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Big Pharma Swooping in to Monopolize The CBD Market

Big Pharma Swooping in to Monopolize The CBD Market

Just as the 20-year-long fight to legalize medical marijuana begins to see substantial success, Big Pharma may swoop in to monopolize both the THC and CBD markets. This post from TruthOut highlights how Big Pharma seeks to capitalize on the pain-reducing compounds derived from cannabis.

The medicinal properties of cannabidiol (better known as CBD), a compound found in the Cannabis sativa L. plant species, are quickly drawing the attention of scientists, plant-medicine lovers, dietary-supplement companies, venture capitalists,professional athletes and Big Pharma -- not to mention people living with serious, chronic medical conditions. Insiders predict the burgeoning market will be as profitable as the NFL.

Today, if you run a search on PubMed.gov, a medical research database, you'll find more than 1,500 academic articles on cannabidiol.

Unlike tetrahydrocannabinol (THC), CBD has no euphoric properties whatsoever, and carries no street value. What it does offer, however, are a host of health benefits. According to a 2013 review published in the British Journal of Clinical Pharmacology, CBD has been shown to reduce pain and inflammation and also has anticonvulsant, anti-inflammatory, anti-tumor and antidepressant properties.

Despite CBD's incredible profile and ability to reduce human suffering, there's a continuing debate over its legal status. Parts of the law are fuzzy and up for interpretation, depending on whom you ask.

"There is this issue of speaking out of both sides of one's mouth when we discuss CBD," said Joy Beckerman, president of Hemp Ace International, a Seattle-based consulting firm.

For instance, the jury is still out when it comes to a whole slew of issues surrounding the plant compound: Is CBD truly legal in all 50 states, just some states or none at all? Meanwhile, it's also unclear as to whether CBD is more legal if it's being imported into the country compared to being grown on American soil. And finally is it safe to sell across state lines? And how about "CBD-only" medical marijuana laws? (Seventeen states, including Alabama and Florida, have legalized CBD for medical use while keeping THC illegal.)

"All of those questions have information but they don't have answers because [the law is] that gray and it's that developing," said Beckerman, who also teaches a seminar for existing practicing licensed attorneys titled "The Curious Legal Status of CBD and Industrial Hemp-Derived Cannabinoids."

According to CBD manufacturers, US regulatory arms, such as the Food and Drug Administration (FDA), Customs and Border Protection (within the Department of Homeland Security), Drug Enforcement Administration (DEA) and Department of Justice, are making it increasingly difficult for dietary supplement companies to sell CBD. They say the current atmosphere is reminiscent of alcohol prohibition in the 1920s.

Some selling "CBD-rich hemp oil" have experienced significant disruptions to their businesses: big sums of money frozen by credit card companies or PayPal, customs agents seizing products at the border and FDA-issued warning notices.

"The [FDA's] punishments for running afoul of their endless regulations (that, often, their reps don't know well) can range from a mere letter and a fine to complete shutdown of operations without recourse," said Jennifer Carney, a journalist who is versed in cannabis compliance. "The FDA is the most unforgiving agency with very minimal oversight, and has rules that seem to apply to some (little guys) but not to Big Pharma."

Big Pharma Moves In

GW Pharmaceuticals, a "biopharmaceutical company focused on discovering, developing and commercializing novel therapeutics from its proprietary cannabinoid product platform," is being praised as the leading pharmaceutical company exploring cannabinoid drugs.

While there are other pharmaceutical firms devising cannabidiol-based medications, GW Pharmaceuticals has applied for numerous drug patents that specify particular formulations of CBD and THC to treat cancer pain, childhood epilepsy and multiple sclerosis (MS) -- conditions the Cannabis sativa L. plant has been treating for several hundred years.

Some fear that just as the 20-year-long fight to legalize medical marijuana begins to see substantial success, Big Pharma is now swooping in to monopolize both the THC (typically referred to as medical marijuana) and CBD markets. They are often classified together since both compounds are derived from the same plant.

"This could very well affect the cannabis business in the US and possibly around the world," a manufacturer of CBD-rich pet foods told me, asking to remain anonymous for fear of experiencing difficulties with her business. She also believes the FDA and GW Pharmaceuticals are in cahoots.

