Since the passage of the 2018 Farm Bill, the market for hemp-derived extracts has been growing across the nation. In March 2019, Virginia passed legislation removing many barriers to industrial hemp processing in the state, including removing the term “hemp” from the definition of “marijuana” in the Virginia Criminal Code. Following the legislation, the Virginia Department of Agriculture and Consumer Services (VDACS), was tasked with overseeing hemp production in the state. Specifically, VDACS licenses and regulates manufacturers of hemp products (“processors”). In summer 2019, VDACS issued a series of letters that caused confusion among registered processors about what products they were allowed to produce. These letters forth contradictory policy regarding the production and sale of products containing hemp-derived extracts intended for human consumption (“Hemp Extracts”). CBD is considered a permissible Hemp Extract. The newly settled VDACS policy will regulate Hemp Extracts as approved food additives.
Background on VDACS Guidance
On May 16, 2019, the VDACS Commissioner issued a letter to all processors advising that, due to state and federal food laws and regulations, VDACS would not approve the manufacture of food products containing Hemp Extracts. This letter caused concern among processors, who wanted to enter the market after hemp-derived CBD was legalized at the federal level, under the 2018 Farm Bill. After numerous processors pushed back on the policy, the VDACS Commissioner issued another letter to industrial hemp processors on July 15, 2019. This letter explained that Governor Northam was directing VDACS to treat Hemp Extracts as approved food additives, meaning that processors of Hemp Extracts would be placed under food safety inspection.
Current VDACS Policy
On July 25, 2019, the VDACS Commissioner issued yet another letter advising processors that VDACS had formulated its policy with respect to its regulatory oversight of the manufacturing of Hemp Extract. The letter explained that VDACS would now treat a Hemp Extract as an approved food ingredient or dietary supplement. A processor seeking to manufacture Hemp Extracts must comply with all food safety laws and regulations pertaining to food manufacturing. This means that Hemp Extracts will now be subject to the regime of VDACS’ Food Safety Program and the general regulations which apply to all food or beverage manufacturers, in addition to new regulations for processors only. Moreover, food establishments that offer food or beverages infused with Hemp Extracts may offer only products that are produced in compliance with the food safety laws and regulations of the state in which the Hemp Extract product is manufactured.
VA Food Safety Program Guidelines
The July 25th letter set forth a number of guidelines that processors must follow when seeking approval to manufacture Hemp Extract. First and foremost, any business involved in manufacturing Hemp Extract must ensure that they are produced from industrial hemp grown in compliance with federal or state law. This means that Hemp Extract must have a tetrahydrocannabinol (THC) concentration of no greater than 0.3%. Second, processors must meet certain standards promulgated by the Virginia Board of Pharmacy relating to the production of the CBD regulating microbiologicals, mycotoxins, heavy metals, and residual solvents. This information can be found in detail in both the July 25th letter and the Application to Operate as a Manufacturer of Hemp Extract. These two sources also provide information regarding pesticide use and requirements for pesticide residue in Hemp Extract. VDACS may conduct random testing of Hemp Extract or product containing Hemp Extract. Lastly, the Secretaries of Agriculture and Forestry and Health and Human Resources are working on a report to the General Assembly regarding standards appropriate for the production of hemp-derived oil. However, businesses are advised to comply with the food safety standards outlined in the letter and application until any further notice is received from VDACS.
Businesses seeking to manufacture Hemp Extract should consult with an attorney about how to effectively manage the nuanced and tedious application process. Without a license, you simply can’t do business.
To become a processor, a business must be registered with VDACS as a processor. Processors that wish to manufacture Hemp Extracts must then complete and submit to VDACS an application to operate as a “Manufacturer of a Hemp-Derived Extract Intended for Human Consumption”. After an application is submitted, VDACS will inspect the business’ food processing and storage areas. Once the inspection is complete, applicants will be charged a $40.00 fee for operating a food processing business.
Unless otherwise noted, applicants must include all of the following items in their application:
- Written documentation of zoning approval from local zoning office to operate a food processing business on the property;
- Documentation that Hemp Extracts are produced from industrial hemp grown in compliance with federal or state law;
- Documentation that Hemp Extracts have a tetrahydrocannabinol (THC) concentration of no greater than 0.3%;
- A certificate of analysis if the label states that any amount of cannabinoids are present in the finished product;
- A diagram of processing and storage areas;
- If private water supply is used (e.g., a well), applicants must provide evidence that the water is potable. Applicants must also submit a recent copy of water test results showing Coliform bacteria are “absent” using a laboratory certified by the Virginia Safe Drinking Water Program;
- A list of all products submitted for review with planned method and location of distribution;
- A list of all ingredients used in the business, with the source of each of those ingredients;
- A product information sheet for each product, marking “Trade Secret” on any formulation or process that is confidential; and
- A copy of the intended label for each product.
VDACS’ Food Safety Program is able to inspect new food businesses within approximately 60 days of receiving a completed application.
Out-of-State Sources and Federal Limits
VDACS has stated that it will approve out-of-state sources of Hemp Extract if they are manufactured in compliance with the food laws and regulations in the state in which the entity is manufacturing the product. The products must also meet Virginia standards. It is also important to remember that the FDA still maintains that the Food, Drug, and Cosmetics Act makes it illegal to add CBD to food products that are introduced into interstate commerce. Thus, processors should be certain they are not selling their CBD food products out of state.
By: John McGowan, Meredith Kinner and Andrew Gargano