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DEA Ruling on Cannabinoid Extracts: An Update

DEA Ruling on Cannabinoid Extracts: An Update

In December 2016, the Drug Enforcement Agency (DEA) released a final ruling concerning the scheduling of cannabinoid extracts from cannabis sativa plants. The ruling was at first seen as a major blow to the medical marijuana industry, the pharmaceutical cannabidiol (CBD) industry, and the natural product industry that all rely on these extracts.

Although marijuana and hemp are both derived from the same plant, cannabis sativa, they are importantly on different ends of the spectrum molecularly. Only marijuana contains the infamous cannabinoid, Tetrahydrocannabinol (THC), which is well known for its psychoactive effects when consumed or inhaled. Industrial hemp can only legally contain less than 0.03% THC, meaning it does not pose any risk for psychoactivity. Within the large variety of cannabinoids found within both strains of cannabis, there is also a wide variety of health benefits depending on which cannabinoid is most present naturally (or isolated within a lab). Consumption of CBD extract will trigger far different results than the consumption of THC extracts, and both cannabinoids are being pursued through clinical trials for extremely different health benefits. Also, while medical marijuana continues to create heated nationwide discussion on its benefits and legal difficulties, hemp derived CBD oils have been gaining positive traction and increasing acceptance as its health benefits are confirmed through thorough scientific scrutiny.

The current DEA ruling, which issued a new Administration Controlled Substances Code Number for all cannabinoid extracts, initially created a lot of fear within the hemp industry because of its far reaching and clumsy wording. With the broad stroke of a brush, the United States government has lumped marijuana extracts alongside hemp CBD extracts: “an extract containing one or more cannabinoids that has been derived from any plant of the genus Cannabis, other than the separated resin (whether crude or purified) obtained from the plant.” On first review of the ruling, it is clear that the DEA is at the very least trying to create confusion by lumping two molecularly different substances under the same label.

As the dust settles around this ruling, experts within the industrial hemp industry are starting to breathe more easily as it’s becoming clear that the DEA’s clumsy wording about the legalities of extracts from hemp likely will not destroy the progress being made. The legal status of industrial hemp has formerly been ruled on by the American Agricultural Act, which provided clarification for the hemp industry under the Legitimacy of Industrial Hemp Research Act. In 2015 under Section 7606, the difference between marijuana and hemp was legally clarified, each being identified as a different substance, and research on industrial hemp products was protected. Therefore, the new ruling by the DEA which does not differentiate between the two substances, becomes pretty difficult to enforce.

According to many companies within the CBD industry, they believe the primary goal of the DEA ruling was to create fear, confusion, and distrust of CBD oil products. As lawyers have begun to weigh in on the possible outcomes of what the DEA has published, there is increasing belief that the ruling will be impossible to hold up if brought to court.

Some experts also believe that the ruling was specifically developed to target the pharmaceutical industry, rather than those companies that use CBD oil in their natural products.  This is because the pharmaceutical industry has been pursuing the health benefits of CBD through different methodology than what is used in the natural product sector. The medical industry must ensure to put their products through strict scientific study relying on CBD isolates to provide more accurate results. A CBD isolate is a molecularly pure form of CBD that allows for the greatest control over dose, use and results. Isolates are also sometimes used to boost the CBD content of naturally derived CBD oil extracts. It is the use of these isolates that the DEA was potentially targeting, because some companies were selling CBD isolate products like a medical drug without having the proper approvals to sell it as such. Some experts believe that the DEA needed a way to manage and track the sale of these medical products.

Adding another complicated layer to the onion of the CBD legal quagmire, is the fact that hemp products imported from Europe and which are extracted from hemp stalk, are completely legal within the United States. They are protected as imported goods, and as long as they fall within the certain regulations of the DEA, FDA and USDA, can be legally sold within the country. However, where does this leave American hemp producers which often face complicated legal battles in order to continue operating? In 2015, under the Consolidated Appropriated Omnibus Act, the government clarified that “None of the funds made available in this Act or any other Act may be used…to prohibit the transportation, sale or use of industrial hemp that is grown or cultivated in accordance with subsection 7606 of the Agricultural Act of 2014.” This means that as long as the operator is approved to grow, sell and produce hemp products under the research clause, they are freely able to continue to do business. The research clause seems to be broadly applied, but has often lead to difficulties for some producers in receiving approval.

It seems that four months after the DEA ruling, the industry is a bit less nervous about the possible ramifications. Although many customers and investors initially shied away from CBD out of fear, it is slowly becoming apparent that nothing has changed. Since it's now pretty well understood that the DEA’s ruling will likely not hold up in court due to its lack of differentiation and inadequate wording, the industry is simply waiting until the ruling is struck down and redefined. Since marijuana extracts and CBD extracts are so fundamentally different, (with fundamentally different effects) they should be ruled on separately based on their own individual characteristics.

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