CBD Regulation Case Stayed Pending Rulemaking

On May 22, the Central District of California issued an order concerning legal action “relating to the marketing and sale of cannabidiol (CBD) products.” The case originated with a suit against a California corporation that “produces and sells a range of CBD products, including sprays, oil drops, gummies, capsules, and soft gels” where the plaintiff, an Arizona citizen, alleged that the corporation illegally labeled CBD products as “dietary supplements” in violation of the Federal Food, Drug, and Cosmetic Act (FDCA). The court, following the defendant’s motion to dismiss, stayed the majority of the proceedings pending further rulemaking by the Food and Drug Administration (FDA) and dismissed the plaintiff’s requested declaratory judgment.

The plaintiff requested a declaratory judgment that the defendant “misrepresented the nature, ingredients and effectiveness of the [CBD] products and that its actions are unlawful.” The court granted the defendant’s motion to dismiss the claim for declaratory judgment because the plaintiff lacked standing. Standing for a declaratory judgment required that the plaintiff prove the presence of a redressable future injury which the court determined the plaintiff failed to possess as the allegations “make it clear they believe Defendant’s products are illegal and mislabeled, and they do not allege they expect to be repeat customers as things stand now.”

Moving to the remainder of the legal claims, the court determined that a stay, and not dismissal, to be the correct course of action. The court based the grounds for the stay on the “primary jurisdiction doctrine,” which “allows court to stay proceedings…pending the resolution of an issue within the special competence of an administrative agency.” The court determined that while application of the doctrine is not always appropriate, situations involving “circumstances that require resolution of first impression” or that if left to courts would “present a substantial danger of inconsistent rulings” required use of the primary jurisdiction doctrine. Conclusively, the “several CBD-related lawsuits currently making their through the court systems” and the “issues of first impression surrounding how the FDA intends to classify and regulate CBD products” satisfied the aforementioned legal standard and warranted a stay of remaining legal claims until the “FDA completes its rulemaking regarding the marketing, including labelling, of CBD ingestible products.”