Business
DEA considers ban on delta-8 THC, severe CBD restrictions
The U.S. Drug Enforcement Administration is proposing changes to federal drug-control laws that could effectively ban nearly all delta-8 THC products currently on the market and significantly upend the country’s $5 billion CBD industry, according to a presentation at a recent agency conference.
Products containing delta-8 THC and other cannabinoids derived from hemp, legalized nationwide under the 2018 Farm Bill, have proved enormously popular in states without regulated adult-use cannabis markets.
So, too, have products containing CBD, which can be converted into intoxicating delta-8 THC via a chemical process.
But delta-8 THC and other novel cannabinoids, many of which have unknown or poorly understood safety profiles, also have drawn increasing scrutiny from lawmakers and law-enforcement.
To date, 14 states have banned delta-8 THC outright, though sales continue online and at smoke shops and other retailers.
Critics say the booming trade in hemp-derived cannabinoids was not what Congress intended when it legalized hemp – defined as cannabis plants with 0.3% THC by dry weight – and it takes advantage of a loophole that the DEA is proposing to close.
Scheduling D8, restricting CBD
At a recent agency conference in Houston, Terrence Boos, chief of the DEA Diversion Control Division’s Drug & Chemical Evaluation Section, indicated that the DEA will propose a new limit of no more than 0.1% THC on a weight-to-weight ratio in hemp-derived products.
That recommendation, which the DEA said in its presentation came from the federal Department of Health and Human Services, is the same THC limit found in Epidiolex, the Food and Drug Administration-approved CBD pharmaceutical.
Boos’ presentation also indicates that federal drug laws would capture any cannabinoid “manufactured synthetically rather that [sic] produced by extraction from the plant.”
Since most delta-8 THC and other hemp-derived, intoxicating cannabinoids are produced via a chemical process from CBD source material – a “chemical synthesis,” Boos’ presentation notes – they would become controlled substances.
It’s still not clear what schedule of the Controlled Substances Act the DEA will propose for delta-8 and other synthetic cannabinoids.
Also unclear is how much appetite the DEA would have for enforcement.
If enforced, the DEA’s proposal would ban nearly every delta-8 THC product on the market, said Shane Pennington, an attorney with Vincente LLP, a cannabis-focused law firm.
It would also drastically transform the market for CBD products, he added.
Current federal law allows for hemp-derived products to contain 0.3% THC, three times the DEA’s proposed limit.
Scheduling decisions
Delta-9 THC is a Schedule 1 controlled substance, but 22 states and the District of Columbia have legalized adult-use cannabis, and federal law enforcement has shown little interest in cracking down on what’s become a multibillion-dollar industry.
But even if the proposal is Schedule V, which is considered the most lax category, the impact on the existing regulated industry could be transformative.
“It’s really, really huge,” said Pennington, whose firm first brought attention to the DEA’s intentions.
“This would include possibly all of the delta-8 on the market,” Pennington said.
The DEA did not respond to requests for comment.
To date, federal agencies have proved mostly unwilling to tackle the new trade in hemp-derived cannabinoids including non-intoxicating CBD and intoxicating delta-8 THC, estimated to be a $5 billion market nationwide.
The federal Controlled Substances Act is silent on delta-8 THC, and federal law does not clearly define what qualifies as a synthetic cannabinoid.
In January, the FDA announced it would decline to regulate CBD, passing that responsibility onto Congress.
It’s possible that Congress could address intoxicating cannabinoids, which many states have moved to regulate or ban outright, when it revisits the Farm Bill.
That legislation is due to be renewed this year.
In the meantime, however, the DEA has declared that certain synthetically derived cannabinoids – including delta-8 and delta-9 THC ester – to be illegal, a revelation made in an email to attorney Rod Kight.
Kight told MJBizDaily on Thursday that he believes any attempt by the DEA to criminalize hemp-derived cannabinoids would be illegal.
“If the DEA attempts to schedule delta-8 THC and other THC isomers derived from hemp as ‘synthetic THC,’ then it will be blatantly violating the 2018 Farm Bill, which specifically includes ‘derivatives’ of hemp within the broad exemption included in the definition of ‘hemp,’” Kight wrote in an email. “A ‘derivative’ is, by definition, a synthesized compound.”
Also unclear is the DEA’s timeline.
The rulemaking process can take years and would be announced in the Federal Register.
Business owners and other stakeholders would have opportunity to participate during a comment period.
New Mexico regulators fined a cannabis operator nearly $300,000 and revoked its license after the company allegedly created fake reports in the state’s traceability software.
The New Mexico Cannabis Control Division (CCD) accused marijuana manufacturer and retailer Golden Roots of 11 violations, according to Albuquerque Business First.
Golden Roots operates the The Cannabis Revolution Dispensary.
The majority of the violations are related to the Albuquerque company’s improper use of BioTrack, which has been New Mexico’s track-and-trace vendor since 2015.
The CCD alleges Golden Roots reported marijuana production only two months after it had received its vertically integrated license, according to Albuquerque Business First.
Because cannabis takes longer than two months to be cultivated, the CCD was suspicious of the report.
