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Hemp CBD extractors can comment on onerous DEA rule

DEA Seal 2019
Editorial credit: chrisdorney / Shutterstock.com
In a lawsuit against the DEA, the Hemp Industries Association is looking for companies adversely affected by a rule that would penalize processing that transiently raises THC levels over 0.3%.

When in the course of extracting CBD oil from hemp biomass, an almost inevitable occurrence is a brief moment where the intermediary hemp material (IHM) concentrates the cannabinoid content to more than 0.3% THC. This is routinely remediated out to waste hemp material (HWM) so that the finished product has THC levels below that 0.3% level.

That, however, is not good enough for the Drug Enforcement Administration (DEA). The nonpareil drug warrior agency issued an interim final rule (IFR) last August that takes the position that transiently hot hemp during the extraction process qualifies as “marihuana,” and thus, extractors are in possession of a Schedule I controlled substance.

Extractors are freaked out that they could now become felons just for doing their job.

Companies harmed by the IFR have a chance to report how it has adversely impacted their business in a lawsuit against DEA. The Hemp Industries Association, on behalf of RE Botanicals and sister company Palmetto Harmony, is requesting comments from stakeholders that could strengthen its case against DEA. Companies can go to this link to register their complaints.

HIA is famous for defeating DEA in court—starting in 2004 when it successfully won the right to nosh on hemp seeds.

“We have a robust case, but we need more documentation for harm,” said HIA president Rick Trojan. “If they call us for evidence, we’d like to have that in our pocket.”

The simple form lists five different broad criteria for registering how the IFR has affected business practices:

  • Caused changes in business practices.
  • Delayed or undermined business deals, contracts or plans.
  • Created confusion among suppliers, local law enforcement or customers.
  • Created uncertainty or worry among business partners, employees or customers.
  • Resulted in state or local law enforcement interference.

“We’re looking for evidence of harm,” said Trojan. "If the news caused cooling of investment, pullback in expansion, those types of things." 

The comments will be reviewed by HIA and its legal team and may be included in the lawsuit, but also may remain confidential with HIA. Respondents will be asked permission again if HIA deems the comment worthy of inclusion.

Lawsuit issues

But drug warriors do not go quietly into that good night, and DEA remains in the picture. It issued an interim rule seeking to regulate the industry—in particular, against extractors. When processing hemp from the hempy biomass to oil, the intermediary hemp material (IHM) transiently contains THC levels above the legal limit of 0.3%. DEA has taken that scenario, as well as waste hemp material (HWM) as another inevitable byproduct of hemp processing, as a reason to crack down on extractors.

Enter the 43-page HIA lawsuit. HIA is seeking comment from anyone affected as part of the case it is building against DEA.

DEA’s interpretation of the farm bill has “serious, immediate, and irreparable consequences,” according to HIA's complaint. “All 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 risk 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: the definitions of hemp and THC in hemp in the 2018 farm bill includes IHM and WHM; such materials are therefore not controlled substances; and DEA lacks any independent authority to regulate any aspect of hemp production, including IHM and WHM.

The lawsuit also makes note of DEA’s continuous attempts to regulate the hemp industry as a means of informing the court of continuous and historic overreach.

It’s anybody’s guess which way the court will decide. On the one hand, the 2018 Farm Bill is rather explicit about writing DEA out of the regulation of hemp. But the U.S. Department of Agriculture wrote a rule re-inserting DEA. And the recent hubbub over buzzy delta-8 THC has raised eyebrows that this kissing cousin to get-high delta-9 THC—while technically legal per the farm bill—nevertheless is reason enough to get DEA back in hemp’s business.

HIA is a trade association that represents more than 1,000 member hemp businesses, including some 300 hemp processors and individuals involved in the manufacturing, distribution or sale of hemp extract and other products lawfully derived from hemp. Law firms working on behalf of the HIA include the Hoban Law Group, Vicente Sederberg and Knight Law Office.

 

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