How the Kava Ban and Mandatory GRAS Could Transform the Functional Beverage Industry

Two seemingly separate developments create a regulatory environment that threatens to significantly restrict the use of herbal ingredients in functional beverages. The first is the Southern District of New York’s ruling upholding New York City’s kava ban; the second is FDA’s anticipated proposal to eliminate self-affirmed GRAS determinations.

Together, these developments signal a dramatic shift from the industry’s historical reliance on traditional use and expert consensus toward a more restrictive framework requiring extensive regulatory oversight. In essence, it threatens one of the fastest-growing market segments in the health and well-being market.

The Kava Precedent: A Blueprint for Botanical Restrictions

The federal court’s decision in the Kavasutra case represents more than just a local enforcement action; it establishes a precedent where local health officials restrict traditional botanicals under the guise of food safety without a clear understanding of whether a particular botanical is safe for human consumption.

Indeed, the court’s reasoning that steeping kava root in water creates a “food additive” because it alters water’s chemical composition fundamentally misunderstands both the nature of traditional food preparation and established food law principles. This interpretation diverges sharply from decades of federal precedent, including the United States v. 29 Cartons Black Currant Oil decisions, which recognized that botanical substances themselves are foods, not additives, even when mixed with delivery vehicles like water or capsules. Indeed, this court reasoned that water was the food rather than kava, which was fundamentally incorrect.

Regardless, the implications extend far beyond kava bars in New York City. Under the court’s expansive logic, any dietary ingredient — whether ashwagandha in a wellness shot, adaptogens in a functional beverage, or even traditional herbs like ginseng in a smoothie — could be classified as an “unapproved food additive” when served in commercial food establishments.

As I have written, this situation creates a regulatory minefield where local health departments could suddenly deem long-accepted business practices as violations of food safety regulations, potentially forcing the closure of juice bars, health food stores, and wellness-focused restaurants that have operated safely for decades.

Now the FDA appears set to drop the next hammer providing another basis for more robust local enforcement.

The GRAS Evolution: From Self-Determination to Mandatory Oversight

Simultaneously, the FDA’s anticipated proposal to eliminate self-affirmed GRAS determinations threatens to dismantle the regulatory pathway that has enabled innovation in the functional beverage sector for over 60 years.

The Spring 2025 Unified Agenda confirms that the agency expects to publish its proposed rule in October 2025, fundamentally altering how companies can bring botanical ingredients to market. Under the current voluntary system, companies can rely on expert panels and scientific evidence to self-determine GRAS status, allowing for relatively rapid product development and market entry.

The proposed mandatory notification system would require all companies to submit GRAS notices to FDA before marketing any ingredient claimed as GRAS, effectively creating a bottleneck that could delay product launches by 6-18 months or longer. This represents a seismic shift from the current landscape where functional beverage companies can leverage historical use data and expert scientific consensus to bring innovative products to market quickly.

Moreover, Congressional proposals, including H.R. 4958 and Senate bills introduced by Senators Markey and Booker, would go even further by potentially sunsetting the GRAS pathway altogether within two years. In other words, powerful political forces are at play and while the Secretary of Health and Human Services and the Democrats are not usually aligned, they appear to be so on this issue.

Statutory Authority Challenges and Legal Vulnerability

Perhaps most significantly, the FDA’s proposed rule faces substantial legal challenges regarding the agency’s statutory authority to mandate GRAS notifications. The Federal Food, Drug, and Cosmetic Act created the GRAS exemption as a safe harbor for substances “generally recognized among experts” as safe, and the statutory provisions cited by FDA — sections 201, 402, 408, and 701 — do not appear to provide independent authority to eliminate this exemption through rulemaking.

As established principles of statutory construction dictate, general rulemaking provisions typically cannot override specific statutory exemptions without clear congressional intent. A summary of these sections are provided below

1. FDCA § 201 (21 U.S.C. § 321): “Definitions”

Section 201 of the Federal Food, Drug, and Cosmetic Act (FD&C Act) establishes key definitions, including definitions for “food additive” and “generally recognized as safe.”  As a definitional provision, it establishes that GRAS substances are those “generally recognized among experts” as safe. This section creates the statutory framework for the GRAS exemption rather than providing independent rulemaking authority to modify that exemption. To state it differently, it creates a safe harbor for ingredients that are added to food in which experts would agree are safe.

2. FDCA § 402 (21 U.S.C. § 342): “Adulterated Food”

Section 402 defines when food becomes “adulterated,” including when it contains unapproved food additives. Specifically, § 402 states a food is adulterated if it contains an unapproved food additive. However, GRAS substances are not food additives. So, in essence, this section reinforces the existing GRAS framework rather than expanding regulatory authority over GRAS substances if they are not filed with FDA. Notably, § 402 does not establish that the failure to notify FDA of a GRAS determination renders the substance adulterated as a matter of law. Indeed, only new dietary ingredients that are notified to FDA are deemed adulterated as a matter of law under FD&C Act § 413(a), provided they were not previously used as food in a chemically unaltered form.

3. FDCA § 408 (21 U.S.C. § 348): “Food Additives”

Section 408 establishes FDA’s food additive approval process and authorizes regulations for substances meeting the statutory definition of “food additive.” Since GRAS substances are specifically excluded from the food additive definition in § 201(s), this provision’s regulatory scope is limited to non-GRAS substances requiring premarket approval. Thus, the basis for FDA’s reliance on this section as a source of legal authority is unclear.

