DEA Just Dropped a Bomb on the Hemp Industry. Part 1: Hemp Extract

DEA issued an interim final rule that affects hemp/CBD processors and manufacturers.

Editor’s Note: This article is the first of two companion articles about the interim final rule issued by the DEA. It addresses the issue of hemp extract. The second article addresses delta-8 THC. You can read it by clicking here.

In a long-anticipated action, the US Drug Enforcement Administration (DEA) issued an interim final rule (IFR) today on the implementation of the hemp provisions of the Agricultural Improvement Act of 2018 (Farm Bill) as it relates to marijuana and tetrahydrocannabinols (THC) under the Controlled Substances Act (CSA). You can read the IFR by clicking here.

As I will discuss, the IFR threatens to destroy the hemp/CBD industry. Fortunately, it is not set in stone. You can submit comments on it through October 20, 2020 by clicking here and following the online instructions at that site for submitting comments. To ensure proper handling of comments, you should reference “RIN 1117- AB53/ Docket No. DEA-500” on all correspondence.

I. INTRODUCTION

As most readers of this blog know, the DEA is the US federal agency charged with enforcing the CSA. Far from being even-handed, the DEA is the primary player and policy shaper in the notorious and failed “War on Drugs”, particularly with respect to cannabis. It has aggressively and persistently asserted itself into the hemp industry, despite the Farm Bill’s express removal of hemp, a lawful form of cannabis, from the CSA. The issuance of today’s IFR, which will be published in the Federal Register tomorrow (August 21, 2020) and is effective immediately, continues the DEA’s pattern of unwanted and aggressive interference with a lawful industry.

The IFR starts off by deceptively downplaying its intent: “This interim final rule 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.” In fact, a careful reading of the IFR reveals its intent to be much different. It is not an overstatement to assert that adoption and enforcement of the IFR will severely disrupt, and potentially destroy, the hemp industry.

In this article, I discuss what could potentially be a fatal blow to the entire hemp/CBD industry, namely, the IFR’s criminalization of work in progress hemp extract, a fundamental component of any consumer hemp/CBD product.

II. WORK IN PROGRESS HEMP EXTRACT- A NECESSARY COMPONENT OF HEMP AND CBD PRODUCTS IS DEEMED TO BE ILLEGAL

This article is about the legal status of work in progress hemp extract (WIPHE) that contains delta-9 tetrahydrocannabinol (THC) concentrations in excess of three tenths of one percent (0.3%). For purposes of this article WIPHE means extract of hemp in a partially processed state that is not intended for consumer use or consumption. The IFR has deemed WIPHE to be an illegal schedule 1 controlled substance (the most restrictive) under the CSA:

[T]he definition of hemp does not automatically exempt any product derived from a hemp plant, regardless of the D9 -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% D9 -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% D9 -THC limit on a dry weight basis) or are from exempt parts of the plant (such as mature stalks or non-germinating seeds). See 21 U.S.C. 802(16) (emphasis added). As a result, a cannabis derivative, extract, or product that exceeds the 0.3% D9 -THC limit is a schedule I controlled substance, even if the plant from which it was derived contained 0.3% or less D9 -THC on a dry weight basis.” (emphasis added)

While this position may appear to make sense on the first reading, it is actually a radical and unsupported interpretation of the Farm Bill for the reasons I will explain below. (Note: I have previously addressed this issue in another context in an article you can read by clicking here.) If allowed to stand, this provision could literally destroy the entire hemp/CBD industry. This is because WIPHE is a necessary component of all consumer hemp/CBD products. By taking the position that it is an illegal controlled substance, the DEA is pulling the proverbial rug out from under the entire industry. For this reason, I am publishing my legal theory on the legal status of WIPHE, which I encourage you to use in your comments to the IFR.

III. THE FARM BILL CONTEMPLATED AND LEGALIZED WIPHE

a. Hemp and Its Extracts Are Not Controlled Substances

Hemp is expressly lawful under federal law. The Farm Bill defines it 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)

b. Dry Hemp, Including Partially Processed Dry Hemp, Is Lawful

It is clear that a hemp plant (or part of a plant) with THC levels that do not exceed the statutory 0.3% concentration limit on a dry weight basis is lawful. That plant (or part of the plant) can be chopped, ground, plucked, and otherwise processed dry and remain lawful. This is because the statutory definition directly addresses hemp on a dry weight basis. The issue addressed in this letter arises when hemp is processed for its oil, which necessarily renders the hemp plant and its parts “wet”. The statute does not contemplate measuring THC levels of a wet extract. For this reason, in determining whether it is lawful to transport WIPHE we must focus both on both the language and Farm Bill’s apparent intent.

