On November 19, 2020, the European Court of Justice delivered the conclusions for the so called Kanavape Case (C-663/18). The judgment provides some much-needed clarity over the status of CBD in the EU and whether it should be classified as a narcotic substance.
The ECJ concluded that “A Member State may not prohibit the marketing of cannabidiol (CBD) lawfully produced in another Member State when it is extracted from the Cannabis sativa plant in its entirety and not solely from its fibre and seeds”. The case is particularly relevant as it clarifies that CBD derived from whole-plant hemp extracts cannot be qualified as narcotic substances.
How the dispute started
The case originated in France and concerned Kanavape, an electronic cigarette containing CBD oil derived from hemp extracts legally processed in Czech Republic. The French Competent Authority launched criminal proceedings against the owners of the company, finding multiple infringements with French legislation, particularly regarding those provisions enabling exclusively the use of hemp seeds and fibres while prohibiting the use of hemp flowers.
As CBD oil was imported from Czech republic, the French Court of Appeal of Aix-en-Provence referred the question for a preliminary ruling to the ECJ in order to assess whether the French provisions prohibiting the marketing of CBD from the whole Cannabis sativa plant are contrary to the EU law, essentially amounting to an import ban in possible violation of Art.34 TFEU.
ECJ considerations and interpretation of UN Narcotic Conventions
The ECJ first points out that substances classified as narcotics do not benefit of the free movement of goods, since their sale, when and if permitted, is subject to strict specific control and surveillance. To determine whether the free movement of goods is applicable to CBD, it must be first clarified whether CBD is a narcotic. From here, the Court starts by highlighting that CBD is not itself regulated by the UN Convention on Narcotic Drugs of 1961 and, since such conventions are instruments of international law, such legal texts must be read keeping in mind the spirit, objective and context of the international treaties as set out by the 1969 Vienna Convention on the Law of Treaties. The aim of the treaty, clearly stated in the preamble of the UN Single Convention, is to protect ‘the health and welfare of mankind’.
Following the literal interpretation of the UN Convention provisions in regard to a whole-plant hemp extract results in considering it non-compliant with the terms of the Convention, due to the inclusion of the cannabis flower in the extract. Since the flower corresponds to the definition of cannabis as provided by the Convention, a CBD raw material derived from a whole-plant hemp extract is considered as a narcotic substance, according to the literal interpretation.
However, CBD does not have any psychotropic effects and does not seem to have any harmful effects on human health on the basis of the current scientific knowledge, as indicated also by the WHO reports and recommendations to reschedule cannabidiol.
Accordingly, an interpretation deeming CBD as a narcotic given the current scientific knowledge would contravene the spirit of the Convention. For this reason, the Court points out that the CBD at matter cannot be qualified as a narcotic substance, according to the terms set out by the Single Convention. This means that CBD extracted from hemp will be compliant as long as the limit on THC content is observed. Since the CBD at matter was also commercialized in Czech Republic, Art. 34 & 36 TFEU are applicable to the subject matter.
Free movement of goods within the EU, Art. 34 & 36 TFEU
The free movement of goods is a fundamental EU right; thus, a prohibition is set out ex Art.34 TFEU on quantitative restrictions on imports and all measures having an equivalent effect between Member States. Correspondingly, the ECJ had to assess whether the French provisions are contrary to Art.34 TFEU or whether these could be justified based on one of the reasons of public interest set out by Art.36 TFEU.
Art. 36 TFEU is an exception to the free movement of goods that must be interpreted strictly. Additionally, the Member States need to prove that the measure is justified due to a real risk to public health, that the provisions are proportionate to the objective pursued and that are non-discriminatory. Nevertheless, the French measure does not seem to fulfill such requirements, since it allows synthetically produced CBD, but prohibits natural CBD derived from flowers, although there is no difference in regard to effects and characteristics between the two of them.
Consequently, the referring French Court will need to determine whether, based on the current scientific knowledge, the French provisions are justified due to a real alleged risk to public health rather than a mere hypothetical consideration.
What are the implications for cosmetics, e-cigarettes and food supplements?
The judgment sets out that CBD raw materials and hemp extracts derived from flowers or whole-plant hemp extracts are not subject to the UN Convention on Narcotic Drugs, provided that the limits on THC content are satisfied. Therefore, such raw materials cannot be considered as narcotics and, actually, benefit of the free movement of goods.
This clarifies considerably the situation for cosmetic products and general consumer products such as electronic cigarettes, cartridges, lubricants, etc.
For what concerns CBD in food and food supplements, the European Commission had temporarily suspended the processing of novel food applications for CBD derived from natural hemp extracts. The decision was motivated by the lack of clarity over the possible narcotic status for naturally derived CBD. While the judgment clearly does not affect the novel food classification, the EU Court concludes that CBD cannot be considered to be a narcotic based on the current scientific knowledge.
Hence, based on the above explanations, it could be reasonable to assume that the EC might resume processing novel food applications for naturally derived CBD extracts.
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