DSA: Sale of CBD Supplements Violates DSA Code of Ethics

DSA Code of Ethics

The Code Administrator of the Direct Selling Association (DSA) made it known to all member companies in a memo released July 30 stating  “…it is the determination by this office that the sale of ingestible CBD (cannabidiol-based oils) products such as a foodstuff, nutritional supplement, tincture or for any digestible means for humans or animals is violative of the DSA Code of Ethics.”

The association also stated in the memo that they are instituting a 90-day window for member companies selling CBD products during which they will not be cited for DSA Code of Ethics violations, and to account for additional time to permit the FDA to “articulate a path forward wherein sale of these products may be deemed legal.” See below for more on 90-day window.

“…not all supplements qualify for this regulatory exclusion”
The DSA pointed to numerous recent news articles and CBD-product promotional materials have cited the passage of the 2018 Farm Bill as permitting, under federal law, the sale of hemp-based products such as CBD oil:

As DSA members that market nutritional and related products know, federal law generally does not regulate the sale of nutritional supplements as long as those products do not make unsubstantiated claims and/or claims to cure disease or similar medicinal benefits. However not all “supplements” qualify for this regulatory exclusion. The exclusionary clauses of the Federal Food, Drug, and Cosmetic Act provide that a substance approved as a new drug or the subject of substantial clinical investigations which have been made public is prohibited from use in food or dietary supplements unless the substance was first marketed as a food or dietary supplement.

To this point, the FDA has approved CBD as an active ingredient in an epilepsy drug, Epidiolex and CBD is currently the subject of substantial clinical investigations which have been made public. FDA has also stated that the “first marketed as” exemption to the exclusionary clauses does not apply to CBD, as the agency is not aware of any data demonstrating that CBD was marketed as a food or dietary supplement prior to the initiation of substantial clinical investigations of CBD as a drug.

The memo goes on to say that while the FDA concedes it has not yet determined the appropriate path to take in regulating the increasing use of CBD-infused supplements, the fact that the FDA may not be enforcing the law as it exists does not nullify the facts nor vitiate the application of the DSA Code. Section A.1.b. of the DSA Code of Ethics states:

Member companies and their independent salespeople must comply with all requirements of law. …Compliance with all pertinent laws by member companies and their independent salespeople is a condition of acceptance by and continuing membership in DSA (emphasis added).

In conclusion, public statements by FDA officials together with the disclosures made during the agency’s hearing discussed above as well as DSA’s panel discussion at the Annual Meeting confirm that the present sale of ingestible CBD products is illegal under federal law and hence violates the DSA Code of Ethics.

DSA’s 90-Day Window

The DSA states they are aware that the legal status of CBD ingestible products may be in flux as the FDA considers its options in regulating these products. Consequently, for the next 90 days, DSA companies presently selling CBD-infused ingestible products will not be cited for DSA Code of Ethics violations for that sale. This 90-day window will account for additional time to permit the FDA to articulate a path forward wherein sale of these products may be deemed legal.

The DSA concludes by saying that if the FDA does not act within that timeframe, and CBD-infused products continue to be sold in interstate commerce by a DSA member, that company may be deemed to be in violation of the DSA Code of Ethics. The company will be requested to remedy this Code violation by halting sales of those products. If after that final notice the DSA member company is in violation of the DSA Code of Ethics, and CBD-ingestible sales continue to occur, the Code requires this office to notify the DSA Board of Directors of the member’s ongoing violation of the DSA Code of Ethics by such sale.

This story will be updated.

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