Helter Skelter: Global Regulatory Chaos Over CBD

While it may seem counterintuitive, ambiguity and irregularity in a marketplace can actually create explosive growth in a nascent industry. This has certainly been the case for CBD and other hemp-derived, non-psychoactive cannabinoids. Since these compounds entered the ingredient marketplace, there has been insatiable consumer demand and enormous uptick in sales. This has driven the majority of the global cannabis industry’s focus toward CBD. In this case, it does seem that the uncertainty and inconsistency surrounding the regulatory treatment of this compound in the U.S., and around the globe, actually drives consumer interest.

Some have dubbed CBD as “Chaos By Design.” Maybe that’s what we owe to the explosive trajectory of the natural product ingredient category in the U.S., starting long before CBD entered the market more than eight years ago. But it's getting stranger and stranger. 

Global regulatory chaos and inconsistency are in line for an apex of disorder over the next few months. I can't stop wondering just what the regulatory bodies have coming, but I think we’ll find out real soon. Dare I say pandemonium? 

As we have detailed previously, the UN is set to consider an historic vote in December, in Vienna, where it will consider (and likely adopt) the WHO recommendations that CBD and other non-psychoactive cannabinoids derived from hemp not be treated like narcotics and not be scheduled accordingly. Science, of course, supports this.    

If you’re under the impression that the situation in the U.S. is clear with respect to cannabinoid regulations, you’re mistaken. In 2018, the federal definition of “marihuana” was directly amended so that it no longer includes “industrial hemp.” 

7 U.S.C. 1639o stated, “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.” I want to stress the importance of the dry weight language that expressly refers to plant material. Make no mistake about it, Congress (or at least those attorneys who had a hand in drafting the language) chose their words very carefully. 

According to the above, hemp and its “derivatives, extracts, and cannabinoids” are 100% legal, right? That is precisely what Congress wrote and the President signed into law. 

Not so fast. 

In short, the 2018 Farm Bill cemented industrial hemp as a lawful, non-controlled, agricultural crop and commodity under U.S. law. It took the 2014 Farm Bill enactment a major step forward and removed all limitations (i.e., research-based activities as defined in the 2014 Farm Bill) and entirely removed hemp (and its derivatives) from the Controlled Substances Act, as described above.  

Even the U.S. Drug Enforcement Administration (DEA) affirmed that “…hemp, including hemp plants and cannabidiol (CBD) preparations at or below the 0.3 percent delta-9 THC threshold, is not a controlled substance…” The agency went on to say that “hemp, including hemp plants and cannabidiol (CBD) preparations at or below the 0.3 percent delta-9 THC threshold is not a controlled substance.”  

In addition to the DEA, on May 28th, 2019, the USDA issued a bulletin as a legal opinion for hemp production. It authorizes interstate delivery of hemp and legalized THC derived from hemp. 

Perhaps the most impactful portion of this USDA bulletin is the subject of THC, which is the part of the cannabis plant that produces a psychoactive response in the brain or the feeling of getting “high.” It stated, "[b]y amending the definition of marijuana to exclude hemp as defined in AMA 297A, Congress has removed hemp from schedule I and removed it entirely from the CSA (Controlled Substances Act). In other words, hemp is no longer a controlled substance. Also, by amending schedule I to exclude THC in hemp, Congress has likewise removed THC in hemp from the CSA."  

To further cement hemp’s position as a mainstream agricultural commodity, the USDA issued Interim Regulations on October 30, 2019 (a summary analysis of which can be found here)

Even the FDA had weighed in when former Interim Commissioner, Scott Gottlieb, announced that the FDA was looking at “providing potential regulatory pathways....for products containing cannabis and cannabis-derived compounds.” This year, current FDA Commissioner, Stephen Hahn, acknowledged that it would be “a fool's game” to attempt to pull CBD products off the market.

Over seven significant U.S federal government agencies have squarely addressed the legality of hemp and its derivatives – including CBD. Yet the pathway remains unclear. And for better or for worse, the rest of the world tends to follow the lead of U.S.

