Is Cannabidiol (CBD) Authorized for Sale in France?
What is the legal situation of CBD in France?
After several years of battle and legal uncertainty, cannabidiol (or CBD), a non-psychotropic molecule of hemp, is finally authorized to be sold in France while its consumption was already permitted throughout the European Union.
The Court of Justice of the European Union (“CJEU”), in a decision dated November 19, 2020, had invalidated France’s prohibition to sell CBD products authorized in other European member States where harmful effects on health could not be demonstrated, on the basis of the freedom of movement of goods, one of the pillars of the European single market. In light of this decision, on July 20, 2021, the French government submitted to the European Commission its draft decree on hemp aiming to revise its existing decree of August 22, 1990. The project aims to regulate the cultivation, import, export, and industrial and commercial use of all parts of the hemp plant in France.
The Commission published its opinion on November 12, 2021, and the French decree was finally published on December 30, 2021.
In essence, the new regulation extends the authorization for cultivation, import, export, and industrial and commercial use of hemp with a THC content of less than 0.3% in all parts of the plant, while use was previously limited to only fibers and seeds. This is in accordance with the rules of the Common Agricultural Policy that will come into force on January 1, 2023.
Moreover, the decree authorizes an increase in the levels of THC in the finished products which was previously 0%. However, this increase is only authorized for products transformed into oils, such as those integrated in cosmetic products, food supplements or cartridges for vaping, for example.
The raw flowers and leaves can only be harvested, imported, or used for the industrial production of hemp extracts, meaning that the sale to consumers of raw flowers or leaves in any form, alone or mixed with other ingredients, as well as their possession by consumers or their consumption is prohibited.
How is the new French decree impacting the CBD business?
According to the professionals in the sector, the flower of hemp currently represents 50% to 70% of the turnover of retailers, excluding tobacconists.
Furthermore, hemp products “may only be imported from countries outside the European Union or exported outside the European Union if they are accompanied by documents attesting to their conformity”.
According to French authorities, this restriction is not only meant to protect public order by preventing any confusion with narcotic products, but also public health by avoiding the uncertain health effects of CBD-based products. Moreover, it seems that the authorities consider that the police will not be able to determine the difference between THC and CBD flowers.
The decree is manifestly contrary to the decision of the CJEU which recalled that unlike tetrahydrocannabinol (THC), the molecule of cannabis sativa with psychoactive effects, CBD cannot be considered a narcotic, as it has “no psychotropic effect or harmful effect on human health”. On June 23, 2021, the French Supreme Court (“Cour de Cassation”) stated that flowers legally produced in a European country cannot be banned in France. However, it did not decide on the substantive issue of a marketing ban in the name of the objective of protecting public health.
Who is challenging the French decree?
The adoption of this decree has therefore not solved all the French difficulties on the status of CBD. In particular, several producers and professional unions and associations have already indicated their willingness to challenge this decree before the European authorities.
Appeals in particular around the definition of the criteria of classification of narcotics, were brought before the Constitutional Council (“Conseil Constitutionnel”) which ruled on January 7, 2021, that the government decree banning the sale of raw CBD leaves and flowers, is constitutional. However, the decision does not deal with the prohibition of the sale and possession of hemp flowers, but simply with the constitutionality of the decree. The Council has also stated that cannabidiol based products (CBD) including the flower were not included in the list of psychotropic substances and took the opportunity to retain two cumulative criteria for defining a drug: “addiction” and “harmful effects on health”.
A summary proceeding was filed before the Council of State (“Conseil d’Etat”) by the Union of CBD professionals on January 1, 2022. On January 24, 2022, the Council of State suspended the enforcement of the decree provisions related to the prohibition of sales to consumers, possession, and consumption of flowers and leaves in their raw state. According to the judges, it does not appear, from the investigation, that hemp flowers and leaves with a THC content of no more than 0.3% would be sufficiently harmful to health to justify a total and absolute prohibition measure. This threshold is the one retained by the contested decree itself, to characterize the plants authorized for cultivation, importation, exportation, and industrial and commercial use. Nor does it follow that it would be impossible to control the THC content. Therefore, these provisions of the decree are suspended until the Council of State, ruling on the substance of the case, decides on their legality.
