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DEA Archives - Hemp Market Report

StaffStaffOctober 13, 2020
dea-medical-marijuana-1280x640.jpg

16min00

The Hemp Industries Association and a South Carolina-based hemp company, RE Botanicals, filed a new federal action today aimed at clarifying the scope of the 2018 U.S. Farm Bill. This is the second federal action taken by the plaintiffs, who last month filed a petition for review of the DEA’s August 21 interim final rule (IFR) in a federal appeals court.

The complaint for declaratory and injunctive relief filed Monday afternoon in the U.S. District Court for the District of Columbia alleges the DEA is unlawfully attempting to regulate certain products derived from lawful hemp by misinterpreting the Agriculture Improvement Act of 2018, also known as the 2018 Farm Bill. Specifically, the DEA classifies intermediary hemp material (IHM) and waste hemp material (WHM), two necessary and inevitable byproducts of hemp processing, as Schedule I controlled substances. The plaintiffs argue that Congress deliberately removed such commercial hemp activity from the DEA’s jurisdiction when it legalized hemp production, including hemp processing, via the 2018 Farm Bill.

The DEA’s interpretation of the 2018 Farm Bill “has serious, immediate, and irreparable consequences,” the complaint states. “[A]ll hemp processors and manufacturers who work with and/or store IHM and/or WHM must now choose between ceasing to process, manufacture and/or store hemp; obtaining a Schedule I license from DEA; or risking criminal prosecution under the [Controlled Substances Act]. Given the centrality of hemp processing to the hemp industry’s supply chain, forcing processors to choose between the foregoing options would effectively destroy the entire hemp industry.”

The plaintiffs ask the court for a judicial determination that (1) the definitions of hemp and THC in hemp in the 2018 Farm Bill includes IHM and WHM, and that such materials are therefore not controlled substances; and (2) the DEA lacks any independent authority to regulate any aspect of hemp production, including IHM and WHM.

“The explanatory language accompanying the text of the IFR…reveals that DEA has an understanding of the definition of ‘hemp’ that is contrary to the 2018 Farm Bill’s plain language (and Congress’ intent) and effectively sweeps hemp into DEA’s purview,” the complaint states.

The plaintiffs are also seeking an injunction (1) enjoining the DEA from enforcing the CSA as to IHM and WHM and from classifying such materials as Schedule I substances, and (2) preventing the DEA from promulgating any rules relating to the production of hemp.

The complaint highlights the DEA’s nearly two-decade history of unlawful attempts to improperly assert regulatory authority over legal hemp products outside its jurisdiction.

“DEA’s latest jurisdictional overstep threatens every stage of the hemp production supply chain and jeopardizes the entire hemp industry,” according to the complaint. “If allowed to stand, DEA’s intrusion will undermine a lynchpin of the new hemp economy that has created tens of thousands of new jobs and provided a lucrative new crop for America’s struggling farmers.”

The Hemp Industries Association is a trade association that represents approximately 1,050-member hemp businesses, including approximately 300 hemp processors and individuals involved in, or impacted by, the manufacture, distribution and/or sale of hemp extract and other products lawfully derived from hemp.

RE Botanicals, Inc. is a hemp manufacturer and retailer based in South Carolina. In 2019, it acquired Palmetto Synergistic Research LLC (dba Palmetto Harmony), which was founded to provide lawful, reliable, and high-quality hemp products.

The plaintiffs are represented in the district court action by leading hemp industry attorneys at Vicente Sederberg LLPKight Law Office PC, and Hoban Law Group.


Tee CorleyTee CorleySeptember 10, 2020
dea-medical-marijuana-1280x640.jpg

5min00

On August 20th, 2020, the Drug Enforcement Agency (DEA) proposed new rules for hemp and CBD to ensure they are fully compliant with the 2018 Farm Bill.

The Farm Bill legalized commercial cultivation and sale of hemp, but that left the DEA in a grey area. While the DEA says they’ve been in compliance with the new rules since the 2018 Farm Bill was passed, these new rules clarify what the DEA feels is within their jurisdiction.

The new rules will:

  • Revise the definition of THC and cannabis extracts under the Controlled Substances Act (CSA) to exclude legal hemp and its family of products
  • Remove CBD-based drugs approved by the Food and Drug Administration (FDA) from Schedule V, the federal list of controlled substances
  • Remove restrictions on importing and exporting legal hemp and its derivatives

Legal hemp is defined as cannabis containing less than 0.3% THC by dry weight. Hemp and CBD have recently revolutionized the health and wellness industry, and the FDA-appoved hemp-based anti-seizure medication Epidiolex has laid the groundwork for further study on the health benefits of cannabinoids.

So, what do these new rules mean for the global hemp market? We sat down with Brandon Beatty, the longest-standing CEO of a CBD company at Bluebird Botanicals who also sits on the Board of the US Hemp Roundtable, to get some clarification.

How will the DEA’s new rules affect the global hemp market?

Beatty points to the third rule, the removal of restrictions on importing and exporting legal hemp, as the main factor to consider.

This rule provides clear guidance around the importation and exportation of legal hemp, which Beatty hopes will open the borders to a more global market.

“I believe various nations look to the USA when it comes to policies like this,” he explains. “Hopefully, it would set a positive precedent.”

Over the next few years, Beatty believes that the global hemp industry could double or triple in worth if other nations decide to play ball.

Are there negative implications written in the proposed rules?

Beatty points out that there is one negative effect of the new rules that needs to be sorted out. The DEA is suggesting a new definition of the term “marihuana extract” that could affect the legality of CBD extraction.

“During the manufacturing process,” explains Beatty, “THC in hemp extracts often temporarily exceeds .3%, which was common knowledge and accounted for by Congress when stating that the .3% THC amount is to be calculated on a dry weight basis.”

Beatty explains that dry weights are currently calculated with the starting and finishing materials, not during intermediary extraction steps. Should this definition be accepted, the results could be devastating for the CBD-hemp industry.

Why the DEA and not Congress?

It’s a fair question. If hemp and CBD are no longer controlled substances, then why is the DEA still involved?

“I don’t think the DEA should be the ones providing this import/export guidance as Congress intended to remove the DEA from the hemp conversation,” Beatty opines.

That’s why Beatty does not blieve these new rules will influence the conversation of marijuana legalization. “That’s up to Congress, not the DEA.”



About Us

The Hemp Market Report will target news from the fast growing worlds of cannabidiol (CBD) and hemp. As a sister site to the Green Market Report, HMR will cover financial stories, but also take a look at lifestyle news as well. The Hemp Market Report will also publish sponsored content as we seek to expand our content offerings.


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