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KFN+ Interview with Krautinvest about the Joint Application of EIHA for CBD as Novel Food

German Version at Krautinvest

An interview with Kai-Friedrich Niermann, lawyer and legal advisor of EIHA

Novel food where you only hear it. But how will a successful collective application affect the market? What does this mean for the availability of CBD in food? The European Industrial Hemp Association (EIHA) is launching a large-scale initiative for more legal and planning security for the European hemp industry. In January 2019, the Novel Food Catalogue was amended in such a way that all hemp extracts of industrial hemp and thus also the cannabinoids contained therein are considered novel foods. The EIHA then tried to prove that people have been consuming cannabinoids in hemp food for centuries. Their position: In principle, enriched and isolated cannabinoids would be considered novel food, whereas hemp leaves and flowers and hemp extracts from industrial hemp with a natural content of cannabinoids would be traditional foods and would therefore not necessarily fall under the Novel Food Regulation. The Federal Government nevertheless maintains that the Federal Office of Consumer Protection is „currently not aware of any case in which cannabidiol (CBD) would be marketable in food, i.e. also in food supplements“.
In view of this situation, the EIHA now assumes that legal and planning security for the European hemp industry and the trade with CBD-relevant products can only be provided by an authorisation as novel food. For this purpose, the EIHA has formed a so-called „Novel Food Consortium“ with a project GmbH. But: What does this mean? How can companies participate? What are the consequences for the market of a prospectively successful outcome? Kai-Friedrich Niermann, Lawyer and legal advisor of the EIHA, answers these and other questions.

krautinvest.de: The news that the EIHA is launching a joint application with its members for the approval of CBD products as novel food was the headline last week. For which products will an application be filed?

Kai-Friedrich Niermann: This decision by EIHA and its member companies was indeed unique and will write industrial history. The EIHA continues to advocate that CBD products with a natural content of cannabinoids, as regulated in the Novel Food Catalogue until 2019, may be placed on the market. However, the EIHA is now taking matters into its own hands and will create the planning security for its member companies that is denied to it by the authorities due to the incomprehensible and incorrect amendments to the Novel Food Catalogue.

Applications will be made for various CBD-containing basic products, i.e. ingredients. The CBD share is up to 10 percent and thus covers all marketable formats.
krautinvest.de: How is the application financed?

Kai-Friedrich Niermann: The proposal is financed by a special contribution of the members, which was decided by the General Assembly last week. The special contribution is 15,000 euros for companies with a turnover of less than one million euros, and at the peak 140,000 euros for companies with a turnover of more than 20 million euros. The contributions will increase in percentage terms the later one joins the proposal. The special contribution will be collected in several parts, depending on the progress of the scientific studies. The cost of the application is estimated at approximately 3.5 million euros. This will be used to finance extensive studies, including those involving human exposure, which will examine the toxicity of THC in particular and, as a result, enable new guideline values to be set that will enable industry to live better.
This is because the extremely low THC guideline values with which the industry is currently struggling are outdated and no longer scientifically tenable. Besides the Novel Food problem, the THC guideline values in food are the second major problem of the industry. The studies are intended to show that even products with much higher THC values than those currently recommended in Germany and Europe can be considered absolutely safe for the consumer.
krautinvest.de: Who makes the applications?

Kai-Friedrich Niermann: The applications will be submitted by a new company, EIHA projects GmbH, a wholly owned subsidiary of EIHA. This company acquires the rights under the Novel Food Regulation, manages them and transfers them to the members. Each EIHA member concludes a private written contract with the project GmbH.

krautinvest.de: What rights does a company that participates in the joint application acquire? What do companies have to do to participate in the application?

Kai-Friedrich Niermann: The project contract stipulates that consent will be given for the marketing of the member’s individual brands. An assignment of these rights is not possible. To ensure an equal financial participation of all companies in the project, on the one hand, all companies of a holding company with their worldwide CBD-related turnover are considered if the holding company is a member of the EIHA. However, if a subsidiary is a member, the entire worldwide CBD-related turnover of the holding company must also be taken into account.

Companies must therefore become members of EIHA and conclude a contract with EIHA projects GmbH.
krautinvest.de: What consequences will this have for other players who want to enter the market or how will a successful proposal change the market?

Kai-Friedrich Niermann: Products with CBD-isolate or enriched hemp extracts are currently considered by the authorities and courts as a novel food according to the prevailing opinion. A different opinion can be taken on this, as the EIHA has already explained several times. However, several first instance administrative courts have initially adopted the classification of enriched hemp extracts as a novel food throughout Germany. We see an increased enforcement of the Novel Food Regulation, especially in the last two weeks, after the worst consequences of the Corona Pandemic seem to have been worked off, and thus there is again time for „hunting“ CBD products. The City of Cologne even issued a general order prohibiting the marketing of food containing CBD on 17 June 2020, which is legally an extremely unusual step and can be seen more as symbolic politics.

Companies that want to continue to operate on the market without Novel Food approval will therefore have a hard time. One of the opponents will remain the authorities, which will enforce the regulation through administrative law. However, with a successful Novel Food approval in the CBD area, other companies, including EIHA projects GmbH, will also be able to take action against companies under competition law and demand injunctive relief if no market authorisation is available.
Overall, the market will change for the better as uniform standards and new findings on the safety of THC in food increase consumer protection and allow for correct and permitted food labelling. In addition to the image and brand value enhancement, the participating companies will gain lasting legal and planning security.
krautinvest.de: Does the application then also apply to Great Britain?

Kai-Friedrich Niermann: Yes, an application will also be submitted to the FSA. The FSA has made it clear that all applications must be submitted to the EU Commission before 31 December 2020, and to the FSA after that date. All companies that submit a valid Novel Food application by 31.3.2021 can continue to sell their products on the British market. In addition, the FSA will introduce a procedure for the assessment of applications for Novel Food approval, which will be very similar to that of the European Commission.

krautinvest.de: Still another completely different topic, in December a UN decision is to take place for the reclassification of cannabis. How do you estimate the situation?

Kai-Friedrich Niermann: It is not yet clear at all whether a decision will actually be made this time. Many conservative countries, which pursue a very strict cannabis policy, also with regard to medical cannabis, have so far been able to successfully delay a vote.

krautinvest.de: What consequences could the reclassification of cannabis by the UN have for the industry?

Kai-Friedrich Niermann: If medical cannabis should indeed be removed from Annex 4 and listed only in Annex 1, this would give a further boost to the medical cannabis industry. The use of cannabis as a medicine and research would be made much easier. It would also make it easier for other governments to consider the introduction of a medical cannabis program.

With regard to cannabidiol or CBD, the WHO has proposed „preparations containing predominantly cannabidiol and no more than 0.2 per cent delta-9-tetrahydrocannabinol“ not to be subject to international control. The European Commission’s proposal for a common position at the December decision rejected this addition. The THC limit values for preparations containing mainly cannabidiol are not scientifically substantiated and a different interpretation of the way in which this limit value is calculated cannot be ruled out.
This EU position is yet another argument in favour of the EIHA to carry out detailed toxicological studies on the safety of THC in food in order to achieve once and for all a uniform handling.
krautinvest.de: Many thanks for this interview. We are curious about the further development.