March 28, 2023

Volume XIII, Number 87


March 27, 2023

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New DEA Rule Creates More Uncertainty for Legality of CBD Extracts

On August 21, 2020, the Drug Enforcement Administration (DEA) published an interim final rule that may have far-reaching consequences for the entire hemp and CBD industry. In addition to modifying the definitions of “tetrahydrocannabinols” (THC) and “marijuana extract” to exclude legal hemp, and removing FDA-approved CBD-based drugs from scheduled control under the Controlled Substances Act (CSA), the DEA announced a new rule clarifying that all hemp derivatives or extracts exceeding 0.3% delta-9 THC remain schedule I controlled substances. 

Although seemingly innocuous at first glance, this clarification may potentially create a profound practical obstacle to the legal manufacturing of most hemp-derived CBD products. As many processors and extractors in the industry know, hemp extract that is not in its final form almost invariably exceeds 0.3% delta-9 THC concentration at some point during the extraction process before that percentage is brought back into legal compliance for the final product. 

The DEA explains its reasoning as follows:

[T]he definition of hemp does not automatically exempt any product derived from a hemp plant, regardless of the D9-THC content of the derivative. In order to meet the definition of ‘hemp,’ and thus qualify for the exemption from schedule I, the derivative must not exceed the 0.3% D9-THC limit. The definition of ‘marihuana’ continues to state that ‘all parts of the plant Cannabis sativa L.,’ and ‘every compound, manufacture, salt, derivative, mixture, or preparation of such plant,’ are schedule I controlled substances unless they meet the definition of ‘hemp’ (by falling below the 0.3% D9-THC limit on a dry weight basis) or are from exempt parts of the plant (such as mature stalks or nongerminating seeds). See 21 U.S.C. 802(16) (emphasis added). As a result, a cannabis derivative, extract, or product that exceeds the 0.3% D9-THC limit is a schedule I controlled substance, even if the plant from which it was derived contained 0.3% or less D9-THC on a dry weight basis. 

The DEA’s interpretation of the interplay between the definition of hemp extract in the 2018 Farm Bill and marijuana extract in the CSA appears inconsistent with the express intent of Congress to exempt hemp and hemp-derived products – including extracts – that contain less than 0.3% delta-9 THC concentration on a dry weight basis. 

In relevant part, the Farm Bill’s definition of legal hemp extract includes “the plant Cannabis sativa L. and any part of that plant, including … extracts …, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3% on a dry weight basis.” There is admittedly some ambiguity in the statute’s definition because liquid extracts cannot be weighed on a dry weight basis. Based on a clear reading of the Farm Bill, however, it should not be reasonable to assume that Congress intended to make illegal any CBD products derived from legal hemp and containing less than 0.3% delta-9 THC concentration in final form. We also point out that the interim final rule does not explicitly distinguish mid-process extract as having a distinct legal status from the final product, such that even the DEA’s new position on this topic remains uncertain. 

On its face, the DEA’s new rule removes any doubt that hemp-derived delta-9 THC is legal so long as the product contains less than 0.3% on a dry weight basis. But the new rule also is unhelpful by creating added uncertainty on whether any hemp extract, even unfinished product, that contains more than 0.3% delta-9 THC is an illegal schedule I controlled substance. 

The public has 60 days to submit comments to the DEA about its rule, which becomes effective immediately. One should expect a robust negative reaction by the hemp and CBD industries, as well as litigation against the DEA should its new rule stand.

© 2023 Wilson ElserNational Law Review, Volume X, Number 237

About this Author

Ian Stewart Litigation Attorney Wilson Elser Law Firm

Ian Stewart has defended complex litigation in state and federal courts for 25 years with a focus on product liability, complex general casualty, cannabis law, data privacy and cybersecurity, and intellectual property litigation. Ian is deputy regional managing partner of the firm’s Los Angeles office and a member of the Information Governance Leadership Committee.

As co-chair of the firm’s national Cannabis & Hemp Law Practice, Ian leads a national multidisciplinary team of lawyers who serve all aspects of the cannabis and hemp industries, as well as financial institutions and...

Neil Willner, Wilson Elser Law Firm, White Plains, Health Care and Cannabis Law Attorney

Neil Willner focuses his legal practice on medical malpractice, dental malpractice, nursing home liability and general liability centered on complex litigation. His clients include physicians, prominent New York hospitals and nursing homes, and national dental corporations as well as summer camps. Neil served as a paralegal and a member of trial team in a medical malpractice defense firm while attending law school at night, giving him insights into all facets of the practice. Neil was also a law clerk at a New York firm working on product liability and medical...