What Could The DEA’s Interim Final Rule Mean For The Hemp Industry?

DEA accepted public comment on the proposed regulations through Oct. 20, 2020.

Earlier this year, the Drug Enforcement Administration (DEA) released an interim final rule that the agency says will bring the Controlled Substance Act in line with the 2018 Farm Bill, which opened the door for the production of hemp.

The proposed final rule classifies any Cannabis sativa L. material with Delta-9-THC content greater than 0.3 percent on a dry weight basis as “marihuana,” a schedule I controlled substance. Hemp is classified as Cannabis sativa L. with Delta-9-THC content of 0.3 percent or less.

As part of this proposed guidance, a cannabis derivative, extract or product that exceeds the 0.3 percent Delta-9-THC limit is controlled, even if the plant from which it was derived contained 0.3 percent or less Delta-9-THC on a dry weight basis. This presents a challenge for extractors, since THC content may exceed the limit before or during the extraction process.

The DEA accepted public comment on the interim final rule through Oct. 20, and more than 3,300 electronic comments were submitted. The agency has not made any additional movement these proposed regulations.

While the industry awaits further guidance, Tyler Williams, founder and chief technical officer, Cannabis Safety & Quality, and Harvey Craig, founder and CEO of Harvey’s All Naturals, weighed in on what the DEA’s interim final rule could mean for both extractors and manufacturers of infused products.

CP: Why would the DEA consider regulating THC content during the extraction stage, versus just the hemp plant or finished products? Does the DEA have jurisdiction over this?

TW: The industry’s main concern is from the following statement: “Note that CBD in a mixture with a Δ9-THC concentration greater than 0.3% by dry weight is not exempted from the definition of ‘marihuana’ or ‘tetrahydrocannabinols.’ Accordingly, all such mixtures exceeding the 0.3% limit remain controlled substances under schedule I.”

This change would mean that any hemp-derived CBD raw materials or work-in-progress (WIP) that is over the 0.3 percent limit would technically be illegal and it would be a controlled substance under schedule I. This is very typical to see in the industry. For example, as an extraction facility you will likely receive biomass over the 0.3 percent limit. However, through different processing techniques and formulations the finished product can be under the 0.3 percent limit. 

I think the DEA is just trying to do everything they can to strong-arm their way into maintaining control over cannabis. As a government agency, the DEA’s goal is to not lose funding. Once the DEA starts losing control over cannabis, then departments within the agency start shutting down and people lose their jobs. The DEA has publicly stated that the regulations within the 2018 Farm Bill were always meant to be this way, and this IFR was their way of providing “clarification” that inevitably confused the industry more than anything. It’s really about keeping their hands in the pot, so to speak. The USDA has jurisdiction over the farming of hemp, and once the dry flower enters the processing phase, oversight is passed on to the FDA. 

CP: If this becomes the final rule, what could it mean for producers of hemp or CBD extracts?

TW: If this does become the final rule, then the DEA will need to prepare for multiple lawsuits, inevitably prolonging the waiting game for hemp and CBD companies still searching for helpful guidance. Beyond that, this means hemp and CBD manufacturers will be wasting thousands of dollars on destroying WIP that is above the 0.3 percent threshold. This is due to the DEA’s rules on destroying non-conforming product.

HC: For us, it basically means “business as usual.” As a farmer and producer, we are glad the FDA will further regulate hemp or CBD as a “food supplement” rather than a drug. My hope is that further regulations will weed out the scam products and help consumers by making producers truly show on the bottle what is in each product.

CP: If this becomes the final rule, what could it mean for producers of hemp- or CBD-infused food and beverages?

TW: For infusers (producers of CBD-infused food and beverages), this could mean the price of extract increases. This might be due to the amount of product that is wasted from the unnecessary destruction of raw materials and WIP that is over the 0.3 percent limit. 

