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Recent FDA Warning Letter Valuable Reminder To CBD Industry – Don’t Ignore Basic Regulatory Compliance


Aug
09

Following similar announcements by CVS and Walgreens, Kroger became the latest retailer to join the CBD craze when it announced plans to sell CBD-infused products. Sales of products containing CBD are expected to top $5 billion this year, a 700% increase from 2018, and could reach nearly $24 billion in sales by 2023, according to analysts. However, a recent warning letter from the FDA contains important reminders for the industry.

Although hemp-derived cannabidiol (CBD) was de-criminalized by the federal government in the 2018 Farm Bill, the Bill did not affect FDA or the States’ authority to regulate CBD or other cannabis or hemp products in FDA-regulated products. To date, the FDA has not approved CBD in food or drinks for humans or animals, dietary supplements or topical cosmetics and maintains its current position that it is illegal to sell a food or dietary supplement that contains added CBD in interstate commerce. Historically, however, the FDA has generally taken a passive approach to the enforcement of hemp-derived CBD products.

On July 22, 2019, FDA issued a warning letter to one of the largest producers of CBD-based products, Curaleaf, Inc. The FDA reiterated that certain hemp substances, including CBD, have a questionable regulatory and safety status in the eyes of FDA and some state governments despite the 2018 Farm Bill. But the more likely trigger for the action was the marketing claims that were associated with Curaleaf’s products.

The FDA surveyed Curaleaf’s website and social media pages, and found claims like:
• “[S]oothing tincture for chronic pain.”
• “CBD has been demonstrated to have properties that counteract the growth of spread of cancer.”
• “CBD has also been shown to be effective in treating Parkinson’s disease.”
• “CBD oil can be used in a variety of ways to help with chronic anxiety.”
• “CBD is being adopted more and more as a natural alternative to pharmaceutical-grade treatments for depression and anxiety.”

These are clear drug claims related to treating or preventing diseases, and FDA concluded that the products were misbranded and unapproved new drugs.

In response to the warning letter, the company stated that it’s removing statements from its website and social media that FDA identified as noncompliant. Also of note, following the warning letter, CVS immediately removed all Curaleaf products from its shelves, and Curaleaf’s stock tumbled.

The bottom line is that fundamental regulatory compliance matters. The full list of Curaleaf’s claims reinforce best practices for drafting and substantiating claims appearing on any food or dietary supplement labels (not just those containing CBD). And if the claim is on a product that is already under scrutiny for regulatory discretion, then compliance is especially important.

In addition to regulatory enforcement action, publicly issued warning letters may also lead to class action lawsuits based on a claim that statements are false and misleading and actionable under state consumer protection laws. While the statute the FDA is tasked with implementing (the Federal Food, Drug, and Cosmetic Act) does not include a private right of action, litigants and courts often use FDA warning letters for guidance as to whether a marketing claim is, or is not, susceptible to challenge under various consumer protection laws.

It is crucial for companies that market or sell CBD products to confirm that their marketing materials and labeling generally comply with FDA requirements and avoid making unapproved human or animal drug claims. If you currently market or are considering marketing CBD products, contact our Food and Dietary Supplement regulatory team to guide you through state and federal labeling and advertising requirements.

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FAA Issues Landmark Rules Authorizing Drones For Commercial Use


Jun
22

drone postOn June 21, 2016, the Federal Aviation Administration (FAA) finalized its long-awaited rules authorizing the commercial use of small unmanned aircraft systems (UAS or “drones”). The new rules take effect in August and will allow drones to be flown commercially to benefit a host of industries such as agriculture, construction, real-estate photography, power and utilities, media coverage and emergency response.  The rules are estimated to “generate more than $82 billion for the U.S. economy and create more than 100,000 new jobs over the course of the next 10 years.”  Press Release, Federal Aviation Administration, DOT and FAA Finalize Rules for Small Unmanned Aircraft Systems (June 21, 2016) (available at https://www.faa.gov/news/press_releases/news_story.cfm?newsid=20515).

