The DEA has, yet again, overstepped its rulemaking authority when it comes to hemp. And this time, the entire hemp processing industry could be at stake, together with the manufacturing and sale of delta-8 tetrahydrocannabinol (D8) — a medically effective and valuable cannabinoid naturally occurring in cannabis, including hemp.
The interim final rule (IFR) issued by the agency controverts the plain text of the Agricultural Act of 2018 (the Farm Bill), prompting mass uncertainly among hemp industry participants. The situation presents a breeding ground for litigation against the DEA, and if a lawsuit is filed, it will be Hemp v. DEA, Round IV.
On August 20, 2020, the DEA surprisingly issued the IFR — and of immediate effect — which, among other things, criminalizes, as a Schedule I substance under the Controlled Substances Act, (a) hemp-derived products that exceed more than 0.3% delta-9 tetrahydrocannabinol and (b) synthetic tetrahydrocannabinols. While the DEA is accepting public comment to the IFR until October 20, 2020, prior notice and opportunity to comment has not been provided.
Typically, when governmental agencies issue rules pursuant to statutory authority, they must provide the public with prior notice and an opportunity to comment upon such rules. This “notice and comment” period may be dispensed with when they merely declare their statutory understanding, or if they find “good cause” exists, meaning that the use of traditional procedures is “impracticable, unnecessary, or contrary to the public interest” — a fact-intensive inquiry, concerning, among other things, immediacy and futility. To this end, in the IFR itself, the DEA proclaimed that it offered nothing “new” and “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.”
Careful review of the IFR, however, reveals that the DEA may be seeking to covertly rewrite express provisions of the 2018 Farm Bill.
In enacting the 2018 Farm Bill, Congress expressly exempted from the Controlled Substances Act, “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). It is therefore clear that dry hemp with a delta-9 THC level of less than 0.3% is legal.
In the 2018 Farm Bill, however, Congress did not explicitly address the legality of “work in progress hemp extract” (WIPHE) — dry hemp that has been partially processed, ultimately intended for refinement and inclusion in hemp-derived products, such as consumables or topicals. Most hemp extraction techniques cause the level of THC in the resulting extract to be higher than when measured on a dry weight basis; hemp which contained 0.3% THC on a dry weight basis likely contains more THC when measured as WIPHE.
While the 2018 Farm Bill does not address WIPHE specifically, legal experts agree that Congress intended to exempt extract products, including WIPHE, from the Controlled Substances Act —otherwise the term “extracts” would not have been written into the 2018 Farm Bill. This conflict between the 2018 Farm Bill and the IFR is obvious.
Less obvious is Congress’ intent when classifying “synthetic tetrahydrocannabinols,” which are also not defined by Congress, as Schedule I substances. Because D8 naturally occurs in hemp in low proportions, most D8 for sale was converted from hemp-derived CBD isolate. According to attorney Rod Kight, “D8 created by a chemical reaction (such as converting CBD to D8 through the use of a catalyst), will likely be deemed by the DEA to be an illegal synthetic THC” — a conclusion that would undermine the term “derivatives” in the 2018 Farm Bill. Attorneys at Coats Rose PC, disagree, opining that the IFR does not criminalize D8, since the term “synthetically derived” relates to manmade chemicals, not the conversion of one naturally occurring isomer into another (and the 2018 Farm Bill includes isomers).
The DEA’s overstep is sadly consistent with its prior practice. In 2017, two lawsuits were filed against the DEA in connection with, among other things, the DEA’s effort to categorize all CBD extract as a Schedule I substance, regardless of its source, including federally legal hemp, and to hold the DEA in contempt for failure to adhere to a court mandate issued in 2004, prohibiting DEA interference in hemp. In that mandate, the 9th Circuit Court of Appeals invalidated a series of DEA “rules,” thereby halting the criminalization of products derived from the non-psychoactive components of the cannabis plant expressly exempted from the definition of “marihuana” in the Controlled Substances Act (such as mature stalks, sterilized seed, etc.). In each lawsuit, the hemp industry prevailed.
Some good news is that, as of early September, New Frontier, a cannabis data company, reported no downturn in the hemp market responsive to the IFR. And reportedly, the DEA itself professed that its enforcement priorities lay elsewhere, specifically on the opioid crisis. Nonetheless, the new potential exposure to criminal liability resulting from the IFR has the hemp industry rightfully concerned and swift legal action is inevitable.