Answers to readers’ questions about CBD law.

One of the things I enjoy most about writing this blog is the feedback I get from readers. I receive comments almost daily. Unfortunately, I can’t post all of them because many are specific legal questions that require a consultation rather than a general response that is appropriate to a blog. (If you have specific legal questions about your cannabis, hemp, or CBD business, please contact me directly.) Fortunately, I do get good general-purpose legal questions on occasion. In this blog post I thought I’d answer the following excellent questions from a reader in Colorado.

1. The DEA contends that all CBD is illegal; however, I have not seen that it is taking action against it. Is this true and, if so, why?

Although it is virtually impossible to get an accurate picture of the DEA’s enforcement actions and the Justice Department’s prosecutions against CBD producers and sellers, I believe it is fair to say that CBD related prosecutions (i.e., prosecutions based primarily or solely on production and sales of CBD oil and associated CBD products versus prosecutions on cannabis producers and suppliers who deal in high CBD strains) is low to non-existent. The obvious follow up question, given the DEA’s stance that CBD is illegal, is why? Of course, any answer I have is speculative since I’m not privy to the inner workings of the DEA. However, I can comfortably theorize that the DEA is not actively pursuing CBD producers and CBD sellers for a few reasons: First of all, CBD is not mentioned in the Controlled Substances Act (“CSA”). There is a very good argument to be made that it is not illegal because it is not specifically scheduled in the CSA. As much as I like this position, I wouldn’t hang my proverbial hat on it. This is because there’s also a good argument to be made that it is illegal- at least in certain circumstances- since it is a “part” of the cannabis plant and also a “compound” of the plant, both of which are specifically illegal under the CSA. That being said, it is a much more difficult legal case to argue that pure CBD is illegal when it is not listed in the CSA than, say THC, which is specifically listed and defined. Secondly, CBD is not used to get high. As most people know, it is a non-psychoactive cannabinoid. Good or bad, the DEA seems particularly interested in people not getting high, regardless of whether the “high” is actually harmful. Additionally, because it is not used to get high and has been documented as having significant medical applications, most users are buying it for health-related purposes. It’s much tougher to convict a cancer patient using CBD oil than a street dealer slinging weed. Finally, under many circumstances, CBD is legal in the US. The DEA simply doesn’t have the resources to sort out the legal from the illegal CBD. This leads to the next question:

2. Is it accurate to say that anything made from the stalk or seed of cannabis (no matter the state or country or origin) is exempted from the CSA and therefore legal to sell and buy in all 50 states?

In a word, yes. Specifically, according to the CSA “marihuana… does not include the mature stalks of such plant, fiber produced from such stalks, oil or cake made from the seeds of such plant, any other compound, manufacture, salt, derivative, mixture, or preparation of such mature stalks (except the resin extracted therefrom), fiber, oil, or cake, or the sterilized seed of such plant which is incapable of germination.” Anything that falls under this definition is legal.

3. Some CBD Oil companies contend that it’s only legal to ship <.3% THC CBD oil to all 50 states if the CBD oil is IMPORTED from Europe. Is this true? 

No. This is not true. Click here for my full response to this question. In short, some domestic CBD is legal. Domestic CBD is legal in all 50 states if it is sourced from industrial hemp which was grown legally in a state that has enacted industrial hemp laws that comport with the 2014 Farm Bill. Such domestically produced CBD may be processed, transported to, and sold in all 50 state, including states that haven’t enacted industrial hemp laws pursuant to the Farm Bill. My caveat is that this is according to Federal law and, importantly, hinges on a small clause in a funding bill. Also, individual state laws may vary.

4. If CBD is legal at the Federal level but illegal in a particular State, which laws prevail?

In the US, we live in a federal system, which means that there are overlapping areas of sovereignty between the US government and individual State governments. Usually, when a Federal law and a State law are in conflict the Federal law trumps the State law. However, in the case of CBD, which is legal at the Federal level, Federal law does not trump a conflicting State law. The reason CBD (or, to be technically accurate, hemp) is not illegal at the Federal level is because Congress said that Federal funds could not be used “to prohibit the transportation, processing, sale or use of industrial hemp that is grown or cultivated in accordance with section 7606 of the Agricultural Act of 2014, within or outside the State in which the industrial hemp is grown or cultivated.” Withdrawing funding from an enforcement agency is not quite the same as enacting a law that specifically legalizes hemp. So, and without going into a philosophical discussion on whether a law that cannot be enforced is actually a law at all, the fact is that Congress didn’t explicitly legalize hemp and CBD nationwide. Rather, it simply withdrew funding for prosecuting violators of the law. Accordingly, anti-hemp State laws do not conflict with Federal law and are thus enforceable.

5. How would the DEA, US Customs, and other US agencies determine if the CBD oil was derived from the cannabis stalk or flower? Can’t any company just say it’s from stalk? How would the government enforcement agencies prove otherwise?

I get this question a lot. My first and best answer is that I always advise my clients to comply with the law. I don’t ever recommend subterfuge when dealing with CBD, hemp, cannabis and a government agency or official. Honesty and integrity are the best business policies. That being said, it is true that, absent an admission by the producer or an investigation into the source of CBD in a specific product, it is difficult for the US government to determine whether the CBD at issue is legal or not. CBD extracted from the stalk is the same chemical compound as CBD extracted from the flower. Sure, the extraction methods may be different and the flower generally has higher and better yields. However, the end result is the same. CBD is largely legal or illegal based on its source. If the government cannot determine the source then it cannot prove a crime. But, don’t lie about the source. At best, read some criminal law blogs on the Fifth Amendment and the right to remain silent. Silence is legal (and golden). Lying to the US government is not.

Rod Kight is a lawyer based in Asheville, NC. He is licensed in North Carolina and Oregon and represents legal cannabis businesses. You can contact him by clicking here.

5-4-2016