Meanwhile, the European Commission has established viable pathways to market for CBD. As of January 2019, the compound was considered a Novel Food by European regulators, a “food that was not used for human consumption to a significant degree within the Union before 15 May 1997, irrespective of the dates of accession of the Member States to the Union.” Previously, the European Foods Safety Authority (“EFSA”) had classified CBD as a “novel food” ingredient. Many in the industry did not like this designation within the Novel Foods Catalogue, but at least it appeared to provide a viable regulated pathway to market. Following Brexit, the United Kingdom began to look at the Novel Foods standards and accelerated a plan by and through its FDA equivalent, carving some certainty for proper CBD products.  

Then 2020 happened. Specifically, the summer of 2020. As if a pandemic, economic downturns, and Murder Hornets were not enough, on or about July 20, 2020, the European Commission began to ponder whether hemp flower extracts should be treated as drugs, and paused their work on novel food applications for CBD products. According to reports, the EU notified all of the approximately 50 CBD novel foods applicants and directed them to provide feedback as to whether the substances should be designated as narcotics.

This represents a major shift in potential treatment of this cannabinoid. And it's not just a change in style. We’re left asking - where did this come from? It certainly does not track the WHO recommendations.

It will likely be 2021 before the FDA will come out with regulations as it is presently gathering safety data concerning the products. At least the FDA has not suggested a 180-degree turnaround, like the EU Commission.  

Meanwhile, countries across Latin America are implementing direct pathways for CBD products to become registered and enter into the stream of commerce with the backing of nationalized healthcare systems. In addition, various Asian countries are clearing pathways to market for these products.  

Then the DEA dropped its bomb in late August, further confusing the THC by dry weight issue - a flagrant course correction. All against the backdrop of the State of New York abandoning its hemp program due to onerous USDA requirements, along with other states.

With regards to CBD and other hemp-derived, non-psychoactive cannabinoids, we have pure unadulterated chaos from a regulatory perspective. This path is unsustainable. We know that the global economy requires hemp derivatives. We have a proven market demand. Yet here we are, stalled. We need uniformity, we need consistency, and we need leadership. 

That leadership must come from farmers and experienced cannabis public policy individuals. The way forward is simple and based on evidence, data, and existing pathways. It requires deft leadership from those who deeply understand the global marketplace, various global policies, and what is takes to bring uniformity and order to regulatory chaos. Otherwise, the hemp industry will hit a brick wall.  

Industrial hemp is a renewable, alternative resource that can be used for food, biofuels, plastics, clothing, building materials, and the like, as detailed in this 2018 Forbes article (which interestingly mirrors a Popular Mechanics article from 1937, coining hemp the “Billion Dollar Crop.”

When the DEA’s Interim Final Rule was published in the Federal Register, I reached out to the former deputy undersecretary for food safety at the U.S. Department of Agriculture, Caren Wilcox. Today, Caren serves as the executive director of the U.S. Hemp Growers Association (USHGA), a national nonprofit organization that serves as a unified voice for the hemp farming community, an information-sharing network that advances the interest of hemp growers. Wilcox says that she “received an immediate call of distress about the new DEA rule from one of my members who both grows hemp and processes it.” She adds, “The rule promulgated by the DEA has come under major scrutiny by the hemp grower and processor community as well as from attorneys across the United States. This attempt by DEA to make an interim step in extraction illegal, and thus interfere in production of cannabinoids like CBD and CBG is unwarranted, but apparently not a surprise to veterans in the hemp community. I have been reminded that the DEA tried to use the same theory to make hemp food products (that have been eaten by humans for thousands of years) illegal. That attempt failed. We will be offering our comments to DEA shortly.” 

Brick walls are nothing new to this industry. We have overcome obstacles posed by misguided regulators and unsustainable policy time and time again. But this is not the time to let the chips fall where they may. Now is the time to take action. Those of us who roll up our sleeves to advance the global cannabis day in and day out, have charted the development of this industry - sprung from night into sun. We know what works and what doesn’t. Now is the time to be leaders.