Marijuana

DEA Interim Final Rule Threatens The Existence Of The Hemp Industry

It is clear that the Rule is a pretext for the DEA to maintain its authority over cannabis.

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Last week, the DEA dropped a bomb on the hemp industry when it released an Interim Final Rule (the Rule) on hemp and hemp-derived cannabinoids (collectively referred to as Hemp).

Although the Rule provides that it “merely conforms DEA’s regulations to the statutory amendments to the CSA that have already taken effect, and it does not add additional requirements to the regulations,” the Rule improperly criminalizes intermediary hemp, which is partially processed hemp extract — also known as “wet hemp” — not intended for consumption or end use consumers. This attack on intermediary hemp is hugely problematic in that wet hemp is a vital component of all finished Hemp products.

The Agriculture Improvement Act of 2018 (the 2018 Farm Bill) legalized hemp by removing the plants, its derivatives, extracts, and cannabinoids from the definition of “marihuana” under the Federal Controlled Substances Act (the CSA). However, the 2018 Farm Bill did not address the processing of hemp, neither did the USDA’s Interim Final Rule that regulates the cultivation of hemp. This regulatory gap regarding the processing of hemp is at the center of this Rule and why it has the potential to destroy the Hemp industry.

The 2018 Farm Bill defines hemp as:

the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.” (Emphasis added).

Accordingly, it is clear that the plant, its derivatives, extracts, and cannabinoids are no longer schedule I controlled substances. Moreover, if derivatives, extracts, and cannabinoids are lawful, it logically follows that it is lawful to process the hemp plant into such derivatives, extracts, and cannabinoids. Yet, the Rule ignores this nuance and provides:

[T]he definition of hemp does not automatically exempt any product derived from a hemp plant, regardless of the Δ9 -THC content of the derivative. In order to meet the definition of “hemp,” and thus qualify for the exemption from schedule I, the derivative must not exceed the 0.3% Δ9 -THC limit.

The definition of “marihuana” continues to state that “all parts of the plant Cannabis sativa L.,” and “every compound, manufacture, salt, derivative, mixture, or preparation of such plant,” are schedule I controlled substances unless they meet the definition of “hemp” (by falling below the 0.3% Δ9 -THC limit on a dry weight basis) or are from exempt parts of the plant (such as mature stalks or nongerminating seeds). See 21 U.S.C. 802(16). As a result, a cannabis derivative, extract, or product that exceeds the 0.3% Δ9 -THC limit is a schedule I controlled substance, even if the plant from which it was derived contained 0.3% or less Δ9 -THC on a dry weight basis. (Emphasis added).

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Any hemp derivative, extract or product must go through an extraction process. This extraction process inevitably results in the creation of “wet hemp” and in an increase in Delta-9 THC concentrations in excess of 0.3%, even if fleetingly. Therefore, it is reasonable to infer that Congress intended to legalize “wet hemp.”

Nevertheless, the Rule disregards this fact and suggests that hemp processors are handling a schedule I controlled substance, even if the finished product contains no more than 0.3% Delta-9 THC. Consequently, the Rule creates significant criminal risk for anyone processing hemp.

In light of the DEA’s historical control of cannabis and its lack of enthusiasm in the legalization of hemp – USDA Secretary Sonny Perdue has repeatedly blamed the DEA for interfering with the development of hemp regulations — it is clear that the Rule is a pretext for the DEA to maintain its authority over cannabis.

Ultimately, the Rule and the issues raised in this blog post reveal that statutory ambiguities should be addressed by Congress or by the courts before the DEA gets to adopt such regulations. As such, hemp stakeholders should comment on the Rule through October 20 and reach out to their elected officials to help them understand the importance of this issue and the need to clarify the legality of intermediary hemp to help the Hemp industry follow its course and succeed.

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Nathalie practices out of Harris Bricken’s Portland office and focuses on the regulatory framework of hemp-derived CBD (“hemp CBD”) products. She is an authority on FDA enforcement, Food, Drug & Cosmetic Act and other laws and regulations surrounding hemp and hemp CBD products. She also advises domestic and international clients on the sale, distribution, marketing, labeling, importation and exportation of these products. Nathalie frequently speaks on these issues and has made national media appearances, including on NPR’s Marketplace. For two consecutive years, Nathalie has been selected as a “Rising Star” by Super Lawyers Magazine, an honor bestowed on only 2.5% of eligible Oregon attorneys.  Nathalie is also a regular contributor to her firm’s Canna Law Blog.

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