c. The Statute Contemplates WIPHE

With respect to the Farm Bill’s language, it clearly contemplates that hemp extracts will be created, and that they will be lawful. Otherwise, the term “extract” would not have been included in the definition of hemp. Under almost any normal hemp extraction and manufacturing process it is impossible to avoid a stage in which the extract is both “wet” and within the 0.3% THC limitation. For example, take the most basic processing method of trimming and separating a hemp plant’s stalks, stems, and seeds (SSS) from its leaves and flowers. Processing the plant in this way, which occurs on some level for most hemp cultivated in the US, increases the concentrations of THC despite not increasing the actual amount of THC. This is because the plant parts consisting of the SSS are weighty and do not have meaningful quantities of trichomes from which THC and other cannabinoids are produced. Separating the trichome-rich portions of the plant from the other parts will always increase the THC levels in the resulting non-SSS product, which is typically biomass or flower. This problem is compounded with contemporary extraction techniques, which use highly technical methods to separate and refine desired hemp “parts” (i.e., cannabinoids, terpenes, sesquiterpenes, etc.) from the less valuable parts (i.e., fibers, waxes, chlorophyll, etc.) into the extracts, oils, distillates, and isolates used in almost all consumer hemp products on the market.

For these reasons, it is reasonable to assume that Congress intended for extracts to be produced and that such production will necessarily result in a stage during the processing phase when the extract contains THC concentrations in excess of 0.3%. In other words, it is reasonable to conclude that Congress contemplated the existence of WIPHE.   

d. The Farm Bill’s Intent Is to Distinguish Hemp from Marijuana

Under federal law, the legal status of cannabis sativa l (cannabis) is based on its THC concentrations. If it contains THC concentrations that exceed 0.3% it is marijuana (or so-called “hot” hemp). On the other hand, if it contains THC concentrations that do not exceed 0.3% it is lawful hemp. In distinguishing hemp from marijuana, Congress created a “bright line” test based on THC levels. For this reason, it is reasonable to assume that Congress did not intend to legalize for sale or use hemp extracts that contain THC levels in excess of 0.3%, even when the extract is derived from a lawful hemp plant. If not, this would neuter the statute’s clear intent to distinguish between lawful (hemp) and unlawful (marijuana) forms of cannabis.

However, as discussed above, it is also clear that Congress contemplated WIPHE. The most logical and coherent reconciliation of these two premises (ie, (a) that Congress did not intend to legalize “hot” hemp extract, and (b) that Congress contemplated WIPHE) is that Congress contemplated, and impliedly authorized, WIPHE, provided that it was not sold or consumed. In other words, “hot” hemp extract is lawful only when it is in a dynamic state between the lawful hemp plant itself and the lawful resulting extract during a legitimate manufacturing process and not sold or made available to end use consumers while in that dynamic state. This is to say that hemp extract it is lawful when it is WIPHE.

IV. CONCLUSION

The issue of WIPHE has been around, albeit “underground”, for several years. I routinely discuss it with my clients that process and manufacture hemp and CBD products. Without any official position on the matter by the USDA or the FDA, nor any enforcement attempts by the DEA, the WIPHE issue remained an “elephant in the room”, a massive issue that no one wanted to discuss. The general idea was that if no one addressed it publicly then it would never come to light. Unfortunately, it has finally come to light in the form of an official DEA rule. As usual, the DEA has taken the wrong position. This time, its position is an existential threat to the hemp/CBD industry. I encourage you to comment on the link provided above and to reach out to your elected officials. Hemp is a popular issue with both Democrats and Republicans, and our leadership needs to understand that the DEA is threatening to wipe it out.

Disclaimer: The legal positions expressed in this article are not intended to be, and should not be construed as, legal advice. The issues presented and legal theories asserted are novel. You should consult with an attorney before taking any action regarding these matters.

August 20, 2020

ATTORNEY ROD KIGHT REPRESENTS HEMP
BUSINESSES  THROUGHOUT THE WORLD.

Rod Kight is an international hemp lawyer. He represents businesses throughout the hemp industry. Additionally, Rod speaks at cannabis conferences, drafts and presents cannabis legislation to foreign governments, is regularly quoted on cannabis matters in the media, and is the editor of the Kight on Cannabis legal blog, which discusses legal issues affecting the cannabis industry. You can contact him by clicking here

 

23 comments on “DEA Just Dropped a Bomb on the Hemp Industry. Part 1: Hemp ExtractAdd yours →

  1. Maybe if the hemp farmers would read this article and be proactive before they have DEA at their operations, they will band together and force clarity on the issue.

