The Legality of Cannabis-Based Products


Author: William B. Helbling

Originally published in October 2019

Copyright © 2019 Knox McLaughlin Gornall & Sennett, P.C.

Industrial Hemp and Marijuana

What is the “Farm Bill” and Controlled Substances Act

Farm Bill: Every five years, Congress passes legislation that sets national agriculture, nutrition, conservation, and forestry policy, commonly referred to as the “Farm Bill” (United States Senate Committee on Agriculture, Nutrition, & Forestry).

The Controlled Substances Act: The Controlled Substances Act places all substances which were in some manner regulated under existing federal law into one of five schedules (“The Controlled Substances Act”, The United States Drug Enforcement Administration). This placement is based upon the substance’s medical use, potential for abuse, and safety or dependence liability. Id.

Definition of Marijuana

Marijuana (Marihuana) was previously defined under the Controlled Substances Act as: “… all parts of the plant Cannabis sativa L., whether growing or not; the seeds thereof; the resin extracted from any part of such plant; and every compound, manufacture, salt, derivative, mixture, or preparation of such plant, its seeds or resin. Such term 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.” (21 U.S.C. § 802(16) - emphasis added).

Definition of Hemp

Industrial Hemp under 2014 Farm Bill: “…the plant Cannabis sativa L. and any part of such plant, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.” (7 U.S.C. § 5940).

Note: tetrahydrocannabinol (“THC”) is the psychoactive chemical in Cannabis. THC is the chemical compound that makes people “high”.

Legality of Industrial Hemp under 2014 Farm Bill and Controlled Substance Act

Under the 2014 Farm Bill, Industrial Hemp was essentially only allowed to be grown or cultivated if permitted by state law or for research purposes.

The 2018 Farm Bill

2018 Farm Bill Enactment

On December 20, 2018, the 2018 Farm Bill was signed into law and established a new federal hemp regulatory system under the US Department of Agriculture (“Hemp and the 2018 Farm Bill”, Jennifer McGrath).

The new program aims to facilitate the commercial cultivation, processing, and marketing of hemp.

Under the 2018 Farm Bill, “Hemp” is defined as:

“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 (H.R. 2, 115th Cong. § 10113 (2018) (inserting § 297A(1)).

Subsequent Amendment to the Controlled Substance Act

Section 802(16) (defined above) is modified to exclude “hemp” from the definition of marijuana (21 U.S.C. § 802(16)).

What Now?

Farmers may grow, sell and use industrial hemp, as long as hemp cultivated does not contain more than .3% of THC and complies with state law/regulations.

Pennsylvania Regulations

How do you grow Industrial Hemp in Pennsylvania?

For the past two years, the PA Department of Agriculture (“DoA”) has had an industrial hemp research pilot program in place. Upon enactment of the 2018 Farm Bill, the PA DoA has expanded its pilot program by issuing industrial hemp permit applications to the public (“Industrial Hemp”, Pennsylvania Department of Agriculture).

The 2019 Permit Application requested the following information:

  • Background Check of Persons (cannot have a drug related felony);
  • Planting Locations;
  • Planting Plans and Charts; and
  • Seed Acquisition.
  • 2019 Industrial Hemp Parameters” (Post Farm Bill), Pennsylvania Department of Agriculture

Restrictions:

  • THC levels less than 0.3%;
  • Attachment of Permit on shipments throughout PA and US;
  • No use of name, symbols and logos of PA may be used in promotion of products.

Inspections

DoA will conduct random inspections of permit holders during growing seasons to determine THC levels, pesticide testing, and identification of plant pests.

Upon inspection, the DoA will request exact planting locations including size of planting area, planting date, the varieties planted, and farm/facility map showing boundaries of planting areas.

USDA Approval

Pursuant to Subtitle G of the 2018 Farm Bill, the PA DoA has submitted a state plan outlining its regulatory framework of industrial hemp to USDA for approval. The PA DoA state plan is currently pending.

Industrial Hemp Interstate Commerce Issues

Big Sky Scientific LLC v. Idaho State Police

Facts: In January of 2019, Idaho state police seized nearly 13,000 pounds of hemp from Blue Sky Scientific LLC, which was produced in Oregon and was in transit to Colorado. Oregon has an existing industrial hemp program allowing the cultivation of industrial hemp consistent with the 2014 Farm Bill (i.e.for research purposes). Hemp is considered a controlled substance under Idaho law. Blue Sky Scientific LLC filed suit against the Idaho State Police in federal court to obtain their confiscated hemp (Big Sky Sci. LLC v. Idaho State Police, No. 1:19-cv-00040-REB [D. Idaho 2019]).

