The Great Hemp Conundrum
By Meital Manzuri, Alexis Lazzeri and Josephine Klein
The legal status of hemp has evolved significantly at the federal level and at the various states’ level since the federal Agricultural Act of 2014 first allowed for the cultivation and research of industrial hemp. Thereafter, the 2018 Farm Bill amended the CSA in four significant ways.
First, it defines lawful “hemp” and distinguishes it from illegal marijuana. (7 U.S.C. § 1639o(1)). Second, it removes hemp from the definition of marijuana. (21 U.S.C. § 802(16)(B)(i) (“The term ‘marihuana’ does not include. . . hemp, as defined in section 1639o of title 7…”). Third, it amended the CSA such that Schedule I lists only “[t]etrahydrocannabinols, except for tetrahydrocannabinols in hemp…” meaning prima facie that hemp-derived THC derived is not a schedule I narcotic. (7 U.S.C. § 1639o(1)).
Finally, the 2018 Farm Bill expressly states that the definition of “Marihuana Extract” is limited to extracts “containing greater than 0.3 percent Delta-9-tetrahydrocannabinol on a dry weight basis.”
In this article, we will go through the evolution of hemp laws and regulations, differentiate between different cannabinoids, and discuss the implications of recent regulatory developments.
The Agricultural Act of 2014 (“2014 Farm Bill”) Granted State Agricultural Departments and Research Institutions the Ability to Cultivate and Study Industrial Hemp.
The federal Controlled Substances Act (“CSA”) lists “marijuana” as a Schedule I controlled substance and thus, despite state level legality, is generally federally unlawful. (21 U.S.C. §§ 812(c) (Schedule I) (c) (10) & (17)). Under federal law, marijuana is defined as “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.” (21 U.S.C. § 802(16)).
In 2014, then-President Barack Obama signed the Agricultural Act of 2014 (“2014 Farm Bill”) into law, allowing specific institutions of higher education and/or state departments of agriculture pilot programs to cultivate and begin researching “industrial hemp,” notwithstanding the CSA’s then-prohibition on hemp production. Thereafter, the 2014 Farm Bill created a legal gray area for a number of years, whereby hemp was federally illegal yet certain public and private actors could grow and sell it. (Agricultural Act of 2014, H.R.2642 113th Cong. (2014)).
The Agricultural Improvement Act of 2018 (“2018 Farm Bill”) Removed “Hemp” from CSA and Redefined it to Include the Entire Plant, Arguably Legalizing All Cannabinoids Other than Delta-9 THC.
Then, in 2018, the Agriculture Improvement Act of 2018 (“2018 Farm Bill”) removed “hemp” from the definition of “marijuana” in the CSA and distinguishes “hemp” from “marijuana” based on concentration of Delta-9 tetrahydrocannabinol “of not more than 0.3 percent on a dry weight basis,” (7 U.S.C. § 1639o(1) (emphasis added)), truly transforming the federal legal landscape. Furthermore, the 2018 Farm Bill revised the definition of “industrial hemp,” essentially legalizing the entire plant and all extracts of the plant. Accordingly, the only meaningful legal distinction between hemp and “marijuana,” both of which are members of the cannabis genus, family of Cannabaceae, is the presence of 0.3 percent Delta-9 THC. Assumedly, lawmakers thought Delta-9 THC, the major cannabinoid found in abundance in cannabis, is the only cannabinoid that gives users a “high.”
The Difference Between Delta-8 THC and Delta-9 THC: Minor and Major Cannabinoids.
Seemingly unbeknownst to lawmakers, there are 113 cannabinoids naturally occurring in cannabis (hemp and marijuana), and they can all have different effects on the human body. For example, Delta-8, one of the more famous minor cannabinoids that can give users a “high”, can be derived from both hemp and marijuana plants because marijuana and hemp are the same plant genus. Due to a variety of reasons, most Delta-8 is synthesized from CBD from hemp with the assistance of solvents. Currently, Delta-8 manufacturers have to use a chemical conversion process via a structural isomerization process in a laboratory to obtain enough Delta-8 THC from hemp for any singular consumer product.
On the other hand, Delta-9 THC is a major cannabinoid found in abundance in cannabis plants. Thus, extraction of Delta-9 THC is fairly cheap and simple. As such, Delta-9 can be derived from marijuana plants without requiring chemical synthesis.
Legal Distinction Between Delta-8 THC and Delta-9 THC
To further complicate things, Delta-8 THC may be currently legal in states that do not have laws allowing recreational Delta-9 THC cannabis. For instance, if a state has a USDA hemp cultivation program but State law does not allow for Delta-9 THC, Delta8 products made exclusively from hemp derived CBD may be considered legal in that state. Additionally, if a state does not allow for the cultivation and consumption of recreational cannabis but has a medical cannabis program, then Delta-8 THC derived from the marijuana plant (cannabis with more than .3% Delta-9 THC) may be legal for those participants in the medical cannabis program, sold in a legal setting.
Those looking to produce, sell and/or consume Delta-8 products must consult each state’s regulatory framework to determine the legal status. On the federal level, as addressed below, pursuant to the DEA Interim Federal Rule, it must be “naturally” derived from hemp and it may not contain more than 0.3% Delta-9 THC.