The risk for infusers is a lot lower than the extractor in this situation. The infuser will purchase the extracted material from a supplier who will likely provide a COA stating it is below the 0.3 percent limit. However, the industry is still lacking standards for testing at this time. Let’s not forget the fact that two labs can come up with different results for the same material (e.g. one over, and one under the 0.3 percent limit). If I’m an infuser, my supplier approval procedure requires me to test my distillate and spot-check my supplier’s lab results. In those cases, which lab result would prevail if they showed different results? How can we have this strict of a limit if the industry still doesn’t agree on the best methods for testing? 

CP: Food and beverage products containing Delta-8-THC are popping up on the market. What could this rule mean for Delta-8 and synthetically derived THC? 

TW: The DEA has clearly stated the following: “All synthetically derived tetrahydrocannabinols remain schedule I controlled substances.” This means that any synthetically derived THC is a schedule I substance in the eyes of the DEA, even if it is below the 0.3 percent threshold. Delta-8 is still legal, if it meets the statutory definition of “hemp,” which is limited to materials derived from the plant Cannabis sativa L, and below the 0.3 percent threshold. 

However, if it at any time in the process surpasses the 0.3 percent THC limit, then it would be considered illegal and would need to be destroyed in accordance to the DEA. If this is enforced it would cost CBD producers/manufacturers a significant amount of cash and create yet another barrier to entering the market.

CP: Do you think this rule could have an impact on any guidance the FDA delivers on hemp and/or CBD in the future?

TW: Due to the profound lack of communication between these regulatory bodies, it’s tough to say. One can only hope that the FDA realizes the lunacy of these rules and aims to develop regulations based on sound science and cold-hard facts. The USDA has pushed back enforcement of certain interim rules, such as disposal of non-compliant plants and DEA laboratory registration. 

HC: From what I understand, there will be some new guidelines on what information is required via lab testing. Any legitimate oil producer should be able to provide this information rather simply. If they can’t, then they’re probably not providing a healthy/legitimate product to begin with. Therefore, the new federal regulations will hopefully make these companies either change or go out of business.

CP: What can hemp or CBD extractors or producers of hemp or CBD-infused food and beverages do to protect themselves in the meantime?

TW: As a hemp farmer or CBD manufacturer, the best thing you can do right now is to have all your ducks in a row, getting certified to standards that are based on science. In this industry, we walk a fine line of what’s legal and what’s not. And if you have all the paperwork showing that you’re trying to do the right thing, that’s going to go a long way. Not only does getting certified for safety and quality ensure a superior product to your customers, it also to creates a paper trail proving that you’re trying to play by the rules. 

HC: They can do their best to keep up with the new federal guidelines and follow protocol. It’s not easy as it sits right now to farm/process/produce cutting-edge products with many grey areas. Although, the Department of Agriculture here in Colorado has been helpful and understanding to work with as rules are implemented.

CP: Is there anything else you’d like to add?

TW: This misdirected guidance from the DEA is yet another reason to push for self-regulation. If the industry doesn’t self-police, it remains just another vice in the eyes of the skeptical public and opens up opportunities for organizations like the DEA to reignite fear and confusion within the industry. 

After the public comment period closes on Oct. 20, whatever their next move is, it’s going to be awhile before anything comes to fruition. The DEA will also have to release a statement, which will also be a waiting game. In the meantime, I would recommend looking into acquiring safety and quality certifications, which is where Cannabis Safety & Quality (CSQ) comes in handy. CSQ is a safety-driven company setting reliable cannabis industry standards to help companies minimize risk, protect their brand and provide the best product for their consumers. CSQ’s standards were built in 2020 to meet ISO requirements and regulatory cannabis requirements from seed-to-sale.

HC: One big thing I have noticed in this saturated CBD gold rush is that most companies are simply making a product for profit by using low quality oils purchased on the wholesale market. I feel these companies are giving the industry a bad name. Hopefully, through proper regulation, the end customer will be able to understand the products and therefore make quality decisions in purchasing products that will truly help them with long-term benefits.