Opinion | The Cannabis Industry is Rife with Fraudsters. The FDA is AWOL.

Over the last 30 years, the $6 billion agency has become the world’s premier regulator of prescription drugs, with hundreds of scientists and experts laser-focused on the swift and efficient approval of safe and effective therapeutics. But when it comes to the non-prescription products that tens of millions of Americans buy every day — and which underlie a vast and growing industry — the agency is far less focused and effective, and in some cases, totally absent. I should know.

I work in an industry where consumers are deeply afflicted by FDA’s reluctance to regulate. My company, Caliper Holdings, produces Ripple, a brand of THC-infused marijuana products, and Caliper, a brand of CBD-infused hemp products, and we’ve done so for years without any guidance, oversight or interest from the FDA. Not in the seven years since Colorado and Washington first legalized marijuana for recreational use, nor in the three years since Congress legalized the production of hemp-derived cannabinoid products, has the FDA taken action to protect consumers from bad actors or offered guidance to those wanting to do right by consumers.

In fact, because of loopholes and quirks in the underlying laws, the cannabis industry isn’t subject to even the minimal regulation that governed Sarah Brown’s homemade root powder.

It’s not every day that a businessperson in the United States calls for more — in fact, any! — regulation of their industry. But the FDA’s failure to act is not only dangerous for consumers; it’s deeply damaging to the legitimate companies that are forced to compete with those that are reckless or worse.

The FDA will tell you their hands are tied, that the Federal Food, Drug, and Cosmetic Act clearly states that, once a substance has been investigated as a drug (as THC was in 1985 and CBD was in 2018), it cannot later be regulated as a food or supplement. It is less inclined to mention that the same statute also gives HHS Secretary Xavier Becerra the power to exempt products from the strictures of the law’s so-called Exclusionary Clause. And like it or not, these products are already in the market and consumers are using them.

Ultimately, the FDA’s first duty is to protect consumers, and its decision not to regulate or provide guidance for consumer cannabinoid products puts us all in harm’s way. Those who support lax enforcement and a weak FDA like to suggest that these industries will regulate themselves, as if bad actors — the charlatans and frauds Woodcock warns of — have any incentive to do that. Twenty-two guys running into each other on a field doesn’t spontaneously evolve into an orderly game of football.

Rules and penalties are essential to a functioning sport, just as regulations and enforcement are essential to a functioning market. I know this personally because my company prioritizes safety and honesty, despite a complete and total lack of market incentives to do so. As it stands today, companies who invest in food safety programs, accurate labeling and claims substantiation are at a significant disadvantage to lying liars who lie. Consumers can’t tell at a glance whether a product contains the CBD it says it does, has high levels of salmonella, or pulled its “fast-acting” claim out of thin air. Test results are often faked, corners are often cut, and everyone knows the FDA won’t do anything about it. When quality is costly and lying is free, we shouldn’t be surprised when charlatanism thrives.

In fact, the evidence of consumer fraud in cannabinoid products is widespread, ongoing and known to the FDA. In July of 2020, the agency submitted a study to Congress, in which it detailed rampant fraud in the consumer CBD marketplace: 55 percent of the products tested failed to meet their label claims for CBD content. Claiming your product contains something it doesn’t isn’t cute, it’s fraud. And every consumer who buys a fraudulent product suffers harm. Multiply FDA’s findings by 20 million consumers, and you start to understand the scale of the fraud being perpetrated on the public as FDA sits idly.

The consequences of fraud lead to physical harm, too. Just last month, a cannabis brand named Select (owned by Curaleaf, one of the country’s largest multi-state marijuana operators) mixed up batches of its THC and CBD products, leading to several cases of consumers getting unintentionally high. That’s awful, obviously, and it’s a direct consequence of FDA’s failure to prioritize consumer safety in its policymaking. Consider what happened next. While the Oregon Liquor and Cannabis Commission immediately recalled the state-legal THC products that didn’t actually contain THC, the FDA still has yet to recall any of the nationally sold CBD products that actually contained THC.

Sometimes the FDA hides behind the need for more data in its refusal to step in and regulate these products. “We continue to underscore the need for scientific evidence to support the safety profile of CBD,” Woodcock said recently. “We remain steadfast in our effort to obtain research data and other safe public health input to inform our approach and to address consumer access in a way that protects public health and maintains incentives for cannabis drug development through established regulatory pathways.”

That’s all well and good, but how does that help consumers today? Companies are selling products. Consumers are consuming them. The FDA can either ensure a safe, regulated marketplace or tolerate an unsafe, unregulated marketplace. There is no third option. The world does not wait.

To be clear, I fully support more research into cannabinoids. My company helped fund the only peer-reviewed, published clinical research on commercially available CBD and THC consumer products. But that research happened in spite of the FDA, not because of it. The FDA has failed to provide or support the development of common standards of identity, a necessary prerequisite to the “real world data” that the agency claims to need. Until manufacturers are held to a common standard for labeling and content, it’s impossible to make real-world comparisons across products. Similarly, the FDA has failed to provide or support the development of common analytical standards for laboratory tests. Until we can be sure that labs in different states are generating the same results from the same products, reliable real-world data will remain out of reach.

You can’t have an intellectually honest discussion about cannabinoid regulation that doesn’t start with accepting that cannabinoids are widely available. According to the Consumer Brands Association, 28 percent of Americans have tried CBD, and “74% either incorrectly assume CBD is federally regulated or have no idea if it is regulated.” When products are widely and openly available in a modern society, it’s no surprise people assume that they’re regulated on par with the products around them. And if a public health regulator can’t or won’t keep a product off the shelf, then it has a moral obligation to write and enforce rules that ensure that product, as sold, is as safe as possible. If acting Commissioner Woodcock believes the Exclusionary Clause of the FDCA prevents the agency from protecting consumers, she should either fight to remove that restriction or step aside and let someone else carry the banner of public health and safety.

It’s important to understand that all of this is fixable, and quickly. The FDA could issue clear enforcement guidance that prioritizes label accuracy, good manufacturing practices and batch traceability for consumer cannabinoid products, and step up its enforcement efforts. Secretary Becerra could promulgate a rule excepting all plant-derived cannabinoids from the Exclusionary Clause, which would force the FDA to regulate these products as consumers find them in market. Alternatively, Congress could amend the FDCA to remove or narrow the scope of the Exclusionary Clause, as contemplated by the bipartisan Hemp and Hemp-Derived CBD Consumer Protection and Market Stabilization Act (H.R. 841).

And if resources are an issue, Congress could increase FDA’s appropriations. Roughly half of the FDA’s budget currently comes from prescription drug user fees, a dynamic that creates clear and obvious incentives for FDA leadership to prioritize pharmaceutical industry desires over broad-based consumer protections. But if money’s really the thing, Congress could also charge user fees to industry for food and supplement products. (For the record, I think that’s a truly awful idea, and yet it’d still be an improvement on our current situation). In the extreme case, we could formally cede FDA to pharma and hive off the agency’s consumer protection functions into a new agency fully funded by the public purse and solely charged with regulating products as consumers find them in the market. In other words, create an agency that actually prioritizes consumer safety above all, which is what the public already thinks the FDA does, despite all evidence to the contrary.

The idea of a public health agency that works purely in the public’s interest is radical, I grant you, but we began to build one in 1906 with passage of the Pure Food and Drug Act. It’s time to finish what we started.