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Court Rejects Challenge to DEA Rule, Leaving CBD Federally Illegal

May 1, 2018
(KarpenkovDenis/iStock)
Update, 5/2/2018: This story has been updated to include the 9th Circuit ruling’s mention of the federal farm bill, which some in the hemp industry have interpreted to limit the court’s decision.


In a decision likely only to add to the legal confusion around cannabidiol (CBD) in the United States, a federal appellate court in California has rejected an industry challenge to a DEA rule that effectively outlawed the cannabinoid.

The rule, which the DEA published in 2016, established a new Controlled Substances Act drug code for “marihuana extract,” putting even hemp-derived extracts in the same restrictive Schedule I category as psychoactive THC. In doing so, the new rule set the stage for a wave of raids on CBD retailers and related businesses.

While the DEA has said the rule change was an administrative move aimed at better tracking extracts and complying with international drug-control treaties, critics worry it could pose an existential threat to the nation’s burgeoning hemp industry and restrict patient access to CBD, the medically promising and non-intoxicating cannabinoid.

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Under federal law, “hemp” is defined as Cannabis sativa plants with less than 0.3% THC. Anything with more THC is “marijuana.” As such, CBD oil from hemp was commonly thought to fall outside Schedule I. But the 2016 DEA rule defined a cannabis extract as “containing one or more cannabinoids that has been derived from any plant of the genus Cannabis” and reiterated that any such substance “will continue to be treated as Schedule I.” Bad news for hemp-derived CBD.

Immediately, lawyers for the hemp industry filed a challenge.

Because none of the parties to the petition filed comments during the DEA rulemaking process, the court wrote, they’re not eligible to challenge the final rule.

The Hemp Industries Association and other hemp-related businesses argued that the DEA overstepped its rulemaking authority by taking an action that effectively added cannabis extracts, and specifically CBD, to the Controlled Substances Act (CSA) without action from Congress. The petitioners cited a 2004 appellate decision that said the DEA has no authority to regulate drugs that were not explicitly scheduled and that parts of the plant are exempt from the definition of marijuana.

On top of that, the hemp businesses claimed, the 2014 Farm Bill included a provision allowing certain states to allow hemp cutivation through pilot projects—and barring federal law enforcement agencies, including the DEA, from interfering.

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On Monday, however, a 9th US Circuit Court of Appeals panel rejected the industry’s petition for review. So for now, the DEA rule remains in place.

Bob Hoban of Hoban Law Group, a Denver-based attorney who represented the industry group in the challenge, said he was disappointed by the ruling.

“Given the pervasive confusion and irreconcilable conflicts of the law that have led to product seizures, arrests and criminal charges against those involved in the lawful hemp industry, the Petitioners believe that the Final Rule must be invalidated, absent the Court clarifying and further resolving these conflicts and their severe consequences,” he wrote in an emailed statement.

Part of the court’s decision rested on a technicality. Because none of the parties to the petition filed comments during the DEA rulemaking process, the court wrote, they’re not eligible to challenge the final rule in court.

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The DEA began its rulemaking process in 2011, and the final rule on cannabinoids was published Dec. 14, 2016. According to the court, the Hemp Industries Association and other were silent during the comment period. Once the rule was published, however, they “filed the instant petition for review that same day.”

“A party may petition a Court of Appeal for review of a final DEA decision,” the court wrote, “but if the party fails to make an argument before the administrative agency in comments on a proposed rule, they are barred from raising that argument on judicial review.”

The groups challenging the rule, for their part, argued that a comment submitted by a private citizen raised the same concerns. The court, however, was unpersuaded, writing that “Neither this comment nor any other raised with sufficient clarity Petitioners’ current argument that the final rule scheduled a new substance.”

Hoban’s firm says it’s currently working to “carefully weigh” the available options, which includes a rehearing that must be requested within 45 days.

As Hemp Industry Daily reports, that appeal is already in the works. “We will be appealing, and we will be funding that appeal,” Michael Brubeck, CEO of Centuria Natural Foods and a petitioner in the case, told the publication.

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Update: Since Monday’s ruling, some in the hemp industry have downplayed the decision’s significance. The US Hemp Roundtable, which describes itself as a “coalition of dozens of hemp companies,” said on Wednesday that the “DEA’s extract rule does not apply to hemp”:

Contrary to some early reports, this ruling does NOT classify hemp-derived cannabidiol (CBD) as a controlled substance, nor does it signify that the popular hemp product is federally illegal. Indeed, the ruling has no legal or practical impact on hemp or hemp products.