Key aspects of the rules include:

  • Maximum drone speed, 100 mph;
  • Maximum drone weight, 55 lbs.;
  • Maximum drone altitude, 400 ft.;
  • Drone must remain in the line of sight of the operator at all times during flight;
  • Operations are allowed during daylight and during twilight if the drone has anti-collision lights;
  • Flights are not permitted within five miles of an airport without obtaining FAA approval;
  • Pilot must be at least 16 years old;
  • A single pilot may not operate more than one drone at one time;
  • Flights are prohibited over any persons not directly participating in the operation, under a covered structure or inside a covered stationary vehicle;
  • Pilot must pass an aeronautical knowledge test at an FAA-approved knowledge testing center for a remote pilot certificate and pass a background check by the Transportation Security Administration.

In the months ahead, the FAA will offer an online process to waive some restrictions if an operator can prove the proposed flight will be conducted safely. Although the new rules do not deal with privacy issues, the FAA has encouraged all operators to check local and state laws before gathering information using sensors, video and photography technology.  For more information on drones and registration with the FAA, see http://knowbeforeyoufly.org/.

  • Luke C. Holst is a registered patent attorney with experience in both patent prosecution and patent litigation. Holst is a former Patent Examiner at the U.S. Patent and Trademark Office; Law Clerk to the Honorable Mark W. Bennett at the U.S. District Court for the Northern District of Iowa; and Legislative Counsel at the U.S. Capitol to an Iowa Congressman on the U.S. House of Representatives Committee on the Judiciary. At McGrath North, Holst works on patent issues, other intellectual property matters, and litigation.

 

 

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Who Owns Farm Data?


Apr
11

farm dataAs farmers gear up for planting season, a common question asked is who owns farm data generated by agriculture technology providers (“ATP”)? The answer isn’t as simple as it should seem.

Farm data is generally defined as data collected and analyzed from sensors and software on planters, combines, sprayers and other farm implements. Farm data can be used to help farmers improve efficiency, reduce inputs, know when to irrigate, produce better yields and ultimately make higher profits. However, farmers have concerns over how their agricultural data may be used, shared and sold which may lead to adverse economic or commercial consequences for the farmer. For example, will farm data be accessible to government agencies like the Environmental Protection Agency, used by Wall Street traders to speculate or manipulate the commodities market or leveraged by seed and chemical companies? The issue is further exasperated when multiple parties are involved. For instance:

    • Does a landowner own farm data generated on their land or the tenant?
    • Does a co-op that applies the fertilizer and/or pesticide own the farm data or the farmer who pays for the application?
    • Does the owner of the precision ag hardware that collects the data own the farm data or the farmer on whose land the equipment is used?

In light of these questions and concerns, the American Farm Bureau Federation led a consortium of thirty-five farm and commodity groups to set forth “Privacy and Security Principles for Farm Data.” The principles state with regard to farm data ownership:

Ownership: We believe farmers own information generated on their farming operations. However, it is the responsibility of the farmer to agree upon data use and sharing with the other stakeholders with an economic interest, such as the tenant, landowner, cooperative, owner of the precision agriculture system hardware, and/or ATP etc. The farmer contracting with the ATP is responsible for ensuring that only the data they own or have permission to use is included in the account with the ATP.

Available at http://www.fb.org/issues/bigdata/privacysecurityprinciplesfarmdata.html.

It must be noted that the “Privacy and Security Principles for Farm Data” aren’t binding and there are no federal laws directly regulating the storage use or transfer of agricultural data. However, the takeaway is that farmers, landlords, co-ops and agriculture technology providers need to make sure their contract or lease is explicit to who owns farm data. When drafting such contracts, important questions to keep in mind include: (1) Does the contract describe what type of data is being collected; (2) Is control of farm data addressed; and (3) Does the contract state whether the farm data may be accessed, sold or shared with others? Farmers, landlords, co-ops and agriculture technology providers therefore need to take the time to carefully draft and understand contractual language before they sign to ensure farm data ownership issues are clear.

