On Thursday, the U.S. Supreme Court rejected the opposition to California’s Proposition 12, which bans the sale of pork in the state that comes from pigs kept in gestation crates. In a 5-4 vote, the court’s decision rejects a pork-industry challenge claiming the legislation would unlawfully regulate out-of-state farmers.

The proposition, an animal protection law passed in 2018 known as the Prevention of Cruelty to Farm Animals Act, makes it illegal to house hens, sows, and veal calves in what the state calls “a cruel manner.” It also prohibits the in-state sale of products from caged animals raised out of state, which has been a major concern of the National Pork Producers Council and the American Farm Bureau Federation.

The industry groups say that the measure violates the Commerce Clause, a provision in the U.S. Constitution that courts have previously interpreted as only allowing the federal government to regulate interstate commerce. The groups argue that the California law violates this clause by forcing farmers outside the state to modify their practices in order to sell pork in California.

They also stated that Californians only consume 13% of the pork eaten in the U.S., so most of the product comes from pigs raised outside the state, meaning that the majority are not raised under the conditions that Proposition 12 mandates.

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When foods make people sick, the U.S. Department of Justice (DOJ) often partners with FDA to investigate and prosecute violations of food safety laws that appear to involve willful failure to follow regulatory requirements. When DOJ elects to get involved, the alleged food safety violations are typically egregious and have caused significant harm to the public. In these circumstances, DOJ may pursue civil penalties, criminal charges, or both.

Abbott Laboratories recently confirmed that DOJ had opened a criminal investigation into operations at the company following the infant formula recall and ensuing crisis in 2022. It was reported that DOJ previously entered into a consent decree with Abbott to allow the company to resume operations as long as they complied with certain requirements imposed by the decree. Reports released about the operations at Abbott assert that senior management at the facility and company may have been aware of the alleged conditions that led to the recall and failed to correct the conditions. FDA additionally alleged that Abbott Laboratories infant formula may have caused the death of two infants.

Other companies have been targeted by DOJ in the past. DOJ has previously, for example, pursued criminal charges against Kerry Inc. for insanitary plant conditions that were linked to a Salmonella outbreak. Blue Bell Creameries and individuals responsible at the corporation were also the focus of DOJ investigations and ultimate charges for Listeria contamination of ice cream. DOJ also used its authority to charge and convict individuals responsible at the Peanut Corporation of America for their conspiracy to distribute Salmonella-contaminated peanut products into interstate commerce.

When the U.S. Congress passed the laws that give FDA authority to regulate food products, Congress expressly included penalties for violations by food companies. The Federal Food, Drug, and Cosmetic Act provides for criminal and civil penalties for violations of the act’s requirements. Specifically, the legislation sets the penalty for an initial violation of certain provisions of the act as imprisonment for no more than one year, a fine of no more than $1,000, or both—for each count. When a violation occurs after a previous conviction for a violation of the act, or if the violation is committed with the “intent to defraud or mislead,” the penalty can be imprisonment for no more than three years, a fine of no more than $10,000, or both imprisonment and a fine (21 U.S.C. § 331(a)). Again, this is for each alleged count.

When a violation is identified, DOJ is responsible for investigating the violation and determining whether civil or criminal penalties should be pursued. Because possible violations are identified every day by FDA, DOJ must evaluate each violation to determine if DOJ’s resources would be best used under those circumstances. Typically, cases are referred to DOJ by FDA after a review of the violation by the agency to determine if a criminal investigation is recommended. FDA has stated that, among other factors, it will consider the likelihood and severity of harm associated with the violation and whether the violation reflects a pattern of behavior or the disregard by the company of prior warnings. DOJ then conducts its own investigation after receiving a referral from FDA, and will consider similar criteria, in addition to evaluating the likelihood of successfully prosecuting the violation.

Voluntary Self Disclosure

Notably, DOJ recently announced a voluntary self-disclosure program that will be applicable to any corporate misconduct prosecutable by a U.S. attorney, including violations of the Federal Food, Drug, and Cosmetic Act. The program allows DOJ to enter into more favorable resolutions with companies that voluntarily self-disclose misconduct that may constitute a violation.

To qualify as a voluntary self-disclosure under the program, the disclosure must be voluntary and not be a disclosure required by a regulation, contract, or DOJ resolution; it must also be prompt and not in response to threat of disclosure or government investigation, and must include all relevant facts known to the company. Even when a disclosure does not meet each of these requirements, DOJ has stated that it will, nevertheless, still consider the disclosure favorably.

When evaluating the violation, DOJ will consider the disclosure, among other factors, when determining what resolution to seek. For example, DOJ will consider whether the company fully cooperated with DOJ. Additionally, timely and appropriate remediation by the company will be positively considered by DOJ. Finally, factors such as the pervasiveness of the conduct throughout the company, its impact on public health, and the knowledge of executive management will also be considered by DOJ.

