Wait, Is THC-O Actually Legal??? 4th Circuit Says DEA’s Position “Lacks the Power to Persuade”

On September 4, 2024, in a groundbreaking and unexpected ruling (Anderson v. Diamondback Inv. Grp., No. 23-1400 (4th Cir. Sep. 4, 2024)) the 4th Circuit Court of Appeals found that THC-O acetate, commonly referred to as “THC-O”, meets the legal definition of “hemp” under the 2018 Farm Bill and is not a controlled substance, contrary to the DEA’s position:

“[R]ather than originating from organic matter—like the hemp-derived cannabinoids at issue —, synthetic cannabinoids are just that: compounds manufactured entirely out of synthetic materials… [W]e reject Diamondback’s contention that the DEA’s interim final rule or letter mandates a finding that THC-O is illegal.“

The Court took the DEA to task, specifically finding its position that THC-O is illegal as set forth in its Interim Final Rule and its February 13, 2023 letter to me, to be unpersuasive:

“Though we “may . . . seek aid from the interpretations of [the agencies]
responsible for implementing particular statutes…we find that the DEA’s interpretation here lacks the ‘power to persuade.’“

Ouch. I’m confident the DEA did not like reading that line. But that’s not all. The Court kept going and continued to disparage the DEA’s interpretation of the Farm Bill:

“[T]he DEA in February 2023 “clarified that THC-O [specifically] . . . is a Schedule I controlled substance as THC-O does not naturally occur in the cannabis plant and can only be obtained synthetically.” But the Ninth Circuit [Court of Appeals] rejected this same argument as it applied to delta-8 THC…. Between the DEA’s February 2023 letter and AK Futures [the Ninth Circuit case ruling that delta-8 THC is lawful], we think the Ninth Circuit’s interpretation of the 2018 Farm Act is the better of the two. And we’re free to make that determination ourselves, despite a contrary interpretation from the DEA, because we agree with the Ninth Circuit that § 1639o is unambiguous, see AK Futures, 35 F.4th at 692, and because, even if it were ambiguous, we needn’t defer to the agency’s interpretation, see Loper Bright Enters. v. Raimondo, 144 S. Ct. 2244, 2262 (2024)[.]“

That last dig about not needing to “defer to the agency’s interpretation” was a reference to a recent landmark Supreme Court case, Loper Bright, which overruled the “Chevron Doctrine” that required federal courts to defer to federal agencies’ interpretations of ambiguous statutes. That’s a fascinating legal issue in and of itself with enormous implications for the cannabis industry, but it is beyond the scope of this article. The point I am making is that the Court was clear and even forceful in its message that the DEA’s positions on hemp will not get special treatment by the courts. Instead, when interpreting the Farm Bill, courts will rule in favor of the most “reasonable” interpretation, even if that interpretation is contrary to the DEA’s position. Importantly, the court found in this case that the most reasonable interpretation is the one that follows the plain and “unambiguous” language of the law, not the interpretation that requires inserting language into the Farm Bill – scientific or otherwise – that is not there. 

I should note that this case is a feast of legal issues, and this article only focuses on the ones most pertinent to the cannabis industry. It arises out of a wrongful termination lawsuit filed by a North Carolina woman who was fired from her job after testing positive for marijuana but who claims her firing was wrongful because she was using legal hemp products, including THC-O. For those interested in a deeper dive, you can read the case in its entirety below. Additionally, this case had a dissenting opinion by Judge Richardson who questions whether the court reached the right conclusion in determining that THC-O meets the definition of a legal hemp “derivative” since, as the DEA states, it does not naturally occur in the plant. I discuss this issue, and the DEA’s position, in an article you can read here. 

So where does that leave us? At least under federal law, the 4th Circuit has ruled that THC-O meets the legal definition of “hemp” as defined in the 2018 Farm Bill. That is big and unexpected news. 

Additionally, and perhaps more importantly, the court killed the DEA’s buzz when it comes to its interpretations of the Farm Bill. Most readers of this blog are aware of the DEA’s letters regarding the legal status of tetrahydrocannabinolic-acid, known as “THCa”, and my view that the DEA’s position is incorrect based on a plain reading of the law (see here and here). The 4th Circuit’s broad dismissal of the DEA’s position on THC-O, combined with the 9th Circuit’s ruling that delta-8 THC is lawful despite the DEA’s position to the contrary, confirms that federal courts will not defer to the DEA on the Farm Bill when its position is not reasonable. Both courts dismissed DEA positions on the Farm Bill that focused on the Farm Bill’s supposed “intent” and that required inserting additional language into the definition of “hemp”. Instead, the courts focused on the plain and “unambiguous” language of the law in their rulings. This bodes well for the hemp industry. In particular, it seems to be a win of sorts for the burgeoning market in THCa flower, which the DEA contends is illegal. This is because THCa meets the definition of “hemp” when its delta-9 THC concentration does not exceed 0.3% by dry weight since the plain language of the Farm Bill, and rulings by both the 4th Circuit and the 9th Circuit courts of appeal, confirm that delta-9 THC is the sole metric to distinguish legal hemp from illegal marijuana and also because the definition of “hemp” includes its “acids”. (THCa is an “acid”.) 

Special thanks to my friend and colleague, Phil Dixon, for notifying me of the 4th Circuit’s ruling. For lawyers in North Carolina and anyone else in the country with an interest in criminal law, Phil is an incredible resource, and I highly recommend the blog he writes for the UNC School of Government. Phil and I recently discussed hemp legal issues in a podcast that you can watch by clicking here.

Here’s the 4th Circuit’s ruling:

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September 5, 2024

Rod Kight is an international cannabis lawyer. He represents businesses throughout the cannabis industry. Additionally, Rod speaks at cannabis conferences, drafts and presents 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.