CJEU: CBD is not a narcotic drug

Canabidiol (hearafter CBD) is one of 113 identified cannabinoids in cannabis plants and accounts for up to 40% of the plant's extract. On 19 November 2020, the Court of Justice of the European Union (hereafter CJEU) issued its preliminary ruling in Case C-663/18 (Kanavape). In essence, it held that CBD is not a narcotic drug and that EU member states cannot prohibit sale of CBD lawfully manufactured in one EU member state, even if said CBD is extracted from the entire hemp plant and not solely from its fibre and seeds.

Context

In 2017 the Criminal Court of Marseille, France, convicted the two directors of a company (Catlab SAS) that markets the electronic cigarette named "Kanavape" based on the fact that it contains CBD oil extracted from the whole hemp plant, including the leaves and flowers, imported from the Czech Republic. Indeed, French legislation (Order of August 22, 1990) restricts the cultivation, importation, exportation and industrial and commercial use of hemp solely to its fibre and seeds. As fibre and seeds contain very limited CBD, French strict regulation de facto prohibits the marketing of all hemp-derived CBD-based products in France.

On the other hand, EU law does not require that the use of the legitimately cultivated hemp plant (more than 70 listed varieties of hemp containing up to 0.2% THC) be limited to its sole fibre and seeds.

The owners of Catlab appealed the decision of the Criminal Court of Marseille.

The Court of Appeal of Aix-en-Provence, France, to which the case was then referred stayed the proceedings and asked the CJEU whether the French legislation is incompatible with EU law. The exact question read as follows: "Must Regulations [No 1307/2013 and No 1308/2013], and the principle of the free movement of goods, be interpreted as meaning that the derogating provisions introduced by the Decree of 22 August 1990, by limiting the cultivation, industrialisation and marketing of hemp solely to fibre and seeds, impose a restriction that is not in accordance with [EU] law?"

In its preliminary ruling issued on 19 November 2020, the CJEU held that the general ban on CBD in France is contrary to EU law. The prohibition may however be justified by the objective of protecting public health, but must not go beyond what is necessary in order to attain it.

Main findings

There is a prohibition in all the Member States on marketing narcotic drugs, with the exception of strictly controlled trade for use for medical and scientific purposes. The CJEU considers that, according to the current state of scientific knowledge, CBD (unlike Tetrahydrocannabinol, hereafter THC) does not appear to have any psychotropic effect or any harmful effect on human health. Therefore, CBD cannot be considered as a narcotic drug. Moreover, the CBD at issue in the main proceedings had a THC content not exceeding 0.2% and was lawfully produced and marketed in the Czech Republic.

The CJEU also mentions that the general French ban on CBD is a measure having equivalent effect to quantitative restrictions on imports, which are prohibited by Article 34 of the Treaty on the Functioning of the European Union.

Finally, the CJEU holds that such ban could be justified by an objective of protecting public health, as invoked by France. However, such legislation should be (i) appropriate for securing the attainment of that objective and (ii) proportionate to that objective (it should not go beyond what is necessary to attain that objective). The CJEU leaves that assessment to the Court of Appeal of Aix-en-Provence, but provides two insights on this regard:

• In France, the ban does not affect synthetic CBD (since the ban concerns the entire natural hemp plant with the exception of its fibre and seeds), which would have the same properties as the natural CBD at hand and could even be used as a substitute of the latter. This would be an insight that French legislation is not appropriate for protecting human health.

• The Court then accepts that France does not have to demonstrate that CBD has dangerous properties identical to that of narcotic drugs. However, the Court of Appeal of Aix-en-Provence will have to assess available scientific data in order to confirm that the risk to public health, as alleged by France, is not based on purely hypothetical considerations. A decision to ban the marketing of CBD constitutes the most restrictive obstacle to trade in products lawfully manufactured and marketed in other Member States, and can only be adopted if that risk appears sufficiently established.

The CJEU concludes in such terms:

"Articles 34 and 36 TFEU must be interpreted as precluding national legislation which prohibits 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, unless that legislation is appropriate for securing the attainment of the objective of protecting public health and does not go beyond what is necessary for that purpose [...]".

Impact

In essence, this ruling does not leave much freedom of decision to the Court of Appeal of Aix-en-Provence, to which the matter will now be sent back for resolution of the individual case at hand. The interested party to the dispute will have difficulties to prove that CBD has dangerous properties considering the international scientific evidence showing that (i) CBD has not psychotropic effect and (ii) CBD does not seem to have abuse potential and cause harm (findings of the World Health Organization). The Court of Appeal of Aix-en-Provence should hence most likely exclude the application of the French regulations. We can expect a decision in a year or so.

Going forward and beyond this individual dispute, the French Government will, in principle, have to apply the CJEU's preliminary ruling and replace the present ban on CBD. If and when it intends to spontaneously follow on the CJEU's ruling, the French Government has two options:

• It could simply allow the marketing of 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.

• Alternatively, the French Government may follow the Advocate General's conclusions by replacing the strict ban by less restrictive measures such as the establishment of a maximum CBD content or recommended daily dosages depending on the type of CBD product. It could also choose to impose precise labelling and information duties in relation to the product or regulated sales channels.

Moreover, this ruling will also bind on the courts in other EU Member States which will apply this precedent in subsequent cases. Similar provisions in the other EU Member States could hence also be challenged before national courts. Other EU member states may then also reassess their restrictions related to CBD products.

On 2 December 2020, in considering a series of World Health Organization (WHO) recommendations on cannabis and its derivatives, the United Nation Commission on Narcotic Drugs (CND) voted to remove cannabis from Schedule IV of the 1961 Single Convention on Narcotic Drugs, where it was listed with the most risky narcotics, including heroin. This means that the United Nation now effectively accepts the medical potential of cannabis. WHO also recommended that CBD with 2 percent or less THC should not be subject to international controls. Surprisingly, the CND rejected this proposal. It seems that this rejection was based on the fact that CBD does not seem to be currently under international control under the drug conventions, as it is not specifically mentioned in relevant legislation. CBD will remain in some legal ambiguity under the United Nation conventions for the moment.