Marijuana Law, Policy, and Authority

Is CBD Legal Under Federal Law?

Posted by on Friday, September 28, 2018 in News, Updates.

The question posed by the title of this post has been vexing commentators for the past few months, with different sources giving wildly different answers. In this post, I hope to shed some light on the legal status of cannabidiol (CBD) under federal law.

It’s a complicated question, but here’s my bottom line conclusion: under federal law, CBD (or more accurately, certain activities involving CBD) is legal under only three circumstances. Namely, when:

  1. it is extracted from parts of the cannabis plant which Congress excluded from the definition of marijuana; or
  2. it is produced for research purposes pursuant to the federal Agricultural Act; or
  3. it has been approved by the FDA for medical use

Let me elaborate on each of these three circumstances, which, for reasons that will become clear, appear vanishingly narrow. As a result, I doubt that much (if any) of the CBD now being produced and sold in the U.S. as “legal” really qualifies as such.

1. CBD extracted from parts of the cannabis plant which Congress excluded from the definition of marijuana

As discussed in my book (page 21), Congress defined marijuana to include:

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.

21 U.S.C. § 802(16).

Because Congress excluded certain parts of the cannabis plant (e.g., the mature stalks) from the definition of “marijuana” used in the CSA, it stands to reason that substances (like CBD) extracted from those same parts of the plant should likewise be excluded from the CSA. Indeed, the Ninth Circuit Court of Appeals said as much in Hemp Industries Association v. Drug Enforcement Administration, 357 F.3d 1012 (9th Cir. 2004) (discussed in the book on page 26, n.3). In that case, the HIA challenged a proposed DEA Rule that would have placed THC on Schedule I, alongside marijuana. The court invalidated the THC Rule because it was over-broad—namely, it applied to THC extracted from parts of the cannabis plant which Congress had expressly excluded from the definition of marijuana. For example, the Rule would have effectively forbidden the sale (or even possession of) a variety of innocuous products, like textiles, made from the mature stalks (etc.) of the Cannabis plant because they contained trace amounts of THC.

To be sure, back in 2016, the DEA temporarily cast doubt on the legality of CBD even when it is extracted from a part of the cannabis plant not considered “marijuana.” In that year, the agency issued a different Rule, this one placing all “marihuana extract” (including CBD) on Schedule I, seemingly without regard to the source of the extract. Here is the relevant language of the “marihuana extract” Rule:

“Marihuana Extract–…Meaning 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.”

In comments to the Rule, the DEA insisted that it covered CBD—i.e., that CBD was a “marihuana extract” (a “cannabinoid . . . derived from any plant of the genus Cannabis”) and was thus included on Schedule I. (The full Rule and comments to it can be found here.)

Even though the “marihuana extract” Rule is in tension with its holding in Hemp Industries Association, the Ninth Circuit rebuffed a suit brought by the HIA challenging this Rule. It is important to note, however, that the court rejected the HIA’s challenge on largely procedural grounds. In a non-published decision, Hemp Industries Association v. Drug Enforcement Administration, 720 Fed. Appx. 886 (2018) (HIA II), the court found that HIA had forfeited (most of) its arguments because it failed to raise them in a timely manner—namely, during the agency’s notice and comment period (the agency had proposed the rule all the way back in 2011).

In any event, the issue became moot soon after HIA II was decided. That’s because the DEA issued a “Clarification” of the “marihuana extract” Rule (see here), explaining that the Rule does NOT apply to “materials or products that are excluded from the definition of marijuana set forth in the Controlled Substances Act” (and notwithstanding the unqualified language of the Rule). In other words, even the DEA now seems to accept that the CSA does not bar someone from possessing, manufacturing, or distributing CBD extracted from the mature stalks (or other excluded parts) of the cannabis plant.

HOWEVER, while it may be legal (federally) to possess, manufacture, and/or distribute CBD extracted from excluded parts of the Cannabis plant, it might not (yet) be feasible to extract usable quantities of CBD (or other cannabinoids) from those parts. After all, Congress probably excluded those parts of the Cannabis plant from the definition of marijuana precisely because they could not be used to manufacture drugs in the first instance. Indeed, in its Clarification, the DEA claimed that “[a]ccording to the scientific literature, cannabinoids are not found in the parts of the cannabis plant that are excluded from the CSA definition of marijuana.” If the DEA is right, then few (if any) of the CBD products now being produced and sold on the market are truly legal under this first circumstance because few (if any) of them could actually be produced from excluded parts of the Cannabis plant.

