Category: Drug & Cosmetic Law

Gin Manufacturer Bacardi Avoids Lawsuit for Its Use of “Grains of Paradise”

A federal judge in the Southern District of Florida recently dismissed an action alleging that Bacardi’s use of a botanical called “grains of paradise” in its gin was “harmful and illegal,” holding that the statute on which the lawsuit was based was preempted by federal law. Marrach v. Bacardi U.S.A, 19-cv-23856 (S.D. Fla. Jan. 28, 2020).

The complaint alleged a violation of the Florida Deceptive and Unfair Trade Practices Act. While Plaintiff himself suffered no harm from the drink, he cited a nineteenth-century provision forbidding the adulteration of alcoholic beverages with “grains of paradise” to support his claim that Bacardi’s use of the botanical was illegal. However, Bacardi argued in its motion to dismiss that the complaint was preempted because the Federal Food, Drug and Cosmetic Act (FDCA) permits the use of “grains of paradise.”

In an opinion that did not mince words, Judge Robert N. Scola granted the motion to dismiss, opening with the observation: “Numerous class actions have greatly benefited society such as Brown v. Board of Education, In re Exxon Valdez, and In re Agent Orange Product Liability Litigation. This is not one of those class actions.” He noted that the Food Additives Amendment of 1958 granted the FDA broad authority to monitor and control the introduction of food additives, signaling Congress’s intent to prevent rules unnecessarily prohibiting access to safe food additives. Judge Scola held that the Florida statute, which criminalizes adulterating liquor with grains of paradise, frustrated this purpose and was therefore preempted because it was in conflict with federal law.

Plaintiff attempted to counter this reasoning by arguing that the 21st Amendment gave states the right to regulate liquor, thereby overriding any argument that federal law governed in this matter. Judge Scola disagreed. As an initial matter, “the 21st Amendment does not in any way diminish the reach of the Supremacy Clause,” and therefore has neither the intent nor effect of undermining federal preemption of inconsistent state law. Moreover, Judge Scola noted that other courts have found similar state law prohibitions on food additives to be preempted by the FDCA.

Like previous cases we have covered on this blog, the decision underscores the FDA’s broad regulatory authority over food and beverage products which cannot be circumvented by plaintiffs simply by bringing claims under state law. In doing so, it provides important assurance to manufacturers of such products that their reliance on federal law will not be undercut by arcane state provisions.

© 2020 Proskauer Rose LLP.

For more on food & beverage authority, see the National Law Review Biotech Food & Drug section.

Can the DOJ Really Prosecute State-Legal Marijuana Entities?

On Feb. 10, 2020, as West Virginia companies were finalizing applications for medical marijuana permits, President Donald J. Trump made statements that caused several companies to reconsider filing. President Trump said he is “empowered to ignore the congressionally approved medical cannabis rider [to the Omnibus Spending Bill], stating that the administration ‘will treat this provision consistent with the president’s constitutional responsibility to faithfully execute the laws of the United States.’”[1]

Both existing medical marijuana companies and those interested in applying for permits want to know whether this assertion of power would be justified and if it would affect their ability to do business going forward. That is: Has the executive branch been empowered to ignore the congressional spending power given to Congress in the Constitution? If so, from where does that power derive? Further, when two Congressional Acts conflict, what is the executive “empowered” to do, if anything?

Under Article II, Section 3, of the Constitution, “The executive power shall be vested in a president . . . [who] shall take care that the laws be faithfully executed.”[2] By assigning the executive power to see that laws be “faithfully executed” and assigning Congress with “all legislative powers” granted by the Constitution, the founders limited the executive to only enforce the laws promulgated by Congress.[3] Thus, the executive branch is given limited power, which “must stem either from an act of Congress or from the Constitution itself.”[4] Under the Controlled Substances Act (CSA), Congress has given the executive expressed power to enforce the laws identified under the CSA. This power, however, is limited to Congressional authority. Thus, the power can be suppressed or eradicated by Congress at will. When this occurs, the executive has little to no ability to enforce the law.[5]

In 1970, Congress enacted the CSA to regulate specific drugs deemed at risk of abuse and dependence.[6] Since then, cannabis has been declared by Congress to be a Schedule I drug, meaning there is no acceptable medical use, establishing its outright ban. To support the banning of cannabis, Congress asserted, “Controlled substances [like cannabis] have a substantial and detrimental effect on the health and general welfare of the American people.” Until 2014, Congress supported the full enforcement of the CSA through Omnibus Spending Bills.

However, in 2014, in public law No. 113-235, Section 38, in the Rohrabacher-Farr Amendment, Congress expressed its will to limit the DOJ’s (executive’s) power to enforce the CSA by restricting the DOJ’s use of congressionally approved funds therein. Specifically, the amendment prevented funds made available under the spending bill “to be used to prevent [32 States and the District of Columbia] from implementing their own state laws that authorize the use, distribution, possession, or cultivation of medical marijuana.” In so doing, Congress effectively removed the DOJ’s power to enforce the CSA against state legal entities.

