Reed Smith Client Alerts

The 2018 Farm Bill transformed the hemp industry by making it legal to produce and sell hemp, and also legalized the production and sale of cannabidiol (CBD). However the U.S. Food and Drug Administration (FDA) was quick to jump in and say “not so fast” for food, beverage, and dietary supplements. The upshot of all of this is that the legality of hemp on the federal and state levels is complex and evolving. The early days of legalization have been marked, in particular, by confusion about the use of CBD derived from hemp. This Client Alert will attempt to sort through the current state of the law pertaining to hemp-based CBD in the United States.


Hypothetical fact pattern. Murray is an entrepreneur who wants to launch a CBD retailer selling knishes and sodas infused with CBD, as well as CBD lotions for skin conditions. 

What is CBD? CBD is a chemical compound found in the resinous flower of cannabis, alongside tetrahydrocannabinol (THC). Although THC has psychoactive properties, the CBD compound itself is non-psychoactive and is believed by many to have therapeutic properties. CBD is extracted from cannabis through an industrial process, and the resulting oil typically contains no or very low levels of THC.1

May Murray just use any kind of CBD? No. Although CBD can be extracted from any strain of cannabis, including strains that contain THC, the 2018 Farm Bill only legalized industrial hemp, a specific strain of cannabis that contains less than 0.3% THC. All other forms of cannabis (generally referred to as marijuana) and their by-products are still listed as Schedule I controlled substances under federal law. So if Murray wants to infuse products with CBD, he may only use CBD extracted from industrial hemp and must be certain that the resulting product contains less than 0.3% THC.