Oct 2, 2020

21st Century Gold Rush: Cannabis Volume III - CBD Retail Operations

By Jennifer E. Adams and Barbara B. Ormsby of Deutsch Kerrigan, LLP[1]

For a PDF version of this article, please click here.  

This article is the third in a series to be published on a monthly basis through 2020.  You can find the articles every month at www.deutschkerrigan.com.  Volume I:  What You Need to Know About Louisiana’s Therapeutic Marijuana Act; Volume II:  The Business Side of Cannabis; Volume IV:  Hemp Farming vs. Cannabis Farming; Volume V:  2020 Election Effect.   For questions, please contact jadams@deutschkerrigan.com or bormsby@deutschkerrigan.com.

As you drive around your hometown, dying to get out of your house because of the pandemic, you may notice storefront signs that say “CBD.”  In New Orleans, some might confuse that for the “Central Business District” of our downtown area, but “CBD” actually stands for cannabidiol.[2] It is the second most prevalent of the active ingredients of cannabis (marijuana).[3] While CBD is an essential component of medical marijuana, it is derived directly from the hemp plant, which is a cousin of the marijuana plant.[4] And, while CBD is a component of marijuana (one of hundreds), by itself it does not cause a “high.”[5]

On June 6, 2019, Louisiana Governor John Bel Edwards signed into law a bill (HB 491) that allows for the sale of hemp-derived CBD products with a concentration of less than 0.3 percent to be legally sold in the state.  The law follows in the footsteps of the federal Farm Bill (Agriculture Improvement Act of 2018) that legalized the agricultural production of hemp in the United States and the sale of hemp-derived products like CBD.[6]  More than 1485 permits have been obtained in Louisiana since the law went into effect.[7]

If you are an entrepreneur who wants to open a CBD shop in Louisiana, you have some options. Individuals or business entities can obtain Hemp CBD Retail Dealer permits from the Louisiana Office of Alcohol and Tobacco Control by submitting an application and paying a $175 fee.[8]  Such permits allow permittees to sell hemp or hemp-derived CBD products in Louisiana, though permittees cannot sell hemp or CBD products designed for inhalation, alcoholic beverages containing hemp or CBD, food products containing hemp or CBD (unless such products are FDA approved), or any CBD products marketed as dietary supplements.[9]  Any products sold by permittees must be: produced from hemp grown by an authorized grower in the state; registered and labeled in accordance with the State Food, Drug, and Cosmetic Law;[10] and approved by the Louisiana Department of Health.[11]  Hemp and CBD product labels cannot contain medical claims and must include the following language: “This product has not been evaluated by the Food and Drug Administration and is not intended to diagnose, treat, cure, or prevent any disease.”[12]  Labels must also have scannable codes or a web addressed linked to a document or website that “contains certification of analysis as provided in the law.”[13]  If a permitted CBD retailer sells CBD products that are not properly registered or approved by the Louisiana Department of Health, the retailer’s permit may be denied, suspended, or revoked, and the retailer may face monetary penalties.[14] 

In contrast, Colorado has an industrial hemp/CBD and a cannabis market.  Both are very competitive and medical and recreational cannabis sales hit a record $1.75 billion in 2019, up 13% from 2018, according to data from the Colorado Department of Revenue’s Marijuana Enforcement Division.[15]   Marijuana tax collections also hit an all-time high, at more than $302 million in 2019.[16]  Thus, while Louisiana has opened the doors slightly for economic success in the CBD retail area, it has a long way to go before reaping the benefit of Colorado-type dollars. 

October 2020

[1] Julie Schwartzwald, 2021 JD Candidate at Tulane University, and a 2020 summer law clerk with Deutsch Kerrigan, LLP, assisted with the research and writing of this article. 

[2] “Cannabidiol (CBD)-what we know and what we don’t,” Harvard Health Blog. www.health.hardvard.edu/blog, Peter Grinspoon, MD., August 24, 2018.

[3] Id.

[4] Id.

[5] Id.

[6] “CBD retailers say new rules could limit sales in Louisiana,” Maria Clark, The Daily Advertiser, August 1, 2019. www.theadvertiser.com.

[7] https://atc.louisiana.gov/docs/CBD%20Current%20Permit%20List.pdf

[8] See Louisiana Office of Alcohol & Tobacco Control, Hemp Derived CBD Product Retail Permit Information, available at https://atc.louisiana.gov/docs/H-CBD%20Retail%20Application.pdf.

[9] Id.

[10] La. R.S. § 40:601 et. seq.

[11] Id.

[12] Id.

[13] Id.

[14] Id.

[15] “Colorado marijuana sales hit a record $1.75 billion in 2019,” Tieny Ricciardi, The Denver Post, February 18, 2020.  www.denverpost.com.

[16] Id.