In addition to the question of enforcement authority by the executive, there are also questions regarding whether Congress was endowed with the power to regulate the cultivation, processing, or sale of drugs generally. In our limited federal government model, in order for Congress to create a law, it must have been given the power to act by the Constitution.[7] There are two essential constitutional provisions typically relied upon to justify the vast majority of our laws, which are both found in Article I, Section 8 of the Constitution.[8] The first is the power to tax and spend for the “general welfare” of the people. The other is the power to regulate interstate commerce. The founders feared the power to tax and spend for the general welfare had the potential to be broadly construed, and they discussed at length how the General Welfare Clause should be interpreted narrowly.[9] 

In other words, absent an enumerated power listed in Article I, Section 8 or an amendment to the Constitution, Congress has no constitutional power to act. Some contemporary examples highlight the means by which Congress has been able to regulate such vices when there is no enumerated constitutional power to do so. For example, when Congress outlawed the sale of alcohol during the prohibition era, it could not do so based on the language of the Constitution. Rather, Congress had to amend the Constitution with the ratification of the 18th Amendment in 1919. Congress had no such constitutional authority to ban alcohol; it had to create a new power to enact prohibition. Likewise, when the federal government wanted to enact a federal minimum drinking age of 21, it knew it could not create a law mandating the restriction, because no such constitutional power exists. Rather, Congress used the General Welfare Clause by conditioning receipt of federal highway funds on a state’s adoption of the 21-year age limit.[10] Congress did not create a national drinking age; it just provided a carrot to trigger state compliance.[11] 

Despite this legislative history, the Supreme Court found Congress has the authority to enact the CSA pursuant to the Commerce Clause.[12] Specifically, in Raich, California’s Compassionate Use Act authorized limited marijuana use for medicinal purposes, and respondents Raich and Monson, who were California residents, both used doctor-recommended marijuana for serious medical conditions.[13] After federal Drug Enforcement Administration (DEA) agents seized and destroyed all six of Monson’s cannabis plants, respondents brought this action seeking injunctive and declaratory relief prohibiting the enforcement of the federal CSA to the extent it prevented them from possessing, obtaining, or manufacturing cannabis for their personal medical use.[14]  Respondents argued enforcing the CSA against them would violate the Commerce Clause and other constitutional provisions.[15] The district court denied the respondents’ motion for a preliminary injunction, but the Ninth Circuit reversed, finding they had “demonstrated a strong likelihood of success on the claim that the CSA is an unconstitutional exercise of Congress’ Commerce Clause authority” as applied to the intrastate, noncommercial cultivation and possession of cannabis for personal medical purposes.[16] On review, the Supreme Court vacated the Ninth Circuit and reinstated the district court’s ruling.[17] It held Congress was acting within its Commerce Clause power in enacting the CSA.[18] Whether that holding would be revisited is a question many are currently asking.

[1] Kyle Jaeger, Trump Budget Proposes Ending State Medical Marijuana Protections and Blocking DC From Legalizing, Marijuana Moment, (February 10, 2020) https://www.marijuanamoment.net/trump-budget-proposes-ending-state-medic….

[2] The Constitution enumerates few powers to the executive.  These include: power to veto bills passed by Congress—art. I, § 7, cls. 2 & 3; power to write checks pursuant appropriations made by law—art. I, § 9; military power as commander in chief—art. II, § 2, cl. 1; pardon power—Id.; power to make treaties, with advice and consent of the Senate—art. II, §2, cl. 2; power to nominate ambassadors, federal judges, and other public officers, with advice and consent of the senate—Id.; power to make recess appointments—art. II, § 2, cl. 3; and power to convene and adjourn both houses of Congress—art. II, § 3. The Constitution also imposes duties on the president, which the president has power to implement. These include: duty to preserve, protect and defend the Constitution—art. II, § 1; duty to advise Congress on the state of the union—art. II, § 3; duty to receive ambassadors and other public ministers—Id.; duty to faithfully execute the law passed by Congress—Id.; and duty to commission officers of the United States—id.

[3] See Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579, 587-588 (1952).

[4] Id. at 585. 

[5] See id., at 602 (Frankfurter, J. concurring) (stating that “[i]t cannot be contended that the president would have had power” when “Congress explicitly negated such authority in formal legislation.”  Thus, “Congress has expressed its will to withhold power from the president”).

[6] Joanna R. Lampe, Cong. Research Serv., R45948, The Controlled Substances Act (CSA): A Legal Overview for the 116th Congress Summary (2019).

[7] Andrew Nolan, et al., Cong. Research Serv., R45323, Federalism-Based Limitations on Congressional Power: An Overview 4 (2018).

[8] The specific provisions stated within U.S. Const. art. I. § 8 are: “The Congress shall have power To lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defence and general welfare of the United States; but all duties, imposts and excises shall be uniform throughout the United States;” and “to regulate commerce with foreign nations, and among the several states, and with the Indian Tribes[.]” 

[9] Prior to the ratification of the Constitution, Alexander Hamilton, largely known as the leading advocate for a strong federal government, provided that “[t]his specification of particulars [the 18 enumerated powers of Article I, Section 8] evidently excludes all pretension to a general legislative authority, because an affirmative grant of special powers would be absurd as well as useless if a general authority was intended.”[9]The Federalist 83 (Alexander Hamilton) (emphasis added); later Hamilton would take a more expansive view on the clause. See Hamilton, Alexander, (5 December 1791) “Report on Manufactures” The Papers of Alexander Hamilton (ed. by H.C. Syrett et al.; New York and London: Columbia University Press, 1961–79).James Madison, another key Federalist, said if Congress could do anything it wanted to promote the general welfare, then it “would be a metamorphosis of the Constitution into a character which there is a host of proofs was not contemplated by its creators.”[9] Letter from James Madison to James Robertson, Jr., (20 April 1831), National Archives, Founders Online, https://founders.archives.gov/documents/Madison/99-02-02-2332 (last updated September 29, 2019).

[9] See South Dakota v. Dole, 483 U.S. 203, 211-12 (1987).

[10] See id.

[11] Something to consider today is Congress’ recent act to raise the federal age of tobacco use to 21. Rather than attempting to connect the minimum age to a constitutional authority like the prior examples, it appears Congress outright mandated it to the states. This demonstrates that, over time, Congress feels it has gotten stronger as constitutional protections have weakened.

[12] Gonzales v. Raich, 545 U.S. 1 (2005).

[13] Id. at 6-7.

[14] Id. at 7.

[15] Id. at 8.

[16] Id.

[17] Id. at 9.

[18] Id. at 22.

© 2020 Dinsmore & Shohl LLP. All rights reserved.

For more on marijuana businesses, see the National Law Review Biotech, Food  & Drug law section.