2. CBD produced for research purposes pursuant to the federal Agricultural Act

The Agriculture Act of 2014 created a second (possible) set of circumstances in which the possession and possibly manufacture of CBD could be legal. The Act exempts from the CSA the growing of “industrial hemp”, defined as a cannabis plant with very low levels of THC, for research purposes. The Act is codified in 7 U.S.C. Section 5940 and is noted in the book on page 25, n.2.

Borrowing a page from the first argument above, some claimed that the Act indirectly legalized CBD, at least when it is extracted from industrial hemp. In particular, the argument goes, if CBD extracted from excluded parts of the cannabis plant is not covered by the CSA (see circumstance 1 above), then it logically follows that CBD extracted from excluded plants should not be covered by the CSA.

The Act, however, imposes some severe (and oft-overlooked) limitations on industrial hemp and thereby limits the circumstances in which one can legally extract and / or sell CBD extracted therefrom. Perhaps most importantly, the Act authorizes only the production of industrial hemp—and then only for research purposes. It does NOT authorize the distribution (e.g., sale) of hemp, nor, presumably, the sale of products made from hemp. Furthermore, the Act grants permission to produce industrial hemp only to universities and state agricultural departments. It does NOT authorize other parties—say, commercial businesses—to produce hemp, even for research purposes. (Senate Majority Leader Mitch McConnell has proposed legislation that would remove many of these restrictions on hemp, see here, but it remains just a proposal for now.)

Given these limitations imposed on industrial hemp, I suspect the Agricultural Act does not create much of an opportunity to produce (and especially, to sell) CBD legally.

3. CBD approved by the FDA for medical use

The FDA and DEA have recently created a third circumstance in which CBD is legal under federal law. The FDA got the ball rolling in June 2018, when it approved a drug (Epidiolex) made from natural CBD—i.e., CBD extracted from the Cannabis plant (any part). The decision can be found here. This was a notable development. It marked the first time that the federal government had found any drug derived from the Cannabis plant had medical benefits. (The FDA had previously approved two synthetic forms of THC for medical use.)

The FDA’s approval of Epidiolex did not, by itself, make it lawful to possess or distribute CBD under federal law. Even after the approval, the company that makes Epidiolex (GW Pharmaceuticals) still couldn’t lawfully sell it. It was still considered “marijuana”, and thus a Schedule I drug, if it was produced from the buds or leaves of the Cannabis plant. So GW Pharmaceuticals had to wait for the DEA to move Epidiolex off of Schedule I.

Of course, there was little doubt the DEA would do so. That’s because the CSA does not allow a drug to be placed on Schedule I if it has some demonstrated medical utility (even cocaine is on Schedule II). To be sure, there was some uncertainty over just how far the DEA would go—for example, would it reschedule just Epidiolex, or would it reschedule all CBD based drugs? And which Schedule (II-V) would it find most appropriate? But on September 27, the agency resolved those issues: it placed all “FDA-approved drugs that contain CBD derived from cannabis and no more than 0.1 percent tetrahydrocannabinols in schedule V,” the least tightly regulated category under federal law. The DEA scheduling decision can be found here.

So now GW Pharmaceuticals can start selling Epidiolex. Oddly, however, the company likely cannot manufacture the drug yet, at least not in the United States. That’s because the company likely needs to extract the CBD for the drug from cannabis plants / parts of cannabis plants that are still considered “marijuana” (and thus Schedule I controlled substances) under federal law. In other words, GW Pharmaceuticals may now lawfully distribute CBD made from the buds or leaves of the Cannabis plant; it just can’t produce (or even possess) those buds and leaves here in the United States.

Given that Epidiolex is (thus far) the only FDA “approved drug[] that contain[s] CBD derived from cannabis” and that Epidiolex has a fairly limited market (it’s approved to treat certain rare forms of epilepsy), the DEA’s latest scheduling decision doesn’t change my conclusion that CBD is legal under federal law in only very limited circumstances.

That’s it for now. If you’re interested in learning more about the legal issues surrounding CBD, let me recommend the following sources and commentary:

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