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FDA Deeming Regulations - How it Impacts the Cannabis Industry

BACKGROUND

On May 10, 2016, the FDA published the final “deeming rule,”[1] which extends the FDA’s tobacco product authority under the federal Food, Drug, and Cosmetic Act (FDCA) to all products meeting the statutory definition of “tobacco product.” Up until now, the existing FDA statutes and rules have only addressed cigarettes, cigarette tobacco, roll-your-own tobacco, and smokeless tobacco. The new rules expand the term “tobacco products,” to include, among others, vaporizers, vape pens, hookah pens, electronic cigarettes, e-pipes, and all other ENDS (Electronic Nicotine Delivery Systems). Notably, manufacturers of components and parts of ENDS which are sold or distributed separately for consumer use – i.e. e-liquids, cartridges, atomizers, certain batteries, cartomizers and clearomizers, tank systems, drip tips, flavorings for ENDS, and programmable software – are subject FDA’s product authorities.

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Newly deemed “tobacco products” are now subject to the same premarket review provisions of Section 905(j) and 910 of the FDCA that govern currently regulated tobacco products, meaning that manufacturers of newly deemed products will be required to obtain premarket authorization through one of three premarket pathways: SE Exemption Requests; SE Reports; or Premarket Tobacco Product Applications (PMTAs). Because the “grandfather date” of February 15, 2007 still stands, and most e-cigarette and vapor products were commercially marketed after the grandfather date, the deeming rule effectively mandates that these products will be subject to the PTMA review process.

Manufacturers will have a 24-month initial compliance period from August 8, 2016, to prepare PTMAs for authorization, as well as a 12-month continued compliance period after those dates in which to obtain FDA authorization. Importantly, the aforementioned compliance policy applies only to products that are commercially marketed as of the effective date of the deeming rule (August 8, 2016): any new product not on the market as of August 8, 2016, is not covered by the compliance policy and is subject to enforcement if marketed without premarket authorization. [2]

Submission of a PMTA will cost between $117,000 to $466,000, as indicated by the FDA.[3] However, industry experts suggest the FDA is underestimating costs and have placed the figure at well over $1 million.

QUESTIONS AND ANSWERS FOR THE CANNABIS INDUSTRY

1. How will the new FDA regulations affect the cannabis industry?

Although the FDA has thus far limited its contact with the cannabis industry, the new rules may indirectly apply to cannabis products because of the dual-use nature of many “tobacco products” – such as vape pens that can be used for either tobacco/nicotine-derivatives or cannabis-derivatives.

A key phrase the FDA uses in defining a “tobacco product” in its Deeming Rule is whether the product is “intended or reasonably expected to be” used for human consumption of a tobacco product or alter or affect a tobacco product. This “intended or reasonably expected to” language will likely have further reaching effects to the cannabis industry for a couple of reasons: (1) cannabis is still currently federally classified as a Schedule I drug; and as such, (2) most cannabis-related products have been marketed as for use with tobacco/nicotine.

Therefore, the FDA will be able to regulate cannabis products that are marketed as “intended or reasonably expected to be used for human consumption of a tobacco product or alter or affect a tobacco product” – which includes most cannabis vaporizer components (empty vape cartridges, batteries, cartomizers, tank systems, etc.)

Please note that these new regulations are targeted at tobacco/nicotine products; therefore, they do not specifically address the FDA’s role in regulation of cannabis oil. For more information specifically about cannabis oil, please see Question 7.

2. Will the FDA regulations affect the importation (from other countries) of vaporizer components, parts, and accessories, i.e. vape cartridges, batteries, cartomizers, etc.?

In the “Draft Guidelines for Industry - Premarket Tobacco Product Applications for Electronic Nicotine Delivery Systems (ENDS)”, the FDA states that:

“At this time, FDA intends to limit enforcement of the requirements of ENDS products sold or distributed separately for consumer use. FDA does not, at this time, intend to enforce these requirements for components and parts of newly deemed products that are sold or distributed solely for further manufacturing into finished tobacco products and not sold separately to the consumer. For example, an e-liquid that is sold or distributed for further manufacturing into a finished ENDS products is not itself a finished tobacco product, and at this time, FDA does not intend to enforce such e-liquids that are sold or distributed without a marketing order. In contrast, an e-liquid sealed in final packaging that is to be sold or distributed to a consumer for use is a finished tobacco product. FDA intends to enforce against such finished e-liquids that are sold or distributed without a marketing order.”[4]

Therefore, with respect to our clients that import vape cartridges, batteries, cartomizers, etc. for use with cannabis, the FDA should not have the authority to regulate the importation of such components so long as the components are not sold separately to the customer and will be “sold or distributed solely for further manufacturing.” In other words, the FDA will only be regulating the importation of vape pens, cartridges, batteries, etc. that are sealed in final packaging and are ready for sale to a consumer.

