The Ninth Circuit Court of Appeals has allowed a DEA rule declaring CBD oil a Schedule I drug to stand. This means the cannabinoid remains illegal under federal law and any state hemp program allowing the manufacture or sale of cannabidiol is non-compliant with federal law. This includes virtually all state hemp programs.
CBD oil has proven effective in treating a number of medical conditions, including seizures, pain and anxiety. It is currently one of the leading uses for industrial hemp and by far the most profitable. Most states that have legalized hemp have authorized the sale of CBD oil through their hemp pilot programs.
In 2016, the DEA published a rule creating a new Controlled Substances Act drug code for “marihuana extract.” This put hemp-derived extracts in the same restrictive Schedule I category as psychoactive THC.
The DEA has since reiterated that CBD oil is illegal under federal law. According to the DEA, it cannot be sold under any circumstances. An Indiana TV station interviewed DEA spokesman Rusty Payne.
“It’s not legal. It’s just not.”
Payne says cannabis plants are considered a Schedule I controlled substance, and medicinal oils derived from cannabis plants are illegal according to two federal laws: the Controlled Substance Act and the Food, Drug and Cosmetic Act. He said confusion surrounding the Agricultural Act of 2014 (better known as the “Farm Bill”) is frequently cited as legal justification by those who want to manufacture, sell or use CBD oil. The DEA believes the Farm Bill permits only CBD research — not CBD marketing and sales.
“Anybody who’s in violation [of the federal laws] always runs that risk of arrest and prosecution,” he said.
Lawyers for the hemp industry filed suit, trying to get the DEA rule overturned. According to a report at Leafly, “The Hemp Industries Association and other hemp-related businesses argued that the DEA overstepped its rulemaking authority by taking an action that effectively added cannabis extracts, and specifically CBD, to the Controlled Substances Act (CSA) without action from Congress … On top of that, the hemp businesses claimed, the 2014 Farm Bill included a provision allowing certain states to allow hemp cultivation through pilot projects—and barring federal law enforcement agencies, including the DEA, from interfering.”
On Monday, the 9th Circuit panel rejected the industry’s petition for review, leaving the DEA rule in place. That means any state allowing the sale of CBD oil is violating federal law.
FEDERAL FARM BILL
In 2014, Congress cracked the door open for hemp in the U.S. with an amendment to the 2014 Farm Bill. The law allows hemp cultivation for research purposes, but prohibits “commercial” production.
The “hemp amendment” in the 2014 farm bill —
…allows State Agriculture Departments, colleges and universities to grow hemp, defined as the non-drug oil-seed and fiber varieties of Cannabis, for academic or agricultural research purposes, but it applies only to states where industrial hemp farming is already legal under state law.
In 2016, the U.S. Department of Agriculture and Drug Enforcement Agency released a “statement of principles” to guide interpretation of the hemp section in the Farm Bill. It states, “The growth and cultivation of industrial hemp may only take place in accordance with an agricultural pilot program to study the growth, cultivation, or marketing of industrial hemp established by a State department of agriculture or State agency responsible for agriculture in a State where the production of industrial hemp is otherwise legal under State law.”
In short, the current federal law authorizes farming of hemp – by research institutions, or within state pilot programs – for research only. Farming for commercial purposes by individuals and businesses remains prohibited.
The definition of “commercial” and the extent to which sales and marketing are allowed under the rubric of “research” remains murky. This has created significant confusion.
The statement of principles also asserted that industrial hemp programs are limited to fiber and seed. It didn’t mention the CBD oil or other edible hemp products. As we’ve discussed, the DEA has declared CBD illegal, and the FDA has also indicated hemp food products manufactured through research programs also violate federal law.
IN PRACTICE
A number of states, including Colorardo, Oregon, Maine and Vermont have simply ignored federal prohibition and legalized industrial hemp production within their state borders.While prospective hemp growers still have to take federal law into consideration, by eliminating the state requirement for federal permission the law clears away a major obstacle to widespread commercial hemp farming within the state’s borders.
Colorado was the first state with widespread commercial hemp production. Farmers began growing hemp in southeast Colorado back in 2013 and the industry is beginning to mature. The amount of acreage used to grow industrial hemp in the state doubled in 2016 to nearly 5,000 acres, and nearly doubled again in 2017.
Several other states with federally-compliant hemp programs, such as Kentucky, North Dakota, Minnesota and New York, have grown significant acreage under federally-approved research programs. This takes the first step, but with federal shackles in place, these states are not legally allowed to develop any kind of commercial market. Ironically, in all of these states, CBD oil is a huge part of their program. That means despite their best efforts, these states are still not compliant with the feds.
Consider Kentucky. Walk into virtually any health food store in the commonwealth, and even many major grocery chains, and you will find edible hemp products on the shelf. The feds claim this is illegal. More than half of Kentucky’s hemp acreage has been cultivated for CBD. The feds claim this is illegal. And yet as the state Ag Commissioner Ryan Quarels noted in a letter to the DEA, “such products are already being grown, processed and consumed by Kentuckians every day, In fact, consumable hemp products were legal to buy and use even before the Industrial Hemp Research Pilot Program began in 2014.”
Nobody has gone to jail. The feds haven’t levied any fines. The DEA hasn’t sent in the SWAT team to destroy Kentucky hemp fields. DEA spokesman Patterson even admitted the agency is not enforcing the hemp law.
LESSONS
There are several important lessons here.
- We can’t depend on the federal government to limit the power of the federal government. Federal courts generally defer to federal agencies and their wide latitude to write rules.
- It’s impossible to comply with federal hemp rules and create any kind of viable hemp industry. The rules are too convoluted and restrictive.
- The feds don’t have the personnel or resources to enforce their hemp laws. In fact, they are not doing so to any measurable degree.
- Given 1-3, other states should follow the lead of states like Colorado and Oregon, and simply ignore the federal law regarding hemp cultivation. States should move forward with developing their own hemp industries no matter what the federal government says.