The 2019 Honig Act Means New Obligations for New Jersey Employers Around Cannabis at Work

Employers cannot afford to ignore the direct impact of the 2019 amendments to the law permitting legal medicinal marijuana use in New Jersey. Among the most important areas of concern, employers must be prepared to (1) create policies that will comply with federal, state and local laws, as well as maintain a safe workplace and (2) respond to a potential increase in positive drug tests and the resultant challenges to any employer action taken in response to a positive test result (e.g., denial of employment for an applicant or termination of the employment of a current employee).

New Jersey’s former Compassionate Use of Medical Marijuana Act (CUMMA) contained language stating:

[N]othing in [CUMMA] shall be construed to require… an employer to accommodate the medical use of marijuana in any workplace. N.J.S.A. 24:6I-14.

On July 2, 2019, Governor Murphy signed into law the Jake Honig Compassionate Use Medical Cannabis Act, N.J.S.A. 24:6I-2, et seq. (Honig Act), which replaced CUMMA. The revised employment law provisions of the Honig Act create job protections. The above-cited language from CUMMA changed, and the Honig Act provides as follows:

It shall be unlawful to take any adverse employment action against an employee who is a registered qualifying patient based solely on the employee’s status as a registrant with the commission [i.e., the Cannabis Regulatory Commission established pursuant to the law].

The Honig Act defines “adverse employment action” as “refusing to hire or employ an individual, barring or discharging an individual from employment, requiring an individual to retire from employment, or discriminating against an individual in compensation or in any terms, conditions, or privileges of employment.” N.J.S.A. 24:6I-3. State regulations were adopted to support CUMMA (N.J.A.C. 8:64-1 et seq.) but no new regulations were promulgated in furtherance of the Honig Act.

The patient/employee-friendly provision moves New Jersey into the group of states with medical marijuana laws that expressly provide employment law protections for medical marijuana users (e.g., Arizona, Arkansas, Connecticut, Delaware, Illinois, Maine, Minnesota, New York, Nevada, Oklahoma, Pennsylvania, Rhode Island and West Virginia).

The Honig Act establishes a procedure employers must follow when an employee tests positive for marijuana. If an employee (or prospective employee) tests positive for cannabis, the employer is required to (1) provide written notice of the right to provide a valid medical explanation for the test result and (2) offer an opportunity to present a valid medical explanation for the result. N.J.S.A. 14-6I-9.

The employee or applicant has three (3) working days after receipt of the employer’s written notice to explain the result or request a retest of the original sample (at the employee’s expense). The Act does not define “working days.” A valid explanation for the positive test result may include an authorization for medical cannabis issued by a health care practitioner or proof of registration with the medical marijuana commission.

If an employee demonstrates she is a valid medical marijuana user, employers will not be permitted to use that alone as a basis to take adverse employment action, unless the employer can demonstrate that one of the federal exemptions applies.

The Honig Act permits employers to take adverse action if an employee possesses or uses an intoxicating substance during work hours, or if such use would require an employer to commit any act that would cause the employer to be in violation of federal law.

“Cannabis” has the meaning given to “marijuana” in section 2 of the New Jersey Controlled Dangerous Substances Act, N.J.S.A. 24:21-2. The NJ Controlled Dangerous Substance Act includes cannabis as a Schedule I(e) hallucinogenic that has a high potential for abuse, has no accepted medical use in treatment in the United States, or lacks accepted safety for use in treatment under medical supervision. Accordingly, we assume “intoxicating substances” includes medical marijuana as it’s used in the Honig Act.

Nothing in the Honig Act requires an employer to commit any act that would cause the employer to be in violation of federal law, lose a licensing-related benefit pursuant to federal law, or lose a federal contract or federal funding. For example, most federal contractors are required to comply with the federal Drug-Free Workplace Act (DFWA), which precludes the possession or use of controlled substances at work sites. 41 U.S.C. §8101(a)(5)(B).

Future lawsuits surrounding marijuana use are likely to be focused on the types of reasonable accommodations employers should make and what jobs are too safety-sensitive to permit an accommodation for medical marijuana use. Due to the Honig Act’s infancy, it is not clear if New Jersey courts will follow precedent from other states imposing a burden on the employer to engage in an interactive process with the employee to determine if there are medical alternatives that are equally effective, and the use of which would not violate company policy.

In some other states, when there are no equally effective alternatives, the employer bears the burden of proving that the use of a medication would cause an undue hardship to the employer’s business to justify the employer’s refusal to make an exception to an anti-drug policy. In addition, the use of medical marijuana may be for an underlying condition meeting the definition of a disability, a condition that affords job protections, including the need to engage in the interactive process seeking to reach a reasonable accommodation.

For example, in Massachusetts, an employer may be able to show an undue hardship exists where accommodating the medical marijuana use would impair the employee’s performance of her work; pose an unacceptably significant safety risk to the public, the employee or fellow employees; or violate an employer’s contractual or statutory obligation and thereby jeopardize its ability to perform its business. We do not yet know how New Jersey will interpret what constitutes an undue hardship in accommodating an employee’s medical marijuana use.

On March 27, 2019, New Jersey’s Appellate Division, the second-highest court, issued an unpublished opinion in Wild v. Carriage Funeral Holdings, Inc. et al., A-3072-17T3 (March 27, 2019). Mr. Wild appealed dismissal of his lawsuit against his former employer alleging various Law Against Discrimination (LAD) violations and common-law defamation. His lawsuit claimed his employer discriminated against him for his use of medical marijuana, which he used as part of his cancer treatment. Both parties pointed the Appellate Division to the fact that “nothing” in CUMMA requires an employer to accommodate a medical marijuana user. Based on that the defendants argued, the plaintiff’s claims under the LAD could not go forward.

