Four Things Cannabidiol Companies Should Consider When Drafting a Hemp CBD Contract

When it comes to hemp-derived Cannabidiol (CBD), Both the FDA and State governments have different approaches.

For the most part, the ball is on the federal government’s court to regulate hemp and CBD. The U.S. Department of Agriculture (USDA) and the FDA are yet to issue regulations, but states such as California are still considering laws that would allow hemp CBD products. 2018’s Farm Bill interstate transport protections are also yet to be fully implemented because the USDA has not reviewed state hemp protection plans yet.

This causes much uncertainty with Hemp CBD players in the industry, both in terms of how these companies should handle their internal operations or contract with third parties.

Keeping Your Cannabis Company Legal

1. Ensuring That the Hemp is Legal

Before purchasing Hemp CBD products, you should get reassurance that the hemp has been grown in accordance with the law, using seed cultivars, and passes testing requirements. It is not enough to trust the information given by a seller.

If the hemp has not been grown in line with the legal requirements, then it has the potential of tainting products made from it and present a significant risk to everyone in the supply chain

2. Ensuring That the Hemp Sold is “Hemp”

Any Hemp CBD company should ensure that it is not buying CBD derived from cannabis. The difference between hemp and cannabis is usually the 0.3% THC threshold. If what is cultivated contains more than 0.3% THC, it could be considered as cannabis, which is illegal under the federal law and in some states.

Even though more states are now requiring testing, it is good to include independent lab testing as a contract requirement.

3. Chain of Custody

At times, the regulating body may demand proof that a company’s hemp products are made using legally produced hemp.

If a company is unable to prove its hemp’s “chain of custody,” an investigator can easily deduce that the hemp at issue was grown illegally.

With this, it is wise to get all the information regarding the chain of custody in a contract, as opposed to just hoping that your suppliers will provide that information when needed.

4. Be watchful on Adverts

Over the recent past, we have seen the FDA issue warning letters to industry players who make medical claims in connection with their CBD products. Such litigations on misleading information are likely to increase in the coming years.

Hemp companies should be keen at looking at the content regarding marketing on their contracts. This is because a company could face penalties even when a third party markets its products unlawfully.