Louisiana’s New CBD Retail Sale Requirements Will Apply to All Online Retailers

By Courtney Barnes

Jul 6, 2020

Louisiana House Bill 843, effective August 1, 2020, includes several notable amendments to the state's hemp production and CBD programs that will impact operators nationwide. While many of the changes to state law are intended to promote consistency with the 2018 Farm Bill, others are more unique. Notable provisions of HB 843 include registration requirements for online retailers and strict prohibitions and penalties on processing and selling smokable hemp. If you are an operator who produces, distributes, or sells hemp-derived CBD products in Louisiana,  it’s time to start preparing to comply with these soon to be enforced requirements.

Retail Sale Requirements for CBD Products

In what appears to be a first-of-its-kind provision for state hemp program legislation, Louisiana will require online retailers—including those without a physical in-state presence—to obtain a permit from the state to lawfully sell CBD products directly to consumers. Once HB 843 takes effect, all CBD retailers, whether online or otherwise, are required to obtain a permit from the Louisiana Office of Alcohol and Tobacco Control (ATC), as well as register with and have their product labels preapproved by, the Louisiana Department of Health to lawfully to sell CBD products within the state of Louisiana.

HB 843 explicitly includes “remote retailers” in its CBD product retailer registration requirements, defining the term as “a person or entity who offers any industrial hemp-derived CBD product for sale at retail, or for any transaction of products in lieu of a sale, through a digital application, catalog, or the internet, that can be purchased and delivered directly to a consumer in Louisiana.” The bill clarifies that operators are not required to have a physical place of business in the state of Louisiana in order to sell industrial hemp-derived CBD products at retail and, interestingly, classifies each individually registered domain name owned or leased by an online retailer as a separate place of business that requires a permit. CBD products may be sold at events held at a location other than the permitted retailer's place of business, but the retailer must first obtain a special event permit from the ATC.

CBD Product Manufacturing Requirements

Like other states, Louisiana requires that all CBD products be produced from hemp cultivated under a United States Department of Agriculture (USDA) or state plan adopted pursuant to the 2018 Farm Bill, or a 2014 Farm Bill pilot program. HB 843 continues the state’s prohibition on the sale of CBD foods unless approved as a food additive by the Food and Drug Administration (FDA), and further prohibits such products from being marketed as “dietary.”  The bill also prohibits hemp products from containing any active pharmaceutical ingredient (API) recognized by the FDA, other than CBD.

Before being sold in the state, a CBD product must be registered with the Louisiana Department of Health and have its label endorsed. An application for registration must provide test results for cannabinoid concentration, solvents, pesticides, microbials, and heavy metals, as well as include various information about the product testing and method of analysis. CBD products may not be marketed or labeled with medical claims or sold to consumers under the age of 18.

Smokable Hemp Prohibition

HB 843 makes clear that the production and sale of hemp rolling papers are permitted, but explicitly prohibits and penalizes the processing and sale of all other smokable hemp products. The law provides authority to the Department of Agriculture and Forestry to issue stop orders to businesses and allows the commissioner of alcohol and tobacco control to issue fines for violations. Violators may be subject to a fine of $300 for a first offense, up to $1000 for a second offense, and up to $5,000 for third and subsequent offenses.

Hemp Producer Application Process

HB 843 fine-tunes and amends a variety of provisions relating to the state’s hemp license application requirements to align the 2018 Farm Bill and USDA interim final rule. In addition to defining terms such as “key participant,” and “federally defined THC level for hemp,” it amends the definition of “applicant” to clarify that an applicant is a natural person who applies for a grower, processor, contract carrier, or industrial hemp seed producer license on behalf of a legal business entity or other organization through which the business is conducted, as opposed to the business entity itself being classified as an applicant. For purposes of conducting background checks, however, the term “applicant” further includes key participant or designated responsible party.

Restrictive Hemp Producer License Eligibility Mandates

Although HB 843 retains the state’s criminal background check and license eligibility mandates, it’s worth noting the restrictive nature of these. Whereas federal law prohibits individuals who have been convicted of a controlled substance-related felony within ten years preceding the date of application from obtaining a hemp producer license, Louisiana additionally prohibits anyone who has been convicted of a drug-related misdemeanor within the two years immediately preceding the date of application from obtaining a license under its hemp production program. The act specifically states that “no person shall be eligible to obtain a license if convicted under state or federal law of any of the following: (a) a felony within the ten years immediately preceding the date of application; or (b) a drug-related misdemeanor within the two years immediately preceding the date of application.”

If you have additional questions about Louisiana’s hemp production and CBD programs or are interested in applying for a license or permit, contact our hemp and cannabinoids team at 303-860-4501 or via email.

 

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