The Wild court analyzed whether the plaintiff pleaded a case under the LAD; it did not weigh and analyze proofs. The court concluded the plaintiff set forth allegations necessary to his cause of action and the matter was reversed and remanded for further proceedings. The Appellate Division held CUMMA’s declaration should not be construed to “require” an accommodation, but does not mean such a requirement might not be imposed by other legislation. N.J.S.A. 24:6I-14. Further, the court concluded that CUMMA’s refusal to require an employment accommodation for a user does not mean CUMMA immunizes employers from obligations already imposed elsewhere. Essentially, CUMMA does not limit the LAD by permitting an employer’s termination of a cancer patient’s employment by discrimination without compassion.

The Appellate Division rejected the argument CUMMA and the LAD are in conflict because CUMMA states that “nothing in this act shall be construed to require … an employer to accommodate the medical use of marijuana in any workplace.” N.J.S.A. 24:6I-14. CUMMA intended to cause no impact on existing employment rights; CUMMA neither created new employment rights nor destroyed existing employment rights. CUMMA imposes no burden on defendants, and negates no rights or claims available to a plaintiff under the LAD.

The New Jersey Supreme Court agreed to review the case and heard oral argument on February 4, 2020. The State Supreme Court is considering the impact of the Honig Act’s amendments providing employment protections to medical marijuana users. Because the Honig Act was passed after the events leading to Wild’s termination, it is unclear how it will affect his case on appeal. The Court may address whether the Honig Act, as amended, grants employees a private right of action, and, if so, whether the amendments are retroactive. We anticipate the Supreme Court’s decision within the next three to six months.

While the Honig Act grants employee protections, it is likely that employees still will seek to bring suits under the LAD as a continued source of protection because, unlike the Honig Act, the LAD allows the possibility for punitive damages and contains a fee-shifting provision.

For now, employers should, at a minimum, make sure they comply with the notice and communication provisions in the Honig Act when an employee/applicant tests positive.

© 2020 Wilson Elser

For more on marijuana and employment see the National Law Review Labor & Employment section.

JUUL Faces New Lawsuit Over Marketing Tactics

Marketing to youth has long been part of the tobacco industry’s strategy to keep a steady influx of customers. However, since the Joe Camel lawsuit in 1997, tobacco companies have increasingly been under fire for targeting underage consumers. Most disavow these intentions, but from time to time, a company will draw attention to these kinds of tactics. Most recently, the vaping pioneer, JUUL, has been pinpointed.

Despite assertions that they had never marketed their products to children or teenagers, a recent New York Times article reports that JUUL purchased ad space on youth-centered websites like Nickelodeon, the Cartoon Network, Seventeen magazine, and educational sites for students as young as middle school.

This report highlights a new lawsuit filed by the Massachusetts attorney general, Maura Haley, on February 12, 2020. The suit indicates that JUUL was targeting underage demographics during its early launch period between June 2015 and early 2016.

Efforts to target this demographic were deliberate according to the lawsuit. JUUL rejected an initial marketing proposal that aimed to attract adult smokers by using vintage 1980s technology. Instead, they produced a campaign featuring youthful models and sought to enlist millennials, Gen Z celebrities, and Instagram influencers to increase appeal to younger consumers.

“This is the first real window into JUUL’s original marketing plan, and what it did to target our kids — target our kids. That’s what we’re talking about,” Healey said at a press conference. “JUUL’s own documents show that the company intentionally chose fashionable models and images that appeal to young people for its ads. They tried to recruit celebrities and social media influencers like Miley Cyrus and Kristen Stewart to promote its products. It purchased ad space and websites for kids, such as Nickelodeon, Seventeen, and Cartoon Network. It’s sold and shipped e-cigarettes to underage kids in Massachusetts through its website. And it worked.”

Equally – if not more – troubling are charges that these ads were placed in paid advertising positions across a wide range of websites intended for underage audiences. Sites include:

Educational sites: basic-mathematics.com, mathplayground.com, mathway.com, onlinemathlearning.com, and purplemath.com, socialstudiesforkids.com, and schcollegeconfidential.com

Gaming sites for young girls: dailydressupgames.com, didigames.com, forhergames.com, games2girls.com, girlgames.com, and girlsgogames.com

General game and craft sites for young children: allfreekidscrafts.com, hellokids.com, and kidsgameheroes.com

The report also alleges that JUUL had given e-cigarettes to consumers who provided high school students’ email addresses.

Campaign for Tobacco-Free Kids, among other national anti-smoking organizations applauded the lawsuit. Matthew Myers, president of the organization, commented that “What is remarkable is the extent to which a single company, drove this train and the extent to which the decisions of that company were knowing, conscious and intentional with disregard for the health and safety of our kids.”

JUUL executives have yet to address the specific charges in the complaint. Company spokesperson Austin Finan has only commented that, “While we have not yet reviewed the complaint, we remain focused on resetting the vapor category in the U.S. and earning the trust of society by working cooperatively with attorneys general, regulators, public health officials, and other stakeholders to combat underage use and transition adult smokers from combustible cigarettes.”

Public sentiment has turned against JUUL as more information comes to light about the dangers of vaping and concern over what has been called “an epidemic” of underage vaping by the federal government. According to a 2019 CDC study, e-cigarette use was reported at 27.5% among high school students and 10.5% among middle school students. The company has strongly rejected claims that it has focused its marketing on youth and maintains its position that its sole goal is to help adult smokers transition to a safer option.

 

COPYRIGHT © 2020, STARK & STARK

For more on tobacco/vape product regulation, see the National Law Review Biotech, Food & Drug Law section.

Smoking Cannabis Legally in Illinois: What’s an Employer to Do?

On January 1, 2020, Illinois joined the growing number of states that allow the sale and use of marijuana for personal and recreational use. The law has been so popular that most of the cannabis dispensaries in Illinois sold out of their supply within the first week.

