The Curious Case of Cannabidiol

A regulatory maze leaves CBD in legal limbo.

For true marijuana connoisseurs, tetrahydrocannabinol (THC) isn’t the only thing in marijuana about which to rave. There’s also the increasingly popular cannabidiol (CBD) part of the plant. CBD is a compound in marijuana with mild to no psychoactive effect. It is frequently used to prevent seizures and there also have been some promising studies regarding its ability to treat brain injuries. CBD’s market potential is growing rapidly, but its legal status is uncertain.

Many companies claim to be able to sell and ship medical-grade CBD anywhere in the U.S. via the internet. For more on this, go here, here, and here. But is CBD actually legal under federal law so as to allow for what otherwise appears to be interstate drug trafficking? It all depends on where the CBD originates.

Marijuana is currently listed as a Schedule I narcotic under the federal Controlled Substances Act, meaning the federal government believes it to be a dangerous drug with no recognized medical benefit. Consequently, any CBD derived from marijuana violates the federal Controlled Substances Act, and the Drug Enforcement Administration has already stated that it believes CBD to be a marijuana derivative and, therefore, a Schedule I drug.

Hemp, on the other hand, is more complicated. The DEA defines hemp as the parts of the cannabis plant excluded from the Controlled Substances Act, namely the mature stalks and seeds. To legally grow cannabis in the U.S. — hemp or not — you must possess a permit from the DEA, which the DEA typically never issues. Consequently, cultivating hemp without a permit remains a federal crime. The only exception is the 2014 federal Farm Bill, which defines “industrial hemp” as cannabis that contains less than 0.3 percent THC by weight, and which allows state departments of agriculture, universities, and colleges to cultivate industrial hemp for educational and research purposes without a DEA permit. Despite the prohibition on hemp cultivation without a DEA-issued permit, it is not a violation of the federal Controlled Substances Act to purchase, sell, and possess processed hemp products.

In the 2005 case of Hemp Industries Association v. Drug Enforcement Administration, the Ninth Circuit held that the DEA had gone beyond its mandate in attempting to regulate all products containing any amount of THC because “Congress did not regulate non-psychoactive hemp in Schedule I.” The Ninth Circuit further held that “[t]he DEA’s action is not a mere classification of its THC regulations; it improperly renders naturally-occurring non-psychoactive hemp illegal for the first time.” The court concluded that Congressional intent was, “unambiguous… with regard to the regulation of non psychoactive hemp,” and ruled that the DEA “cannot regulate naturally-occurring THC not contained within or derived from marijuana — i.e., non-psychoactive hemp products-because non-psychoactive hemp is not included in Schedule I.”

Because of the DEA’s general prohibition on any cannabis cultivation, most hemp products we see in the U.S. are imported from overseas. And, as a result of the Hemp Industries Association case, companies and individuals may freely sell CBD derived from processed hemp (not from marijuana), imported from outside the U.S.

Notably, the Food and Drug Administration (FDA) has also inserted itself into the CBD market. Generally, when a company makes a medical claim about a product, that product is classified as a drug. Under the Federal Food, Drug and Cosmetic Act (FDAC), new drugs are not allowed to enter the market without first being FDA-tested (unless they meet the definition of a dietary supplement). When these types of medical claims are made without the requisite testing, the FDA takes action under the FDAC.

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The FDA does not consider CBD to be a dietary supplement; it considers CBD to be a new drug. As a result, earlier this year, the FDA issued warning letters to companies making medical claims about their CBD products. The FDA accused these companies of making unfounded medical and therapeutic claims about their CBD products by, for instance, stating that CBD is effective for treating certain kinds of cancer. The FDA gave these companies 15 days to demonstrate how they were curing their violations of the FDAC or face legal action by the FDA.

Anyone undertaking to sell hemp-derived CBD should make clear to regulators and to its customers that its products come from imported hemp and not from marijuana. Moreover, anyone selling or making hemp-derived CBD should also avoid making any medical claims about those products so as to avoid facing consequences from the FDA under the FDAC.


Hilary Bricken is an attorney at Harris Moure, PLLC in Seattle and she chairs the firm’s Canna Law Group. Her practice consists of representing marijuana businesses of all sizes in multiple states on matters relating to licensing, corporate formation and contracts, commercial litigation, and intellectual property. Named one of the 100 most influential people in the cannabis industry in 2014, Hilary is also lead editor of the Canna Law Blog. You can reach her by email at hilary@harrismoure.com.

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