I recently attended two events in Utah headlined by the United Natural Products Alliance (“UNPA”) where its President, Loren Israelsen, discussed the voluminous public comments received by the FDA in response its latest round of questions regarding how over-the-counter cannabis extracts like CBD should be regulated. Israelsen provided numerous takeaways for UNPA members and their in-house attorneys regarding CBD and cannabis-derived products, and many cannabis businesses can also benefit from these insights.
As a nearly 40-year veteran of the dietary supplements industry, Israelsen knows his business. UNPA, led by Israelsen, was instrumental in helping pass the 1994 Dietary Supplement Health and Education Act (“DSHEA”), and the majority of UNPA’s calls in recent months have been from UNPA members who want to understand how natural products companies can dive into the CBD world. These inquiries culminated in UNPA reviewing the over 4,000 public comments to the FDA’s inquiries regarding cannabis regulation. In UNPA’s review of the FDA comments, UNPA identified several trends emerging that cannabis business owners should understand to help frame where UNPA believes the cannabis industry is heading in the next five years and beyond, including the intersection of cannabis-derived products appearing as foods, food supplements, drugs, and cosmetics. Those trends are summarized below.
The FDA Already Knows a Lot About CBD.
Epidiolex is a drug that was created by Cambridge, UK-based GW Pharmaceuticals and was approved by the FDA as a drug in 2018 to help relieve epilepsy-induced seizures. GW Pharmaceuticals has now done two decades’ worth of research on CBD and other cannabinoids and is responsible for putting CBD on the FDA’s radar many years ago. CBD’s involvement as an active ingredient in an FDA-approved drug precludes CBD from being marketed as a dietary supplement.
The Larger Battle is for Cannabinoids Generally, Not Just CBD.
GW Pharmaceuticals describes itself as having “established a world leading position in the development of plant-derived cannabinoid therapeutics through its proven drug discovery and development processes, intellectual property portfolio and regulatory and manufacturing expertise.” In its 23-page comment submitted to the FDA, GW Pharmaceuticals provided its well-reasoned argument as to why cannabis research should be led by pharmaceutical companies instead of business leaders (a health care professional-driven market instead of consumer-driven). Even though CBD is driving the current cannabinoid craze, companies like GW Pharmaceuticals are looking beyond CBD to the dozens of other cannabis-derived cannabinoids.
This is a Battle Among the Food and Beverage Industry, the Nutraceutical Industry, and Pharma/BioTech.
GW Pharmaceuticals made it clear that if the FDA allows cannabinoid products to be ingested in food, drinks, or dietary supplements, then pharmaceutical companies have zero incentive to spend millions or billions of dollars on R&D to develop new drug compounds to address diseases. It is highly unlikely that the current CBD market structure will extend beyond CBD to other cannabinoids because the FDA will want to maintain R&D incentives for pharmaceutical and biotech companies.
Big Pharma and BioTech are Much Farther Along than the Food and Beverage Industry and the Nutraceutical Industry.
Based on GW Pharmaceutical’s submitted comments, it is clear that the company has spent decades and many dollars on its research, and it likely knows more about cannabinoids than any other pharmaceutical or cannabis company in the world. In the broader industry, at least 10 cannabinoids are currently under research, and companies are manufacturing synthetic cannabinoids and researching cannabinoids derived from non-cannabis sources. Established food and beverage companies and nutraceutical companies have been slowly wading into the CBD world, but they are lagging behind these pharmaceutical companies.
Dosage/Acceptable Daily Intake Will Vary by the Individual.
The observable negative effects of CBD vary by individual factors such as height and weight, and what dosage is “well-tolerated” is not yet widely understood or implemented in the marketplace. That will change. Israelsen believes that the dosage will look something like this: the number of milligrams of CBD per kilogram of person, with special attention to vulnerable populations (children and pregnant/nursing women) and animals.
Everyone is Starting to Lawyer/Lobbyist Up.
During this interim period where the FDA has not yet issued its final rules, the lawmakers and regulators in Washington D.C. are regularly being contacted by trade groups, trade associations, constituents back home, and lawyers and lobbyists. The current political base is focused on how the cannabis industry is helping disenfranchised rural farmers. These hemp farmers are the ones to hitch your wagon to, especially in states that are not saturated with overcapacity. And if the FDA determines that it does not have enough guidance, it will kick the can back up the road to Congress.
UNPA Wants to Join Forces with Cannabis Businesses and Trade/Interest Groups.
UNPA recognizes that there are many cannabis interest groups and that both existing natural products companies (and trade alliances like UNPA) and new natural products companies (aka cannabis businesses and trade alliances) should collaborate to learn from each other and find commonalities. The natural products companies excel in quality control systems and analytical practices. There may be good opportunities to share expertise, resources, and legal strategies. Israelsen said the nutraceutical industry needs to get to know the cannabis farmers and marijuana-related business groups.
Product Liability Insurance was Not Discussed in the FDA Comments But is Critical.
No one likes to talk about insurance except insurance agents and lawyers. Israelsen stressed the importance of insurance for all companies engaging in the cannabis industry, and it underscores this prior blog post about product liability insurance.
The next several months will provide significant insight into these issues and how they will affect the intersecting paths of companies in the pharmaceutical, biotech, nutraceutical, food and beverage, and cosmetics industries. I believe we will see more strategic alliances, partnerships, and mergers and acquisition activities across industries.