So, what now for employers in Illinois? May they tell workers who get stoned on a break that they must leave the workplace? Can they still maintain a drug-free workplace? Can they still do drug testing? The answer to all three questions is yes; however, as explained below, there are important steps that an employer must take should it decide to discipline an employee. While there will be much to work out as Illinois navigates its new cannabis laws, employers may maintain the same standards at work that they had before the law became effective. But they need to know and follow the new law’s requirements.

Parameters of the New Law

On January 1, 2020, the Cannabis Regulation Tax Act (CRTA), 410 Ill. Comp. Stat. Ann. 705/10 et seq., became law, permitting personal and recreational cannabis use for all individuals 21 years of age or older. Under the CRTA, Illinois residents may possess 30 grams of cannabis flower, 500 milligrams of a THC-infused cannabis product and 5 grams of cannabis concentrate for personal use.

The CRTA will not be interpreted to diminish workplace (includes buildings, real property and parking lots under control of the employer and used by the employee to perform job duties) safety. The act identifies and allows employers to adopt certain cannabis policies relating to use, consumption, storage and impairment to further protect employee safety, such as:

  • Employers are allowed to adopt a reasonable zero-tolerance policy for its employees or require a drug-free workplace.
  • Employers are permitted to adopt employment policies relating to drug testing, smoking, consuming, storing and using cannabis while an employee is at the workplace, performing job duties or on call.
  • Employers may prohibit an employee from using cannabis or from being under the influence of cannabis while at the workplace, performing job duties or on call.
  • Employers may undertake disciplinary measures or terminate an employee’s employment for violating a reasonable workplace drug policy.

A Fine Line

One of the trickier aspects for Illinois employers will be making a determination of when an employee is impaired or under the influence of cannabis. The law provides that an employer can express a “good faith belief” that the employee manifests certain articulable symptoms that decrease or diminish the employee’s job performance and responsibilities. The CTRA identifies a number of symptoms an employer may consider in finding an employee is impaired or under the influence, such as “symptoms of the employee’s speech, physical dexterity, agility, coordination, demeanor, irrational or unusual behavior, or negligence or carelessness in operating equipment or machinery; disregard for the safety of employee or others, involvement in any accident that results in serious damage to equipment or other property; disruption of a production of manufacturing process; or carelessness that results in any injury to the employee or others.”

When an employer takes any action against an employee for being under the influence of cannabis, the CTRA requires that an employee be provided a reasonable opportunity to challenge the basis of an employer’s determination. Employers should notify an employee in writing of its determination and invite the employee to state their case as to why the employer’s determination may be incorrect before it takes an adverse action against the employee. All activity in the appeal process should be documented.

Employers’ Rights and Liability

Some good news for employers is that the CTRA does not create or imply a cause of action against an employer for the actions taken relating to an employer’s reasonable workplace drug policy. IL LEGIS 101-593 (2019), 2019 Ill. Legis. Serv. P.A. 101-593 (S.B. 1557) (WEST). Actions taken relating to an employer’s reasonable drug policy include subjecting an employee or applicant to a drug and/or alcohol test, nondiscriminatory random drug testing, disciplining employees, termination of employment or withdrawing an offer for employment because of a failed drug test. The amendments to the CTRA now expressly limit an employer’s liability for disciplining or terminating employment resulting from a failed drug test. Further, the amendments to the CTRA clarify and reinforce an employer’s ability to administer pre-employment and random drug testing policies.

Employers must be careful, however, to not take action against an employee when the use of cannabis is after work hours. The Right to Privacy in the Workplace Act was amended, effective January 1, 2020, 820 Ill. Comp. Stat. Ann. 55/5, to specifically prohibit employers from terminating employment because of an employee’s personal or recreational use of lawful products (including cannabis) outside of the workplace during nonworking, off-call hours. In the event an employee is disciplined or employment is terminated because of cannabis use outside of the workplace during off-duty hours, an employee may bring a discrimination cause of action under the Right to Privacy in the Workplace.

It is anticipated that there will be tension between individuals contesting an employer’s determination that he/she was impaired or under the influence of cannabis at the workplace with the contention that any use was during off-duty hours. For instance, what if an employee used cannabis four hours before starting a shift? The employee may claim protection under the Right to Privacy in the Workplace, whereas the employer may argue the employee was nonetheless under the influence in the workplace. This tension is exacerbated by the fact that there is currently no test to determine how recently an individual has used, consumed or smoked cannabis. Further, there is no test that determines how high or low cannabis levels are in an individual.

Illinois employers will need to understand and follow the CTRA laws and Right to Privacy in the Workplace laws. Employers should prepare specific written policies to address these new issues.

© 2020 Wilson Elser

ARTICLE BY David M. Holmes of Wilson Elser Moskowitz Edelman & Dicker LLP, with assistance from Gabriela C Herrera (Law Clerk-Chicago).
For more on the intersection of recreational cannabis & employment law, see the National Law Review Labor & Employment law section.

FDA Issues Warning Letters, Cautions Consumers on Unapproved CBD Products

Nearly a year after the 2018 Farm Bill legalized hemp nationwide, the legal status of one of its most popular products, cannabidiol (CBD), is becoming clearer.

On Nov. 25, the U.S. Food and Drug Administration (FDA) issued a revised consumer update regarding unapproved CBD products and issued a new round of warning letters to CBD retailers selling products in violation of the Food, Drug and Cosmetics Act (FDCA). The agency also warned of potential health risks and safety concerns associated with numerous unapproved CBD products. The FDA publicized its determination that CBD cannot be considered as Generally Recognized as Safe (GRAS) under federal law, foreclosing one of the regulatory paths available to the FDA for allowing CBD as a food ingredient.

These recent actions underscore the FDA’s interpretation that food products, unapproved drugs, dietary supplements and cosmetics containing CBD sold in interstate commerce often violate the FDCA.

