15 May 2020 - Authored by:Eveline Van Keymeulen
Yesterday, Advocate General Tanchev presented his long-awaited opinion before the Court of Justice of the European Union (CJEU) in Case C-663/18 (Kanavape) stating that the general ban on natural cannabidiol (CBD) in France is contrary to EU law. It is the first time that the highest European Court, including the Advocate General, has been requested to take a position on the legality of the commercialisation of CBD and CBD-based products in Europe.
In his opinion, the Advocate General concludes that: “[EU law] preclude[s] a Member State from prohibiting the importation of cannabidiol oil from another Member State, where that oil is extracted from the whole hemp plant, and not solely from its fibre and seeds, since, in the current state of scientific knowledge, it has not been established that cannabidiol oil has psychotropic effects.” The Advocate General further advocates for a proportionate regulation of CBD-based products in Europe which is less restrictive on the free movement of goods (for example through the establishment of a maximum CBD content).
I. Underlying French procedure and framework
The opinion is delivered in the context of a preliminary reference made by the French Court of Appeals of Aix-en-Provence. In the underlying criminal case before the French Court, two former managers of a start-up company are being prosecuted in France for selling vaping products containing CBD, a non-psychotropic substance contained in the hemp (Cannabis sativa) plant, under the brand name Kanavape®. The CBD used in these products was extracted from entire hemp plants legitimately cultivated in the Czech Republic by a certified laboratory in accordance with applicable Czech and EU legislation, and subsequently imported and sold in France and many other EU countries.
However, the French regulatory framework – as interpreted by the French competent authorities – currently prohibits the marketing of products derived from the whole hemp plant, restricting the use of the plant to only its fibre and seeds, and thus – in practice – bans the marketing of all products containing CBD in France. By contrast, the use of synthetically produced CBD (which is chemically identical) is generally permitted given the absence of a link with the Cannabis sativa plant. By way of reminder, it should be noted that CBD in itself is not classified as a – prohibited – narcotic or psychotropic substance in international, European or French law, given that it does not have any psychotropic effect.
In this context, the French Court of Appeals stayed the national proceedings and referred the following question to the CJEU: “Must [EU law, in particular] the principle of the free movement of goods, be interpreted as meaning that [the applicable French regulatory framework], 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?”
By referring this question to the CJEU, the referring Court seeks to understand whether the current French “ban” on CBD is incompatible with EU law and should thus not be applied in the underlying French case.
II. Opinion of the Advocate General
In his opinion, after having discarded the applicability of the rules on the EU common agricultural policy (CAP) to CBD, Advocate General Tanchev focusses his analysis on the (i) applicability and (ii) application of the fundamental rules regarding free movement of goods in the EU, i.e., Articles 34 and 36 of the Treaty on the Functioning of the European Union (TFEU).
a) CBD is subject to free movement of goods in the EU
First, the Advocate General confirms unequivocally that the free movement principles are indeed applicable to CBD, given that it is not classified as a narcotic drug under the International Conventions or French law. He thereby confirms the principle that only narcotic drugs which are not distributed through channels strictly controlled by competent authorities with a view to use of medical or scientific purposes, do not benefit from the free movement of goods in the EU.
b) French restriction on free movement of CBD is not appropriate nor proportionate
Second, and most importantly, according to the Advocate General, Articles 34 and 36 TFEU “do preclude legislation such as [the French legislation at issue], since CBD oil appears not to possess any psychotropic effects and the legislation at issue in the main proceedings is not therefore appropriate for protecting human health.“ The Advocate General first confirms that national legislation, which prohibits the importation of CBD oil where it is extracted from the whole of the hemp plant, must be regarded as a measure having equivalent effect within the meaning of Article 34 TFEU. While such measure may be justified, in light of Article 36 TFEU, for example, on grounds of protection of health and life of humans (as claimed by the French government), in light of established CJEU case law “this is only the case if such measure is appropriate for securing the achievement of the objective pursued and does not go beyond what is necessary to attain it.“
According to the Advocate General, however, the French ban on CBD is not appropriate, let alone proportionate, to protect public health as: “in the light of the information provided to the Court, it is hard to consider that the French Government has clearly identified the harmful, in particular psychotropic, effects involved in the use of CBD oil in electronic cigarettes, even less that it has carried out a comprehensive assessment of the risk to health based on the most reliable scientific data available and the most recent results of international research.” Consequently, the French government should not be entitled to invoke the so-called “precautionary principle” (which allows a Member State to take protective measures without having to wait for the reality and the seriousness of those risks to be fully demonstrated) because this requires, first, identification of the potentially negative consequences for health, and second, a comprehensive assessment of such risks based on the most reliable scientific data available and the most recent results of international research. In the opinion of the Advocate General, the French government clearly failed to provide such scientifically solid proof of alleged health risks related to CBD.
