Wildly confusing state and federal laws create a massive gray area for CBD and hemp-based products
By Michael Chernis
For years, when people smoked marijuana, it meant getting “high.” But times have changed, especially in the cannabis field. With the rising recognition and popularity of CBD, using cannabis is no longer tied to getting stoned. Particularly for medical patients, the focus is on medication and healing.
CBD, or cannabidiol, is one of more than 80 known cannabinoids in the cannabis plant. In contrast to THC, CBD is non-psychoactive.
CBD use is on the rise as more and more research provides evidence of its medical benefits. Its effectiveness for children with epilepsy is just one example of its healing power. But CBD products clearly fall into a legal gray area; they can be purchased in health food stores and even from Amazon, but are they any more legal than THC products?
The answer is somewhat complicated, and unfortunately the best response is that it depends on where the CBD oil came from.
The starting point for analyzing the legality of CBD is federal law, which applies to all cannabis-related cultivation and distribution activities, even those which are wholly intrastate. The federal Controlled Substances Act, passed in 1970, makes it a crime to manufacture and distribute marijuana, which is classified as a Schedule 1 controlled substance, along with heroin and LSD. The definition of marijuana is set forth in 21 U.S.C. §802(16): “The term marihuana means 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.”
Thus, under the Controlled Substances Act, the legality of a marijuana product is not based on THC content.
Contrary to popular belief, the federal definition of marijuana does not exclude CBD, industrial hemp or mixtures containing less than 0.3% THC. In fact, CBD is not even defined within the Controlled Substances Act.
Rather, the legality of a product containing CBD depends on the plant material from which it was derived, and not its percentage of THC. If, for example, CBD oil is made from cannabis flowers, then that material is federally illegal. Conversely, if the oil is derived from mature plant stalks, then it may be legal federally, if it were cultivated outside the United States.
For CBD products derived from exempted portions of plant material to be legal, that material must be imported from another country. See Kiczenski v. Ashcroft, 2006 WL 463153, *3 (E.D. Cal. 2006). This is because the exempted portions of the plant (such as the mature stalk) cannot be cultivated separately from the leaves and flowers, which are banned. In other words, it is not possible in the United States to cultivate CBD plants legally under federal law, which is why so much CBD material is imported from other countries.
What about industrial hemp? There is hardly an area of the law that is more confusing than this. The term “hemp” historically has been used to refer to varieties of cannabis plants with a THC content too low to create any psychoactive effects (usually less than 1% THC). Industrial hemp is the legal nomenclature traditionally used outside the United States for these cannabis varieties. The European Union, for example, defines industrial hemp as cannabis with 0.3% THC or less, and makes that percentage the barometer for legality. Because of its low THC content, hemp has become synonymous with cannabis strains that produce relatively high quantities of CBD. The problem is that in the United States, unlike in Europe, industrial hemp is generally not legal.
The federal Agricultural Act of 2014 (also known as the Farm Bill) is the source of a great deal of confusion regarding terminology. This law defines industrial hemp as “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.”
At first glance, this definition appears to carve out an exception to the Controlled Substances Act for any cannabis derivative containing less than 0.3% THC. Unfortunately, this industrial hemp legislation does not offer protection to the overwhelming majority of hemp cultivators and CBD producers. Rather, as Section 7606 of the act makes clear, it only protects the cultivation of industrial hemp by institutions of higher education or state departments of agriculture, where the hemp is grown for research in a state that has passed its own hemp legislation.
Therefore, the 2014 Farm Bill offers no protection to typical cannabis businesses selling products with CBD or derived from hemp. And thus, unless the CBD oil is derived from portions of the cannabis plant that are exempted from the Controlled Substances Act, and are cultivated outside the United States, they remain federally illegal to the same degree as THC products.
In 2011, the DEA sought to make CBD a Schedule I controlled substance. It did so by proposing a rule to add “marijuana extracts” to Schedule I. The proposed rule defined marijuana extracts as “extracts that have been derived from any plant of the genus cannabis and which contains cannabinols and cannabidiols.”
The DEA assigned a unique code number – 7350 – to marijuana extracts. However, this proposed rule has never been formally adopted, so neither “marijuana extracts” nor “cannabidiol” are included in the DEA’s schedule of controlled substances according to the federal register or the Controlled Substances Act. This minor detail, however, has not prevented the DEA from claiming that CBD is a banned Schedule I substance. For example, in June 2015, DEA deputy assistant administrator Joseph T. Rannazzisi told the U.S. Senate that “CBD derived from the cannabis plant is controlled under Schedule I of the CSA,” and that the exempted portions of the cannabis plant cannot produce cannabinoids. This begs the question of whether CBD may be derived from portions of the plant exempted from the definition of marijuana. One of my clients who is an expert in the area insists it cannot, whereas a multitude of CBD product manufacturers claim otherwise. If CBD cannot be sourced from mature plant stalks or seed, then CBD would be a de facto Schedule I controlled substance. But if that were the case, why would the DEA propose a rule to add marijuana extracts to Schedule I?
What is the import of all this? For companies that use CBD oil and CBD derivatives in their products, the distribution of those products is a violation of federal law unless they were sourced correctly.
Can’t the same be said of all marijuana products? The difference is that in states with recreational or medical marijuana programs, everyone knows that it is not legal to transport or distribute those products across state lines. But there is a prevailing misconception that CBD products are not subject to the same rules as THC products. Again, that is not accurate.
Finally, even for companies making or selling CBD products from exempted plant material that falls outside the definition of marijuana under the Controlled Substances Act, that still does not mean you can legally sell that product in all 50 states. Each state has its own definition of marijuana. While most states define marijuana exactly the same as the Controlled Substances Act, it is still important for businesses to research how each state where they’re marketing their product defines marijuana. Individual states may expressly ban the marketing of CBD products, or may require licensing under that state’s medical marijuana program to sell those products.
Michael Chernis is the founder of Chernis Law Group P.C., located in Santa Monica, California. He is an attorney with more than 20 years of experience, having spent 14 years working for several of the most prestigious law firms in New York City before moving to Los Angeles in 2008. He represents collectives, dispensaries, cultivators, manufacturers and other medical cannabis clients. He can be reached at michael@chernislaw.com.