FDA warning letters

In this recent round of enforcement efforts, the FDA issued fifteen warning letters to CBD companies selling a variety of products in interstate commerce, including balms, capsules, oils, tinctures, lotions, gummies, chews and sprays that were marketed for use by adults, children and animals.

The letters outline the FDA’s legal analysis which concludes that the products at issue were marketed in interstate commerce as unapproved new drugs, misbranded drugs, adulterated foods or improperly labeled as dietary supplements in violation of the FDCA. The crux of this analysis is that CBD is an active ingredient in an approved drug as well as other drugs under clinical investigation.

These products triggered FDCA violations in a variety of ways:

  • Unapproved new drugs – CBD products making claims to prevent, diagnose, mitigate, treat or cure serious diseases, such as cancer, AIDS, schizophrenia and diabetes.
  • Misbranded drugs – CBD products marketed as drugs that also fail to bear adequate directions for use.
  • Dietary supplement labeling – Improperly using the label “dietary supplement” when it does not meet the definition under the FDCA.
  • Adulterated human food – CBD products marketed as conventional human foods and contain a drug approved by the FDA.

Each warning letter identified an “unapproved new drug” violation with products making aggressive health claims surrounding cancer or other similar serious conditions, suggesting the FDA continues to focus its efforts at “egregious, over-the-line” health claims as referenced by former FDA Commissioner Scott Gottlieb.

FDA consumer update

The FDA simultaneously issued a consumer update, signaling that unapproved CBD products remain prohibited under the FDCA. The agency noted it has seen only limited data about CBD safety and that some of the data points to risks that should be considered before taking CBD.

The FDA warned that unapproved CBD products may pose safety risks and make unproven health claims. The FDA fears consumers may put off getting proper diagnosis, treatment or supportive care due to unsubstantiated claims associated with CBD products.

Additionally, the FDA noted the information it currently has “underscores the need for further study and high quality, scientific information about the safety and potential uses of CBD.” The consumer update further notes:

  • No FDA evaluation of CBD products – There has been no FDA evaluation of whether unapproved CBD products are effective for their intended use, what the proper dosage might be, how they could interact with FDA-approved drugs or whether they have dangerous side effects or other safety concerns.
  • Potential health risks – Specifically, the FDA also identified some of the potential risks associated with using CBD products, including liver injury and male reproductive toxicity. Other potential health risks remain unknown to date, including the effects of sustained daily usage by adults as well as the effects on children, breastfed newborns and developing fetuses.
  • Side effects – Other side effects include drowsiness, gastrointestinal distress and increased irritability and agitation.
  • Unregulated manufacturing process and product safety is unknown – The manufacturing process of unapproved CBD drug products has not been subject to FDA review and the effects of CBD containing potentially unsafe levels of contaminants, such as pesticides and heavy metals, are unknown.

CBD remains a legal product

Despite this recent action from the FDA, hemp-derived CBD remains a legal product under federal law, but it must be marketed without violating the FDCA. Additionally, the warning letters and consumer update highlight that the FDA is targeting its enforcement to companies engaged in interstate commerce and making egregious, unsubstantiated health claims.

As is the case with other cannabis issues, the disconnect between state and federal law means companies are finding ways to bring products to market while limiting their risk. However, stakeholders must be aware of the risks under state and federal law when marketing any product containing CBD.

Expect more information from the FDA soon

The consumer update also notes that the FDA is “evaluating the regulatory frameworks that apply to certain cannabis-derived products that are intended for non-drug uses, including whether and/or how the FDA might consider updating its regulations, as well as whether potential legislation might be appropriate.” More information will be coming soon from the FDA, but it may be awhile before CBD can be marketed legally as a food ingredient or dietary supplement under federal law.

Copyright © 2019 Godfrey & Kahn S.C.

More on FDA CBD Regulation via the National Law Review Biotech, Food & Drug law page.

HHS HIV Drug Lawsuit: Setting Precedent for Other High Priced Medications or Government Collaborations?

On November 6, 2019, the bonds between the U.S. government and pharmaceutical companies were stretched when the U.S. Department of Health and Human Services (“HHS”) filed a patent infringement lawsuit against Gilead Sciences in Delaware federal court regarding Gilead’s popular HIV drugs, Truvada® and Descovy®.  HHS rarely sues for patent infringement.  In fact, the U.S. government and pharmaceutical companies typically have collaborative relationships.  For example, Gilead provided the Center for Disease Control and Prevention (“CDC”) with free drugs for government experiments to expand treatment for certain diseases.  So, what happened?

In 2004, Gilead—after receiving patent protection—began selling Truvada® to treat people already infected with HIV.  The CDC later investigated whether Truvada® could be used as a prophylactic to prevent HIV in monkeys and received patent protection for four key patents that “generally cover processes for protecting a primate or human host from a self-replicating infection by an immunodeficiency retrovirus, including HIV.”  (Complaint, ¶ 196).  Specifically, the claimed inventions provide protection “by a combination of nucleoside reverse transcriptase inhibitor, such as FTC, and a nucleotide reverse transcriptase inhibitor, such as tenofovir, or esters/prodrugs of tenofovir, such as TDF or TAF.” Id. Gilead donated the FTC, TDF, and tenofovir used in the CDC’s research, but its personnel do not appear to have otherwise assisted in the research.

The government alleges that first, it helped develop the drug with Gilead, and second, that Gilead “repeatedly refused to obtain a license from CDC to use the patented regimens” and “profited from research funded by hundreds of millions of taxpayer dollars[,]” without paying any royalties to the CDC.  HHS seeks damages and royalties for Gilead’s alleged infringement.  Many speculate that HHS’s motivation goes beyond royalties to something deeper: to increase access and decrease the price of Truvada® and Descovy® for pre-exposure prophylaxis (“PrEP”).