When a company becomes aware of misconduct, DOJ seeks to encourage disclosure. The policy allows DOJ to recommend a reduced fine when a voluntary self-disclosure occurs. In addition, DOJ can utilize resolutions other than a guilty plea in such circumstances, which may allow the company to better remedy any violation and recover after the misconduct is resolved.

Deferred Prosecution

There are favorable resolutions available when a voluntary self-disclosure occurs. These include entering into a deferred prosecution agreement (DPA), which requires the company to institute certain procedures and protections to ensure future compliance with requirements. Under a DPA, DOJ agrees not to prosecute the underlying violation further if the company continues to comply with the additional requirements outlined in the agreement.

Indeed, in 2020, Chipotle entered into a DPA with DOJ. Under that agreement, DOJ agreed not to pursue a guilty plea based on the 2015 outbreaks associated with Chipotle and the underlying concerns with the company’s illness policy and training. In exchange, Chipotle was required to develop, implement, and maintain an improved food safety compliance program. In addition, the company was required to use independent experts to evaluate its approach to food safety. Ongoing certification of compliance by Chipotle was required for the duration of the agreement, and the company paid a criminal fine of $25,000,000. Had DOJ pursued charges, however, Chipotle might have faced much more significant penalties than were included in the DPA.

Individual Accountability

In addition to potential criminal and civil liability for a food company, responsible individuals within the company can also face liability. The Responsible Corporate Officer Doctrine, also referred to as the Park Doctrine, allows DOJ to expand criminal prosecution to companies and officers of the company, even without any intent to violate the law or awareness of the violation. In fact, DOJ attorneys have been directed to ensure that individuals are held accountable, as well as corporations, when misconduct occurs. To successfully prove a case against a corporate officer under the Park Doctrine, DOJ must demonstrate that the individual was in a position of responsibility relevant to the violation, that the individual was able to prevent or correct the violation, and that the individual failed to prevent or correct the violation.

A strong food safety culture throughout an organization can prevent corporate misconduct that could lead to investigations by DOJ. Recent DOJ resolutions with food companies, for example, have included criminal charges against individuals who knowingly and willingly covered up contamination of foods in commerce. When a violation of requirements becomes known to a company, rapid and effective action to prevent illness in consumers and to correct the underlying causes of the violation must be taken to reduce the risk of prosecution. In addition, any time a company learns that a consumer may have become ill as a result of consuming its products, company leadership should consult immediately with legal counsel to ensure it is taking appropriate actions in response. Doing so could make the difference between going to prison or staying out of jail.

Stevens is a food industry attorney and founder of Food Industry Counsel, LLC, and a member of the Food Quality & Safety Editorial Advisory Panel. Reach him at stevens@foodindustrycounsel.com. Presnell, a food industry consultant and lawyer who is also with Food Industry Counsel, has worked in the food industry for nearly a decade. Reach her at presnell@foodindustrycounsel.com.

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A bill introduced in California aims to require manufacturers to omit certain food additives, barring five chemicals from candy, cookies, and other food items.

Jesse Gabriel, a state assembly member located in the San Fernando Valley, who chairs the Assembly Committee on Privacy and Consumer Protection, introduced the bill last month. If passed, the legislation would ban the manufacture, distribution, and sale of foods containing certain additives in California.

The proposed legislation would ban the use of five food additives: brominated vegetable oil, potassium bromate, propylparaben, FD&C Red 3, and titanium dioxide. Each of these additives is an approved food additive under FDA’s current regulations, although some, like titanium white, do have limitations or restrictions on use. 

“Though some of these food additives have largely been phased out of foods, several are still widely used,” says Shawn K. Stevens, an attorney with the Food Industry Counsel, LLC, and a member of the Food Quality & Safety editorial advisory board. “If California passes this bill, the industry would likely need to either reformulate products or stop distribution in California.”

There are more than 10,000 chemicals and additives allowed in food in the United States, often in small amounts; however, many haven’t been evaluated by FDA in decades. Many were initially approved under the FDA’s Generally Recognized as Safe (GRAS) program.

Stevens notes that the bill would serve to modify FDA’s food additive regulations for products sold in California so food additives approved by the FDA would no longer be permitted in foods sold in the state. “Unlike other California regulations that regulate the distribution of food, such as proposition 65 [which requires the state to maintain and update a list of chemicals known to the state to cause cancer or reproductive toxicity], this bill would require a total ban of the targeted food additives,” he says.

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Abbott Laboratories is under investigation by the U.S. Department of Justice (DOJ). The investigation follows the DOJ’s probe into the deaths of two infants last year who allegedly consumed infant formula produced at Abbott’s Sturgis plant in Michigan. The facility was shut down through June 2022 to address deficiencies, which resulted in a nationwide formula shortage.

Laurie J. Beyranevand, JD, a professor of law and director of the Center for Agriculture and Food Systems at Vermont Law and Graduate School in South Royalton, says it’s important to note that the DOJ has both a civil and criminal unit. “Last May, the civil unit of the DOJ filed a complaint and entered into a consent decree with Abbott Laboratories that enabled them to resume manufacturing of infant formula after having been previously enjoined from production,” she tells Food Quality & Safety. “The complaint alleged that Abbott manufactured adulterated powdered infant formula under insanitary conditions that failed to protect it from contamination from certain bacteria including Cronobakter sakazakii and Salmonella.”

