved by the U.S. Department of
20
Agriculture (USDA), and (c) permitting transporta-
tion of hemp across state lines (notwithstanding any
state level prohibition on the cultivation or sale of
hemp).7
Sellers of hemp and CBD products take the view
that the de-scheduling of hemp under the 2018 Farm
Bill was self-executing, notwithstanding the fact
that, as of the date of this article, the USDA has not
adopted or approved any plans to legally cultivate
hemp in accordance with the 2018 Farm Bill. That
process is not expected to take place until late 2019.
To the extent that the hemp from which the CBD on
the shelves is extracted is “legally produced,” it is in
accordance with the 2014 Farm Bill.8 As discussed in
further detail below, in connection with the case of
Big Sky Scientific LLC v. Idaho State Police, Case No.
19-CV-00040 (D. Idaho), that view is not universally
held.
Furthermore, certain products containing CBD,
including medicines, foods, and dietary supplements,
are subject to regulation by the U.S. Food and Drug
Administration (FDA) under the Federal Food, Drug,
and Cosmetic Act (FD&C Act) and Section 351 of
the Public Health Service Act (PHSA). Due to an
explosion of the number of CBD products on the
market in the first quarter of 2019, which included
certain foods and beverages containing CBD as well
as various products making a variety of question-
able health claims, in April of 2019 the FDA’s then
Commissioner, Scott Gottlieb, issued an announce-
ment that, in no uncertain terms, stated that the mar-
keting and sale of such products was prohibited until
the FDA completes its rulemaking process.9 This was
followed by the announcement of a public hearing
and comment period related to “Scientific Data and
Information About Products Containing Cannabis
or Cannabis-Derived Compounds.”10 This resulted
in well over 1,000 public comments, and a packed,
invitation-only, public hearing on May 31, 2019.
However, notwithstanding intense industry interest
in moving this forward quickly, it is not expected that
the FDA will complete its rulemaking in 2019.
The House Appropriations Committee (the
House Committee), which publishes reports to
accompany annual spending bills, released one such
report on June 3, 2019, which lays out the House
Committee’s expectations for the FDA regarding
hemp-derived CBD. The House Committee first
expressed concern about “the proliferation of foods
July 2019 J O U R N A L O F I N T E R N E T L AW
and dietary supplements marketed in violation of the
[FD&C Act], including products containing canna-
bis and cannabis-derived ingredients.”11 According
to the House Committee, these non-FD&C Act
compliant products pose a safety hazard to consum-
ers “through unsubstantiated and misleading claims
such as treating a wide-range of life-threatening dis-
eases and conditions,” including “harmful drug-drug
interactions, somnolence, and elevated transami-
nases or liver toxicity.”12 In light of those concerns,
and recognizing that the 2018 Farm Bill preserves the
FDA’s authority “to take appropriate actions regard-
ing cannabis, including hemp and its derivatives,” the
House Committee stated that it expected the FDA to
consider the feasibility of a “regulatory pathway that
would permit CBD in certain foods and dietary sup-
plements” and also protect public health.13
Still, a wide range of products (including most
topical and cosmetic products) do not appear to fall
into categories that the FDA presumptively prohib-
its from marketing and selling while its rulemaking is
ongoing. As a result, major retailers have announced
plans to sell products containing hemp and CBD.14
Smaller retailers (such as pharmacies and “smoke” or
“head” shops) have been even quicker to respond to
the market, and online retailers (either direct to con-
sumer or resellers) are no different. With this back-
ground in mind, we turn to some of the challenges
facing these businesses in today’s legal and regulatory
landscape.
C H A L L E N G E S FAC I N G
BUSINESSES SELLING HEMP AND
C B D - R E L AT E D P R O D U C T S
THE MARKET FOR HEMP AND CBD
PRODUCTS AND WHERE THEY ARE SOLD
In the wake of the passage of the 2018 Farm Bill,
sales of products containing hemp and CBD have
exploded. According to one recent estimate, the U.S.
