Selling CBD Products Online? State Retailer Registration Requirements May Apply

By Catie Wightman

Nov 16, 2020

Though hemp is federally legal under the 2018 Farm Bill, many states have distinct rules for the cultivation, processing, manufacturing, and retail sale of the plant and its derivatives. As more states develop CBD-specific regulations for retailers, it’s important to become familiar with the requirements so your business is compliant.

State Requirements for Online CBD Products

States have varying requirements for the sale of hemp-derived CBD products, including sales and marketing, testing, packaging, and/or labeling of CBD products sold in the state. Of the states that regulate sales and marketing, some require that CBD products register with state officials, while some require the retailer to register or obtain a license. If you are selling CBD products—even products sold exclusively online—you must follow retailer requirements in the states where you sell products (i.e., where your customers are located).

Who Must Register to Sell Online CBD Products?

Certain states require retailer registration or licensure from state regulatory authorities before a business can sell CBD products online. If you’re selling products in or to customers in those states, you need to register or obtain licensure—even if you do not have a physical presence in those particular states.

For example, Louisiana explicitly includes “remote retailers” (defined to include sales through the internet) in its CBD product retailer registration requirements.

How Do You Know if Your Business Must Register to Sell Online CBD Products?

To determine whether your business needs to register, you should review the CBD product and hemp regulations in the state you are selling (or plan to sell) such products.

Step 1: Determine which agency has authority

The agency that oversees registration or licensing for retailers may differ from the agency regulating hemp products or hemp production.

Step 2: Review the agency website

The agency that provides hemp product or production information may not include the retailer registration requirements on its website, so it is vital to review all hemp and CBD laws and regulations in that state.

Step 3: Review applicable laws and regulations

Not all state regulations are clear about whether retailer requirements apply to online retailers, so you might need to confirm with regulators. For example, Texas regulations do not explicitly state that the CBD retailer registration requirements apply to online retailers. However, in a comment on the final rules, Texas regulators clarified that these requirements also apply to those selling exclusively online.

How Are States Enforcing Online CBD Product Registrations?

Only time will tell how states will enforce registration and licensing requirements for online retailers. Moreover, it’s difficult to predict how state agencies will track private online sales. Though, those who fail to register or obtain a license run the risk of violating state laws, and such violations could lead to product seizures, among other consequences.

Current Trends and Looking Forward

States are increasingly adopting expansive CBD retailer registration or licensing rules. Online retailers should continue to monitor for changes in all states where they sell products. For instance, New York is the latest state to include such requirements in its proposed CBD regulations. Under these draft regulations, online retailers and brick and mortar stores that sell CBD products must register each retail facility with the New York State Department of Health.

Vicente Sederberg LLP is continuously monitoring changes to CBD regulations across the country. Please reach out to a member of our hemp team if you are interested in evaluating whether your business is subject to registration requirements.

 

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