GW's Epidiolex, meanwhile, is being primed to become the first FDA-approved cannabis-derived treatment option for those living with severe epilepsy.

Analysts, on average, believe the drug could generate annual sales of $1.1 billion by 2021, according to consensus forecasts compiled by Thomson Reuters Cortellis.

GW's other drug, Sativex, treats MS and is also being reformulated to treat cancer-related pain. Sativex has already been distributed in 15 countries, while GW has licensing agreements with Bayer HealthCare, Otsuka Pharmaceutical and Novartis.

Sativex can cost an average of $16,000 annually, whereas legal dietary supplements that contain similar compounds are only a fraction of the cost.

FDA: Thou Shalt Not Market CBD as a Dietary Supplement

On February 4, 2016, the FDA issued at least eight warning letters to dietary-supplement companies, accusing them of making health claims about CBD and warning them that CBD may not be positioned as a dietary supplement.

Because CBD-containing products have not been approved by the FDA, they cannot be marketed for the diagnosis, cure, mitigation, treatment or prevention of any disease. The FDA therefore warned the companies that it considers these products unapproved new drugs.

According to the FDA's website,

CBD products are excluded from the dietary supplement definition under section 201(ff)(3)(B)(ii) of the Act [21 U.S.C. § 321(ff)(3)(B)(ii)]. Under that provision, if a substance (such as CBD) has been authorized for investigation as a new drug for which substantial clinical investigations have been instituted and for which the existence of such investigations has been made public, then products containing that substance are outside the definition of a dietary supplement. There is an exception if the substance was "marketed as" a dietary supplement or a conventional food before the new drug investigations were authorized; however, based on available evidence, FDA has concluded that this is not the case for CBD.

In broad strokes, this means that if a pharmaceutical company has (seemingly) gotten there first in creating a CBD-based pharmaceutical drug, then CBD is off limits to dietary-supplement companies, unless the product existed when those three criteria were met. The scenario doesn't work the other way around: If a dietary-supplement company brings a product to the marketplace, this doesn't prevent Big Pharma from introducing their own version.

"We can question whether we have perfect balance when they [Big Pharma] are being offered exclusivity while we are being offered a shared marketplace," said Michael McGuffin, president of the American Herbal Products Association, a trade association aimed at supporting the responsible commerce of herbs and herbal products.

Another point up for debate in the 201(ff) provision is when CBD actually entered the market. According to Stuart Tomc, vice president of human nutrition at CV Sciences, "CBD has been marketed as a dietary supplement prior to commencement and public notice of any substantial clinical investigations instituted on CBD, thereby rendering the IND preclusion inapplicable."

And according to Raphael Mechoulam, an 85-year-old Israeli chemist best known for isolating THC, cannabidiol was discovered in the late 1930s and early 1940s, both in the UK and the US. "The structure was not known, the activity was not known, so it was left behind," he recently told The Wall Street Journal.

In 1980, Mechoulam published the results of a small clinical trial, but no one seemed interested. In an email to Truthout, he noted that he and his team "reported a small anti-epilepsy clinical trial with CBD with positive results 35 years ago. Nobody bothered to expand it or even to repeat it. Thousands of patients, many of them children, could have been helped."

The Matter of Red Yeast Rice

In 2015, the FDA sent out warning letters to go after deceitful CBD sellers.

"We've seen a lot of fraud in this industry: Some of these products contain no CBD, or far less than advertised. It's basically an uncontrolled experiment that is going on now in the Wild West," said Ethan Russo, a board-certified neurologist and former senior medical adviser to GW Pharmaceuticals. "You cannot make a supposed claim on what a product can do without randomized controlled trials and a particular preparation," added Russo, who advocates for the legalized production of CBD through a regulated market with standards.

Deceitful corporate schemes do a disservice to quality vendors. That's why we have the FDA, to assure safety and proper labeling -- not to peddle the interests of Big Pharma or deny human beings a micronutrient found in nature.

"When it comes to CBD, 201(ff) is equivalent to saying you cannot take vitamin C until you get sick with scurvy, because it's being used as a drug," said Will Kleidon, founder of Ojai Energetics, an organic CBD manufacturer.

