California Public Health officials confiscated $140,000 worth of cannabidiol-infused beverages from an LA warehouse.
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As more states legalize recreational marijuana use, another part of the cannabis plant has found a market niche. CBD, short for cannabidiol, is a molecule that can be derived from hemp or cannabis.  It doesn’t contain THC, so it won’t get you high.

“I became really like obsessed with CBD,” says Jonathan Eppers, founder of Vybes beverages.

Eppers, whose company makes CBD drinks that are sold in nearly 250 U.S. grocery stores, coffee shops, and hotels, says that he launched the beverage startup in 2017 after using CBD oils to treat his own anxiety. But the products that he sells are illegal—even in states like California where recreational marijuana is now widely available.

“I didn’t really didn’t think too much about the regulations around CBD because CBD oil was being sold in grocery stores here in LA,” Eppers says.  “But once I got into it we sort of realized we were in a gray area with CBD.”

In January 2019, Eppers said officials from the California Department of Public Health (CDPH) showed up to one of his Los Angeles warehouses and confiscated $140,000 worth of Vybes beverages. Eppers says state officials put an embargo on his product and went after a company that helps package his products in Northern California.

“Basically for two months, we haven’t been able to sell Vybes which is costing us hundreds of thousands of dollars,” states Eppers.

California is just one of many states where CBD sales are legally murky. The law clearly allows for the sale of cannabis-derived CBD products, but items that contain the hemp version of the molecule are prohibited.

“The Department of Public Health here is of the view that CBD can’t be put in foods, beverages, animal foods you name it,” says Griffen Thorne, a cannabis lawyer with Harris Bricken. “It is kind of interesting that you have marijuana, which is still federally illegal and there’s a path towards sales for companies that want to actually make and sell marijuana products. Whereas CBD is derived from a plant that’s no longer federally illegal and there are a ton of roadblocks and there’s zero clarity on how to do it for many products.”

Just months after Eppers launch his company, the CDPH released an FAQ document that echoed the Food and Drug Administration’s stance on CBD, stating that products containing the compound could not be sold by unlicensed retailers. But the document contained no guidance for enforcement, and many retailers—unaware of the state’s stance on CBD—have continued selling the product to consumers.

“It wasn’t until after the Farm Bill passed that California became a lot more aggressive and actually [started] going after companies here in California that were producing CBD products,” says Eppers.

Kenny Morrison, a cannabis industry veteran who runs VCC Brands and serves as president of the California Cannabis Manufacturers Association, sees parallels between today’s CBD market and the early days of recreational marijuana.

“It’s all just layovers from prohibition,” Morrison states. “The retail model of cannabis being sold at a storefront, in order for that to become accepted and commonplace people had to sort of break the law or interpret the law in a new way. And we’re seeing that with CBD as well.”

With consumer sales of CBD products projected to top $2 billion by 2020, lawmakers in several states, including California, are pushing for bipartisan legislation that would legalize the use of CBD in food, beverage, and cosmetic products.

Produced and shot by Alexis Garcia. Additional camera by Zach Weissmueller, Paul Detrick, and Justin Monticello.

Photo credits: Hollandse-Hoogte/ZUMA Press/Newscom, Jens Kalaene/dpa/picture-alliance/Newscom, Michal Fludra/ZUMA Press/Newscom, Lucy Nicholson/REUTERS/Newscom, Jevon Moore/SplashNews/Newscom, and Vybes. Additional footage provided by the Drug Policy Alliance.

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