Which CBD products are authorized to be sold?
The sale of flowers actually forms the bulk of the turnover of the 1,800 CBD stores located in France. The decree of December 31, 2021 justified mainly by reasons of public health, is therefore, for the industry, an earthquake.
CBD stores and tobaccos should stop selling raw hemp flowers and leaves from the beginning of this year pending the decision of the Conseil d’Etat.
However, the good news for all distributors and manufacturers of CBD is that products with THC less than 0.3 %, are now authorized for sale, which was not the case before.
The other benefit is that the harvest of flowers and leaves to produce hemp extract is now authorized which should be beneficial to the agriculture sector.
However, CBD is considered a novel food and therefore CBD and foodstuffs containing it cannot be marketed without the prior assessment by the European Food Safety Authority (EFSA) and authorization.
The European Food Safety Authority (EFSA) is therefore supposed to give its green light for each new CBD-based food product. However, according to the professional association of hemp, the files submitted to date (more than a hundred) are still pending validation, which leaves industry professionals in a very uncertain situation.
To date, the European Authorities prohibit marketing foods or dietary supplements containing cannabidiol (CBD) throughout the European Union, where it is not specifically authorized under the provisions of this Regulation.
The European Food and Safety Authority (EFSA) is expected to outline its position around January 31, 2022, on the safety of cannabidiol (CBD) as a novel food in a move expected to aid in future novel food applications.
What should be the next steps?
The conflict here is not new and has been dragging on for a few years; indeed, the public authorities have witnessed the rise of the new well-being industry of hemp. As cannabis has been legalized in some countries such as Canada and many States in the United States, a CBD or cannabidiol industry has emerged.
This market already represents approximately 3 billion euros worldwide annually. Europe should eventually represent 30% of the world market.
The France market is already estimated at 300 million euros and should reach 1.5 billion per year in a few years, with at least 10,000 people employed in this industry. However, two-thirds of this market is expected to come from the marketing of flowers and raw leaves. While France is only ranked 3 or 4 in Europe in terms of consumption figures, agriculturally, France is the largest European producer of hemp and the third largest in the world after China and Canada (which supplies the huge American market).
The battle is therefore not ended between the hemp industry and the defenders of economic freedom on the one hand, and the public authorities on the other!
We are left with some uncertainty as to the French legal framework of the CBD market pending a final decision on the merits of the legality of the challenged decree.
More generally, the development of a common European approach to CBD-based products is desirable.
Therefore, here are some of the important steps to take:
- Make sure the CBD products you are manufacturing and selling or distributing are compliant with French and EU regulations.
- If you are distributing your CBD products in countries outside of France (or in other EU member States), get clarification on whether or not these products can be imported to France.
- Make sure that the CBD products you are importing comply with EU regulation and in particular, have been approved as Novel Food by the EU.
- Check that the advertisements made for products containing CBD do not create any confusion with cannabis and do not make any therapeutic claim.
More generally, it is important to stay up to date with regulatory changes in relation to CBD in Europe to fully understand what is authorized and what is not.
Ms. Olivia Lê Horovitz has extensive experience practicing corporate law. Her practice is primarily focused on cross-border mergers and acquisitions as well as private equity transactions. She represents clients in a variety of complex multijurisdictional acquisition transactions, including acquisition or sale of businesses, distressed companies, restructurings, divestitures, spin offs, recapitalizations, joint ventures and complex commercial contracts. Ms. Lê Horovitz regularly advises US, European, Israeli and Chinese companies wishing to invest in Europe in the context of private and public acquisitions as well as French companies looking to expand internationally. She also advises French and foreign investment funds and strategic investors in their financing and acquisition activities as well as private and public companies at all stages of their development. On the counseling side, Ms. Lê Horovitz advises clients on a full range of domestic and international sensitive corporate governance and responsibility issues, including environmental social governance (ESG). She also helps companies navigate European and French regulations in the growing industry of cannabis and CBD. Read more here.