  • Luke C. Holst is a registered patent attorney with over twenty years of experience in the agriculture industry as part owner-operator of a family farm in Northwest Iowa. Holst is a former Patent Examiner at the U.S. Patent and Trademark Office; Law Clerk to the Honorable Mark W. Bennett at the U.S. District Court for the Northern District of Iowa; and Legislative Counsel to Congressman Steve King at the U.S. Capitol. At McGrath North, Holst works on patent and trademark issues, including intellectual property litigation.
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The FAA’s Proposed Regulations on Drones and their Impact on Agriculture


Feb
26

droneAmidst falling farm prices and lower income, the agriculture industry is turning towards an emerging technology in an attempt to deploy resources more efficiently and increase profit margins. Drones, also called Unmanned Aerial Vehicles (“UAV”) or Unmanned Aerial Systems (“UAS”), offer a futuristic approach to farm management that provide many benefits over traditional methods.  Under the traditional approach, crop scouters would periodically inspect fields along their perimeter to judge crop conditions.  Because farms typically encompass hundreds or thousands of acres, the interior of the field was often left unchecked during the growing season.  Today, farmers may utilize UAVs equipped with high definition cameras to obtain complete aerial views of their fields and monitor crop conditions in real-time.  Thus, farmers may quickly and efficiently respond to circumstances affecting crop health, poor drainage, and areas requiring replant to boost yields.  As technology evolves, UAVs are also coming equipped with infrared cameras and advanced sensors that allow farmers to check for signs of crop disease, recognize nutrient deficiencies, assess drought conditions, identify weed hot-spots, apply pesticides, irrigate on an as-needed basis, and predict harvest yields.  The livestock sector has further taken note of this cutting edge technology, wherein a leader in the cattle feeding industry recently filed a patent application with the United States Patent and Trademark Office for incorporating UAVs into livestock feeding operations.  For all of these significant reasons, the Association for Unmanned Vehicle Systems International has predicted that the agriculture industry will capture up to 80% of the commercial drone market.

Unfortunately, flying drones for commercial use is currently prohibited in the United States, absent express permission from the Federal Aviation Administration (“FAA”). According to the FAA, commercial use may be considered using a UAV to take photographs/videos for compensation and/or sale to another individual.  Commercial use may also include a farmer using a UAV to take photographs of his/her fields for decision-making purposes (e.g., identifying target areas requiring replant, fertilizer application, irrigation, etc.).  In 2015, the FAA released proposed rules for the commercial use of drones.  Key aspects include:

  • Maximum drone speed, 100 mph;
  • Maximum drone weight, 55 lbs.;
  • Maximum drone altitude, 500 ft.;
  • Drone must remain in the line of sight of the operator at all times during flight;
  • Operator must conduct flights during daylight hours only;
  • Operator must be at least 17 years old;
  • Operator must pass an “aeronautical knowledge test” every 24 months; and
  • Operator must obtain an Unmanned Aircraft Operator Certificate.

The FAA has predicted that the proposed rules will be finalized as early as June 2016. Therefore, UAVs may soon be flown commercially to benefit the agriculture industry, in addition to a host of other industries such as real-estate photography, media coverage, and law enforcement.  In the meantime, UAVs may still be operated for hobby or recreational purposes (e.g., taking photographs for your own personal use) after being registered online with the FAA.  For more information on UAVs and registration with the FAA, see http://knowbeforeyoufly.org/.

  • Luke C. Holst is a registered patent attorney with over twenty years of experience in the agriculture industry as part owner-operator of a family farm in Northwest Iowa. Holst is a former Patent Examiner at the U.S. Patent and Trademark Office; Law Clerk to the Honorable Mark W. Bennett at the U.S. District Court for the Northern District of Iowa; and Legislative Counsel at the U.S. Capitol to an Iowa Congressman on the U.S. House of Representatives Committee on the Judiciary. At McGrath North, Holst works on patent and trademark issues, including intellectual property litigation.
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