Under the consent decree, the company was required to retain outside experts to bring the Sturgis, Mich., facility into compliance with the requirements under the Food, Drug, and Cosmetic Act and current good manufacturing practices.

This new investigation is a criminal investigation of the company, though the scope remains unclear. “Given the severity of the violations—including the fact that a whistleblower said the company knew about the contamination and falsified records to prevent FDA officials from identifying problems related to the company’s processes for monitoring the presence of bacteria in formula—in conjunction with the ongoing formula shortages, the DOJ may have determined civil penalties were not sufficient to address the issue,” Beyranevand says.

Abbott Laboratories says that it is cooperating fully with the investigation.

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Food companies routinely make claims about the geographic origin of the food products they sell. Some notable examples include Florida oranges, Idaho potatoes, Parmigiano Reggiano cheese, and Champagne. These origins are usually associated with a perceived level of quality, and, therefore, the products that carry their name are able to command a higher cost. But, what foods can and must use a geographic claim, and what are the risks when such claims are, in fact, used?

Mandatory Country of Origin Labeling

First, in the U.S., country-of-origin labeling is required on many imported foods and on most fresh and frozen produce. This labeling requires that companies declare what foreign country the food is from in a clear and explicit manner. In most cases, country-of-origin labeling is included on a product’s label purely due to regulatory requirements, rather than for marketing purposes.

With that said, however, any required country-of-origin claims must be truthful and not misleading, or the product could be subject to regulatory enforcement action. The Federal Trade Commission regulates the use of “made in the U.S.” and similar claims, and has strict requirements to ensure that any such claims made are truthful and not misleading.

Voluntary Geographic Labeling

Setting the required country-of-origin requirements aside, many foods labels are also laced with much more visible voluntary claims highlighting, with marketing prominence, the geographic origin of the food. In most cases, such claims do, in fact, accurately reflect the true geographic origin of the food.

In some cases, however, the claims may become untruthful, such as when companies change ownership or manufacturing facilities change locations. In other cases, the claims may have never had any truth at all, and were simply misappropriated by the food product manufacturers to intentionally enhance marketability and overall profit. These types of claims, where the claimed geographic origin of the product is misleading, are often the target of threatened or actual consumer class action lawsuits.

Because geographic claims are generally used to create a product that is perceived to have a higher quality, plaintiff class action lawyers have made a business out of challenging geographic claims made on product packaging or in product marketing. These claims, which in virtually all cases are styled as class actions, allege that the geographic claim was misleading and caused the consumers to spend more money on the product than they otherwise would in the absence of the geographic claim.

When such claims are asserted and lawsuits are filed, courts have treated the claims differently based upon how truthful or misleading the statements are, how the claims are actually communicated (i.e., through statements, vignettes, or other imagery), and whether there are any disclaimers or other conflicting (but truthful) geographical labeling.

In 2021, for example, a class action lawsuit against Unilever alleging the use of misleading claims was carefully assessed by the court and dismissed. The class action lawyers claimed that marketing on Maille mustard products was misleading because the labels referenced “Paris” and included words in French, which allegedly implied that the product was made in France. The court determined that, because the label did not otherwise represent it as a product of France, and because the product contained an accurate (required) country-of-origin label indicating that it was a product of Canada, the label was not misleading. The court concluded, in that case, based upon all of the labeling factors, that mere references to a geographic location on a label do not necessarily imply that the product is manufactured or produced in that geographic location. This was especially true given the Canada country-of-origin label.

In 2020, the whiskey brand Widow Jane was sued because the product’s label stated that the product was “Kentucky Bourbon Whiskey,” but was bottled with water from New York. After distillation in Kentucky, the alcohol was shipped to New York by the manufacturer and then bottled with New York water. In response to the consumer class action suit alleging that the reference to “Kentucky” on the labeling was misleading, the court granted a motion to dismiss, finding in that case that the claim was partially true, and that any misleading label claim was not material, in any event, to the purchasing habits of the consumer–plaintiff.

Courts have, however, ruled the other way when resolving lawsuits involving more express and alleged misleading claims of geographic origin. Godiva Chocolate, for example, recently settled a class action lawsuit alleging that references to Belgium in the product label suggested that the chocolate was produced in Belgium, even though the product was allegedly not manufactured exclusively in Belgium. The settlement reportedly set a maximum value for claims totaling $15 million, plus attorney’s fees and costs.