This conclusion is hardly surprisingly in light of the international scientific evidence with respect to CBD available to date. First, it is not contested that CBD has no psychotropic effect. In addition, when it comes to possible other harmful effects, the most prominent international reference body, the World Health Organisation (WHO)’s Expert Committee on Drug Dependence (ECDD) has confirmed at multiple occasions that “CBD does not appear to have abuse potential or cause harm” and “there is no evidence of […] any public health-related problems associated with the use of pure CBD.” In this respect, the Advocate General indeed rightfully notes that the WHO has recommended a less restrictive scheduling of CBD in the Single Convention, first, by removing from Schedule I the references to ‘extracts and tinctures of cannabis’ and, secondly, by clarifying that even ‘preparations containing mainly [CBD], the [THC] of which does not exceed 0.20%, are not subject to international control’.
The Advocate General nevertheless leaves it to the French Court to confirm that the use of CBD oil entails no risks associated with harmful effects, in particular effects other than psychotropic effects. However, importantly, if the Court were to find that such risks may exist, it will need to make sure that the relevant French legislation does not go beyond what is necessary to protect human health. Even though the Advocate General thus leaves the final word to the national court, he clearly suggests that the French CBD ban is very unlikely to meet the required proportionality test “since it prohibits outright the importation of CBD oil extracted from hemp leaves and hemp flowers, when it might perhaps have been possible to lay down a maximum CBD content, similar to the 0.20% threshold for THC.” Indeed, an outright prohibition or “ban” is the most far-reaching restriction on the free movement of goods a Member State could possibly impose and should be justified in light of strong scientific evidence of serious public health risks, which seems absent – and has not been presented by the French government – to date.
In light of these considerations, the Advocate General proposes that the EU Court of Justice reply as follows to the question of the national court whether the French legislation imposes a restriction that is contrary to the fundamental principle of free movement in the EU:
“Articles 34 and 36 TFEU preclude a Member State from prohibiting the importation of cannabidiol oil from another Member State, where that oil is extracted from the whole hemp plant, and not solely from its fibre and seeds, since, in the current state of scientific knowledge, it has not been established that cannabidiol oil has psychotropic effects. It is, however, for the national court to satisfy itself that no risk associated with, inter alia, non-psychotropic effects of CBD has been identified or been the subject of a comprehensive scientific assessment, and if it were to find that such a risk existed and that there were such an assessment, to satisfy itself that an alternative measure, less restrictive on the free movement of goods, could be adopted, such as the establishment of a maximum CBD content.”
In sum, if the CJEU were to rule in accordance with the Advocate General’s opinion, it would leave only a very small margin of manoeuvre to the French Court to come to a different conclusion.
III. Possible impact of the Opinion
a) Direct implications on the French legal framework
Should the CJEU follow the Advocate General’s opinion, which it does in the vast majority of cases, and confirm that the French ban on hemp-derived CBD is contrary to EU law, the Court of Appeal of Aix-en-Provence will have to exclude the application of the relevant French regulations in its resolution of the pending underlying case in France.
In addition, the French Government will have to remedy this non-compliance and bring the French provisions in line with EU law by abolishing the present ban on hemp-derived CBD and replace it by less restrictive — more proportionate — measures. As suggested by the Advocate General, such measures could take the form of maximum concentrations or recommended daily dosages depending on the type of CBD product, which would permit a tailored and risk-based approach.
Alternatively, the French regulator could consider imposing specific labelling and/or consumer information requirements, mandatory product notifications or regulated sales channels (to name just a handful of examples) which would arguably be more effective to protect consumers than the present – arbitrary – ban.
b) Important step towards harmonisation of regulations in Europe
A decision of the CJEU, in line with the opinion of the Advocate General, may also have a significant impact on the CBD industry in Europe, currently losing significant market share compared to other regions such as the US and Canada, given the fragmented and inapt legal framework across Member States which is difficult to navigate for both industry and consumers.
A preliminary ruling constitutes a binding interpretation of EU law for EU Member States and EU institutions even if they were not directly involved in the specific preliminary ruling. It will serve as a so-called “precedent” in subsequent cases that are brought before national and/or EU courts. The outcome of this case is thus not only binding on the referring French Court but also on the courts in other EU Member States.
As the CJEU’s decision would set such binding precedent with European reach, it may encourage – or force – other national regulators to (re)examine existing restrictions related to hemp-derived products, or in any event provide room for industry to challenge overly restrictive and arbitrary regulations in light of the free movement of goods in the EU.
The Advocate General’s opinion is therefore a crucial step towards much needed regulatory harmonisation in Europe and – long overdue – legal certainty for the EU CBD industry. In addition, and most importantly, a clear and proportionate, risk-based regulation of CBD-based products will ultimately benefit EU consumers.
The Court’s decision is expected to be rendered from September 2020 onwards.
Disclosure: Eveline Van Keymeulen, Head of Allen & Overy’s Life Sciences Regulatory and Cannabis practices, is representing Antonin Cohen in the proceedings before the CJEU.