DEA Draws Line in the Sand in Interim Final Rule to Implement the 2018 Farm Bill’s Hemp Provisions

Read the IFR here.

According to DEA, this IFR “merely conforms [the agency’s] regulations to the statutory amendments to the CSA that have already taken effect, and …does not add additional requirements to the regulations.” While this may be the case, certain language in the preamble of the IFR has raised questions about how DEA plans to implement and enforce the amended regulations.

Background

Prior to the enactment of the 2018 Farm Bill, cannabis plants and materials derived generally were considered “marihuana” and therefore regulated as Schedule I controlled substances. The passage of the 2018 Farm Bill in December 2018 eliminated one of the biggest legal obstacles to producing and working with hemp and hemp-derived materials in the US by removing “hemp”— defined as “the plant Cannabis sativa L. [cannabis] 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 [Δ9-THC] concentration of not more than 0.3 percent on a dry weight basis”—from the CSA. Prior to issuing this IFR, DEA had not opined publically on how the agency interpreted the statutory definition of “hemp.” Specifically, DEA had not clarified whether, when determining if cannabis-derived material is “hemp”—an agricultural commodity—or “marihuana”—a Schedule I controlled substance—the dispositive factor is the material’s Δ9-THC concentration or its source (i.e., whether it was derived from a “hemp” plant or a “marihuana” plant).

How the IFR Changes DEA’s Regulations

With the issuance of this IFR, DEA made the following changes to its regulations:

• Revising the definition of “tetrahydrocannabinols” (a Schedule I controlled substance) to exclude tetrahydrocannabinols in “hemp” that are not “synthetically derived”;
• Revising the definition of “marihuana extract” (another Schedule I controlled substance) by limiting it to extracts with a concentration of more than 0.3% Δ9-THC on a dry weight basis; and
• Removing FDA-approved drug products that contain cannabidiol (CBD) (i.e., Epidiolex®, previously a Schedule V controlled substance) from control and exempting them from the list of substances that require DEA import and export permits.

In the IFR, DEA appears to have drawn some clear lines in the sand—taking the position that any material derived from a cannabis plant will be considered “marihuana” if it contains more than 0.3% Δ9-THC. But the IFR leaves unanswered a number of questions about how DEA will implement and enforce its amended regulations.

Revised Definition of Tetrahydrocannabinols

As noted above, the IFR revised the regulatory definition of “tetrahydrocannabinols” to exclude tetrahydrocannabinols present in “hemp.” In so doing, DEA explained that cannabis-derived material that contains tetrahydrocannabinols due to their presence in the cannabis plant from which they were derived are not controlled under the CSA, provided that the material has a Δ9-THC concentration of 0.3% or less on a dry weight basis (and is not separately controlled under the CSA). DEA then went on to clarify that because the statutory definition of hemp is limited to materials derived from the cannabis plant, the 2018 Farm Bill did not impact the legal status of “synthetically derived” tetrahydrocannabinols. DEA explained that “for synthetically derived tetrahydrocannabinols, the concentration of Δ9-THC is not a determining factor in whether the material is a controlled substance. All synthetically derived tetrahydrocannabinols remain Schedule I controlled substances.” But what the DEA did not do was to clarify the meaning of “synthetically derived” in this context—causing many in the hemp industry to be concerned that DEA is effectively outlawing certain tetrahydrocannabinols—and Δ8-THC in particular—that occur naturally in the cannabis plant, but are frequently produced by chemical reaction using another naturally occurring cannabinoid(s) as a starting material.

Revised Definition of Marihuana Extract

As noted above, before issuing this IFR, DEA had not taken a clear position (at least not publically) as to whether the Δ9-THC concentration or the source of cannabis-derived material is dispositive when determining if it falls within the definition of “hemp.” In revising the regulatory definition of “marihuana extract,” DEA explained that “a cannabis derivative, extract, or product that exceeds the 0.3% Δ9-THC limit is a Schedule I controlled substance, even if the plant from which it was derived contained 0.3% or less Δ9-THC on a dry weight basis.” This, of course, raises concerns and potential risk to downstream entities in the hemp supply chain. The cultivation of hemp is regulated by the US Department of Agriculture (USDA), which permits a certain amount of variability in the Δ9-THC concentration of hemp grown in accordance with the 2018 Farm Bill. (Readers interested in learning more about USDA’s testing requirements and this “measurement of uncertainty” can consult our previous alert.) But of course, USDA’s requirements apply only to the cultivation of hemp; they do not govern downstream entities in the supply chain like hemp processors and finished goods manufacturers. In this IFR, DEA appears to be taking the position that any cannabis-derived material with a Δ9-THC concentration of more than 0.3% will be considered “marihuana” (but does not provide any guidance regarding testing). As such, certain entities will run the risk of inadvertently violating the CSA—for example, a processor that receives material derived from hemp grown and tested in accordance with the 2018 Farm Bill, but that temporarily has a higher concentration of Δ9-THC than the plant from which it was derived.

As with any IFR, DEA’s rule became effective upon publication, but DEA will be accepting comments for 60 days (until October 20, 2020). Among other things, comments likely will address criminal liability if the Δ9-THC concentration of in-process materials temporarily exceeds the statutory 0.3% threshold, as well as clarification regarding “synthetically derived” THC. We at Arent Fox will continue to monitor developments for any further clarification on these and any other related issues that might become available.