The group’s broad interpretation stems from a paragraph in the court ruling about the federal farm bill, which permits some states to grow hemp through pilot programs. In it, the court acknowledged that the farm bill allows for certain parties “to grow or cultivate industrial hemp.” But that provision contains no specific protection for extracts, and the 9th Circuit judges rejected the hemp industry’s argument that the DEA rule violates the farm bill.

In other words, two things are true under the 9th Circuit ruling: First, those permitted under the farm bill to grow and cultivate industrial hemp in the US may legally do so. But second, any “extract containing one or more cannabinoids that has been derived from any plant of the genus Cannabis”—which includes industrial hemp—is now considered a Schedule I controlled substance.

The full 9th Circuit ruling is embedded below:

Hemp Industries Assn. v. US Drug Enforcement Administration — 9th Circuit petition denial by Ben Adlin on Scribd

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Ben Adlin

Ben Adlin is a senior editor at Leafly who specializes in politics and the law. Follow him on Twitter: @badlin

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  • Motormouth

    What a disappointment. The pharmaceutical industry is denying people a much better option for controlling and treating a whole host of conditions.

    • C Gosnell

      I know firsthand the benefits of CBD, they are many and FAR better than the crap the pharmaceutical industry pushes. I have my card so they can F Off in my case.

    • Michael

      Yep. Like the NRA, the GOP receives huge donations from big pharma. So I am sure this had a significant effect on their decision.

      • E.L. Bl/Du

        yea, whoever, or whichever pharmaceutical CORPORATION (corrupteration) who is now getting BIG tax breaks paid generously to ban this. Its MORE than just common sense to allow it, but see, they cant make money off of it if we can grow our own medicine that works. Ever notice they are the only ones who can afford to make commercials anymore?

    • Namez

      Seems like it’s unconstitutional to disallow the public further legal appeals on this ruling simply because comments were not voiced earlier. Yes, the ruling is probably a nod to Big Pharma indeed.

  • lovingc

    How are they making illegal when the FDA has allowed a pharmaceutical company to produce CBD this is ridiculous. The congress and the administration hates the american people and freedom!

    • Austin

      I suspect it has to do with that very reason, unfortunately (Big Pharma=MONEY>health). Epidiolex (which btw contains sugar as one of its main ingredients and is far less healthy than 99% of the tinctures already available on the internet, not to mention way more expensive)…

  • Arcendus

    https://hempsupporter.com/deas-marijuana-extract-rule-does-not-apply-to-hemp/

    “In short, the DEA’s ‘marijuana extract rule’ does not apply to hemp or derivative products such as hemp-derived CBD.”

    I’m confused.

  • DesertRaider

    This should have been taken care of a long time ago. And it’s more puzzling since schedule 1 means no medical benefits, yet the US govt. has two patents on CBD.

  • GoWiThaFlo

    Thanks for a fair and perceptive analysis, Ben.

    What always irks me is how the legal term “marihuana” (the actual spelling in Schedule I, as noted on page 2) reveals the utter stupidity of our federal lawmakers and bureaucrats. We are being forced to endure a fraudulent imposition of the law enforcement apparatus based on nothing more than a Mexican Spanish slang word spelled by complete idiots. Add in a president who proposes further walling off the Mexican border, and you get a poisonous dose of rank hypocrisy. Quite literally, no reason ever existed for us to trust federal, state and local officials who aim to “classify” any part of cannabis plants. Our republic is doomed if we fail to abolish every last vestige of such treasonous bureaucratic madness.

  • It is a humanitarian disaster and an abomination. Americans need legal access to CBD.

  • Bradley Marsoobian

    #donaldtrump The courts are a bunch of crap CBD deserves to be legalized cbd extracts with a variety of cbd compounds like cbcd etc. And less than %3 thc should be legal in all states that decide to allow it with or without prescription its helping,me and millions of others heal and avoid the deadly side effects of pharmaceuticals. Legalize it already stop the confiscations and stupid laws it does not get you high and has absoulutely no pshycoactive side effects even with other cbd compounds.

    • Austin

      I really hope you didn’t vote for that fool, because he certainly won’t listen to you or anyone about anything… #DUMPDRUMPF

      • t.w.

        Austin-fool-)

        Donald Trump Is the greatest First-Year President of All Time.

        • Austin

          HAHAHAHA, totally… Isn’t America just so great again?!

        • Dan V.H.

          Yes, President Trump is the best President of my lifetime, that’s for sure!!!

          • Austin

            Where do you live, Dan, Dumbf**kistan??? Oh wait, Mormonville! That makes perfect sense. He had the religious-right grabbed by the BALLS (and the pussy) the whole entire time… You know voting for Drumpfy was clearly not the Christian thing to do, right?