Similarly, the Kona Brewing Co. brand, owned by the Craft Beer Alliance, also settled a claim that alleged that the product labeling implied that the product was brewed in Hawaii. Though a portion of the products sold by the company were, in fact, brewed in Hawaii, this brewery reflected only a small portion of the total brewing capacity for the Kona brand nationally. The product labels included images of Hawaiian landmarks and culture, a map of the Hawaiian islands, and language that stated, “[w]e invite you to visit our brewery” in Hawaii. In addition to required changes to the product’s marketing and labeling, the settlement included substantial financial payments to all affected consumers within the affected class, as well as attorney’s fees and costs.

Protected Product Names

In the European Union and several countries outside of the EU, certain foods are regulated such that the food cannot be produced outside of the designated geographic region. For example, the EU’s system designates particular origin regions for foods like Parmigiano Reggiano cheese, Gorgonzola cheese, Asiago cheese, Valencia oranges, and Champagne. These regulations are intended to recognize and protect a specific link between the food and the geographic region, while also helping consumers identify and trust the overall quality of the products. In many circumstances, these EU or country-specific regulations are incorporated into trade agreements between the issuing organization and other countries, including the United States. In addition, World Trade Organization agreements protect certain geographic names through intellectual property protections.

In the United States, protections based on geographic origin can also be protected under trademark law. Though the U.S. Patent and Trademark Office generally prohibits the registration of geographic terms, regional groups and others interested in protecting a group of producers can register a certification or collective mark that is used to designate products from that geographic region. This trademarked mark could then be used only by approved foods and would show that the certified food complies with the geographic mark applied. Certification marks can also, interestingly, be registered even if the mark is a geographic term. Marks used in the United States for identifying products from a certain region include the Idaho potatoes mark, as well as protections for certain products also protected by the EU.

The U.S. Alcohol and Tobacco Tax and Trade Bureau (TTB) also oversees geographic regions associated with American wine. American Viticultural Areas (AVAs) in the U.S. are approved by TTB, and create geographic origin claims applicable to American wines. For example, Napa Valley is an AVA that limits the labeling of “Napa Valley” wines to those produced in the specific AVA.

Best Advice

When considering including a geographic claim on a food, producers should ensure that the claim is truthful, not misleading, and doesn’t infringe on existing trademarks for protected  product names. Products similar to, or identical to, a protected product cannot use the trademarked title or mark without approval, and consumer class actions remain a risk for any geographic claims made. In the end, nobody wants to be labeled for having misleading geographic labels.

Stevens is a food industry attorney and founder of Food Industry Counsel, LLC, and a member of the Food Quality & Safety Editorial Advisory Panel. Reach him at stevens@foodindustrycounsel.com. Presnell, a food industry consultant and lawyer who is also with Food Industry Counsel, has worked in the food industry for nearly a decade. Reach her at presnell@foodindustrycounsel.com.

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On October 19, a federal lawsuit filed by plant-based meat manufacturer Don Lee Farms against Beyond Meat and its CEO Ethan Brown alleging the company made misleading claims about its substitute meat products was settled. A second suit also brought by Don Lee Farms against Beyond Meat in a California state court concerning disputes and unpaid bills arising from its previous work for Beyond Meat was also settled. The initial dispute between the companies was filed in 2017, and the settlements end a five-year legal battle.

On October 18, the two parties issued a joint press release noting they had reached a settlement agreement and agreed to dismiss all claims and cross-claims asserted in both court cases. Although no details about the settlement were disclosed, neither party admitted liability or wrongdoing.

In the federal suit, Don Lee Farms, a former co-manufacturer with Beyond Meat, claimed that the latter company violated California state laws governing false advertising and unfair competition under the federal Lanham Act. “The [federal] lawsuit alleged that Beyond Meat was deceiving consumers by overstating the protein content of their products by as much as 30%,” says Robert Abiri, a Los Angeles-based attorney who focuses on false or misleading claims companies make in violation of federal laws. “There is also a secondary set of allegations focusing on using synthetic ingredients when Beyond Meat claims all its products are natural.”

He says that the allegations were based on the notion that not all proteins are the same, and those that come from plants—such as those used by Beyond Meat—are not as efficient or digestible for humans a are those that come from animals. “A consumer would need to eat more of the same amount of Beyond Meat’s protein to reach 20 grams of protein he or she would receive from an animal-based protein product,” Abiri says. For example, Beyond Meat’s advertising a product containing 20 grams of protein is only really providing 15 to 18 grams of the equivalent animal-based protein.

Since the terms of the settlement will likely remain confidential, Abiri notes that it’s hard to measure the exact effect it will have on Beyond Meat. Still, he feels that the settlement will put other manufacturers on notice. The settlement may also cause consumers to reconsider the protein claims made by plant-based protein companies as inferior to those of animal-based proteins.

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In a recent hearing, Jeffrey White, U.S. District Judge of the Northern District of California, upheld a USDA Food Safety and Inspection Service (FSIS) program for pork processing plants that gives plant employees a greater role in the inspection process. The New Swine Slaughter Inspection System, enacted by the agency in late 2019, changed the way pork slaughterhouses run, ruling that pork processing plants’ employees could conduct inspections in the plant, thereby reducing the number of government inspectors needed by as much as 40%.

