The Farm Bill's decriminalization of hemp left a lot of leeway for more regulation to address legal sales of hemp and hemp-derived products.

The mainstreaming of CBD beauty products like lip balm, face serums and soaps containing the hemp extract cannabidiol has seen great demand from consumers, but little oversight from governing bodies.  

The 2018 Farm Bill in December, which removed hemp from the list of drugs under the Controlled Substances Act, set the stage for the widespread commercialization of hemp-derived products, but it left a lot unknown. Then last month, the U.S. Patent and Trademark Office joined the fray. As applications rolled in to trademark CBD products, the agency issued guidance saying that marks can qualify for federal trademark protection if they are legally used in commerce. But it isn’t just about the Controlled Substances Act, the office said —  it also means that the Food and Drug Administration, which implements the Food, Drug and Cosmetic Act, might need to provide some answers. 

In the meantime, brands have been charging ahead. Cannuka, which makes skin-care products with CBD and manuka honey, launched at Ulta Beauty stores in March. The luxury CBD beauty brand Saint Jane now sells something called Microdose Lip gloss, which is made of ingredients including CBD and chamomile extract.

Since the PTO’s guidance on May 2, a few hundred trademark applications have been filed for products containing CBD, according to a review of recent PTO applications for cosmetics and pharmaceutical products. But the agency seems to be taking it slow, waiting to figure out how to evaluate them, especially while the FDA considers the ingredient’s safe and legal marketing, said intellectual property experts.

“I do think it was an important guidance, because there’s been so much confusion in the industry about what is and isn’t eligible for trademark protection,” said Alison Malsbury, an attorney at Harris Bricken who advises clients in the cannabis, entertainment and tech industries.  

“I think the PTO is waiting to see how they’re going to put together a cohesive strategy on how to handle these applications,” she said. “It might take them time to figure out what info they need to request from applicants to prove that the goods comply with the 2018 Farm Bill.”

The Farm Bill basically decriminalized hemp, saying it was no longer a controlled substance that needs the Drug Enforcement Agency’s approval before it could be sold. But it left a lot of leeway for more regulation to address legal sales of hemp and hemp-derived products.

For instance, it said that while states can’t prohibit the transportation of hemp products across state lines, they would still be able to enforce their laws on retail sales of such products. States will have to seek approval from the United States Department of Agriculture for their plans to regulate the product within their borders.  

That effectively means that it’s now up to agencies and states to establish a regulatory framework for companies to legally sell these products, attorneys said.

“The federal government chose to allow each state to come up with its own individual plan, and get approval for it from the USDA, and enforce it within its own borders,” said Nilda Isidro, partner in Goodwin Procter LLP’s products litigation and counseling practice.

“There will be a fair amount of discretion left to the states rather than a single unified standard across all 50 states,” she said. 

The PTO’s guidance also signals that trademark examiners will look at companies’ marketing materials more closely to assess their claims about what their CBD-products can do for consumers. These marketing claims also fall under the jurisdiction of the FDA, which has yet to weigh in concretely on its use in cosmetics. As the FDA considers the issue, can the PTO still grant trademark applications for CBD products? Maybe, but it’s not clear how well it will stick, especially if the FDA comes out later with safety concerns, attorneys said. 

“If you have an application that’s matured to registration, the weakness is that it is subject to a potential cancellation proceeding,” said Olivera Medenica, a partner at Dunnington Bartholow & Miller LLP, who advises fashion brands on intellectual property issues. “And it would be difficult to enforce a mark over a substance that’s not approved by the FDA.”

The FDA applies different standards to pharmaceuticals than to cosmetics, which it scrutinizes far less. But when there are claims that a cosmetic has medicinal or healing effects, it could blur the lines about whether it functions as a drug, said attorneys.   

“To simplify it, if you say it has an effect beyond the layers of the skin, then it becomes a pharmaceutical, and if you don’t say anything [about its effect], but you include it as an ingredient, then it’s a cosmetic,” said James Prochnow, a shareholder at Greenberg Traurig LLP, who focuses on Drug Enforcement Agency and FDA issues. “It’s the claim on the product that will determine whether it’s a drug or a cosmetic.”  

At the end of May, the FDA held a hearing to consider how to regulate CBD in various products, and has asked the industry for more information. The agency has said it will be looking into data from double-blind studies and other trials, and is continuing to hear comments. In the meantime, brands have to be careful about how they market their CBD creams and products, attorneys said.  

“The FDA can construe a health claim to be pretty broad, so even those really general statements could trigger the FDA’s definition of a health claim,” said Malsbury of Harris Bricken. “You’re walking a fine line, especially when you’re making claims about a product that’s already on the FDA’s radar.”

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