After inspecting the company’s premises, the CCD alleged Golden Roots reported cultivation, transportation and sales in BioTrack but wasn’t able to provide officers who inspected the site evidence that the operator was cultivating cannabis.
In April, the CCD revoked Golden Roots’ license and issued a $10,000 fine, according to the news outlet.
The company requested a hearing, which the regulator scheduled for Sept. 1.
At the hearing, the CCD testified that the company’s dried-cannabis weights in BioTrack were suspicious because they didn’t seem to accurately reflect how much weight marijuana loses as it dries.
Company employees also poorly accounted for why they were making adjustments in the system of up to 24 pounds of cannabis, making comments such as “bad” or “mistake” in the software, Albuquerque Business First reported.
Golden Roots was fined $298,972.05 – the amount regulators allege the company made selling products that weren’t properly accounted for in BioTrack.
The CCD has been cracking down on cannabis operators accused of selling products procured from out-of-state or not grown legally:
- Regulators alleged in August that Albuquerque dispensary Sawmill Sweet Leaf sold out-of-state products and didn’t have a license for extraction.
- Paradise Exotics Distro lost its license in July after regulators alleged the company sold products made in California.
Golden Roots was the first alleged rulebreaker in New Mexico to be asked to pay a large fine.
Source: https://mjbizdaily.com/new-mexico-cannabis-operator-fined-loses-license-for-alleged-biotrack-fraud/
Four marijuana companies, including a multistate operator, have filed a lawsuit against U.S. Attorney General Merrick Garland in which they allege the federal MJ prohibition under the Controlled Substances Act is no longer constitutional.
According to the complaint, filed Thursday in U.S. District Court in Massachusetts, retailer Canna Provisions, Treevit delivery service CEO Gyasi Sellers, cultivator Wiseacre Farm and MSO Verano Holdings Corp. are all harmed by “the federal government’s unconstitutional ban on cultivating, manufacturing, distributing, or possessing intrastate marijuana.”
Verano is headquartered in Chicago but has operations in Massachusetts; the other three operators are based in Massachusetts.
The lawsuit seeks a ruling that the “Controlled Substances Act is unconstitutional as applied to the intrastate cultivation, manufacture, possession, and distribution of marijuana pursuant to state law.”
The companies want the case to go before the U.S. Supreme Court.
They hired prominent law firm Boies Schiller Flexner to represent them.
The New York-based firm’s principal is David Boies, whose former clients include Microsoft, former presidential candidate Al Gore and Elizabeth Holmes’ disgraced startup Theranos.
Similar challenges to the federal Controlled Substances Act (CSA) have failed.
One such challenge led to a landmark Supreme Court decision in 2005.
In Gonzalez vs. Raich, the highest court in the United States ruled in a 6-3 decision that the commerce clause of the U.S. Constitution gave Congress the power to outlaw marijuana federally, even though state laws allow the cultivation and sale of cannabis.
In the 18 years since that ruling, 23 states and the District of Columbia have legalized adult-use marijuana and the federal government has allowed a multibillion-dollar cannabis industry to thrive.
Since both Congress and the U.S. Department of Justice, currently headed by Garland, have declined to intervene in state-licensed marijuana markets, the key facts that led to the Supreme Court’s 2005 ruling “no longer apply,” Boies said in a statement Thursday.
“The Supreme Court has since made clear that the federal government lacks the authority to regulate purely intrastate commerce,” Boies said.
“Moreover, the facts on which those precedents are based are no longer true.”
Verano President Darren Weiss said in a statement the company is “prepared to bring this case all the way to the Supreme Court in order to align federal law with how Congress has acted for years.”
While the Biden administration’s push to reschedule marijuana would help solve marijuana operators’ federal tax woes, neither rescheduling nor modest Congressional reforms such as the SAFER Banking Act “solve the fundamental issue,” Weiss added.
“The application of the CSA to lawful state-run cannabis business is an unconstitutional overreach on state sovereignty that has led to decades of harm, failed businesses, lost jobs, and unsafe working conditions.”
Alabama regulators are targeting Dec. 1 to award the first batch of medical cannabis business licenses after the agency’s first two attempts were scrapped because of scoring errors and litigation.
The first licenses will be awarded to individual cultivators, delivery providers, processors, dispensaries and state testing labs, according to the Alabama Medical Cannabis Commission (AMCC).
Then, on Dec. 12, the AMCC will award licenses for vertically integrated operations, a designation set primarily for multistate operators.
Licenses are expected to be handed out 28 days after they have been awarded, so MMJ production could begin in early January, according to the Alabama Daily News.
That means MMJ products could be available for patients around early March, an AMCC spokesperson told the media outlet.
Regulators initially awarded 21 business licenses in June, only to void them after applicants alleged inconsistencies with how the applications were scored.
Then, in August, the state awarded 24 different licenses – 19 went to June recipients – only to reverse themselves again and scratch those licenses after spurned applicants filed lawsuits.
A state judge dismissed a lawsuit filed by Chicago-based MSO Verano Holdings Corp., but another lawsuit is pending.
Source: https://mjbizdaily.com/alabama-plans-to-award-medical-cannabis-licenses-dec-1/
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