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Has your hemp or CBD business run into state compliance issues you didn’t even know existed?
Retailing industrial hemp and CBD products is being positioned as a straight forward and lucrative business for both newcomers, and those already in manufacturing or retail. While it can indeed be lucrative, navigating the hemp and CBD legal environment has grown to be increasingly more complex. This is largely a product of almost all fifty states approaching hemp and CBD sales disjointly with their own policies and enforcement cultures. Front-end work with a qualified attorney may help alleviate many of the headaches and risks associated with expanding into the hemp and CBD arena.
Whether your business is selling CBD gummies in Illinois or hemp botanical oils in Oregon, you will encounter an array of regulatory hurdles that vary from state to state.
While the hemp and CBD programs of each state are distinct, businesses should be prepared to navigate some common requirements to avoid running afoul of local laws. Many states now require external hemp and CBD manufacturers and sellers to be licensed, or at a minimum, registered.
Along with licensing or registration, state laws often mandate laboratory testing of hemp and CBD before products can legally reach consumers. Some states accept third-party laboratory test results, while in other states, officials may collect and test product samples themselves before giving sellers a green light to market. Retailers will also need to invest time in understanding local tax requirements, whether paying a straight forward sales tax, or in some cases, excise taxes. Some states may have even more complex arrangements such as paying the difference between the seller’s home state sales tax and that of the product’s destination-state sales tax.
Many states also have strict rules governing the ways in which hemp and CBD products can be marketed and sold. Some states permit CBD-infused foods, others do not. Most states also strictly regulate marketing hemp or CBD with health claims. Manufacturers and sellers of hemp and CBD products can expect to run into a slew of lesser-known regulations arising throughout the country, from packaging and labeling requirements to detailed record keeping rules.
A misconception among new retailers is assuming that state actions for failure to comply with local hemp and CBD regulations will result in a warning or a “slap on the wrist”. As states struggle to keep up with exploding demand and consumer protection, enforcement agencies are more fervently responding to violations of state laws with formal investigations and often very large fines.
Have questions related to anything you've read above or generally navigating the CBD and Hemp retail space? Feel free to connect with us using the Contact form at the bottom of the Home page or send us an email at contact@clarkespositolaw.com.
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