Member Article

The legal status of CBD, a naturally occurring compound found in the cannabis plant, is murky. Certain Member States are more restrictive about it than others. The Court of Justice of the EU has very recently provided clarification in the context of a preliminary ruling (case C-663/18 of 19 November 2020). This case revolves around CBD’s ban in France, after it had been imported from the Czech Republic where it was lawfully produced. The Court has ruled that CBD is not a narcotic drug and that the principles of free movement apply.

The factual context leading up to the Court of Justice’s ruling in case C-663/18 of 19 November 2020

A French company, Catlab SAS, imported Cannabidiol (“CBD”) into France for use in electronic cigarettes.

CBD comes from the cannabis plant, meaning that its origin creates certain controversy. Indeed, “cannabis” is a loaded term. We have to be mindful, however, that the word “cannabis” can refer to different things. Therefore, some conceptual clarity is in order.

First and foremost, “cannabis” can refer to a plant: Cannabis sativa L. The plant has many uses, including uncontroversial ones, for example, as a source of industrial fibre (hemp fibre).

“Cannabis” is also used to describe a psychoactive drug, generally linked to the cannabinoid Tetrahydrocannabinol (THC) - a compound found in the cannabis plant. In this respect, “cannabis” refers to a product from the cannabis plant.

The link between the psychoactive drug and the component THC explains why regulations regarding industrial cultivation of the cannabis plant – in this context commonly called “hemp” – sometimes set a maximum threshold for the level of THC (e.g. 0.2% in Regulation (EU) 1307/2013).

CBD (or Cannabidiol) is also a cannabinoid, a naturally occurring compound found in the cannabis plant, but not associated with any psychoactive effects.

The CBD at issue was extracted from the Cannabis sativa plant in its entirety using CO₂ extraction. The plant variety from which the substance was extracted had a THC content not exceeding 0.2%. It was lawfully produced in the Czech Republic.

Catlab, however, ran into serious legal trouble. According to French law, the CBD at issue could not be legally marketed in France. Even more so, a French criminal court found Catlab’s directors guilty on several charges, including infringement of the legislation on narcotic/psychotropic substances.

The directors appealed by arguing that the prohibition on the marketing of CBD from the Cannabis sativa plant in its entirety, lawfully produced in the Czech Republic, was contrary to EU law. The appellate court decided to refer the question to the Court of Justice for a preliminary ruling.

The Court of Justice rules that CBD is not a narcotic drug

The CBD at issue was lawfully produced in one Member State and subsequently imported into another. Within the EU single market, the starting point is that goods should be able to move freely. Therefore, to assess the French prohibition, it is necessary to consider whether the principles of free movement apply or whether CBD falls under a different regime.

This is where the Court’s analysis of CBD as a potential narcotic should be situated. In EU law, narcotic drugs fall into a different category. They are subject to a prohibition on importation and offering for sale in all the Member States and cannot rely on the free movement principles. This legal position is a consequence of international instruments, such as the Single Convention on Narcotic Drugs, concluded in New York on 30 March 1961 and amended in 1972 (“Single Convention”), which have found their way into European Union law.

Does the CBD at issue constitute a banned narcotic drug? The Court rules that it does not.

The Court examined how drugs are defined in the Single Convention. The definition is broad. It includes cannabis, cannabis resin, and cannabis extracts and tinctures. The Court has pointed out that, taken literally, CBD that is extracted from the plant as whole, is a cannabis extract and, consequently, a drug. However, that finding would be contrary to the objective of the Single Convention to protect the health and welfare of mankind. The Court has noted that the CBD at issue does not appear to have any psychotropic effect or any harmful effect on human health. Building on this teleological interpretation, it has concluded that the CBD at issue is not a drug within the meaning of the Single Convention.

Because CBD is not a narcotic drug, the principles of free movement apply

It follows from the previous considerations that Articles 34 and 36 Treaty on the Functioning of the European Union apply to CBD. The free movement of goods is fundamental. Restrictions are the exception and must be interpreted strictly. If France would like to invoke the protection of public health, then it is up to France to demonstrate that CBD poses a genuine threat, that the prohibition on CBD’s marketing is appropriate and that it respects the principle of proportionality.

The referring court will need to decide on these points but at the same time the Court of Justice has found it appropriate to already offer guidance on that determination. Most interestingly, the Court has stressed that, although France is not required to show that CBD is as dangerous as a narcotic drug, it is imperative that the alleged risk to public health is not based purely on hypothetical considerations. It is true that a Member State may take protective measures under the precautionary principle, but this is not a free pass. A correct application presupposes a comprehensive assessment of the risk to health based on the most reliable scientific data (see Court of Justice 28 January 2010, C-333/08, Commission v France).

Conclusion

CBD’s legal status is murky, but the Court of Justice has very recently provided some very useful clarifications. In the case C-663/18 of 19 November 2020, the Court has ruled that CBD is not a narcotic drug. It follows that the principles of free movement in the EU apply. If a Member State would like to restrict CBD on the grounds of public health through the precautionary principle, then it must demonstrate that such a restrictive measure is appropriate for securing that objective and does not go beyond what is necessary. The Court has warned that the alleged risk for public health cannot be based on purely hypothetical considerations.

For questions, please contact Philippe de Jong ([email protected]) or Bregt Raus ([email protected]).