As explained in further detail below in (4), although FDA intends to work with the U.S. Customs and Border Protection (CBP) to ensure tobacco products that enter U.S. borders comply with applicable regulations, the FDA is ultimately responsible for determining whether an FDA-regulated article offered for importation into the United States is in compliance with the laws enforced by FDA.

3. There are new products (cartridges, batteries, vape pens) available on the market. Can I upgrade my current models to reflect those changes?

In short, we advise against introducing any “new products” (particularly products that can also be used with tobacco/nicotine products) that were not on the market as of August 8, 2016. This includes refraining from incorporating new technology, methods, packaging, labeling, etc. relating to vape pens and its components. Although the new Deeming Rule is targeted at manufacturers and retailers of tobacco/nicotine products, it is foreseeable that by introducing new vape technology, packaging, or products, manufacturers of cannabis-related products will “awaken” the FDA regulatory authorities to their products. Also, as discussed above, the FDA will be able to regulate cannabis products that are marketed as “intended or reasonably expected to be used for human consumption of a tobacco product or alter or affect a tobacco product” – which includes most cannabis vaporizer components (empty vape cartridges, batteries, cartomizers, tank systems, etc.)

Moving forward, the packaging, labeling and advertising of cannabis-related products with a conceivable dual purpose could be an important factor in determining whether the FDA will deem the product a “tobacco product” subject to the new rules. However, the industry faces a tricky dilemma as labeling a product “for use with cannabis only” is federally illegal, while labeling a product as “for use with tobacco” will cause it to be regulated as a tobacco product. It is also conceivable that sometime in the near future, particularly if the federal government legalizes cannabis, the FDA will embark on similar rulemaking related to cannabis products.

4. How will the FDA enforce these regulations?

To date, the most recent “Enforcement Action Plan” was published in 2010 by the FDA Office of Compliance & Enforcement, Center for Tobacco Products. Until the FDA publishes a new “Enforcement Action Plan,” we can assume that the 2010 regulations are still valid. In its plan, the FDA outlined the following procedures for enforcement of its tobacco regulations:[5]

  • Tobacco Marketing Surveillance: This surveillance would include monitoring and evaluating various sources of information, including: regulatory submissions made to the FDA, point-of-sale advertising and other promotional materials for tobacco products, internet promotional materials, and complaints.
  • State Tobacco Retailer Compliance Check Inspection Program: The FDA will award contracts to State agencies to assist the FDA in inspecting retail establishments that sell cigarettes and/or smokeless tobacco products. These retail inspections will cover the age and identification (youth access) requirements, as well as requirements relating to tobacco product promotion and advertising. FDA may direct an inspection of a particular retailer if a complaint or report is received, including unlicensed establishments and non-traditional vendors.
  • FDA Inspections of manufacturers and distributors: FDA plans to conduct inspections of manufacturers and distributors. If appropriate, inspections of manufacturers and distributors may be conducted by FDA in response to a complaint.
  • Imports Program: FDA intends to work with the U.S. Customs and Border Protection (CBP) to ensure tobacco products that enter U.S. borders comply with the requirements established by the Tobacco Control Act and applicable regulations. CBP, an agency within the Department of Homeland Security, is responsible for administering the nation’s laws relating to imports, exports and the collection of duties. However, FDA is responsible for determining whether an FDA-regulated article offered for importation into the United States is in compliance with the laws enforced by FDA. As previously mentioned, the FDA will not have the authority to regulate the importation of components so long as the products will be sold or distributed for “further manufacturing.” Therefore, please ensure that the FDA product code[6] on your Customs documentation indicates that your vape component is “for further manufacturing.”
  • Enforcement Tools: FDA has the authority to take enforcement action against violative tobacco products and against persons who violate the requirements established by the Tobacco Control Act and applicable regulations. FDA may utilize several enforcement tools, including but not limited to, the following: warning Letters, civil money penalties, no-tobacco-sale orders, seizures, injunctions, and/or criminal prosecutions.

5. Do I need to apply for a PMTA to continue manufacturing vape components, such as oil, cartridges, batteries, cartomizers, etc.?

As discussed above, manufacturers of “tobacco products” will have a 2-3 year compliance period to apply for and receive a “tobacco marketing order,” and any new product not on the market as of August 8, 2016, is not covered by the compliance policy and is subject to enforcement if marketed without premarket authorization. Moreover, the FDA will likely view cannabis vaporizers and its components as a “tobacco products” because they can “reasonably expected to be” used for human consumption of a tobacco product.