2020 DEA Interim Final Rule: “All Synthetically Derived THC Remains Schedule I Controlled Substances.”
As discussed above, the 2018 Farm Bill appears to have descheduled Delta-8 THC when it is derived from hemp. However, the DEA muddied the waters, with the issuance of an interim final rule (“IFR”) on Aug. 21, 2020, stating that “[a]ll synthetically derived THC remains schedule I controlled substances.” (85 Fed. Reg. 163 (August 21, 2020), “Implementation of the Agriculture Improvement Act of 2018.”)
This IFR addressed the implementation of hemp provisions in the 2018 Farm Bill as being in contravention of congressional intent. Importantly, the IFR states that, inter alia, “All synthetically derived tetrahydrocannabinols remain schedule I controlled substances.”
“Hot Hemp” – Another Conundrum
Following the 2020 DEA IFR, it became clear to hemp processors that a new legal quagmire had arisen regarding the creation and regulation of “hot” hemp (hemp with a concentration of more than .3% Delta-9 THC) during the hemp production process. Hemp Indus. Ass’n v. DEA, No. 21-5111 (D.C. Cir. May 21, 2021); Hemp Indus. Ass’n v. DEA, No. 20-1376 (D.C. Cir. Sept. 18, 2020).
Most recently, in Hemp Indus. Ass’n v. DEA, which was ultimately dismissed for lack of Subject Matter Jurisdiction, the Hemp Industries Association (Plaintiffs) and the DEA (defendant) espoused very different ideas on the production and ultimate regulation of “Hot Hemp.” Hemp Indus. Ass’n v. DEA, 539 F.Supp.3d 120, 122 (D.D.C. 2021).
In that case, the Hemp Industries Association argued that the 2018 Farm Bill ultimately authorized the handling of material with more than 0.3 percent Delta-9 THC during the hemp production process, while the DEA argued that they “[have] not sought to control cannabis-derived THC or other cannabis substances that are outside the statutory definition of marijuana.” Through the key stages of the hemp-extraction process, evaporation generates intermediate hemp material and waste hemp material, both of which “‘naturally (and unavoidably) exceed’ 0.3% [D]elta-9 THC concentration.” However, Plaintiffs argue that these materials are not used directly as ingredients in consumer products; rather, both are “refined into extracts or isolates containing less than 0.3% [D]elta-9 THC, which are in turn used as ingredients in such consumer products.” Since the materials that exceed 0.3 percent Delta-9 THC concentration are ultimately not used in consumer products, Plaintiffs argued that the hemp-extraction process should be approved, preventing the need for a Schedule I registration from the DEA. In response, the Court raised the finality of the IFR, explaining that Plaintiffs attempted to circumvent Section 877 in their challenge of IFR. Agreeing with the DEA, the Court said that granting Plaintiffs relief would make it difficult for the DEA to “continue to apply.” Therefore, since Section 877 should not be so easily evaded, the Court granted the motion to dismiss.
States’ Approach on Hemp (A Few Case Studies).
California’s Recent Regulation of Industrial Hemp Products in Food, Cosmetics: AB 45.
Despite California’s early legalization of adult use cannabis, the Golden State had been slow on the adoption of industrial hemp rules and regulations. Finally, in October of 2021, Assembly Bill 45 amended the Adult Use of Marijuana Act, such that the definition of “industrial hemp” now includes “cannabis plants and any part of that plant . . . with a Delta-9 THC concentration of no more than 0.3 percent on a dry weight basis.” Additionally, AB 45 legalized several products which may now contain hemp derived CBD. On July 5, California began accepting applications for the commercial production and distribution of hemp and CBD products.
A Tale of Two States’ Wildly Different Regulation of Delta-8 THC: Texas and Minnesota.
Despite its harsh stance against Delta-9 THC, Texas has been one of the most active legal markets in industrial hemp, although they did ban smokable hemp, which was recently challenged and upheld. Texas Dep’t of State Health Services, et. al. v. Crown Distributing LLC, et. al., S.W. 30 (2022). Further, Texas has also attempted to ban Delta-8 THC.
Conversely, in Minnesota, in an attempt to regulate Delta-8 THC, the Legislature recently (“inadvertently” if you ask some politicians) legalized intoxicating cannabis edibles, including Delta-9 THC products. The new law changed the definition of “non-intoxicating cannabinoid” to “substances extracted from certified hemp plants that do not produce intoxicating effects when consumed by any route of administration.” In effect, this revision means that cannabinoid edible products can be sold in Minnesota “so long as the product contains no more than 0.3 percent of any THC and no more than 5 mg of any THC in a single serving, or more than a total of 50 mg of any THC per package.”
Although the 2018 Farm Bill was initially heralded as federal legalization progress allowing for the commercialization of hemp, the Farm Bill’s revised definition of “hemp” created a tremendous amount of legal ambiguity on the federal level and, as a result, a flourishing gray market for minor cannabinoids has emerged. Similarly, as evidenced by the case studies above and many other examples across the United States, the various states’ definitions and treatment of “cannabis” “hemp” and/or “marijuana” further creates confusion and uncertainty for businesses and consumers alike. Accordingly, unless and until all state and federal laws recognize Cannabis sativa L. as one singular species and regulate it under one umbrella, consumers and businesses will be forced to try and navigate this patchwork of laws and the American public will not benefit from safe access.