  2. Please remove the ‘hit’ on Mother Nature, she’s really helpful if you would allow. Think about what you’re doing. Eventually you will mature and regret these anti Nature rules

  3. This is an excellent summary of the issue that demonstrates powerful logic. That’s for giving us a great tool to raise the issue with the DEA and hopefully with enough input we can move the needle in some way. Terrible to think the entire industry of nascent health products (and jobs / tax revenue) is facing existential threat!

  4. Omg here is we go again with destroying certain things that are a viable resource. Hemp makes medicine, clothing, food, fuel. can me mixed in with any material to make it much kore stronger, even concrete. If you guys over there at the DEA office decide one day that your to destroy cbd and hemp. You will be destroying a viable fuel source to run your vehicles. And you want to take it away like always. I just look at you like your not to bright when you say things liked that.

  5. “While this position may appear to make sense on the first reading…” Nope, didn’t appear to make sense at all. None of it makes sense. To me it seems the DEA is listening to parts of the Government who want this made illegal UNTIL “Big Pharma” comes up with their own products.

    1. It feels like a lot of these discussions are being made after the fact, and its pretty clear its not fair to farmers, because labor is still necessary, so eventually these laws will break the the backs of the the farmers and growers in Texas.

  6. I am 100% service connected disabled veteran. Cannabis saved my life. The neck trauma and brain injury I received after I hanged myself was debilitating. Cannabis gave me connectivity I had lost and it treats my pain better than the opioids I could go get right now. The DEA is being cruel, and I would not of attempted suicide had I been able to use cannabis in all of its forms

  7. I urge you go not make hemp or cbd with less than 0.3% RHC illegal. It is a medicine that is helping so many people right now and is not at all psycho-active. It is very important that the public has access to this important medicine.

    Thank you,
    Laura Donaldson

  8. Any time that federal agencies put their efforts into regulating cannabis, it turns out a mess. Neither FDA nor DEA possess a clear understanding of the field of cannabis and its various derivative products. DEA’s ham-fisted, all thumbs approach to regulating hemp and hemp extracts proves its fundamental lack of understanding of this industry. Think of DEA as a wrecking ball swinging through a quiet neighborhood.

  9. Tremendous article; I really will be following up in all updates; FDA and USDA and DEA must put a line or timming of conversion in the ( WIPHE) that keep us all safe , this legal is for making plus not minus minus .

  10. Who’s life is this saving? The DEA is the most backwards agency in the country. Like hemp and cannabis sativa can save and heal many issues but for some reason the DEA doesn’t want to solve problems, it’s like they’re deliberately creating more issues for the fun of seeing the public suffer.

  11. Good afternoon,

    Can you explain why the THC concentration increases because of this processing stage as described below:

    For example, take the most basic processing method of trimming and separating a hemp plant’s stalks, stems, and seeds (SSS) from its leaves and flowers. Processing the plant in this way, which occurs on some level for most hemp cultivated in the US, increases the concentrations of THC despite not increasing the actual amount of THC. This is because the plant parts consisting of the SSS are weighty and do not have meaningful quantities of trichomes from which THC and other cannabinoids are produced.

    Your post was amazing. Thank you.

    Best regards,

    Brandon

    1. Thanks for reading and commenting, Brandon. As a follow-up to the section you quoted, what I mean is that the percentage of THC in the resulting product (such as the biomass) increases relative to the weight despite the fact that the actual quantity (ie, milligrams, etc.) of THC remains in the same. -Rod

  12. Boy, you’d think that the SEA would be ashamed of all the
    Lies they have fed us for so many years they would finely leave us alone and let us has have our medicine.But evil has no shame!

  13. We can thank Joe Biden who was the author of the all encompassing legislation “War on Drugs”, the 1994 Crime Bill where he played the key role in exponentially expanding the DEA budget, increasing the criminal penalties for possession or sale of even small amounts of marijuana that created the mass incarceration of the black community which doubled between 1995 to 2010. In 1984, he spearheaded a law along with the then racist Senator Strom Thurmond that expanded civil asset forfeiture allowing prosecutors to seize property from people who sometimes hadn’t even been convicted of a crime.

    After 25 years, The “Biden law” still empowers the DEA to act as judge, legislator and executioner to usurp the 2018 Farm Bill that legalized hemp which was overwhelmingly passed by both houses of Congress and signed into law by the president. Unless both houses of Congress create a law to permanently remove THC from any schedule, the CBD hemp industry will never have a clear path to success. The alternative will be the creation of a pharmaceutical single molecule re-created in a lab.

  14. Thank you for this very valuable information. We will be contacting as many individuals as possible to get our point across. This could certainly destroy the entire industry overnight so we must make ourselves heard.

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