However, the FDA will only enforce against “finished tobacco components, including components and parts of ENDS products sold or distributed separately for consumer use.” [7] “In the case of ENDS hardware/apparatus components, FDA expects that it may be difficult for manufacturers to make the showing necessary to meet the statutory standard, given the great extent of possible variations in combinations of hardware components, if all are 70 considered and sold separately. Thus, with respect to apparatus, FDA expects that manufacturers will be most successful where authorization is sought for entire delivery systems, rather than individual components.” [8]

In other words, with respect to cannabis oil, our clients will not be able to apply for a PMTA because the FDA is only regulating e-liquids with nicotine content. Cannabis oil is not therefore a “tobacco product.”

With respect to cannabis vape components (batteries, empty cartridges, cartomizers, etc.), our clients will likely not be able to apply for a PMTA for the individual components because the FDA has suggested that they will only be approving “entire delivery systems, rather than individual components.”

However, with respect to the entire cannabis vape delivery system (without the oil), our clients may be interested in applying for an “Open Aerosolizing Apparatus” PMTA (without e-liquid and including components and parts). If the PTMA is approved by the FDA, our clients would be able to continue producing their cannabis vaporizers (without cannabis oil) and sell/distribute them to licensees, retailers, and customers even after the 2-3 year compliance period.

6. I am interested in applying for an “Open Aerosolizing Apparatus” PMTA for my entire cannabis delivery system (without the cannabis oil). What are my next steps?

Manufacturers must comply with the following requirements:

  1. Register your establishment and submit a list of all tobacco products that are being manufactured for commercial distribution by December 31, 2016.
  2. Submit tobacco health documents[9]
  3. Submit ingredient listing[10]
  4. Include Required Warning Statements on Packages and Advertisements[11]
  5. Submit quantities of Harmful and Potentially Harmful Constituents[12]
  6. Submit Premarket Tobacco Application (PMTA)

For Steps 1-5, although mailing the Center for Tobacco Products (CTP) is permitted, the FDA recommends electronic submission via the FDA’s eSubmitter software[13] to package documents and the CTP Portal[14] to upload eSubmitter package.

In its “Draft Guidelines for Industry - Premarket Tobacco Product Applications for Electronic Nicotine Delivery Systems (ENDS)”, the FDA recommends that your PMTA application for “Open Aerosolizing Apparatus” include detailed descriptions of the following:

  • Aerosolizing apparatus features;
  • Material and/or ingredient functions;
  • Capabilities to monitor product performance (e.g. temperature sensing, voltage sensing, battery life detection);
  • Instructions, and method of operation;
  • Materials of all aerosolizing apparatus components;
  • Operating ranges (e.g. lower and upper wattage, voltage limits that users can adjust);
  • Power supply, such as batteries (including whether it is rechargeable or replaceable);
  • Charging source and the safety of using different charging sources; and
  • Heating source (e.g. heating coil, chemical reaction).

FDA also recommends that your PMTA contain detailed aerosolizing apparatus schematics (e.g. CAD drawings) with dimensions, pictures, and labeling, accompanied by engineering design parameters.

Finally, electrical safety should be discussed, and applicable standards to which conformance have been demonstrated should be identified. This discussion should include appropriate data (e.g. test protocol, data, results). Additionally, you should provide a description of all built-in electrical safety features. If the product contains a controller, you should list and discuss power management techniques used, such as pulse width modulation or direct current.

It is important to note that since many of the regulations in the Deeming Rule are brand new and the FDA has never seen or approved a PMTA for an “Open Aerosolizing Apparatus,” it could be a few months before clearer guidelines and instructions are available. Again, although the FDA has estimated costs to be in the range of $117,000 to $466,000, there are no precedents available to be able to gauge the actual amount of work and costs involved. We will continuously monitor the FDA website for any news and updates regarding PMTAs for “Open Aerosolizing Apparatus.”

Finally, with respect to applying for an “Open Aerosolizing Apparatus,” PMTA, our clients may wish to consider setting up a separate corporate entity that only manufactures the finished vaporizer (without the cannabis oil). The separate, parallel entity could then license the vaporizer back to the parent cannabis entity, as well to other companies/retailers/distributors.