4. FDCA § 701 (21 U.S.C. § 371): “General Rulemaking Authority”

Section 701(a) provides FDA with general authority to “prescribe regulations for the efficient enforcement” of the FD&C Act. However, under established principles of statutory construction, general rulemaking provisions typically cannot override specific statutory exemptions without clear congressional intent. The relationship between general enforcement authority and specific exemptions requires careful analysis of congressional intent and statutory structure.

The timing of this regulatory overreach is particularly problematic for the agency given recent developments in administrative law jurisprudence that have curtailed agencies’ ability to exceed their statutory mandates. Courts have increasingly scrutinized agency attempts to expand regulatory authority beyond clear congressional authorization, suggesting that FDA’s proposed rule would face successful legal challenges. The agency’s reliance on general enforcement authority under section 701 to override the specific GRAS exemption created by Congress appears legally vulnerable and could result in prolonged litigation that creates further uncertainty for the industry.

Economic Impact on the Functional Beverage Sector

The combined effect of these regulatory changes threatens to create significant barriers to entry that could fundamentally alter the competitive landscape of the functional beverage industry. Smaller companies, which have historically driven innovation in this sector, may lack the resources to navigate mandatory GRAS notification processes that can cost hundreds of thousands of dollars and require extensive toxicological studies.

This regulatory burden could accelerate industry consolidation, with larger corporations better positioned to absorb compliance costs while innovative startups face insurmountable barriers to market entry, stifling innovation due to low margins.

The functional beverage industry has experienced explosive growth precisely because the current regulatory framework allows for experimentation with traditional botanicals that have centuries of safe historical use. Mandatory GRAS notifications would require the same “quantity and quality of scientific evidence as is required to obtain approval of a food additive,” effectively treating traditional herbs like novel synthetic chemicals.

This approach ignores the fundamental distinction between substances with extensive historical use and truly novel ingredients, potentially stifling innovation in a sector that has provided consumers with healthier alternatives to conventional beverages. Indeed, FDA has historically been skeptical of historical data, favoring animal data to establish safety, which also raises ethical concerns as consumers are voting with their dollars not to support animal research. Thus, any changes to GRAS must account for real world safety data.

International Implications and Trade Considerations

The regulatory convergence also threatens to put U.S. companies at a competitive disadvantage internationally. While the European Union, Canada, Japan, and South Korea have developed nuanced approaches to botanical regulation that recognize traditional use patterns, the U.S. appears to be moving toward a more restrictive framework that treats all botanicals as potential safety risks requiring extensive pre-market approval.

This regulatory divergence could hinder U.S. exports of functional beverages while creating opportunities for international competitors operating under more flexible frameworks. As I have previously written, the FDCA is hopelessly outdated and the FDA in many ways is tied to the antiquated nature of the act. To put it simply, while lawyers understand nuance, the FDA when enforcing the FDCA does not; state and local regulators certainly do not under nuance.

Countries like South Korea have authorized over 60 functional ingredients derived from plants and algae for use in functional beverages, while Canada has developed a Temporary Marketing Authorization Letter system that allows for case-by-case evaluation of botanical ingredients. These approaches recognize that traditional botanicals should be regulated differently than synthetic additives, providing a more balanced framework that protects consumer safety while enabling innovation.

Strategic Responses and Industry Adaptation

Regardless of whether the FDA has the authority to mandate GRAS notifications, there does appear to be some level of congressional support; thus, the functional beverage industry must prepare for a regulatory landscape that may be dramatically different from the one that enabled its growth over the past several decades.

Companies should proactively start documenting the scientific and historical evidence supporting the GRAS status of their key botanical ingredients, as this documentation will be crucial, whether fighting local restrictions like the kava ban or preparing for mandatory GRAS notifications.

The development of comprehensive safety dossiers, including traditional use data, modern toxicological studies, and expert panel reviews, has become not just good regulatory practice but a necessity for market access.

Industry stakeholders should also consider collaborative approaches to regulatory challenges, including joint funding of safety studies for commonly used botanicals and coordinated legal challenges to overreaching local restrictions. The American Herbal Products Association’s (AHPA) formation of a kava working group following the New York ruling demonstrates the type of coordinated industry response that may be necessary to preserve access to traditional botanicals.

Similarly, trade associations should prepare comprehensive comments on FDA’s proposed GRAS rule, not simply emphasizing the serious legal vulnerabilities of the agency’s approach but the real economic consequences to innovation, consumer choice, health and well-being.

The Path Forward: Balancing Safety and Access

The convergence of the New York City kava ban precedent and mandatory GRAS proposals creates an inflection point for the functional beverage industry that will determine whether traditional botanicals remain accessible to American consumers in conventional food form or become casualties of regulatory overreach.

While ensuring consumer safety remains paramount, the current trajectory threatens to eliminate products with centuries of safe use based on theoretical risks rather than demonstrated harm. The industry’s response to these challenges will determine whether innovation in functional beverages continues to flourish or becomes stifled by regulatory barriers that treat traditional herbs as dangerous chemicals requiring extensive pre-market approval.

It is these barriers that have served to harm the health of Americans under the guise of protecting us. The reality is these botanical are safe when consumed under labeled conditions of use and we should be encouraging healthy habits, not discouraging them. At the same time, industry must market these products responsibly and not as a cure all to everything that ails us, because functional beverages and supplements do not negate an unhealthy lifestyle.

The stakes extend beyond individual companies or even the functional beverage sector itself. At issue is whether the regulatory framework established by Congress to balance safety oversight with consumer access will be preserved, or whether agency overreach and local regulatory activism will undermine the careful distinctions that have enabled Americans to access traditional botanicals safely for generations.

The industry’s ability to navigate this perfect storm of regulatory challenges will determine the future landscape of functional beverages and the broader category of botanical products.