CBD market alone is expected to reach $20 billion
by 2024.15 The range of available products contain-
ing CBD is only limited by one’s imagination, and
includes things like CBD-infused beverages and
foods, chewables, tinctures, moisturizers and creams,
shampoos, supplements and protein powders, oint-
ments, and even dog treats. Because the FDA (and
several states) take the view that CBD is an active
drug ingredient in its own stead, the legality of some
of these products (especially the ingestible kind) is
in question, notwithstanding the de-scheduling of
hemp.16 Yet, as noted by the Congressional Research
Service, hemp and its byproducts have a variety of
uses (beyond quenching America’s thirst for CBD):
• Hemp fibers are used in fabrics and textiles, yarns
and spun fibers, paper, carpeting, home furnish-
ings, construction and insulation materials, auto
parts, and composites.
• Hurds (the short woody fibers found in the stalk
of the plant) are used in animal bedding, paper-
making, and oil absorbents.
• Hemp seed and oilcake are used in a range of
foods and beverages (e.g., salad and cooking oil
and hemp dairy alternatives) and can be an alter-
native food and feed protein source.
• Oil from the crushed hemp seed is used in soap,
shampoo, lotions, bath gels, and cosmetics.
• Hemp is also being used in nutritional supple-
ments and in medicinal and therapeutic prod-
ucts, including pharmaceutical, as well as a range
of composite products.
• Hempcrete (a mixture of hemp hurds and lime
products) is being used as a building material.
• Hemp is used as a lightweight insulating material
and in hemp plastics and related composites for
use as a fiberglass alternative by the automotive
and aviation sectors.
• Hemp is also promoted as a potential biodiesel
feedstock and cover crop.17
Many hemp products are available for sale at
traditional retailers, like health food stores and most
major pharmacies, and even Amazon. Brick-and-
mortar retailers also carry certain CBD products, with
larger retailers sticking to topicals, creams and beauty
products, and smaller (sometimes less sophisticated or
maybe more risk tolerant) retailers carrying various
supplements and ingestibles.
The same is generally true when it comes to
e-commerce. Large online retailers, like Amazon,
will carry many products containing hemp, but not
products containing CBD (which Amazon does not
carry as a matter of policy).18 Those national retail-
ers that sell hemp and CBD products online have a
limited array of products offered for sale, and those
21
 J O U R N A L O F I N T E R N E T L AW July 2019
products will generally only ship to certain states.19
Thus, the majority of CBD products sold online are
sold via smaller portals (sometimes through the manu-
facturer’s own website). The balance of this paper will
deal with issues facing those smaller retailers.
R E TA I L E R S M U S T B E S U R E
T H AT W H AT T H E Y A R E S E L L I N G
I S AC T UA L LY H E M P O R
HEMP-DERIVED
The first thing retailers must be sure of, before
anything else, is that the products they sell are actu-
ally hemp (or hemp-derived CBD). The only thing
legally distinguishing hemp from other cannabis is its
THC content and some strains of hemp, especially the
“flowery” kind used to manufacture CBD, are nearly
impossible to distinguish from cannabis by sight or
smell.20 Indeed, the 2018 Farm Bill requires any plan
for the cultivation of hemp to have safeguards in place
to ensure that what is grown actually qualifies as hemp
and contains a sliding scale of penalties for “knowing”
or “innocent” violations.21 For sellers, failure to ensure
compliance may result in criminal prosecution (for
distributing a controlled substance across state lines),
as well as civil liability.
By way of example, in a recent decision in Horn
v. Medical Marijuana, Inc., 15-CV-701 (W.D.N.Y.
Apr. 17, 2019), a truck driver was allowed to pur-
sue claims concerning the marketing and sale of a
CBD additive (the Dixie X Dew Drops), which was
advertised as having no THC. Id. 2–4. The plaintiff
bought the drops from Dixie X’s Web site to relieve
pain inflammation. Id. at 6. Plaintiff was subject to
drug testing as part of his job, and was fired after
failing the drug test because the drops contained
almost double the amount of allowed THC content.