        • Scooter Bell

          t.w. and Dan V.H. – What weed are you two using, I wish I could see the same thing… :]

          • t.w.

            Quit watching 24/7 Spreading an Anti-American Message -CNN -MSNBC

          • Scooter Bell

            Doesn’t apply, don’t watch despite freedom as an American to do so. The
            comment was a joke via :] . Try laughing a little – it helps.

    • Scooter Bell

      This survey shows that the progression of U.S persons wishing to make marijuana legal is in the majority, and increasing:
      http://news.gallup.com/poll/221018/record-high-support-legalizing-marijuana.aspx
      The health facts, the people and the medicinal results(https://www.health.harvard.edu/blog/medical-marijuana-2018011513085) all support marijuana legalization. Anyone know how to remove politics from the equation? :]

  • Austin

    CBD derived from marijuana is still illegal, while CBD derived from industrial hemp is not. So your title is pretty misleading. The Supreme Court found that the 2014 Farm Act preempts the Controlled Substances Act. This means that industrial hemp that is cultivated and processed pursuant to a state’s pilot program is lawful. The DEA has always contended that the scope of the Farm Act is limited and that it does not apply to commercial activity or authorize participation by private actors, but there is nothing in the statute to support these views. Under the Farm Act (and the industrial hemp provisions in the current Appropriations Act) a state is free, and in fact, encouraged, to conduct commercial market research as part of its pilot program. Moreover, states routinely license private actors to perform various state functions. This is neither new nor controversial. There is nothing in the Farm Act that prohibits a state from authorizing private parties to grow, process, and sell industrial hemp products, including CBD and other extracts, derived from it. The Farm Act TRUMPS the CSA, making these activities 100% LEGAL, period. Basically, the DEA is trying to force people to buy their new FDA-approved (and sugar-based) tincture called Epidiolex. Come on now, Leafly, please change your title. It is needlessly scaring everybody (exactly like the DEA wants).

    • Scooter Bell

      Good point Austin. If CBD was reviewed as a chemical/element, there doesn’t appear to be any difference between industrial hemp
      produced or marijuana besides the source? And if so, that would would mean marijuana has medicinal value, exempting
      it from Schedule 1 designation. :] . It’s a lot of legal finaggling instead of fact processing.

      • Austin

        Right?! If you watch the actual court hearing the DEA/HIA had in San Fransisco, it’s blatantly clear that no one in the room (besides the HIA representative) even knows there is a difference between CBD and THC… They keep referring to industrial hemp as having either a “high amount of hallucinogenic cannabinoids” which makes absolutely ZERO sense. They think what the hemp industry is trying to do is basically commercialize “low-dose marihuana oil” like they’re all stuck in the flipping 1930’s. That’s literally how they spell it.

    • If only the state of Wisconsin realized that. They just made CBD made from hemp oil, even industrial hemp, illegal to sell or possess.

      • Austin

        Actually, I recently heard that’s still not the case (even in WI)… The DOJ apparently backed off (after meeting with state farm lobbyists) it’s position yesterday and had to clarify that so long as it’s derived from hemp and not marijuana, CBD oil is legal to produce and posses under the state’s recent hemp farming pilot program. The state of Michigan was also trying to do the same thing, but were again unable to and had to make clear that they were referring to “marihuana” not hemp. Google CBD (it’s very recent news)!

  • Tatoo49

    To put things simply, “we are being fucked, again”. 2 Steps forward, 1 step back. Everything needs to be a fight because reality has no place in drug policy. According to the DEA.

  • steve

    Remember remember the 6th of November. Vote.

  • 360dunk

    Ultimate irony – Robert Patterson of the DEA comes down with cancer and withers away to a 95 pound frail man because he was too stupid and stubborn to treat his disease with an RSO 1:1 oil concentrate.

    No, I don’t wish cancer on anyone, but I do wish these freaking morons who dictate cannabis policies would wake the heII up. This is NOT a drug without medical value, you blithering idiots! Do the right thing and re-schedule it.

  • 360dunk

    Dear Abbott, Purdue, and Eli Lilly,

    F off, you’ll never get me hooked on your Vicodin, Percocet, or Oxycodone. Cannabis is more effective and it comes without the devastating side effects. I hope you go Chapter 11.

  • Jason David Howard

    Schedule 1 for marijuana is double think at this point

  • Patrick Block

    with all this idiocy maybe some legislators will deschedule all cannabis instead of finagling what is cannabis and what is not. Hopefully mitch mcconnell will change his mind instead of just helping his hemp farmer friend he will help the hurting people of Ky. and deschedule cannabis