Bill legalizing CBD oil passes, but it could cut some manufacturers out of industry

A bill allowing Hoosiers to purchase a low-THC cannabis extract is heading to the governor’s desk, but its stringent labeling requirements could cut most cannabidiol, or CBD oil, manufacturers out of Indiana’s market.

Lawmakers saw Senate Bill 52 as a "fix" to last year's House Enrolled Act 1149, which allowed patients with epilepsy to possess CBD oil, but didn't offer any way for them to purchase it.

It may still be challenging for Hoosiers to find inexpensive CBD oil that meets the requirements of the new measure.

"We’re going to have to come back and fix this next year, but we’ve got to at least get it legal," said Rep. Matt Pierce, D-Bloomington.

Manufacturers and some lawmakers worried the legislature was making the same mistake it did on vaping legislation a few years when it cut many manufacturers out of the market and caused e-liquid prices to jump.

The final version of Senate Bill 52 requires manufacturers to have each batch of product tested in order to ensure it has less than .3 percent THC, meaning it can’t produce a "high."

The measure also requires any products sold in Indiana to have a QR code on the label linking to a document containing information on the batch, such as the ingredients and the name of the company that manufactured the ingredients.

That would require most CBD oil manufacturers to create new labels just to sell products in Indiana, including the market-leading PlusCBD Oil which is typically found in health food stores.

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The bill is also silent on the manufacturing of CBD oil in Indiana — not specifying whether it’s legal or not — which could lead to disagreement over whether the product can be manufactured in the state.

Nathan Renschler, the owner of a CBD oil manufacturing company, said his products manufactured in Fort Wayne would likely come close to meeting the requirements laid out in Senate Bill 52. However, his other two brands manufactured elsewhere would have to have their labels altered.

“To have all these companies including mine have special labels for Indiana, and the rest of the country we have a different label, is pretty silly,” Renschler said. “They don’t have any state regulations on any other vitamin or supplement, but this one gets special regulations and it’s not for any good reason.”

Renschler likened the stringent requirements laid out in Senate Bill 52 to the regulations lawmakers placed on the vaping industry that enabled only six e-liquid manufacturing companies to operate in the state, prompting the FBI to look into the matter.

An IndyStar investigation found connections between the vaping legislation and an earlier drafted medical marijuana bill.

A federal appeals court later struck down a portion of the law that regulated out-of-state producers — much like Senate Bill 52 would.

“(Lawmakers) overreach when they freak out,” Renschler said. “They did it with e-liquid; now they’re doing it with CBD.”

Bill sponsor Rep. Bill Friend, R-Macy, and author Sen. Mike Young, R-Indianapolis, said the specific labeling language came from Indiana State Police and prosecutors, not lobbying groups.

"This is an investigative tool they can use all the way back to the grower of the plant," Young said.

Young also said there are 3,500 labs where manufacturers can test their products, which he argued gives them plenty of choices and freedom. Under the e-liquid legislation that came under question, manufacturers had to get approved by a single security firm before they could manufacture the product.

Still, lawmakers worried about the similarities between the two situations.

"What I don’t want to see is that someone takes it to court six months down the road and we end up with egg on our face because it looks like we’re not creating a level and fair playing field," said Rep. Terri Austin, D-Anderson.

Retailers can continue to sell CBD oil without the specific labeling requirements until July.

The bill passed in the Senate 36-11 and unanimously in the House.

Call IndyStar reporter Kaitlin Lange at (317) 432-9270. Follow her on Twitter: @kaitlin_lange.