Id. He then sued the manufacturer, distributor, and
the financier involved in the venture. Among oth-
ers, Plaintiff asserted claims for violations of New
York’s deceptive business practices statutes (NY
GBL §§ 349, 350), the Racketeer Influenced and
Corrupt Organizations Act (RICO), as well as fraud
in the inducement. At the summary judgment phase,
the former claims were dismissed (because plaintiff
was unable to show a sufficient connection of the
transaction to New York), but the RICO and fraud
claims were allowed to proceed. The RICO claim
22
was predicated on the sale of a controlled substance,
notwithstanding the defendants’ subjective belief
that they were not violating the CSA. Id. at 23–24.
The wrinkle in the case is that the Dixie X drops
were sold in 2012, before the passage of the 2018
Farm Bill, and thus the mixture in question was not
excluded from the definition of “marijuana.” Id. at
10. The analysis might turn out differently today if
the product is manufactured from hemp cultivated
pursuant to the 2018 Farm Bill. Still, the case is a
good case study for some of the dangers about which
a seller needs to be aware (even if a RICO claim
might ultimately be unsuccessful).
This is also a good time to note that opinions
are divided as to whether hemp and hemp-derived
CBD can be transported across state lines today,
before the USDA has adopted or approved any plans
to grow hemp in accordance with the 2018 Farm Bill
(which is not expected to happen until late 2019).
This issue was part of the case of Big Sky Scientific
LLC v. Idaho State Police, Case No. 19-CV-00040 (D.
Idaho), where the Idaho state police seized a ship-
ment of hemp and criminally charged the driver of
the truck. Idaho has not updated its definition of
marijuana to exclude hemp based on THC content
and it took the position that, at any rate, the sub-
stance could not be hemp because it was not culti-
vated pursuant to a plan adopted or approved by the
USDA, and therefore Subtitle G of the 2018 Farm
Bill, which prohibits states from interfering with
the shipment of legally grown hemp, was not impli-
cated. In denying Big Sky’s motion for a preliminary
injunction, the Court agreed with Idaho, at least as
a preliminary matter. See Big Sky Scientific LLC v.
Idaho State Police, 2019 WL 438336 (D. Idaho, Feb.
2, 2019). The USDA, the department charged with
administering the hemp cultivation, has since dis-
agreed with that holding in a publicly available legal
opinion directly addressing the case.22 Specifically,
the USDA takes the position that the de-scheduling
of hemp was self-executing, and therefore not sub-
ject to USDA approving any plan under the 2018
Farm Bill, and that, separately, hemp could be grown
legally otherwise, including pursuant to the 2014
Farm Bill. Still, this is merely the agency’s position,
and has no binding effect on the courts. As a result,
retailers, especially those who ship hemp or hemp-
derived CBD across states with restrictive drug laws,
should be aware of this risk.
July 2019 J O U R N A L O F I N T E R N E T L AW
J U S T B E C AU S E T H E P R O D U C T
C O N TA I N S , O R I S D E R I V E D
F R O M , H E M P D O E S N OT M E A N I T
C A N B E F R E E LY S O L D P U R S UA N T
TO T H E 2 0 1 8 FA R M B I L L
Notwithstanding the cautionary tales above, the
fact that the 2018 Farm Bill “legalized” hemp and
hemp-derived compounds like CBD is everywhere.
Indeed, the Hemp Industries Association launched a
“Hemp Is Legal” campaign earlier this year.23 This has
prompted some industry participants, and many con-
sumers, to label products as “100% legal.” However,
especially when it comes to CBD, it is important
for online retailers to be aware that laws other than
the CSA may apply to hemp products, including
laws administered by the FDA, the Federal Trade
Commission (FTC), and various state-level agencies.
The FDA regulates a wide range of products,
including foods, drugs, vaccines, medical devices
intended for human use, cosmetics, dietary supple-
ments, and tobacco products. The FDA asserted
jurisdiction over certain hemp-derived products,
namely medicines, foods, and dietary supplements
containing CBD, under the FD&C Act and Section
351 of the PHSA. This is in part because the FDA
has previously approved Epidolex, an epilepsy drug
which contains CBD as its main active ingredient.