The plaintiffs in the lawsuit were Food and Water Watch, the Center for Food Safety, and the Humane Farming Association. The lawsuit alleged that NSIS violated the Federal Meat Inspection Act (FMIA). In his ruling, Judge White noted that the inspections by employees did not violate this legislation.

In his ruling, Judge White stated that, although the 2019 final rule permits plant employees to pre-sort animals at NSIS plants, federal inspectors still inspect all hogs prior to slaughter, and the hogs that exhibit signs of disease upon that inspection are set apart and slaughtered separately as required by FMIA. He also stated that, since FMIA requires an examination and inspection of all swine but does not require all swine to be examined at rest and in motion, under NSIS, federal inspectors do inspect all “normal” healthy animals at rest.

USDA has looked to make changes to the way slaughterhouses were run since the early 1990s, and the agency produced the new swine slaughter inspection rule during President Trump’s administration. According to USDA’s declaration, plant employees could make the first level of safety determinations about animals and carcasses before federal inspectors made any final determination.

“This reflects the continued evolution and modernization of animal inspection by redirecting, in essence, resources where they can be used best,” says Shawn Stevens, a food industry attorney with the Food Industry Counsel and member of the Food Quality & Safety Editorial Advisory Board, adding that inspectors have more tasks to conduct than ever before, such as looking at microbiological testing and other data to keep food safe. “In response, it’s reasonable to understand the agency’s attempt to allocate resources and allow plant employees to do some of the ‘prep’ work for the federal inspection.”

This way, when the animal or parts are presented to the inspectors, they can be more efficient, adds Stevens. “I don’t see it as any different than a doctor who relies upon a nurse to ask questions of a patient so the doctor is well informed and do their job. We just now have plant employees getting things ready.”

Stevens notes that it’s clear that with the new rule, federal inspections are still occurring and undertaking required steps. Therefore, any concerns by the plaintiff of slaughterhouses hiding defects and issues should be assuaged, he adds, as these inspectors are in the facilities every day and have the responsibility to walk through and ensure all programs and policies are being followed. “Their responsibility is to ensure the products coming out of these facilities are safe, so it’s illogical to think they are going to do anything or propose any rules that will make our food less safe,” he says. “Everything our agency does is very visible and there’s political ramifications and the last thing they would ever want to do is to adopt a rule that would put consumers at risk.”

The National Pork Producers Council was pleased with the ruling. “The NSIS incentivizes investment in new technologies while ensuring a safe supply of wholesome American pork,” the organization said in a statement. “Pork producers use science-based approaches to continuously improve and modernize their practices to ensure product quality and consistency and their workforce’s health and safety.”

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A potential route to the end of U.S. federal prohibition on cannabis products was introduced in July 2022 in the form of the Cannabis Administration and Opportunity Act (CAOA), authored by Senate Majority Leader Chuck Schumer (D-N.Y.), Sen. Cory Booker (D-N.J.), and Sen. Ron Wyden (D-Ore.). The CAOA is the first-ever bill by major party senators to propose decriminalization of cannabis; the bill also would expunge federal cannabis-related criminal records while also provide funding to law enforcement to shut down illicit cannabis growers and sellers.

However, the CAOA is a hail-Mary bill that few believe will pass.

“We take CAOA very seriously because it’s the first piece of truly comprehensive legislation to legalize, tax, and regulate cannabis at the federal level and has the support of the Senate Majority Leader,” says Aaron Smith, co-founder and CEO of the National Cannabis Industry Association. “That said, we’re still a way off from seeing this bill or any other comprehensive reform proposal pass the Senate, given the filibuster’s 60-vote threshold.”

Jennifer Briggs Fisher is a partner at law firm Goodwin Procter, and co-chair of the firm’s cannabis practice. She’s equally skeptical that the legislation will make it through the Senate. “I don’t think we’re going to see much movement,” she says. “Many in the industry, myself included, were very hopeful following the 2020 election that we would be able to achieve comprehensive cannabis reform at the federal level in President Biden’s first term. It has become abundantly clear that that’s not going to happen, and [it] may have even less of a shot following the election in November, 2022.”

Fisher notes the inconsistency at work in the politics of federal legalization: At this point, 37 states have voted to legalize either medical cannabis or medical and adult use products, and there are ballot initiatives that will likely expand this number in November 2022. “If we use the last couple of election cycles as examples,” she says, “the initiatives will pass, with sometimes overwhelming public support—even in surprising states. We will likely see that trend continue. It’s matched by public opinion and the evolution of how people think about legalization in the United States.”

Yet broad popular support for legalization hasn’t translated into legislative support for the project. In theory, Fisher says, senators from every one of the 37 states where there is some legalization should be supporting the industry, which she says drives revenue, employment opportunities, and access to medicine for constituents. In practice, that hasn’t happened.

Meanwhile, Fisher notes, there remains a strong anti-legalization posture among some politicians, perhaps due to continued stigma against an industry the federal government considers criminal. In many cases, these politicians’ opinions are contrary to their constituents’ feelings about legalization.

