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Throughout Minnesota, storefronts are popping up selling hemp-based CBD products. These products include everything from lotions, tinctures, edibles, and even “bath bombs.” What is CBD and how is it different from delta-9 tetrahydrocannabinol (THC)? What is CBD derived from? Can I get in trouble for buying or selling CBD products? Can I get in trouble for crossing state lines with CBD? How can I set up a business that sells these products? These questions are broad and raise complex, fact-specific questions that require particularized solutions. This article aims to provide generalized answers pertaining to Minnesota’s new CBD legislation that will generally go into effect on January 1, 2020. 

What is CBD?

CBD is the common shorthand for the substance known as cannabidiol. CBD can be derived from hemp or marijuana. The fact that CBD can be derived from marijuana plants is very important in states where marijuana remains illegal (more on this below). THC is the active ingredient in marijuana that causes a user to feel “high”. By contrast, CBD does not cause this “high,” which is one of the reasons why, in June 2018, the US Food & Drug Administration approved the first drug containing CBD for the treatment of seizures associated with severe forms of epilepsy based partially on this fact.  That being said, CBD and THC are both present in hemp and marijuana plants. While THC is present in hemp, the concentration of THC in hemp is generally very low when compared to its concentrations in marijuana plants. 

What is the legal status of CBD in Minnesota?

To understand the legal status of CBD, one must understand the legal status of “industrial hemp,” which in turn requires an understanding of the status of marijuana/cannabis both in Minnesota and federally. Hemp and marijuana plants are cousins of each other. This is considered one of the main reasons why hemp was outlawed since the 1950s in the US, despite its widespread commercial use prior to becoming outlawed. After decades of being outlawed, the 2014 Farm Bill allowed states to create limited pilot programs to study the growth, cultivation, and marketing of industrial hemp. That 2014 Bill defined “industrial hemp” as any part of the plant Cannabis sativa L., with THC concentrations of not more than 0.3% by dry weight. In response to this bill, Minnesota adopted industrial hemp (using the same definition) as an agricultural crop that may be possessed, transported, processed, sold, or bought so long as it is grown legally in Minnesota.

The recent 2018 Farm Bill drastically expanded the scope of the 2014 bill. The 2018 Farm Bill removed hemp as a Schedule I drug and specifically defined hemp as an agricultural crop. The 2018 Bill allows states to regulate hemp within their borders and restricts states from preventing the shipment of hemp through states that choose to keep hemp illegal. Minnesota responded to this bill by passing legislation that will eventually bring Minnesota’s industrial hemp laws in line with the recent federal expansions.  

Is it legal to buy CBD products in Minnesota?

Knowing whether the CBD has been derived from industrial hemp (legal) or marijuana plants (illegal) is very important in Minnesota (and in most other states that have not legalized marijuana). It is now legal in Minnesota to possess, transport, sell, or purchase industrial hemp that is legally grown in Minnesota or in other states that have also legalized the growing of industrial hemp. This means that it is now legal to possess, transport, sell, or purchase CBD derived from industrial hemp, whether that CBD was derived from industrial hemp legally grown in Minnesota or in a different state that has legalized industrial hemp growth. 

Importantly though, the legal status of marijuana in Minnesota has not changed.  Thus, it remains illegal to grow, possess, purchase, or sell CBD that has been derived from marijuana plants (Minnesota’s medical marijuana exceptions aside). Thus, when purchasing CBD products from outside of Minnesota (or even within Minnesota), you must be sure that the CBD is derived from industrial hemp and not marijuana plants. Crossing state lines with marijuana-derived CBD is illegal under federal laws and possessing marijuana-derived CBD in Minnesota is also illegal. Thus, leave the CBD products at home when traveling in order to avoid the headache of being charged with possession of marijuana and having the difficult task of proving that the CBD you possess was legally purchased is derived from industrial hemp and not marijuana.

Is it legal to sell CBD products in Minnesota?

While it is now legal to possess, transport, sell, or purchase hemp-based CBD, there remain a wide array of non-criminal penalties that those who sell hemp-based CBD products must be aware of. This is particularly true when marketing or selling products that claim CBD has various health benefits, such as preventing illness or disease. The Food and Drug Administration (FDA) and Minnesota Board of Pharmacy (MBP) believe that such statements qualify the CBD product as a drug, which in turn requires clinical testing and approvals before a person or business is lawfully able to sell such a product.

In response, Minnesota’s new CBD legislation addresses this concern—at least for those doing business in Minnesota. The new law going into effect on January 1, 2020 sets forth specific rules regarding the sale, testing, and labeling of hemp-based CBD products. These new laws provide clarity as to the testing and labeling requirements that must be met prior to selling or marketing CBD products for human consumption. 

In Minnesota, the testing of CBD products will require proving: a) that the amount or percent of CBD contained in the product is labeled accurately; b) the product does not contain more than trace amounts of any pesticides, fertilizers, or heavy metals; and c) the product does not contain more than 0.3% THC. The labeling requirements that must be met include: 1) information about where the product was manufactured; 2) information about where the product was tested; 3) the amount or percent of CBD in the product; and 4) a statement to the effect that the product does not claim to diagnose, treat, cure, or prevent any disease and has not been evaluated or approved by the FDA, unless, of course, the FDA has actually approved that specific product. On this point, the new Minnesota law is abundantly clear, the hemp-based CBD product’s label “must not contain any claim that the product may be used or is effective for the prevention, treatment, or cure of a disease or that it may be used to alter the structure or function of human or animal bodies, unless the claim has been approved by the FDA.” 

So long as a Minnesota seller of CBD meets all the specific testing and labeling requirements, one may legally sell consumable hemp-based CBD products in Minnesota. That being said, even if one meets all of the requirements in Minnesota, the FDA (and potentially even the MDA and/or MBP) may still have the ability to take various actions against such sellers if there are any questions concerning the CBD products.

Can I grow industrial hemp in Minnesota?

Only with an appropriate license issued by the Minnesota Department of Agriculture (MDA). Currently, a person can apply for and obtain a license to grow only under Minnesota’s Industrial Hemp Pilot Program. This is not an expansive program—there were only 51 participants growing on 710 acres of land during 2018. The MDA has been instructed to implement a permanent hemp growing program that will likely expand upon the prior pilot program. By February 15, 2020, the MDA must submit a new framework for growing industrial hemp to the MN legislature. The MDA has also been granted authority to adopt rules that align with the 2018 Farm Bill. This authority terminates on June 30, 2020. Thus, the ability to obtain a license to grow industrial hemp in Minnesota will likely be expanding at some point in 2020, but what that expansion looks like remains to be seen.

What should I do if I’m interested in entering the CBD market?

The emerging nature of the CBD, hemp, and cannabis markets make them the new Wild West. The laws surrounding these markets and the new scientific discoveries being made are constantly evolving. There can be no doubt that, despite all the risks, these markets are booming and expanding. Navigating the rules and regulations at both the Minnesota and federal level are highly complex. Before wading into these waters, it is important to seek qualified counsel who knows and understands how to best protect your interests.