The FDA generally prohibits the marketing or sale
of (among other things) any human drugs, human
foods and dietary supplements, or animal foods and
drugs, that contain an active drug ingredient without
prior approval.24 The FDA has taken the position that
products with CBD contain an active drug ingredient
and require prior FDA approval. Some industry par-
ticipants believe that the FDA should regulate ingest-
ible supplements containing CBD under the Dietary
Supplements Health and Education Act, which was
enacted in 1994 and is part of the FDC&A Act
(DSHEA). DSHEA established guidelines for dietary
supplement labeling claims for the FDA, and the FDA
is primarily responsible for claims made on product
labeling, product packaging, inserts, and promotional
material accompanying a product. Labeling claims
must be “truthful, not misleading and substantiated”
and, while the act defines a deceptive advertisement
as “one that contains a misrepresentation or omission
that is likely to mislead consumers acting reasonably
under the circumstances to their detriment,” the
act defers to the FDA’s ruling on what is considered
“truthful, not misleading and substantiated.”
One issue the FDA ultimately must decide is
whether products that include CBD should be treated
as “dietary supplements” or “drugs” or maybe both,
based on context. A dietary supplement is a product
“intended to supplement the diet that bears or con-
tains” concentrates or combinations of certain ingre-
dients.25 A drug is a product “intended for use in the
diagnosis, cure, mitigation, treatment, or prevention
of disease” or an “article” “(other than food) intended
to affect the structure or any function of the body of
man or other animals.”26 The FDA regulates dietary
supplements under a different set of regulations than
those covering drug products. One important differ-
ence between the FDA’s regulation of dietary sup-
plements and its regulation of drugs is that dietary
supplements need not be proven safe to the FDA’s
satisfaction before they are marketed.27 Although
the FDA is exploring potential pathways for dietary
supplements or conventional foods containing CBD
to be lawfully marketed as part of its comment and
public hearing period,28 as it stands today, the FDA
takes the position that under the current regime CBD
is not to be treated as a supplement.29
The FDA and the FTC also take very seriously
the uses for which CBD is advertised. Earlier this year,
the agencies jointly sent warning letters to companies
claiming that CBD treats diseases such as Alzheimer’s,
cancer, and various other diseases.30 Online retailers
who may ship nationwide should take note that, in
addition to claims brought by the FDA and the FTC
(due to the implication of interstate commerce), such
unfounded claims may also open manufacturers (and
potentially sellers) to claims by consumers under vari-
ous consumer protection laws as a matter of state law.31
S O M E P R AC T I C A L I S S U E S
REMAIN
In addition to the potential legal issues noted
above, Internet sellers have to contend with issues
not implicated in regular day-to-day e-commerce. As
noted above, certain marketplaces, like Amazon, will
simply not carry CBD products as a matter of policy.
Online retailers should also closely examine their
contracts with freight carriers, as those carriers’ poli-
cies regarding the shipment of hemp or CBD-related
23
 J O U R N A L O F I N T E R N E T L AW July 2019
products vary. Because Federal law treats aiding and
abetting the same as it does primary violations, ship-
pers (perhaps due to cautionary tales such as Big Sky
Scientific) have fairly strict guidelines with respect
to the transportation of these products. Freight for-
warders such as DHL32 and Federal Express33 will not
accept shipments of hemp or hemp-derived products.