Those clinging to prohibition will hold their positions, Fisher says, “Until they start to feel that kind of pressure, either from their constituents, so voters, or industries, [meaning] the job creators in their states who happen to be cannabis companies or the other ancillary companies that benefit from providing products and services to the legal cannabis market. There are a lot of people who have a stake in seeing federal legalization happen, but you haven’t seen them mobilize in the way that’s probably necessary to really move the needle on broad scale legalization and reform.”

Challenges Ahead

The stakes of federal legalization are high, says Smith. “I’m under no illusion that moving from federal prohibition to a system of federal regulation will be easy for the industry, at first; however, federal legalization would bring banking access, fair taxation, and interstate commerce—three issues the industry desperately needs to see resolved in order to thrive.”

Fisher concurs, noting that, above all, an end to federal prohibition would finally allow cannabis companies to engage in interstate commerce, while banking access would allow cannabis producers to use banks like any other business. The third massive challenge for state-legal cannabis producers operating under federal prohibition is Section 280E of the Internal Revenue Code, adopted in 1982, which prevents businesses that traffic in controlled substances—including cannabis—from deducting business expenses. Fisher says that this code is “very debilitating,” and adds that it cuts deeply into a company’s ability to be profitable. “For these companies you see a lot of coverage around revenue numbers, but profit is a different story,” she says.

While the refusal of the federal government to end nationwide prohibition is a source of frustration, few in the industry believe the process of adapting to a federally legal system would be easy. In particular, Fisher notes, states such as California that have taken initiatives to regulate cannabis-infused food products that FDA would not touch will face the challenge of harmonizing their regulations with whatever occurs at the federal level.

“There are still many details that have yet to be determined but federal regulations should not entirely replace state systems, especially for in-state operators,” says Smith. “Edibles producers would still be licensed and primarily regulated by states with an additional layer of regulation by the [Alcohol and Tobacco Tax and Trade Bureau] (TTB) and/or FDA, depending upon the products.”

This places California—and many other states—in the position of having fostered consumer trust in edible cannabis products through regulation that will have to be balanced against any future federal legalization initiative.

Fisher anticipates an additional federal level of regulation could be complicated unless, she says, the federal government takes the approach of looking at the legal states, that have already been in the business, and have “very sophisticated” regulators looking at how to regulate these markets and how to provide oversight on these types of products. “Hopefully, they would take a best-practices approach and not create extra layers of of regulation, but really look at what the states … who are so much farther ahead than the federal government [have done.]”

All that is possible, Fisher says, but it’s not guaranteed. She points to the passage of the Farm Bill in 2018, which federally legalized hemp and hemp-derived cannabidiol (CBD) and granted FDA authority over products containing CBD. “Congress very specifically made sure that the FDA would still have jurisdiction over food and drugs, income cosmetics, containing hemp-derived cannabinoids.,” she says. “They kicked it to the FDA to regulate—and we’re now almost four years post passage and the FDA hasn’t done so.” To date, CBD-infused food, beverage, and cosmetic products remain prohibited from products overseen by FDA.

Fisher believes that the harmonization of state laws and an eventual federal law will be possible, but that the process will be time consuming and face the challenge of merging one federal law with dozens of state laws in different degrees of development. Some states have complex cannabis regulations, while other states are still in the process of figuring out how to manage their regulatory schemes. Other states, meanwhile, may differ in their desire for regulation.

There may also be issues with states who don’t want more robust food safety protocols or manufacturing regulations, adds Fisher, because they haven’t had them before. “It’s hard to get people to go backward in a way, because they’ve been operating under a regime and they’ve been making investments in manufacturing equipment and plants to comply with the only rules that they need to comply with at the moment, which are state rules that vary widely in terms of how stringent they are,” Fisher adds.

Gateway to Other Initiatives

Despite the inevitability of that conflict, Fisher and Smith both see the CAOA as an essential move toward an end to federal cannabis prohibition. “We are just at the beginning of a process to determine what a post-prohibition future will look like for this country and CAOA is a big step forward in that process,” Smith says. However, he adds, “legislation will need support from both sides of the aisle in order to have a chance at passing out of the Senate, and the current CAOA seems to be mainly a Democratic effort.”

Fisher sees the CAOA as the beginning of a more piecemeal approach that encourages the adoption of other bills such as “SAFE Banking Plus,” a bipartisan bill built on previously failed legislation and designed to allow banks to work with cannabis companies, which also features equity measures (to provide those convicted of cannabis offences easier access to the market). There’s also the “Capital Lending and Investment for Marijuana Businesses (CLIMB) Act,” introduced in June 2022, which would allow capital investment in cannabis. “SAFE Banking Plus” is approaching a deal and Fisher suspects it may be voted on during the lame-duck session following the election.

“Even if we don’t see the CAOA coming to the floor for a vote and getting the kind of support it would need to make its way to President Biden’s desk,” says Fisher, “if we can work on things like SAFE Banking Plus and the Climb Acts, which chip away at some of these federal of the regime that federal prohibition has imposed on the legal cannabis industry and the sky doesn’t fall.”

