Euro court’s ruling is only first step in clearing legal path for CBD

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The ruling yesterday by the European Union Court of Justice (ECJ) that CBD cannot be regarded as narcotic, and that CBD products may be freely sold among EU member states, signals that laws and rules governing the valuable compound in Europe may finally be straightened out.

The critical milestone ahead is a decision by the European Commission, whose stance on CBD to this point is in contradiction with the ruling by the ECJ. The Commission in August issued a “preliminary decision” that non-medical CBD and other natural hemp extracts made from hemp flowers – frequently present in hemp food, food supplements and cosmetics – should be considered narcotics in the EU.

‘Impact is binding’

But the European high court’s decision that CBD is not a narcotic is binding on EU institutions including the European Commission, according to attorney Eveline Van Keymeulen of Paris-based Allen & Overy, who assisted one of the defendants who appealed French charges related to selling CBD vape products.

Hemp stakeholders have said if the EC’s “preliminary decision” were to become permanent across the EU, it would throw the sectors that use CBD, the leading hemp extract, into chaos. The ECJ decision Thursday will surely give the Commission pause before it renders a final position on CBD, which is expected some time before the end of the year.

“The impact of this decision goes way beyond France. The Court’s decision sets a binding precedent with European reach,” Van Keymeulen said. “(The) judgment should therefore lead to more regulatory harmonization and legal certainty which is indispensable for the further development of the CBD industry in Europe.”

‘Beginning of end’

While details of the ECJ’s ruling need to be closely evaluated, according to Kai-Friedrich Niermann, a German cannabis lawyer who advises the EIHA: “It is now no longer conceivable that the EU Commission will adhere to its preliminary opinion from July 2020 that hemp extracts are to be classified as narcotics.”

“This ruling is the beginning of the end of the arbitrary stigmatization of CBD,” said Daniel Kruse, President of the European Industrial Hemp Association (EIHA). “In the future, both European and national courts, politicians and authorities will have to orient themselves on the court’s reasoning.”

“We sincerely hope that the Court’s position will set an example and that the European Commission will review its preliminary conclusion on the status of natural CBD accordingly,” said Lorenza Romanese, EIHA’s Managing Director.

Moving on to Novel Foods

If the ECJ ruling stands as the guidepost for CBD in Europe, and clear rules are established, it is sure to set off further investment, research, entrepreneurship and a thriving consumer market over the next several years, Kruse said, noting it could take at least three years to work through what would be the remaining hurdle to a fully open market: Hemp’s status as a Novel Food.

European food safety rules under the EU’s Novel Food regime now require producers of hemp extracts used in food – including, importantly, CBD – to undergo stringent and costly registration requirements; the rules guide the EU’s Novel Food Catalogue, a listing of foods that were not commonly eaten in EU member states before 1997. The Catalogue aims to assure food safety by controlling new, genetically or synthetically designed food products before market entry.

EIHA’s has formed a Novel Food Consortium, with a strategy aimed at consolidating various CBD ingredients into one Novel Food application covering a wide range of hemp food and extract products. The Association formed the consortium as a way to reduce the cost of the Novel Food approval procedure to its members. As a part of the EIHA initiative, science-based toxicology tests for both CBD and THC, and other studies, are planned to establish once and for all the safety of such hemp products.

“If the hemp industry keeps being proactive and comes up with safety assessments and standards through the EIHA Novel Food Joint Application, then the products will be legally marketable all over Europe,” Kruse said. “The value of every Euro invested in the consortium will increase exponentially.”

In the short term, the ECJ’s ruling yesterday should restart that application process, which has been on hold while the EC considers its position on CBD. “The Commission will no longer be able to postpone the novel food applications,” said Niermann.

The court’s justification

The European Court of Justice based its judgment that CBD is not a narcotic on the 1961 Single Convention on Narcotic Drugs and the 1971 Convention on Psychotropic Substances, international treaties that still govern global drug control and national drug laws today. The Court affirmed that “CBD . . . is not mentioned in the former and, while it is true that a literal interpretation of the latter might lead to its being classified as a drug, in so far as it is a cannabis extract, such an interpretation would be contrary to the general spirit of that convention and to its objective of protecting ‘the health and welfare of mankind’,” the court said.

Regarding the sale of CBD products in the EU, the court said in its second key finding: “A decision to prohibit the marketing of CBD, which indeed constitutes the most restrictive obstacle to trade in products lawfully manufactured and marketed in other Member States, can be adopted only if that risk appears sufficiently established.” The judges ruled that if France, where the original case before the ECJ started, is to maintain a ban on CBD, it must provide scientific proof of any dangers in the compound.

What about current sales?

Until the laws and regulations on CBD are finalized in Europe, those companies currently selling such products continue in a legal gray area, under the threat of national and local law enforcement always bringing them problems. Raids and shutdowns have hit hemp shops selling CBD, and CBD companies and ancillary operators such as extractors, have suffered problems, usually as a result of differing attitudes toward CBD by national and local law and health officials. Many have suffered significant losses as a result of misunderstanding, differing national laws and lack of communication.

Nonetheless the CBD market has well established itself, with products widely available in most EU countries. However, some CBD products are occasionally red-flagged for such things as mis-labeling, over-the-limit THC levels and contamination during laboratory spot checks. CBD stakeholders have said that these deficiencies could be avoided in an environment of clear EU laws.

Yesterday’s ECJ ruling is also good news for health & beauty products makers who incorporate CBD into their formulas, who would also suffer if CBD is designated a narcotic. Absent that designation, such products only need meet safety and market requirements of other similar products.

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