United Parcel Service (UPS) will ship hemp and
hemp-derived CBD products, provided that several
conditions are met. Shippers of these products must
be able to state where the raw material for their prod-
uct was grown, how it was processed, and from whom
the shipper obtained the product.34 The United States
Postal Service (USPS) permits the shipment of hemp
and hemp-derived CBD provided that two criteria
are met. In particular, the USPS will ship hemp and
hemp-derived CBD provided that the mailer complies
with all applicable federal, state, and local laws per-
taining to hemp production, processing, distribution,
and sales, and retains records establishing its compli-
ance with such laws for “no less than 2 years after the
date of mailing.”35
Finally, a perceived lack of guidance from fed-
eral regulators has made it difficult for online retail-
ers to access the services of the risk-averse banking
and credit card industries. Many traditional banks and
credit card processors refuse to maintain accounts for
CBD businesses or demand “high risk” monthly or
transaction fees, which makes the services impracti-
cal for retailers. For instance, in March 2019, one of
the biggest payment processors to the industry, a U.S.
Bank subsidiary known as Elavon, notified its hemp
and CBD clients that it had recategorized hemp and
cannabidiol-based merchants as a prohibited business
type and that accounts for such merchants would be
closed within 45 days.36 Although alternative proces-
sors may step in to fill the void,37 what the industry
is truly hoping for is Congressional action, including
passage of the Secure And Fair Enforcement (SAFE)
Banking Act, which would insulate financial institu-
tions servicing state-legal cannabis, hemp, and CBD
industries from liability. Until such reform, or broader
legalization of cannabis at the federal level, merchants
should expect to face difficulties and uncertainty.
While the hemp and CBD industry presents
exciting opportunities to niche online retailers, espe-
cially while larger competitors are only cautiously dip-
ping a toe into the space, it is important not to be so
dazzled by the potential profits as to ignore some of
24
the realities. As the industry matures, ancillary service
providers like banks, credit card companies, and ship-
pers may become more comfortable with the industry.
This will, hopefully, be helped along by greater legisla-
tive and regulatory clarity. This process, however, will
not be completed overnight, and caution should be a
guiding principle for now.
N OT E S
1. While much of the literature uses the terms “psychoactive” and
“non-psychoactive” to describe the compounds, that is not tech-
nically correct, since CBD does actually interact with endocan-
nabinoid receptors in the brain and the central nervous system.
See “Is CBD Really Non-Psychoactive,” Project CBD (May 17,
2016) available at https://www.projectcbd.org/science/cbd-really-
non-psychoactive (“If CBD can relieve anxiety or depression or
psychosis, then obviously cannabidiol is a profound mood-altering
substance, even if it doesn’t deliver much by way of euphoria.
Perhaps it would be better to say that CBD is ‘not psychoactive
like THC,’ rather than repeating the familiar and somewhat
misleading refrain that ‘CBD is not psychoactive.’”). Thus, intoxi-
cating and non-intoxicating is the preferred nomenclature.
2. See 21 U.S.C.A. § 812(b)(1).
3. For more background on that, please see “Despite the Trend
Towards Legalization, Challenges Remain for Investors
Considering Investment in State-Legal Cannabis Industries,”
Client Advisory (March 26, 2019), available at https://www.clm.
com/publication.cfm?ID=5647&Att=172.
4. Federal law did contain certain exceptions for categories of hemp
derived products, which is why things like hulled hemp seeds, and
articles of clothing manufactured from hemp fiber, were avail-
able on store shelves. See, generally, “Hemp as an Agricultural
Commodity,” Congressional Research Service (June 22, 2018),
available at https://fas.org/sgp/crs/misc/RL32725.pdf; Horn v. Medical
Marijuana, Inc., 15-CV-701, at *8 (W.D.N.Y. Apr. 17, 2019)
(noting that the prior definition of marijuana, under 21 U.S.C.
§ 802(16), excluded “certain parts of the plant that are incapable
of germination: (1) the mature stalks of the Cannabis sativa
plant, (2) fiber produced from the stalks of the Cannabis sativa
plant, (3) oil or cake made from the seeds of the Cannabis sativa
plant, (4) any compound, manufacture, salt, derivative, mixture,
or preparation of the mature stalks, fiber, oil, or cake (excluding
resin extracts), and (5) the sterilized seed of the Cannabis sativa
plant.”).
