Regulatory Framework for CBD Products in Switzerland
According to the current regulatory set-up in Switzerland, it is permissible to sell and purchase cannabis products, as long as the THC level remains below 1%. As a consequence, the industry currently shows a specific interest in CBD products, i.e. cannabis products containing a low THC, but high cannabidiol level. The regulatory framework applicable to CBD products has to be determined by allocating the relevant products either to a specific product category, such as medical products, ingestible products, utility products (incl. cosmetics) or tobacco products (incl. tobacco substitutes), or to a catch-all group of non-categorised products.
Regulatory framework for CBD products
A. Medical products
Products of chemical or biological origin intended to have or presented as having a medicinal effect on the human organism are considered medical products in the sense of the Federal Act on Medical Products and Medical Devices. The manufacturing of medical products, as well as the import, export, trade from Switzerland without the products entering Switzerland, including acts from Switzerland as a broker or agent for medical products, are subject to a governmental authorisation. Furthermore, medical products may only be distributed by a specific group of institutions and persons (e.g. apothecaries, specifically educated experts).
B. Ingestible products
CBD products that are intended or can reasonably be foreseen to be ingested by humans, e.g. hemp tea, hemp seed oil, CBD chewing gums or CBD beverages, are generally subject to the Federal Nutrition and Utility Products Act. Such products need to be safe. Authorisations by the Federal Food Safety and Veterinary Office FSVO (Bundesamt für Lebensmittelsicherheit und Veterinärwesen, BLV) are required for certain ingestible products, in particular products that qualify as novel food. The definition of this term refers to the Novel Food Catalogue of the European Commission, which lists products that were not commonly consumed by humans in Switzerland or an EU member state prior to 15 May 1997. Cannabis extracts and derived products containing cannabinoids (incl. CBD) are considered novel food. Products made from the Cannabis sativa seeds, i.e. hemp seeds, seed oil, hemp seed flour and defatted seeds, on the other hand, do not qualify as novel food and can be sold without an authorisation.
Even if no authorisation is required, institutions processing and distributing ingestible products need to notify the competent cantonal authorities of their business activity, subject to certain exemptions in case of primary production and low risk activities.
C. Utility products (incl. cosmetics and e-cigarette liquids)
Utility products cover a wide range of products that do not qualify as medical or ingestible products. This product category consists of consumer articles that are intended or can reasonably be foreseen to come into contact with ingestible products or the human body, such as CBD cosmetics and tinctures, hemp clothes and CBD liquids for electronic cigarettes (e-cigarettes). Generally, utility products are not subject to an authorisation requirement as the admission and sale is based on a principle of self-control. Nevertheless, utility products need to be safe in the sense of the Federal Nutrition and Utility Products Act and respective ordinance.
With respect to cosmetic products, special provisions apply when using natural CBD: It needs to be demonstrated that the CBD was produced from seeds or leaves of the hemp plant. The leaves must not be mixed with blossom and fruit stands of the plant, unless the resin had been extracted of these stands. This restriction is based on the reasoning that blossom and fruit stands contain a higher THC level and as a consequence, their CBD-extracts may also contain an increased THC level.
In addition to cosmetics, CBD is also commonly used in e-cigarette liquids. As these liquids contact the mucous membranes, they also qualify as utility products and must be safe in the sense of the Federal Nutrition and Utility Products Act. Additionally, it is not permitted to add ingredients with an actual or alleged pharmacological effect, which is relevant for the permissible amount of CBD contained in or added to such liquids and the manner of advertising CBD liquids for e-cigarettes.
D. Tobacco substitutes
Tobacco substitutes in the sense of the Tobacco Ordinance refer to products, including CBD products that are intended to be smoked, but do not contain any parts of the tobacco plants Nicotiana tabacum L. and Nicotiana rustica L. In general, a tobacco substitute has to comply with the same rules applicable to the relevant tobacco product it substitutes. In particular, tobacco substituting products need to be registered with the Federal Health Department prior to any sale on the market, they must not cause an immediate or unexpected health risk and they must not have a psychotropic (mind-altering) effect.
The same also applies to the taxation of substitute products, meaning that tobacco substitutes falling within the scope of the Tobacco Ordinance are taxed identically to the products that they are substituting. Products containing cannabis, such as oils and cosmetic products, which are thus clearly not intended for smoking, are not subject to Swiss tobacco taxation. Furthermore, e-cigarettes are currently not subject to Swiss tobacco taxation.
E. Other CBD products
All other products containing CBD, which are not covered by any specific laws, are subject to the Federal Chemicals Act and Federal Act on Product Security. This applies to raw CBD materials (e.g. flowers), as well as to processed CBD products not covered by any of the specific product categories (e.g. aroma oils without an intended or foreseeable use of ingestion or smoking). The manufacturer is obliged to a self-control on the security of the manufactured or distributed products. The relevant product has to be qualified, packed and labelled accordingly and a respective security data sheet has to be completed.
Loyens & Loeff is your ideal partner to advise on the most suitable business structure taking into account the peculiarities of the Swiss legal and tax landscape as well as offering a unique standing in Europe and cross-border business support due to our representation in our home markets Belgium, Luxembourg, the Netherlands and Switzerland.
Valérie SchrämliAssociate Attorney at law
Valérie, attorney at law, is an associate in our Zurich office and she focuses on domestic and cross-border M&A, private equity and capital market transactions, corporate governance, general corporate law and contractual matters.T: +41434346700 E: [email protected]
Beat BaumgartnerPartner Attorney at law, Swiss certified tax expert
Beat Baumgartner, attorney at law and Swiss certified tax expert, is a partner in our Zurich office. He focuses on Swiss and international taxation, M&A, financing and capital market transactions.T: +41434346700 E: [email protected]