The actress Jenny Seagrove teamed up with the National Association for Health Stores to try to overturn the prohibition on kava-kava, which she used to cope with sleeplessness.
The Department of Health imposed the ban in January 2003 after controversial reports linking kava-kava, known for its anti-stress and soothing properties, to people who had suffered liver damage.
The appeal was over a High Court ruling last December that the consultation process which led to the prohibition on the sale and import of the kava-kava root was flawed.
The appeal judges ruled that the information available when the ban was imposed was adequate for the government to reach a conclusion and order prohibition under the Medicines Act.
The UK market for kava-kava products was estimated at 7.5 million a year before the ban.