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Hemp and CBD Businesses Are Concerned About the DEA’s New THC Rule

By Alexander Beadle

Published: Sep 09, 2020   
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At the end of August, the US Drug Enforcement Administration (DEA) released new proposed rules for hemp and CBD, which the agency claimed would simply bring the nation’s Controlled Substances Act (CSA) in line with current practices under the 2018 Farm Bill.

But while the agency characterizes this change as a routine matter that “merely conforms DEA’s regulations[…] that have already taken effect,” the move has sparked deep concerns within the American CBD and hemp industries. Many producers believe that these changes could be setting the stage for a future crackdown on the market.

What are the proposed rule changes?

There are four main components to this Interim Final Rule (IFR) put out by the DEA:

  • New wording which clarifies that reference to “tetrahydrocannabinol” (THC) does not include “any material, compound, mixture, or preparation that falls within the definition of hemp.”
  • The stripping of Schedule V status under the CSA for CBD products approved by the US Food and Drug Administration (FDA) and containing less than 0.1 percent THC.
  • No longer requiring current import/export permits for hemp and its derivatives.
  • Updating the definition of “marihuana extract” to exclude substances that contain less than 0.3 percent THC on a dry-weight basis.

Filed on August 21, the IFR was effective immediately, although there is a comment period that will run until October 20, 2020, to allow for feedback.

Why would this impact the legal hemp industry?

The apprehension many hemp workers now have is due the DEA’s wording on cannabis extracts and how this might relate to the practicalities of producing hemp extracts.

“They leave out the mention of any interim products,” Josh Smith, CEO and chief scientist of Wisconsin-based testing laboratory Premium CBD Labs, told Analytical Cannabis.

“Where that runs into a problem now, is that anybody that runs an ethanol extractor, anybody that does any kind of supercritical CO2 extractions[...] they will create a product that’s over 0.3 percent,” Smith explained.

“Because you concentrate tens of thousands of plants of hemp into a final product in a couple of barrels, so you will be over 0.3 percent. [The rule change] now makes them illegal and in violation of the Controlled Substances Act.”

The concern from the hemp industry is that the DEA might then choose to take enforcement actions against hemp extract manufacturers during this interim stage, before the producer is able to dilute the extract down to its final compliant product.

Writing in a pair of passionate blog posts last week, hemp attorney Rod Kight argued that “the IFR threatens to destroy the hemp/CBD industry” if this potential crackdown comes to fruition.

The compliance issues presented by these work-in-progress hemp extracts (WIPHEs) has been an “elephant in the room” for some time, Kight writes. But now the issuance of this rule has brought the issue into the spotlight and, in his view, “as usual, the DEA has taken the wrong position.”

Kight also points out further issues regarding some ambiguous language surrounding rules on synthetic cannabinoids. While the rule focusses heavily on delta-9 THC, it says little about delta-8 THC, a cannabinoid that is psychoactive, can be derived from hemp, and is of growing interest to the market. While there are no specific laws governing delta-8 THC, the ambiguity of IFR’s wording in restricting synthetic cannabinoids makes it unclear whether hemp-derived delta-8 THC would be included in its enforcement.

Reaction from the industry

If the DEA were to choose to use these potential loopholes to crackdown on hemp extract production, the ramifications for the wider hemp and CBD industry would be massive. Understandably then, those within the industry are voicing their concerns. As of September 9, there are already over 1,950 public comments that have been submitted to the government over this Interim Final Rule.

“I think the more that we talk to people about it, the more they are increasingly worried,” Josh Smith told Analytical Cannabis. “Some people aren't. I mean, in reality, as a testing lab, could this cause us problems? Yes, because there’s always stuff in here that’s over point 0.3 percent THC just by the nature of what we do. But it doesn’t really hurt us too much.”

“But, talking to farmers, talking to the actual small business processors, that’s who’s starting to get a little worried. And even some lawyers that we’ve talked to[...] come back to us later and they’re like, ‘Yeah, this could be a problem.’ They’re really concerned now that this was kind of [the DEA’s] attempt to throw that back under the Controlled Substances Act.”

Speaking to L.A. Weekly shortly after these concerns were raised, a DEA spokesperson said that the agency was “aware of the concerns of the CBD industry, and is evaluating policy options.”

When questioned over the potential for enforcement actions being taken against hemp extraction businesses, Mitchell invoked the current American opioid epidemic and the resurgence of methamphetamine use, saying that the DEA is chiefly concerned with “focusing its resources on disrupting and dismantling the Mexican cartels that are trafficking these deadly substances into and across the nation.”

Whether or not these new rules are in fact tied to any intentional future crackdown on hemp business, these ambiguities still present an issue for all producers who want to run fully transparent and compliant operations.

“Congress is supposed to vote on de-scheduling cannabis completely in the US at the end of this month. It won't go anywhere; the senate won't take it up. But, you know, that would solve everything,” Smith said.

“If they really, really wanted to fix this, it's a simple fix. Just include interim products in this ruling. There's some other stuff that could be changed, but 90 percent of this just would be adding the ability for an interim product to go above 0.3 percent. And that's it; that would fix 90 percent of the issue.”


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