One constant for Fisher is the idea that legal states, producers, and consumers have no appetite for a return to prohibition. The United States is an enormous country, whose size and diversity have been reflected in the varying approaches states have taken to legalization, but Fisher says one thing that an increasingly vocal majority of Americans have made clear is that cannabis markets are going to expand. “I don’t think we could be surprised by anything at this point,” she adds, “but the only thing that is for certain is that we are not going backward.

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The “food freedom” movement is intended to expand the rights of individual consumers to produce and consume their own homemade foods with no regulation. The idea is to enable consumers to achieve better overall health by controlling the quality and safety of the food they eat.

In turn, over the last several years, this movement has inspired new laws in all 50 states and Washington, D.C., that embrace this concept while also permitting the sale of homemade foods to other consumers in certain circumstances. These state laws vary dramatically in the scope of permitted products, limitations on sales, and required oversight by state or local public health agencies. Often, states have implemented either a “cottage food law” or a “food freedom law.” Cottage food laws are typically limited to the sale of baked goods and other shelf-stable, not potentially hazardous foods, while food freedom laws generally significantly expand the ability of home producers to process and sell food products.

Model Food Freedom Laws

Model food freedom laws have been issued by the American Legislative Exchange Council and the Institute for Justice. These model laws have served as the framework for advocates who work to create or expand food freedom laws at the state level.

These model laws typically allow for the sale of any homemade foods, regardless of the product type or total amount of sales made. Sales can be made directly to the consumer or through an agent of the home producer (such as a retailer). Products that contain meat or poultry or that would be classified as dairy products, however, can only be sold by the home producer directly to consumers and must be personally delivered by the home producer. The actual transaction (sales) in all cases can be in person or remote, through internet or phone sales. Additionally, homemade foods must be labeled with a statement indicating that the food was produced in a residential kitchen that is exempt from licensing and inspection.

Overview of Implemented State Cottage Food and Food Freedom Laws

Although model food freedom laws have been made available for the states generally, many states have opted to implement their own laws that vary from the model acts in many ways.

For example, many states have implemented maximum annual sales levels for homemade foods. Maryland recently raised the annual revenue cap for cottage food producers to $50,000, while Connecticut has an annual gross sales limit of $25,000 for cottage food products. In other states, such as Colorado, restrictions are enforced as an annual limit per “product,” which has an annual net revenue limit of $10,000.

Other laws implemented by the states limit the types of foods that can be sold. For example, some states restrict the sale of homemade foods to non-perishable items, while others exclude the sale of acidified foods. Florida and Georgia, for example, permit non-potentially hazardous foods, including bakery items (without temperature-controlled ingredients), jams and jellies, and candy products, while excluding canned acidified foods and other products that are potentially hazardous. In addition to the products permitted by Florida and Georgia, Kansas also permits certain cut produce items, eggs and poultry from small producers, juice, and fish and seafood products. Maine permits shelf-stable foods, including acidified foods, bakery items, and candies. However, Maine’s food sovereignty law allows local governments within the state (such as cities or counties) to expand the types of food that can be sold beyond those items permitted by the state cottage food law.

In some states, in addition to limiting the types of homemade products that can be sold, the states limit the specific locations where the homemade products can be sold. For example, Washington, D.C., limits sales of cottage foods to direct-to-consumer sales that occur at farmers markets, public events, or online sales within the District. Idaho, on the other hand, permits any direct-to-consumer sales, regardless of where and how the sale occurs. As noted, some states permit, in addition to direct-to-consumer sales, sales to retailers. Maryland, for example, allows cottage food producers to sell their products to a retail food store. When Maryland home producers sell to a retail store, basic information about the food and producer must be filed with the overseeing department of health, and the department must determine that requirements for retail sale are fulfilled; however, these requirements are much less stringent than those requirements imposed on food manufacturers.

In some states, home kitchens are required to register with the local public health authority and may be subject to inspections prior to the commencement of homemade food sales from the kitchen. Other states require the completion of a food safety course by the person selling the homemade food. For example, Alabama requires a completion of a food safety course approved by the department of public health, and the certification must be renewed every five years. Arizona requires both completion of a food safety course and registration with the Department of Health Services. Massachusetts requires that cottage food producers, including those selling only direct-to-consumer, to register and obtain a permit from the local board of health; this will typically include an inspection of the residential kitchen prior to issuance of the permit.

Though most states also require specific labeling components, the required elements and defined language vary state to state. Typically, labels must include the name and contact information of the producer, a list of ingredients and allergens in the food, and a statement that the food was produced in a home kitchen not subject to licensing or inspection by the public health agency.