But wait: Can a natural, non-intoxicating compound really be classified as a drug when it's really a "dietary ingredient"? (The Federal Food, Drug and Cosmetic Act defines a dietary ingredient as a "vitamin; mineral; herb or other botanical; amino acid; dietary substance for use by man to supplement the diet by increasing the total dietary intake; or a concentrate, metabolite, constituent, extract, or combination of the preceding substances.") It's happened before.

In 1987, red yeast rice became the center of what would turn out to be a landmark case, often referenced when discussing the complexities of CBD.

Red yeast rice extract has been used as a traditional Chinese remedy since the Tang dynasty to improve blood circulation and decrease cholesterol and triglyceride levels, but it was suddenly classified as a drug once the FDA discovered the active ingredient monacolin K was found to be chemically identical to lovastatin, a compound found in Merck's patented prescription drug Mevacor.

On this basis, the FDA advised that a product called Cholestin was now a drug requiring the FDA's approval for marketing and banned it, even though red yeast rice is an ingredient with a documented history of food use going back nearly a millennium. The FDA concluded that Cholestin was therefore excluded from the definition of "dietary supplement."

A dietary-supplement manufacturer can still use red yeast rice, but cannot manipulate the supplement's lovastatin content, added McGuffin.

Instead of allowing beneficial substances found in nature to be responsibly sold, we have a system that operates on loopholes, compromises, inaccuracies and Big Pharma sway.

Red yeast rice's case history provides lessons for manufacturers and distributors of dietary supplements containing CBD.

"Ultimately, dietary companies are advocating for the same thing consumers are," McGuffin said. "Unfettered and informed access to high-quality, cannabis-derived products that contain CBD."

Pot-Phobic Restrictions on the Harvesting of CBD

Cannabidiols are actually found in many plants such as cacao, black pepper and echinacea (whereas THC is only found in cannabis plants), but the highest levels of cannabinoids are found in the plant species Cannabis. CBD is one of more than 107 active cannabinoids in the cannabis plant that interact with receptors in our body referred to as the "endocannabinoid system," responsible for maintaining homeostasis in our bodies. As a result, many argue that whole plant synergies are more effective than the isolated single-molecule compounds that Big Pharma tries to capitalize on because of patentability. It's well accepted that CBD and THC work synergistically for therapeutic efficacy -- a combination that medical marijuana advocates refer to as the "entourage effect."

However, when it comes to dietary supplements, companies are only able to source CBD from "industrial hemp" plants, which contain lower resin than marijuana. Remember, the DEA still considers cannabis a Schedule I drug, up there with heroin and ecstasy. But for all intents and purposes, hemp and marijuana are the same plant.

The distinction between "industrial hemp" and marijuana was made just a few years ago, for the first time in US history, under the "Legitimacy of Industrial Hemp Research" provision of the 2014 Agricultural Act, otherwise known as the federal farm bill. Almost magically, cannabis was now considered hemp, as long as no part of the plant exceeded a THC concentration of "more than 0.3 percent on a dry weight basis."

Martin A. Lee, author of Smoke Signals: A Social History of Marijuana -- Medical, Recreational, and Scientific and cofounder and director of Project CBD, describes the 0.3 percent legal limit as "an absurd, impractical, resin-phobic relic of reefer madness."

"It has become the lynchpin of cannabis prohibition, a venal, dishonest policy that impedes medical research and blocks patient access to valuable therapeutic options, including herbal extracts with various CBD:THC ratios. For patients struggling with a wide range of conditions, CBD and THC work best together, enhancing each other's beneficial effects," he recently wrote.

While Beckerman acknowledges that there has been progress, she notes that we wouldn't be having these discussions regarding low-THC/high-CBD varieties if not for cannabis prohibition. 

"If we were free to do what we wanted with this medicine, we would breed for desired therapeutic properties regardless of THC-phobic legal definitions. We wouldn't be limiting ourselves; we'd want to create the most efficient systems and biggest return on the energy to extract medicine," she said.

Currently, CBD manufacturers are not permitted to extract CBD from the flowers where the greatest concentrations of THC are found. Instead, they must extract CBD from stems and stalks.

