CDB In F& B

What’s Legal When It Comes to CBD in Edibles and Alcohol

As new trends and topics in the alcohol industry emerge, the OLCC strives to keep current on these issues. Recently, there has been significant interest throughout the industry in the use and sale of cannabidiol (CBD) items on liquor-licensed premises. The Agriculture Improvement Act of 2018 (also referred to as the 2018 Farm Bill) was partially responsible for generating this interest because a part of the bill removed “hemp” and its derivatives from the definition of “marihuana” in the Controlled Substances Act. Although the 2018 Farm Bill established some regulatory authority for hemp under the U.S. Department of Agriculture (USDA) and the Federal Food and Drug Administration (FDA), this piece of legislation did little to explain or clarify the legal status of CBD and CBD products. Due to this uncertainty, the next few paragraphs will attempt to explain the complexities of this issue and help to answer a few questions about CBD products and OLCC liquor licensees.

What is CBD?
First, it is important to understand what CBD is and where it comes from.  CBD is a non-intoxicating chemical compound (called a cannabinoid) that can be derived from cannabis plants. Because both hemp and marijuana come from the same plant (cannabis) they are both interchangeably referred to as cannabis, but there is an important legal distinction. Whether a cannabis plant is considered hemp or marijuana depends upon the amount of tetrahydrocannabinol (THC) the plant contains. THC is, of course, the cannabinoid responsible for the psychological effects associated with marijuana consumption. For a cannabis plant to be considered hemp, it must contain less than 0.3 percent THC, otherwise the plant is considered marijuana. Because marijuana is still considered to be a Schedule I controlled substance by the federal government, the source of the CBD is important. Even if a finished CBD product contains 0 percent THC, if the CBD was derived from a plant that contained more than 0.3 percent THC and is therefore marijuana, the CBD is considered a marijuana derivative. In Oregon, marijuana and all marijuana derivatives may only be sold by a licensed recreational marijuana retail store or medical marijuana registrant. For OLCC liquor licensees, the source of the CBD is also important because permitting the use or sale of a marijuana item on a liquor-licensed premises is a violation that could result in a license suspension or civil penalty. 
  
Although the CBD must be derived from hemp, not all hemp products contain CBD. Hemp stalks and seeds contain only trace amounts of CBD and have been legally used in food and beverages prior to the passage of the 2018 Farm Bill. The CBD used in many popular products is commonly extracted from the flowers and leaves of the hemp plant.  The remainder of this article refers to CBD derived from hemp.

What Conduct is Prohibited?
Despite the current lack of legal clarity, federal agencies have provided guidance on two types of conduct that are prohibited. First, the FDA, which regulates food products and food safety, has determined that selling or offering to sell a food or beverage item containing CBD in interstate commerce is illegal. For OLCC liquor licensees to comply with federal law, they should not purchase CBD products that were produced in another state. 
 
Second, the Alcohol and Tobacco Tax and Trade Bureau (TTB), which regulates the manufacture and sale of alcoholic beverages, has determined it will not approve any alcoholic beverage formulas that contain CBD.  Because obtaining formula approval is required to produce an alcoholic beverage with a non-traditional ingredient (such as hemp), all alcoholic beverages manufactured with CBD are prohibited.  This means that all OLCC licensees that manufacture alcoholic beverages are prohibited from adding CBD during the production of the beverage or prior to bottling.  To help clarify the agency’s position, the OLCC has proposed a rule change that would make it a violation for any OLCC liquor licensee to manufacture, store, or sell any alcoholic beverage that contains cannabinoids or any substance derived from cannabis, including cannabis terpenes.  If adopted at the December Commission Meeting, the rule would apply to all license types and be effective January 1, 2020. 

What about Non-Alcoholic CBD Products?
The two other common questions received by the OLCC on this issue involve non-alcoholic CBD products. Licensees are particularly interested in mixing non-alcoholic CBD beverages with alcohol in a mixed drink for on-premises consumption and are also interested in selling non-alcoholic CBD products on liquor-licensed premises.  

In Oregon, hemp production is regulated by the Oregon Department of Agriculture (ODA). The ODA has adopted rules that govern products made with hemp, including items intended for human consumption.  Under ODA rules, those food and beverage items made with hemp are required to be tested in the same manner that marijuana food items are tested in Oregon. This means that an OLCC licensed laboratory or equivalent lab must receive samples from each process lot of the hemp items and the lab must test those products to ensure they meet certain standards regarding pesticides, solvents, and potency.  Because people are going to be consuming these products, it is extremely important to make sure that these items have been tested.   

Because the effect of mixing CBD and alcohol is currently unknown, the OLCC recommends that licensees do not mix CBD and alcohol together into mixed drinks for on-premises consumption.  If a licensee chooses to do so, it is done at the licensee’s own risk. If a licensee would like to sell a non-alcoholic CBD item on a liquor-licensed premises, the licensee must obtain a copy of the lab report showing that the product was properly tested according to the ODA’s rules. If any licensee is currently selling any CBD products that have not been properly tested, the licensee should have removed all non-compliant products from their inventory by December 31, 2019.

The OLCC is publishing guidance documents on the OLCC website to help explain what types of activities may occur on a liquor-licensed premises. The guidance is split into five categories: alcohol manufacturing, wholesale and distribution, liquor store sales, sale of alcohol at retail, and testing requirements. The guidance is meant to help provide clarity for a very complex issue.  These documents are scheduled to be available by the end of December and will be updated if rules or policies change. If you have questions, please visit the OLCC website at Oregon.gov/OLCC or contact the OLCC. | Jamie Dickinson, Oregon Liquor Control Commission

This article originally published in the Oregon Restaurant & Lodging Association Magazine - Winter 2020