5. Pub. L. No. 113–79.
6. Pub. L. No. 115–334.
7. See 2018 Farm Bill, §§ 7605, 10113, 10114, and 12619. See also,
USDA Legal Opinion on Certain Provisions of the Agriculture
Improvement Act of 2018 Relating to Hemp (USDA Memo),
May 28, 2019, available at https://www.ams.usda.gov/sites/default/
files/HempExecSumandLegalOpinion.pdf.
8. See USDA Memo at § II C.
9. See April 2, 2019, Statement from FDA Commissioner Scott
Gottlieb, M.D. on “new steps to advance agency’s continued
evaluation of potential regulatory pathways for cannabis-contain-
ing and cannabis-derived products,” available at https://www.fda.
gov/NewsEvents/Newsroom/PressAnnouncements/ucm635048.htm.
10. Available at https://www.govinfo.gov/content/pkg/FR-2019-04-03/
pdf/2019-06436.pdf.
11. H.R. Rep No. 116-XXX, at 71 (2019), available at https://appro-
priations.house.gov/sites/democrats.appropriations.house.gov/files/
FY2020%20Ag%20Draft%20Report.pdf.
July 2019 J O U R N A L O F I N T E R N E T L AW
12. Id.
13. Id.
14. See “Wallgreens to sell CBD products in 1,500 stores,” CNBC
(March 28, 2019) available at https://www.cnbc.com/2019/03/27/
walgreens-to-sell-cbd-products-in-some-stores.html; “CVS to sell
CBD products in 800 stores in 8 states,” NBC News (March 21,
2019) available at https://www.nbcnews.com/health/health-news/
cvs-sell-cbd-products-800-stores-8-states-n986016; “Rite Aid will
start selling CBD products in 2 states, stop selling e-cigarettes in
all stores,” CNBC (April 11, 2019) available at https://www.cnbc.
com/2019/04/11/rite-aid-will-start-selling-cbd-products-in-2-states.html.
15. See “U.S. CBD Market Anticipated to Reach
$20 Billion in Sales by 2024,” BDS Analytics
(May 9, 2019) available at https://bdsanalytics.
com/u-s-cbd-market-anticipated-to-reach-20-billion-in-sales-by-2024/.
16. See “CBD Is Wildly Popular. Disputes Over Its Legality Are a
Growing Source of Tension,” New York Time (May 6, 2019)
(noting that New York City, California, and Georgia also ban the
addition of CBD to food).
17. See “Hemp as an Agricultural Commodity,” Congressional
Research Service (June 22, 2018), at 2-3, available at https://fas.
org/sgp/crs/misc/RL32725.pdf.
18. Amazon’s terms of service applicable to “Drugs & drug
paraphernalia,” still list CBD as a Schedule I substance and
forbid its sale. See https://sellercentral.amazon.com/gp/help/
external/200164490?language=en-US&ref=mpbc_200277220_
cont_200164490. Even if that particular term is amended,
Amazon also requires drug products to “be approved by the FDA
for over-the-counter (OTC) sale” before they can be sold on its
platform.
19. For instance, CVS will ship creams containing CBD only to
Colorado, Illinois, Indiana, Kentucky, Maryland, and Tennessee.
20. This has prompted some law enforcement agencies, including in
North Carolina, to urge a ban on the growth of certain strains.
See “Memorandum Regarding Industrial Hemp/CBD Issues,” State
Bureau of Investigation of North Carolina (expressing concern
that “Hemp and marijuana look the same and have the same
odor, both unburned and burned” which “makes it impossible
for law enforcement to use the appearance of marijuana or the
odor of marijuana to develop probable cause for arrest, seizure
of the item, or probable cause for a search warrant.”) available
at https://www.sog.unc.edu/sites/www.sog.unc.edu/files/doc_ware-
house/NC%20SBI%20-%20Issues%20with%20Hemp%20and%20
CBD%20Full.pdf.
21. See 2018 Farm Bill § 10113, Sec. 297B, at (e) (Violations).
22. See “Legal Opinion on Certain Provisions of the Agriculture
Improvement Act of 2018 Relating to Hemp,” USDA
Memorandum (May 28, 2019) available at https://www.ams.usda.
gov/sites/default/files/HempExecSumandLegalOpinion.pdf.
