Merchant Risk Live Wrap-up: Gerard Olson on Cannabis, CBD, and Marijuana

laptop and microphone on desk

What’s the latest on cannabis, marijuana, and CBD? In this episode of Merchant Risk Live, we talk with Gerard Olson, Associate General Counsel at LegitScript, who studies the complex world of cannabis regulation and tracks trends and regulatory changes in the industry. He answers listener questions about recent federal laws to legalize marijuana, risks of processing payments for CBD merchants, the spat of other cannabinoids hitting the market, and more.

Key topics discussed in this episode include the following.

CBD Dietary Supplements

Currently, CBD may not be sold as a dietary supplement. According to the Food, Drug, and Cosmetics Act (FDCA), it is illegal to market CBD as a dietary supplement or otherwise introduce it into the food supply. The FDCA states that products containing a substance that is an active ingredient in an FDA-approved drug product, or which is subject to an investigational new drug application (and for which substantial clinical investigations have been made public), do not meet the definition of dietary supplement.

So then why are CBD supplements and other ingestibles so readily available in grocery stores and online? Part of it, Gerard said, may be enforcement priorities and resources. Federal regulators appear to focus on what they consider the worst offenders, which typically include merchants making impermissible claims about CBD’s ability to treat or cure disease. The agency has issued multiple warning letters against manufacturers of CBD products for marketing their products as dietary supplements, and these have typically included marketing claims.

Other Cannabis-Derived Compounds

Cannabis has more than 80 biologically active chemical compounds. Although delta-9 THC and CBD are the most widely known, people are increasingly exploring and experimenting with other compounds found in the plant.

When people refer to THC, they are generally referring to the compound delta-9 THC. However, Gerard explained that there are other forms of THC, including an increasingly popular compound called delta-8 THC. It is similar in structure to delta-9 THC except for the location of its double bond. Although often considered less potent, delta-8 THC is a psychoactive compound and can get users high. Delta-8 THC can be derived from either hemp or marijuana plants, but products on the market are generally derived from hemp.

Similarly, there has been a proliferation of other cannabinoids that are derived from hemp, in a wide variety of forms, including delta-10 THC and THC-O-acetate. This is a rapidly developing space, and so it’s important for payment service providers to stay abreast of the latest compounds and the regulatory approaches to them.

To hear more on the conversation about cannabis, listen to the full episode.

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The Merchant Risk Live is a biweekly virtual event to discuss trends in merchant risk management with guest experts in payments risk and compliance. Some of the topics include creating effective risk rules, making transaction monitoring and content monitoring work together, getting federal regulation updates, and more! If you’re interested in joining the biweekly live event, sign up today.