Although this provides just a sampling of state laws permitting the sale of homemade foods, it’s apparent that the ability of homemade food producers to sell their products, and the process required to do so, is broadening significantly. As these trends continue to expand, it will be interesting to see, in the absence of strict regulation, whether significant concerns arise with respect to the overall safety of these products. Additionally, due to the substantial variation between state laws permitting sales of homemade foods, there is a potential for conflict among the individual states as well as the federal food safety regulations governing the interstate manufacture, distribution, and sale of foods.

Potential Conflict with Federal Food Safety Regulations

The jurisdiction of federal food safety agencies is typically limited to the oversight of food products manufactured, distributed, or sold in interstate commerce, and will therefore typically not impact the cottage food industry. With that said, where a home producer sells his or her products to retailers over state lines, federal jurisdiction (and, by extension, regulation) may be triggered. Though both FDA and USDA exclude retail establishments from the scope of their regulations, when states permit wholesale distribution of homemade foods to retailers, producers may be subject to federal regulation. Indeed, USDA previously announced its objections to Maine’s food freedom law unless the state modified the law to ensure that all meat and poultry products complied with USDA requirements and exemptions. USDA indicated that, without this modification, Maine’s state inspection program for meat and poultry would no longer be recognized by USDA, subjecting the producers within the state to federal inspection in place of the state program.

Additionally, the FDA Food Code states that food prepared in a private home cannot be used or offered for sale in a food establishment, such as a restaurant. Though the Food Code is not binding on states, many states have enacted a version of the Food Code as the regulatory framework for retail establishments. Contrary to the Food Code, several states, however, now permit food producers operating under cottage food laws to sell foods to retail food establishments.

Cottage food and food freedom laws allow more people to begin producing and selling homemade foods, while also expanding the number of local, handmade foods available to consumers; however, given the substantial variation in state laws, those looking to produce through a cottage food law must carefully consider the applicable state law, as well as any country or local requirements, to ensure that the business plan is feasible under the particular state’s regulatory scheme.

Further, to avoid federal regulation, sales should be made directly to consumers through face-to-face distribution, or only to retailers within the actual state where the food is produced. Doing so will help home processors avoid unanticipated regulatory scrutiny.

Stevens is a food industry attorney and founder of Food Industry Counsel, LLC, and a member of the Food Quality & Safety Editorial Advisory Panel. Reach him at stevens@foodindustrycounsel.com. Presnell, a food industry consultant and lawyer who is also with Food Industry Counsel, has worked in the food industry for nearly a decade. Reach her at presnell@foodindustrycounsel.com.

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A United States federal court judge for the District of Massachusetts approved an agreement to delay enforcement of a state law that would ban pork production processes that used gestation crates.

Judge Mark Wolf signed the agreement on August 11, 2022, which halted the state law, known as Question 3 (Q3), a 2016 Massachusetts ballot initiative set to go into effect on August 15 of this year. The law was set to ban any uncooked whole pork meat sold in Massachusetts that did not meet specific sow housing requirements, regardless of where it was produced.

“The reaction to these proposed laws hearkens back to the early 1900s and the horrible conditions in meat packing facilities and the mishmash of inconsistent laws from state to state to state,” Shawn K. Stevens, food industry attorney for the Food Industry Counsel and member of the Food Quality and Safety Editorial Advisory Board.

That led to what is now the Federal Meat Inspection Act, which says that individual states are prohibited from enforcing any laws different from or in addition to the federal standards. That has led to the courts being reluctant to enforce laws such as Q3. “The arguments to the court are ‘We can’t have a free market where we can freely ship, sell, distribute, and consume these types of animal products if the individual states are requiring their own specific requirements; it’s just not fair,’” Stevens says.

He also notes that the law, if enacted, wouldn’t allow transshipment of whole pork through the state of Massachusetts, jeopardizing approximately $2 billion worth of pork that moves into neighboring New England states.

The National Pork Producers Council (NPPC) called the ruling a “significant outcome,” noting the importance of allowing pig farmers to raise hogs in a way that is best for their animals while maintaining a reliable supply of pork for American consumers. “The impact of Question 3 would have been particularly harmful to those in surrounding New England states who did not have a vote in the 2016 Massachusetts referendum, nor any notice of the dramatic steps that activists had taken trying to force these harmful initiatives on voters in other states,” says Terry Wolters, NPPC president.

The Supreme Court is currently listening to a similar law in California’s—Proposition 12—which was approved by voters in 2018 and makes it illegal to sell pork in the state unless the pig it comes from was born to a sow housed with at least 24 square feet of space and in conditions that allow the sow to turn around freely without touching her enclosure.

A lawsuit was brought by NPPC and the American Farm Bureau Federation against this legislation, arguing that the law is unjustified and counterproductive to advancing animal health and safety and, if enacted, would undermine the global competitiveness of the U.S. pork industry and increase food prices.

Massachusetts Attorney General Maura Healy has gone on record stating that the Q3 rule should be put on hold at least until 30 days after the U.S. Supreme Court issues its ruling on Proposition 12.

The agreement is limited to the pork sales provision of Q3, so producers in Massachusetts are still required to comply with in-state housing standards for pork production.

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