CBD and its Uncertain Legality

CBD Oil is not a pharmaceutical drug. Pharmaceutical drugs should be understood as drugs that are used to diagnose, cure, treat, or prevent disease. While it is likely that CBD will be used in pharmaceutical drugs in the near future, there is currently only one FDA approved pharmaceutical that contains CBD – Epidiolex, produced by GW Pharmaceuticals.  In June of 2018, the FDA approved Epidiolex as a treatment for seizures associated with two rare forms of pediatric epilepsy.  The approval marked the first time the FDA has approved a medication that contains a purified drug substance derived from Cannabis.  That approval forced the Drug Enforcement Agency (DEA) to reclassify the medication. 

Prior to the approval of Epidiolex, the DEA considered all forms of CBD as Schedule I according to the Controlled Substances Act.  Schedule I represents a class reserved for drugs with a high potential for abuse and no accepted medical use, but following the approval of Epidiolex, the DEA announced it would be placing the drug in Schedule V, the least restrictive class. However, any form of the drug that is not specifically FDA-approved remains in Schedule I.

The FDA has also approved Marinol and Syndros for therapeutic uses in the United States, including for the treatment of anorexia associated with weight loss in AIDS patients. Marinol and Syndros include the active ingredient dronabinol, a synthetic delta-9- tetrahydrocannabinol (THC).  Another FDA-approved drug, Cesamet, contains the active ingredient nabilone, which has a chemical structure similar to THC but is synthetically derived.  Other companies developing such treatments include Axim Biotechnologies, which is developing a cannabinoid-based chewing gum delivery method; KannaLife Sciences, which is researching oxidative and neuro-toxic stresses born from a variety of ailments and illnesses including Chronic Pain and Chronic Traumatic Encephalopathy; CURE Pharmaceuticals, which is developing cannabinoids for the treatment of a wide range of sleep disorders; and Columbia Care, which struck a licensing agreement with Australia-based nasal respiratory company Rhinomed for the collaborative development of nasally-delivered cannabis-based medicines.

In the meantime, the times are definitely changing.  On April 4, 2019, a bipartisan group of lawmakers proposed legislation that would end the federal prohibition on marijuana by allowing each state or territory to decide their own pot policy.  The legislation — dubbed the STATES (Strengthening the Tenth Amendment Through Entrusting States) Act — would amend the Controlled Substances Act to limit federal action against those operating legally in states with legalized medical and/or recreational programs. Earlier, in March, 2019, Canopy Growth, a Canadian company, signed a $3.4 billion agreement to acquire the medical marijuana firm Acreage Holdings. The basis of the agreement is that as soon as the U.S. government ends marijuana prohibition, Canopy will assume the Acreage properties and storm onto the U.S. market as the most powerful cannabis seller in the United States.

There are a few rather interesting aspects of this arrangement, the first of which is the fact that Constellation Brands, maker of the beers Corona and Modelo, owns 37 percent equity stake in Canopy, and has an opportunity to take controlling interest in the next few years. So, it is conceivable that, regardless of how much the cannabis industry fights to become its own entity with its own set of unique rules, one of the largest brewers in the world is poised to become the most significant cannabis producer in the United States. Considering that Constellation is already working with Canopy to devise THC-beverages for the Canadian market, all of which is being done in experimental preparation for when the United States goes fully legal, it is difficult to see the point where they might opt out. It appears that Big Alcohol is becoming Big Cannabis.

On December 20, 2018, the Agriculture Improvement Act (the Farm Bill) of 2018 was signed into law. Among other things, this new law changed certain federal authorities relating to the production and marketing of hemp, defined as cannabis and derivatives of cannabis with extremely low (less than 0.3 percent on a dry weight basis) concentrations of delta-9-tetrahydrocannabinol (THC). These changes include removing hemp from the Controlled Substances Act, which means that it will no longer be an illegal substance under federal law.

The 2018 Farm Bill is expansive, allowing hemp to be cultivated broadly, not simply through pilot programs for studying market interest in hemp-derived products. It explicitly allows the transfer of hemp-derived products across state lines for commercial or other purposes. It also puts no restrictions on the sale, transport, or possession of hemp-derived products as long as they are produced in a manner consistent with the law.  However, the new Farm Bill does not create a completely free system in which individuals or businesses can grow hemp whenever and wherever they want. There are numerous restrictions.  First, as noted above, hemp cannot contain more than 0.3 percent THC.  Any cannabis plant that contains more than 0.3 percent THC would be considered non-hemp cannabis—or marijuana—under federal law and would have no legal protection under this new legislation.

Second, there will be significant regulatory power over hemp cultivation and production shared between states and the federal government. Under section 10113 of the Farm Bill, state departments of agriculture must consult with the state’s governor and chief law enforcement officer to devise a plan that must be submitted to the Secretary of USDA. A state’s plan to license and regulate hemp can only commence after the Secretary of USDA approves that state’s plan. In states opting not to devise a hemp regulatory program, the USDA will construct a regulatory program under which hemp cultivators in those states must apply for licenses and comply with a federally-run program.  This system of shared regulatory programming is similar to options that states have had in other regulatory areas such as health insurance marketplaces under ACA, or workplace safety plans under OSHA—both of which have federally-run systems for states opting not to set up their own systems.

Third, the law outlines actions that are considered violations of federal hemp law, including activities like cultivating without a license or producing cannabis with more than 0.3 percent THC. The law details possible punishments for such violations, pathways for violators to become compliant, and even which activities qualify as felonies under the law (such as repeated offenses).  Ultimately, the Farm Bill legalizes hemp, but it does not create a system in which people can grow it as freely as they can grow tomatoes or basil. Hemp is a highly regulated crop in the United States for both personal and industrial production.

One big myth that exists about the Farm Bill is that CBD is legalized. True, section 12619 of the Farm Bill removes hemp-derived products from Schedule I status under the Controlled Substances Act, but the legislation does not completely legalize CBD.  The Farm Bill creates exceptions to this Schedule I status in certain situations.  The Farm Bill ensures that any cannabinoid derived from hemp will be legal if, and only if, the hemp is produced by a licensed grower in a manner consistent with the Farm Bill and all associated federal and state regulations.  Further, at this time, because of the Schedule I status, any cannabis-based research conducted within the United States must use research-grade cannabis from the only approved source -- the Marijuana Program at the University of Mississippi School of Pharmacy’s National Center for Natural Products Research. However, if hemp-derived CBD is no longer listed on the federal schedules, it will raise questions regarding whether they are required to get their products from Mississippi. This will likely require additional guidance from the FDA, the DEA, and NIDA (National Institute on Drug Abuse, who administers the contract to research-grade cannabis) to ensure researchers do not inadvertently operate out of compliance.