7. I am unsure about applying for a PMTA. Can the FDA regulate the manufacturing of cannabis oil?

It does not appear that the deeming rule has any direct effect on the current status quo of the regulatory environment surrounding the manufacturing of cannabis oils. According to the FDCA, an e-liquid is considered a “covered tobacco product” if it contains nicotine, tobacco, or any derivative of nicotine or tobacco.[15] The FDA has intimated that in many instances it is reasonably expected that e-liquids, such as flavored liquids, will be combined with liquid nicotine, or other similar substances, prior to consumption and will therefore be regulated as components of tobacco products.[16] However, it would be difficult to craft a credible argument that cannabis oil is reasonably expected to be consumed with a tobacco product. Accordingly, the deeming rule does not give the FDA any new or modified ability to regulate the manufacturing of cannabis oil.

However, in recent years, the FDA has demonstrated that it maintains at least some ability to regulate cannabis oils, and most specifically cannabidiol (CBD). The FDA has concluded that selling products containing CBD as dietary supplements as well as the introduction of food containing CBD into interstate commerce constitute violations of the FDCA.[17] In both 2015 and 2016 the FDA has sent “warning letters” to manufacturers for their improper marketing of products containing CBD.[18] In short, the FDA has limited its “regulation” to companies that make inaccurate claims in labels or presenting human health risks.

It is important to note, though, that to date the FDA has not shown a particularly large appetite for enforcement actions against cannabis oil manufacturers. When determining whether to initiate an enforcement action for a perceived violation of the FDCA, the FDA considers factors such as agency resources and the threat posed to public safety.[19] In 2015, only 6 warning letters were sent by the FDA to CBD manufacturers, and 8 in 2016, and it is not apparent whether any further action was taken against any of the recipients. Further, the letters themselves only required that the recipient notify the FDA of the steps it intended to take to correct the alleged violations.[20]

CONCLUSION

The FDA’s use of the phrase “tobacco product” and its rationale for regulation based on the public health risk due to “highly addictive nicotine” establish that the rules do not directly affect cannabis-related products. However, the “intended or reasonably expected to” language could be the proverbial back door for the FDA to regulate cannabis-related products if there is a possibility of dual use with tobacco – such as with vape pens that can be used for either tobacco/nicotine-derivatives or cannabis-derivatives.

In summation, we recommend that cannabis companies that manufacture vape pens, components, and parts to consumers refrain from introducing any new parts/models at this time. Furthermore, companies may wish to consider applying for an Open Aerosolizing Apparatus PTMA to continue the manufacture and sale of its vape pens (sans oil/cartridges) to consumers.

With respect to cannabis oil only, the Deeming Rule does not give the FDA any new or modified ability to regulate its manufacturing. Nevertheless, it is also conceivable that sometime in the near future, particularly if the federal government legalizes cannabis, the FDA will embark on similar rulemaking related to cannabis products.

WINTER LLP® is a corporate, transactional, regulatory and intellectual property law firm focused on traditional and emerging markets, with offices in Orange County, San Francisco, and Arizona, servicing clients around the world.



[1]“Deeming Tobacco Products to be Subject to the Food, Drug, and Cosmetic Act, as Amended by the Family Smoking Prevention and Tobacco Control Act; Regulations Restricting the Sale and Distribution of Tobacco Products and Required Warning Statements for Tobacco Product Packages and Advertisements,” available at https://s3.amazonaws.com/public-inspection.federalregister.gov/2016-10685.pdf

[2] FDA, Small Entity Compliance Guide: FDA Deems Certain Tobacco Products Subject to FDA Authority, Sales and Distribution Restrictions, and Health Warning Requirement’s for Packages and Advertisements (May 2016), at 17, available at http://www.fda.gov/TobaccoProducts/Labeling/RulesRegulationsGuidance/ucm499355.htm.

[3] http://www.fda.gov/TobaccoProducts/AboutCTP/ucm378205.htm#13

[6] https://www.accessdata.fda.gov/scripts/ora/pcb/index.cfm

[8] Deeming Rule at pg 69-70, https://s3.amazonaws.com/public-inspection.federalregister.gov/2016-10685.pdf

[9] http://www.fda.gov/downloads/TobaccoProducts/Labeling/RulesRegulationsGuidance/UCM208916.pdf

[10] http://www.fda.gov/downloads/TobaccoProducts/Labeling/RulesRegulationsGuidance/UCM192053.pdf

[11] http://www.fda.gov/downloads/TobaccoProducts/Labeling/RulesRegulationsGuidance/UCM499354.pdf

[12] http://www.fda.gov/downloads/TobaccoProducts/Labeling/RulesRegulationsGuidance/ucm297828.pdf

[13] http://www.fda.gov/ForIndustry/FDAeSubmitter/ucm189469.htm

[14]http://www.fda.gov/TobaccoProducts/GuidanceComplianceRegulatoryInformation/Manufacturing/ucm515047.htm

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