One goal identified by the Trump administration is to eradicate new cases of HIV and AIDS by 2030.  In fact, the administration requested $291 million for this initiative in May 2019. Truvada® and Descovy® play a critical role in PrEP.  PrEP is stated to be a highly-effective HIV prevention strategy that may play a vital role in ending the global HIV and AIDS epidemic.  However, PrEP is not as widely used as it could be.  Some allege that the limited use is related to limited access to the drugs—which in turn could be due in part to the high cost.  In the United States, Truvada® costs roughly $1,782 a month.[1]  Some have speculated that this suit is part of the Trump administration’s initiative to lower PrEP prices and end the HIV epidemic in the United States.  But is there more?

Political anger and public outcry over drug costs has increased over the years.  Three years ago, a national controversy erupted over the price of EpiPen injectors manufactured by Mylan pharmaceuticals.  In 2008, EpiPens cost about $100.  In 2016, that price rose to $600.  This price increase outraged customers and put the company at the forefront of the debate over drug costs.  Public outrage, coupled with a whistleblower lawsuit, led Mylan to finalize a $465 million settlement with the U.S. Justice Department over claims that it overcharged the government for EpiPens.

The EpiPen controversy, coupled with the HHS lawsuit against Gilead, may signal to pharmaceutical companies across the country that the U.S. government is ready and willing to step in and demand lower drug prices.  Accordingly, this case may be an important bellwether and should be followed by those with interests in these areas.

[1] Descovy® is new to the market, so the average monthly cost is unknown.

©1994-2019 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.

ARTICLE BY Aarti Shah and  Kara E. Grogan of Mintz.
For more on drug patents, see the National Law Review Intellectual Property law page.

What to Know About FDA’s Recent Statements on CBD

Last week FDA issued a public release on CBD titled, “What You Need to Know (And What We’re Working to Find Out) About Products Containing Cannabis or Cannabis derived Compounds, Including CBD.”

The FDA document does not break much new ground, though it emphasizes again FDA’s concern with the safety of CBD, some of which comes from FDA’s review of the CBD-based epilepsy drug Epidiolex. FDA does not believe it has enough information about certain aspects of CBD, such as what happens if someone takes CBD daily for sustained periods. In addition, FDA specifically identifies as a potential harm the use of CBD with alcohol because of the increased risk of sedation and drowsiness, which can lead to injuries. FDA, in addition to issuing this document, sent 15 warning letters to companies marketing CBD products that FDA views as unapproved drugs primarily because of the drug like claims made for such products.

FDA appears to be on a path toward considering a regulation to allow the marketing of CBD in conventional foods or as a dietary supplement. This approach will likely take a long time—perhaps some 2-4 years—absent legislative changes that do not appear likely in an election year. In the meantime, FDA continues to view putting into interstate commerce a food to which CBD has been added or to market CBD as or in a dietary supplement as a violation of the  Federal Food, Drug, and Cosmetic Act (FD&C Act).

© 2019 McDermott Will & Emery

For more on the FDA and CBD regulation, see the National Law Review Biotech, Food and Drug Law section.

FDA Issues Warnings to 15 Companies for Illegally Selling Products Containing CBD

On November 25, 2019, the U.S. Food & Drug Administration (“FDA”) published a press release, published a revised Consumer Update, and announced the issuance of new warning letters to 15 companies for illegally selling and marketing various products containing hemp-derived cannabidiol (“CBD”).

To quote the FDA:

“Today’s actions come as the FDA continues to explore potential pathways for various types of CBD products to be lawfully marketed.  This includes ongoing work to obtain and evaluate information to address outstanding questions related to the safety of CBD products, while maintaining the agency’s rigorous public health standards.  The FDA plans to provide an update on its progress regarding the agency’s approach to these products in the coming weeks.”

In the meantime, however, these steps appear to be an effort to stem the tide of proliferation of CBD products on the market – and the growing consumer demand for those products.  It is great that the FDA intends to provide an update on its efforts to develop a regulatory pathway for CBD products under the Federal Food Drug & Cosmetic Act (“FD&C Act”).  But, it is frustrating that the FDA still refuses to identify a set date for that update – or, to publicly commit to a meaningful resolution of the regulatory uncertainty that persists for CBD products today.

A Reminder: Don’t Make Unsubstantiated Claims

As made clear in prior FDA warning letters – and the 15 letters released on November 25th – there continues to be significant regulatory risk in the labeling and marketing of CBD products for sale in interstate commerce.  However, the FDA’s enforcement efforts still appear to be focused on companies and products that engage in the most egregious violations of the FD&C Act – including those making disease claims and those marketed to (or for use by) children and other vulnerable populations.

Among other things, this round of warning letters address the following major issues:

  • Marketing products for use by children and other vulnerable populations.
  • Including a supplements facts panel on product labels, which indicated the company’s intention to market the product as a dietary supplement.
  • Marketing products that are intended for use in the cure, mitigation, treatment, or prevention of diseases and/or intended to affect the structure or any function of the body.
  • Posting materials on the companies’ social media websites that link to a third party’s content indicating that CBD can be used in the cure, mitigation, treatment, or prevention of diseases and/or intended to affect the structure or any function of the body.
  • Misbranding products intended to be marketed as drugs.
  • Marketing human and animal food containing CBD in interstate commerce.
  • Marketing unapproved new animal drugs by selling pet products containing CBD that are intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease in animals and/or intended to affect the structure or any function of the body of animals.

Many of these issues have been referenced in prior actions and warning letters released by the FDA.  By now, it should be clear to all market participants that it is illegal (and irresponsible) to market your CBD products as a cure for cancer, Alzheimer’s, diabetes, or other medical diseases, ailments, or conditions.  CBD companies should heed this clear warning and stop the practice.  Just don’t do it.

The New Concerns

This round of enforcement action seems to signal that the FDA is taking a more aggressive stance on its view of CBD health and safety issues.  The press release and the consumer update both indicate that the FDA has broad safety concerns about CBD products, that there exist many unanswered questions and data gaps about CBD toxicity, and that some of the data available to the FDA raises serious concerns about potential harm from CBD.

