Last week on Thursday August 20, 2020, the U.S. Drug Enforcement Administration (“DEA”) published an interim final rule surrounding hemp and hemp derivatives.

Effective Friday August 21, 2020, the interim final rule is intended to conform “DEA’s regulations to the statutory amendments to the [Controlled Substances Act (“CSA”)] that have already taken effect, and it does not add additional requirements to the regulations.”

Although the 2018 Farm Bill legalized hemp and hemp derivatives under .3% Δ9-THC, hemp processing has always fallen in a regulatory “grey-zone” because of the lack of regulations. Although the 2018 Farm Bill legalized hemp and hemp derivatives under .3% Δ9-THC, hemp processing has always fallen in a regulatory “grey-zone” because of the lack of regulations. Even going back to the 2014 Farm Bill, the lack of regulations was apparent. In fact, most state departments of agriculture allowing for hemp cultivation under the 2014 Farm Bill expressly refused to regulate hemp processing.

However, as of last week, the DEA decided to weigh in by concluding:

to fall within the current CSA definition of marihuana, cannabis and cannabis-derived material must both fall within the pre-[2018 Farm Bill] CSA definition of marihuana and contain more than 0.3 percent Δ9-THC on a dry weight basis. Pursuant to the [2018 Farm Bill], unless specifically controlled elsewhere under the CSA, any material previously controlled under Controlled Substance Code Number 7360 (marihuana) or under Controlled Substance Code Number 7350 (marihuana extract), that contains 0.3% or less of Δ9-THC on a dry weight basis—i.e., “hemp” as that term defined under the [2018 Farm Bill] —is not controlled. Conversely, any such material that contains greater than 0.3% of Δ9-THC on a dry weight basis remains controlled in schedule I…

In addition, the definition of hemp does not automatically exempt any product derived from a hemp plant, regardless of the Δ9-THC content of the derivative. In order to meet the definition of “hemp,” and thus qualify for the exemption from schedule I, the derivative must not exceed the 0.3% Δ9-THC limit.

One of the initial concerns with this language arises as a result of processing hemp into a useable hemp-derivate. Simply stated, when the hemp plant is processed and its cannabinoids are extracted into a crude oil, or similar derivative, concentrated amounts of Δ9-THC inevitably increase beyond the .3% threshold. This is true of any plant processed into an extract or derivative in any industry. Accordingly, under this interim rule, even if a processor were to dilute the end product under .3% Δ9-THC, the processor is in possession of a schedule I controlled substance. Additionally, any product made from that oil is also a schedule I controlled substance – regardless of Δ9-THC.

The 2018 Farm Bill was clear to account for hemp derivatives, extracts, and cannabinoids. Specifically, the term hemp means “the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.” This interim final rule, however, clearly misinterprets the legislative intent inherent in the 2018 Farm Bill by essentially ruling that the processing of hemp is a violation of the CSA. In effectuating this regulatory change, the DEA has either deliberately ignored the language above, or has simply failed to recognize a linguistic nuance.

Despite the intent, the application of this interim final rule will most certainly have a chilling effect on the hemp industry in the U.S., especially for hemp processors. If you have any concerns regarding this rule, we ask that you please submit your written comments to the DEA here. It is imperative to submit comments during the agency’s public commenting period because doing so ensures that DEA considers concerns, as well as preserves the right to sue the agency based on the substance of its final rule. Electronic comments must be submitted, and written comments must be postmarked, on or before October 20, 2020. Please reach out to the Greenspoon Marder Cannabis Practice Group in Denver if you have any questions regarding the DEA interim final rule, the submission of comments, or if you would like our assistance in drafting your comments.