After the legal setback, hemp extractors hope DEA won't make any big moves

Introduction

The federal appeals court ruled Friday that the Drug Enforcement Administration has authority to regulate CBD oil under its internal memo, despite the passage of the 2018 Farm Bill, which removed industrial hemp from the controlled substances list.

The ruling dealt a setback to the burgeoning hemp industry, which had hoped its newly legal status would allow it to thrive unabated by federal regulation.

A federal appeals court dealt a setback to the hemp industry

The Hemp Industries Association, representing over 1,000 hemp businesses and companies, filed a lawsuit against the DEA in August 2018, challenging its new rule that CBD oil is a Schedule I controlled substance.

That doesn't mean they're backing off of their case against the DEA's policy decision; instead, it means they'll focus on the question of whether or not the Farm Bill allows for federal regulation of hemp plants and derivatives under certain circumstances (this is separate from their main argument about DEA overreach).

The 9th Circuit Court of Appeals

Based in San Francisco, ruled that hemp extractors must register with the DEA if they extract CBD oil or THC.

The decision followed a legal challenge by an Oregon company called HempMedsPx, which sells hemp-derived CBD products.

The court said the Drug Enforcement Administration has regulatory authority over hemp plants and derivatives under the 2018 Farm Bill.

In addition, it said the DEA could require anyone who wants to produce or process any cannabis product derived from a variety of marijuana listed on Schedule I during the past two years to register as part of its controlled substance registration program.

“The DEA’s definition is not ambiguous,”

"The DEA's definition is not ambiguous," Judge Diarmuid O'Scannlain in the court opinion. "Extracts are subject to control because they contain THC and thus are 'derivatives' of marijuana."

The Hemp Industries Association (HIA) said the ruling was a major setback for hemp and CBD producers who believed their products were legal under federal law.

Hemp Industries Association and Centuria Foods brought the case.

The Hemp Industries Association and Centuria Foods, Inc. brought the case, which extracts CBD oil from hemp seeds to produce their line of CBD products.

They have argued that the DEA lacks regulatory authority over hemp plants and derivatives under the 2018 Farm Bill, which removed hemp from the controlled substances list.

The Court of Appeals came in line with that argument on Friday but didn't decide whether CBD is legal; instead, it said that "whether a substance is classified as a Schedule I substance – or not – is up to Congress."

This means there's still room for interpretation on how much control the DEA has over CBD products if they are extracted from cannabis plants (which contain both THC and CBD).

Conclusion

The ruling is a blow to the hemp industry, which is struggling to navigate the cannabis market. But it's not a total loss because the decision was based on technicalities rather than substance.

The court upheld the DEA's rule that CBD oil must be treated like marijuana extract, and Schedule I of the Controlled Substances Act governs this substance.

But it did not address whether non-psychoactive components found in hemp plants should also be considered controlled substances under federal law.

Those determinations could come out differently in future cases if they are brought before other courts with different judges who interpret statutes differently than their counterparts at the 9th Circuit Court of Appeals did here today."