23. See “Hemp Industries Association® Launches “Hemp Is Legal”
Campaign in Times Square,” PR News Wire (May 23, 2019)
available at https://www.prnewswire.com/news-releases/hemp-
industries-association-launches-hemp-is-legal-campaign-in-times-
square-300855736.html.
24. See “FDA Regulation of Cannabis and Cannabis Derived
Products: Questions and Answers,” available at https://www.
fda.gov/NewsEvents/PublicHealthFocus/ucm421168.htm (last
visited June 25, 2019), Question 10 (explaining that “under
section 301(ll) of the FD&C Act [21 U.S.C. § 331(ll)], it
is prohibited to introduce or deliver for introduction into
interstate commerce any food (including any animal food or
feed) to which has been added a substance which is an active
ingredient in a drug product that has been approved under
section 505 of the FD&C Act [21 U.S.C. § 355], or a drug for
which substantial clinical investigations have been instituted
and for which the existence of such investigations has been
made public[.]”).
25. 21 U.S.C. § 321(ff)(1).
26. 21 U.S.C. § 321(g)(1)
27. FDA 101: Dietary Supplements, available at https://www.fda.gov/
consumers/consumer-updates/fda-101-dietary-supplements.
28. See “FDA is Committed to Sound, Science-based Policy on CBD,”
FDA Announcement (June 19, 2019), available at https://www.
fda.gov/news-events/fda-voices-perspectives-fda-leadership-and-experts/
fda-committed-sound-science-based-policy-cbd.
29. See “FDA Regulation of Cannabis and Cannabis Derived
Products: Questions and Answers,” Questions 9 (explaining
that the “FDA has concluded that THC and CBD products are
excluded from the dietary supplement definition under section
201(ff)(3)(B) of the FD&C Act [21 U.S.C. § 321(ff)(3)(B)]”).
30. See “FTC Joins FDA in Sending Warning Letters to Companies
Advertising and Selling Products Containing Cannabidiol
(CBD) Claiming to Treat Alzheimer’s, Cancer, and Other
Diseases,” FTC News Release (April 2, 2019) available
at https://www.ftc.gov/news-events/press-releases/2019/04/
ftc-joins-fda-sending-warning-letters-companies-advertising.
31. For instance, as seen in Horn v. Medical Marijuana, Inc, New
York’s deceptive business practices (NY GBL § 349) and false
advertising (NY GBL § 350) statutes are potentially available.
Most states have similar prohibitions in one form or another.
32. ShipCalm, Shipping or Mailing CBD Oil, https://www.shipcalm.
com/blog/shipping-cbd-oil/.
33. FedEx’s Terms and Conditions explicitly prohibit a shipper from
tendering “hemp plants, hemp leaves, hemp oil, hemp seed
oil and CBD derived from hemp” and classify those items as
“Prohibited Items.” See FedEx Service Guide at 114 and 161,
available at https://www.fedex.com/content/dam/fedex/us-united-
states/services/Service_Guide_2019.pdf (updated April 29, 2019).
34. ShipCalm, Shipping or Mailing CBD Oil, https://www.shipcalm.
com/blog/shipping-cbd-oil/.
35. U.S. Postal Service, Publication 52 Revision: New Mailability
Policy for Cannabis and Hemp-Related Products, available at
https://about.usps.com/postal-bulletin/2019/pb22521/html/updt_002.
htm.
36. “U.S. Bank Subsidiary Backs Out of Handling CBD Payment
Processing,” Green Entrepreneur (April 5, 2019) available at https://
www.greenentrepreneur.com/article/331819.
37. Last month, payment processing service Square launched a pilot
program for retailers of CBD products https://www.forbes.com/
sites/tomangell/2019/05/22/square-quietly-launches-program-for-cbd-
cannabis-company-credit-card-processing/#1f3095ba2329.
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