The consumer update contains troubling statements like “CBD has the potential to harm you, and harm can happen even before you become aware of it,” and “CBD can cause liver injury.”  But, no direct evidence or substantiation for these claims is linked to the consumer update or press release.  Instead, the consumer update attempts to draw a corollary line between the data obtained from trials performed in connection with one FDA-approved CBD drug and the non-pharmaceutical products available on the market today.  Equating that data against the products available to consumers today does not produce an apples-to-apples comparison.  There are likely different scientific outcomes from, and different levels of toxicity caused by, the delivery of high dosages of concentrated CBD to mice in a clinical laboratory setting versus the relatively low dosages of CBD found in many food and supplement products available to consumers today.

More scientific research is absolutely needed on the efficacy and safety of CBD used in products intended for human consumption.  And that research will come in time.  But, the information released by the FDA this week appears to be an overstatement of the potential health risks associated with CBD products – at least, as they are known today.  There are health risks associated with bad products – and there are bad products on the market today – but that merely highlights the need for clear regulatory guidance from the FDA.

The Future of CBD

The FDA recognizes that there is a significant public interest in CBD.  It also recognizes that there are reports of CBD products containing potentially harmful contaminants, such as pesticides and heavy metals.   Yet, despite that strong interest and recognition of a need for regulation in the industry, the FDA has delayed its development and implementation of meaningful regulatory guidance for CBD companies.  That continuing delay does a disservice to the industry and to the general public.

Companies that cut corners and sell CBD products containing potentially harmful substances need to be regulated out of existence.  Consumers deserve to know that the CBD brands they purchase and use have been responsibly grown, responsibly and safely manufactured, and are free from potentially harmful substances, like heavy metals and pesticides.  And well-intentioned, responsibly operating CBD companies need and deserve clear regulatory guardrails within which they can safely – and legally – operate their business.

Unfortunately, it appears that regulatory uncertainty will continue to persist until there is more scientific data to support the safety and efficacy of CBD in consumer products.  Obtaining that additional research and data will take time, so the industry may face a long slog until the FDA identifies a clear, detailed regulatory “pathway forward” for CBD.  Until then, it is important for CBD companies to carefully consider the FDA’s position on CBD and the warnings sent this week, and to incorporate those factors into their internal compliance practices as they develop, produce, advertise, and sell their products in interstate commerce.

© 2019 Ward and Smith, P.A.. All Rights Reserved.

For more on cannabidiol/CBD regulation, see the National Law Review Biotech, Food & Drug law page.

Three NBA Players Suspended for Drug Violations

The NBA commenced its new season on 22 October with the battle for Los Angeles, as Kawhi’s Clippers edged the Lakers this time. But, less than three weeks into the new season, attention has turned to off-the-court matters; three NBA players who were active on rosters last season have been suspended for testing positive for banned substances.

Wilson Chandler of the Brooklyn Nets tested positive for Ipamorelin, a growth hormone during the summer. The number 1 pick of last year’s draft, DeAndre Ayton tested positive for a diuretic whilst the Atlanta Hawks’ John Collins tested positive for Growth Hormone Releasing Peptide-2, a synthetic drug found to increase appetite and food intake.

The three players have been suspended without pay for 25 games for violations of the NBA/National Basketball’s Player Association (NBPA) Anti-Drug Program.

The terms governing the Anti-Drug Program are set out in the NBA’s Collective Bargaining Agreement (CBA), entered into between the NBA and the NBPA. The NBPA negotiates the terms of the CBA on behalf of NBA players. The CBA regulates a wide variety of matters relevant to the operation of the NBA.

Amongst other things, the CBA governs:

  • the share of “Basketball Related Income” between the players and the league;
  • the team salary cap and tax structures;
  • rules on player contract terms, including salaries and duration;
  • free agency – the process by which out-of-contract players can engage in contract discussions with other NBA teams;
  • rules on trading players; and
  • the aforementioned Anti-Drug Program.

The current CBA was entered into in 2017, and is due to run until the end of the 2023-24 season. The terms of the Anti-Drug Program are set out in Article XXXIII of the current CBA. The new CBA increased penalties for positive tests for performance-enhancing drugs from 20 games to 25 games for first violations. There was also an increase in suspension periods for second violations from 45 games to 55 games. A third positive test continues to result in the player’s expulsion from the league.

Section 9 of the Anti-Drug Program provides that players who have been found to have taken performance-enhancing drugs may have penalties reduced or rescinded through arbitration. Section 19 provides a defence if the player can present:

clear and convincing evidence that he bears no significant fault or negligence for the presence of the drugs in his test result.

This means the player must not have known or suspected, and could not have reasonably known or suspected, that he was taking, ingesting, applying or using the banned substance. Further, the player must establish how the substance entered his system. This is a high evidential bar to meet.

Nevertheless, Ayton is appealing the findings. Diuretics can be used to help the body remove evidence of other banned substances. Ayton’s follow-up tests revealed no traces of other banned substances. The NBPA is preparing to take the case to arbitration, invoking the section 19 ‘unintentional ingestion’ defence, to appeal the decision. Collins intends to appeal the test results on the same basis, claiming that the offending substance derived from a supplement that “unbeknownst to me, had been contaminated with an illegal component”.

An impartial arbitrator will now review the arguments raised by the players and sustain, reduce or rescind the suspensions.

Performance-enhancing drug suspensions are relatively rare in the NBA. ESPN analyst Bobby Marks described the recent spate of suspensions as “unprecedented”. It will be interesting to see how the arbitration proceedings unfold and whether the penalties are changed.

© Copyright 2019 Squire Patton Boggs (US) LLP

For more on the NBA and related news, see the National Law Review Entertainment, Art & Sports law page.