Law at Issue: Under the 2018 Farm Bill, “[n]o state or Indian Tribe shall prohibit the transportation or shipment of hemp or hemp products produced in accordance with subtitle G of the Agricultural Marketing Act of 1946 (as added by section 10113) through the State or the territory of the Indian Tribe, as applicable.” (H.R. 2, 115th Cong. § 10113 (2018)).

Under Subtitle G of the 2018 Farm Bill, only hemp produced under a state plan that has been approved by the USDA is compliant (“Big Sky Scientific v. Idaho State Police: Considerations for Legally Produced Hemp In Transport”, Catie Wightman).

Currently, the USDA has stated that it will not approve any state plans until federal regulations have been promulgated, and it does not expect federal regulations to be finalized until late 2019.

Holding

The federal court ruled in favor of the Idaho Police. The federal court held that since the USDA had not approved any state’s industrial plan, no industrial hemp in the US could be produced in accordance with Subtitle G of the 2018 Farm Act. As a result, full protection of industrial hemp in transit under the 2018 Farm Bill will not be in place until the USDA approves a cultivator’s state plan.

Note: Said holding could be applied to not only industrial hemp, but also CBD products derived from industrial hemp.

Key Takeaway

Industrial hemp/CBD companies must be cognizant of the laws of the state’s its products will be transported. While the 2018 Farm Bill has provided more favorable legal framework for the cultivation of industrial hemp, such legislation does not preempt state law and regulations.

What is CBD?

Cannabidiol (“CBD”)

CBD is the second most prevalent active ingredient in cannabis (“Cannabidiol (CBD) – what we know and what we don’t”, Harvard Health Publishing). CBD is a 21-carbon terpenophenolic compound which is formed following decarboxylation from a cannabidiolic acid precursor (“Cannabidiol: Critical Review Report”, World Health Organization).

CBD has been known to treat:

  • Epilepsy
  • Anxiety
  • Chronic Pain, and
  • Sleep Issues

CBD Derived from Marijuana and Industrial Hemp

Both marijuana and industrial hemp contain CBD. Generally, most CBD products are derived from industrial hemp, as extracts from marijuana contain higher traces of THC and are illegal in most states (i.e. greater than .3%) (The Farm Bill, hemp legalization and the status of CBD: An explainer, Brookings).

There are two ways to extract CBD:

  1. Isolated CBD – removing only CBD from plant; and
  2. Full Spectrum – pure oil from the cannabis plant leaves, stem, or flower (“Hemp Oil vs CBD Oil vs Cannabis; What is the Difference?”, Zatural)

CBD Products

Given the changes under the 2018 Farm Bill, new companies are producing and selling CBD products derived from industrial hemp.

Types of CBD Products:

  • Oils
  • Lotions and Balms
  • Pills and Gummies
  • Cosmetics, and
  • Dog Treats

A new study reported by Forbes has estimated that the collective market for CBD product sales will surpass $20 billion dollars by 2024 (CBD Market Could Reach $20 Billion By 2024, Says New Study, Forbes).

FDA Regulation of CBD

FDA Approved?

Only one prescription CBD drug has been approved by the FDA to treat rare and severe forms of epilepsy (“What You Need to Know (And What We’re Working to Find Out) About Products Containing Cannabis or Cannabis-derived Compounds, Including CBD”, US Food & Drug Administration). Outside of the one approved drug, the FDA has not approved any other CBD product.

FDA has made it clear that it will not tolerate companies illegally selling CBD products that claim to prevent, diagnose, treat, or cure disease (FTC Joins FDA in Sending Warning Letters to Companies Advertising and Selling Products Containing Cannabidiol (CBD) Claiming to Treat Alzheimer’s, Cancer, and Other Diseases, US Food & Drug Administration).

Given the foregoing, CBD products are only subject to regulation when sold with the claim of therapeutic benefit (CBD Is Wildly Popular. Disputes Over Its Legality Are a Growing Source of Tension, The New York Times). In addition, the FDA maintains that CBD added to food products is prohibited.

Potential FDA Regulations?

The FDA is currently evaluating if it will create a regulatory framework for cannabis derived products that are not drugs. Such regulations are tentative, as the FDA continues to conduct studies on the effectiveness and dangers of CBD and CBD products (“What You Need to Know (And What We’re Working to Find Out) About Products Containing Cannabis or Cannabis-derived Compounds, Including CBD”, US Food & Drug Administration).

How to Advise

Cultivation and Sale of Industrial Hemp

  1. Assessment of Viability under PA Regulations;
  2. Interstate Commerce Considerations; and
  3. PA Compliance Considerations.

Production of CBD Products utilizing Industrial Hemp

  1. Type of Product;
  2. Labeling and Disclaimers; and
  3. Interstate Commerce Considerations.

Author: William B. Helbling

Originally published in October 2019

Copyright © 2019 Knox McLaughlin Gornall & Sennett, P.C.