Cutting Through the Noise on CBD Oil

The industry has been in an uproar about the DEA's recent statements about CBD oil.   The conventional wisdom in the industry press appears to be that CBD oil was previously legal under federal law, and that the DEA just tried to make it illegal.   Take a look at these headlines:

DEA QUIETLY CLASSIFIES CBD OIL AS SCHEDULE 1 DRUG (High Times)

New DEA Rule Says CBD Oil is Really, Truly, No-Joke Illegal (Leafly)

THE DEA JUST BANNED CND AND HERE'S WHY (Green Rush Daily)

Do not be misled by these headlines.  Outside of some very specific exemptions, it has long been the federal government's view that CBD oil derived from cannabis flowers is illegal under federal law, regardless of the THC level.  

As far as the cannabis industry is concerned, the present state of federal law is as follows:  (1) anything derived from cannabis flowers is considered marijuana under the Controlled Substances Act; and (2) the only meaningful exemption for CBD oil under federal law is from the 2014 Farm Bill, and that only applies to CBD oil derived from hemp grown as part of a state-run pilot program overseen by a state department of agriculture or a research university.  

The idea that anything is federally legal hemp so long as it contains less than 0.3% THC is just not correct.  Here is why.

The Controlled Substances Act

The Controlled Substances Act defines "Marihuana" as follows:

(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.

This has two major parts:  First, it starts by broadly defining "marihuana" as anything derived from the plant cannabis sativa L.  

Second, it excludes from the definition a few specific items:  "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."     

The Hemp Industrial Association v. Drug Enforcement Agency case concerned this exemption, and held that the DEA's attempt to make illegal the sale of sterilized cannabis seeds or oil made from cannabis seeds if the seeds or oil contained THC.  The U.S. Court of Appeals held that "sterilized seeds" and "oil or cake made from the seeds" are "explicitly exempted from" the definition of marijuana in the Controlled Substances Act.  This ruling did not create any exemption for other products that do not contain THC. 

Where does that leave CBD oil?  If it is derived from cannabis, it is marijuana under the Controlled Substances Act unless it is included in the specific list of exemptions.   And until someone finds a way to produce CBD oil from stalks or seeds -- which no one is claiming to do -- CBD oil still falls under the definition of marijuana under the Controlled Substances Act.

2014 Farm Bill

Section 7606 of the 2014 Farm Bill, which is codified at 7 U.S.C. section 5940, creates an exemption from illegality under federal law.  It provides that, "Notwithstanding the Controlled Substances Act," an "institution of higher education" (as specifically defined)  or a "State department of agriculture may grow or cultivate industrial hemp" under specific conditions.  Those conditions are as follows

(1) the industrial hemp is grown or cultivated for purposes of research conducted under an agricultural pilot program or other agricultural or academic research; and
(2) the growing or cultivating of industrial hemp is allowed under the laws of the State in which such institution of higher education or State department of agriculture is located and such research occurs.

 

It defines "industrial hemp" to mean " 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."

This DOES NOT mean that any cannabis or cannanbis-product with less than 0.3% THC is federally legal industrial hemp.  The 2014 Farm Bill only legalized industrial hemp grown by qualified educational institutions or state agriculture departments pursuant to state law.   The USDA, DEA, and FDA have made clear their views on this for many months.  And most states have not been forward-thinking enough to allow licensed private farms to participate in the state-run research programs; Kentucky is a stand-out in this regard.

While Section 673 of the 2016 Appropriations Act limits federal spending and protects hemp growers, it only applies to industrial hemp grown in accordance with the 2014 Farm Bill's pilot program provisions.   It does not protect anyone growing a plant meeting the definition of industrial hemp in other states or in an manner other than as part of a state-run or university-led research program.

Federal Enforcement

Despite the broad reach of federal law, the current DOJ obviously has not made enforcement against CBD sellers a priority, and for good reason.  And in addition, the Rohrabacher amendment provides protections to those acting in compliance with state law on medical cannabis, even if they are involved in trafficking CBD that is illegal under federal law.  

But beware those who might lead you to believe that selling CBD oil is purely legal and cannot be punished by the federal government.  They are, to put a fine point on it, selling snake oil.  It remains critical that the industry change federal law on this issue, among so many others relating to cannabis.

California Legalized