Fortunately, things are evolving, albeit in an unexpected way, says attorney Rod Kight from Asheville, North Carolina. Based on a 2015 funding bill, CBD derived from industrial hemp -- including CBD derived from cannabis flowers -- may be transported to, and sold in, any state in the US that does not have laws expressly forbidding it. The Omnibus Appropriations Act of 2016 contains the following provision in section 763:

None of the funds made available by this act or any other act may be used ... to prohibit the transportation, processing, sale or use of industrial hemp that is grown or cultivated in accordance with section 7606 of the Agricultural Act of 2014, within or outside the State in which the industrial hemp is grown or cultivated.

Although this language does not explicitly amend the farm bill, it does forbid the use of federal funds to enforce any law that would otherwise prohibit transporting, processing, selling or using CBD in any state so long as the CBD was extracted pursuant to the provisions of the farm bill. The practical effect of this clause is that it makes CBD legal on the federal level throughout the US, says Kight.

According to the DEA Office of Diversion Control, parts of the cannabis plant are exempt from being scheduled as a Class One substance: "The mature stalks of such plant, fiber produced from such stalks, oil or cake made from the seeds of such plant, any other compound, manufacture, salt, derivative, mixture, or preparation of such mature stalks (except the resin extracted therefrom), fiber, oil, or cake, or the sterilized seed of such plant which is incapable of germination."

Meanwhile, the only reason hemp food products aren't off limits altogether is because of the Hemp Industries Association's victorious 2004 lawsuit in the US Court of Appeals for the Ninth Circuit against the DEA.

In the ruling Judge Betty Fletcher wrote:

They [the DEA] cannot regulate naturally-occurring THC not contained within or derived from marijuana -- i.e., non-psychoactive hemp products -- because non-psychoactive hemp is not included in Schedule I. The DEA has no authority to regulate drugs that are not scheduled, and it has not followed procedures required to schedule a substance. The DEA's definition of "THC" contravenes the unambiguously expressed intent of Congress in the [Controlled Substances Act] and cannot be upheld.

CBD hemp oil purveyors often cite the ruling when explaining why their products are "legal in all 50 states." Yet others say that the court decision never mentions CBD.

"I get into debates all the time with people who say that case legalized CBD," Beckerman said. "I am not arguing with them other than to say, 'Jesus Christ, it was a case about oil pressed from a hemp seed.' At no point did they discuss cannabinoids in the spirit of plant material collection other than when the poor ... justices had to spell it out concerning THC for the ignorant and obstinate DEA."

However, Kleidon and many others, who have consulted with attorneys and experts, maintain that as long as their product does not include a psychoactive concentration of THC, and it is derived from stalk and stem, there is no federal violation.

"Many times the raw materials have been imported, declared at customs [and] taken out by FDA agents who legally report and prevent illegal substances from entering the country," Kleidon said. "It's been declared as CBD-rich hemp stalk oil, and it's been tested and pulled for. If it was a controlled substance, they would be committing a federal crime. And that is not the case."

"Dietary supplements are currently selling CBD with a sword of Damocles hanging over their head," said Marc Ullman, an attorney at Rivkin Radler who represents clients in matters relating to all aspects of FDA and DEA matters.

If the production and use of all cannabis-derived products (including recreational marijuana, medical marijuana and non-psychoactive compounds like CBD) weredecriminalized entirely, as many activists have called for, many of the unnecessary restrictions on CBD's production would immediately be lifted.

According to Beckerman:

While there are currently three competing federal bills that specifically seek to define "cannabidiol" and remove it from the Controlled Substances Act (S.683,H.R. 1635 andS.1333), if the feds would simply deschedule "marihuana" from the Controlled Substances Act, then all forms ofcannabis-- whether marijuana or industrial hemp -- and all of the constituents ofcannabis, including CBD, will be liberated from the displaced control of the DEA. Sen. Bernie Sanders filed the "Ending Federal Marijuana Prohibition Act of 2015" (S.2237) in November of 2015.

But in the meantime, Russo argues that it's important to ensure that the criminalization of pot does not spread to CBD.

"The USA is one of the only countries in the world where CBD is illegal," Russo said. "It has nothing of the features of a Schedule I drug. It's not addictive. It does not produce intoxication. It's a matter of guilt by association because of the plant from which it derives."

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