What On Earth is Up With CBD Oil and the DEA?

If you were distracted this week by Donye West, you missed a major US DEA action.   Image result for trump kanyeIt appears that the DEA just declared war on hemp-based CBD oil.

Why does that matter?  It is not as big as their refusal to reschedule marijuana to Schedule II, but…

It matters for medical cannabis cancer patients in Kentucky who need to order CBD oil online and have it shipped to them from California or Colorado.

It matters for the families shelling out hundreds of dollars to buy the ubiquitous “Charlotte’s Web.”

It matters to beauty supply giant, Ulta, who has their own line of hemp-seed oil products.

It matters to hundreds (maybe thousands) of gas stations around the country now selling “CBD oil” products on the same shelves they used to sell K2 bathsalts before they were outlawed.

And maybe, just maybe it matters to the dreaded “Big Pharma.”

What Just Happened?

So what the heck did the squirrelly DEA do?  They published a new “Administration Controlled Substances Code Number for “Marihuana Extract,” Effective January 13, 2017.  In their own words of what this is about:

“Because the definition of marihuana in 21 U.S.C. 802(16) includes both derivatives and preparations of marihuana, the DEA until now has used drug code 7360 for extracts of marihuana. This final rule finalizes a July 5, 2011, Notice of Proposed Rulemaking (76 FR 39039) in which the DEA proposed that a new drug code 7350 be used for extracts of marihuana.”

In plain English, this means the DEA is creating a new category for tracking Schedule 1 marijuana extracts and infused products, separate from Schedule 1 marijuana flower.  But why is that news?  Because for the last few years an undercurrent industry of hemp-based CBD oil products have been sold on the internet and across state lines and many thought it was legal.

Why would they ever think that selling marijuana (particularly “no-THC hemp” marijuana) across state lines was legal?  Because of the U.S. Congress.  The U.S. Farm Bill has carved out industrial hemp from the U.S. Controlled Substances Act for the last two years (See Sec. 7606).  To be clear, industrial hemp was defined as marijuana with less than .3 percent THC, and was only permitted for research through state-legal programs (take note: that’s something wholly different than selling CBD oil extracted from hemp in the Emerald Triangle of California and shipping it to my house in Chicago’s suburbs).  This .3% THC cap was seen as the key to circumvent national distribution of CBD oil.  The DEA just stepped up to say “ohhh, no you di’ n’t!!!”

Who Cares?

Who does this effect?  After Jan. 13, it could affect a lot of folks.  To me the biggest impact is on the thousands of people in Southeastern states like Georgia and Alabama that have adopted “CBD oil laws” allowing truly sick and suffering patients to get a “Get out of jail free” card if they are caught with CBD oil that is below small limits of THC.  Those laws don’t allow the patients to grow their own, or buy from a state-licensed grower or dispensary.  Those patients have to somehow get the products out of state, across state lines, which the DEA is now saying triggers a violation under the Controlled Substances Act.

Truth be told this is consistent for the DEA – while Congress continues to chip away at the DEA’s enforcement authority and enforcement funding, the DEA has largely shrugged their shoulders and maintained their authority to crack down on Schedule 1 marijuana – including hemp-based CBD oil.  This rule just formalizes what they’ve always implied.

Other than patients, you have hundreds of businesses extracting oils from domestically- and internationally-grown hemp, and shipping the products across the country.  As you read this they are on the phone with their respective lawyers and investors.

You better believe that Congress cares, with a significant hemp champion found in Senate Majority Leader Mitch McConnell (R-KY).  You also have to wonder how states rights play into all of this when over 80% of the country lives in a state where hemp-based CBD oil or outright medical marijuana is legal.

Keeping Lawyers Employed

So why would the DEA do this?  And why now?  As noted by Vice: “The weed extract CBD doesn’t even get people high — but the DEA continues to treat it like heroin.”

I’ve read a number of legal analyses of this, and there are many theories about what’s going on here.  NC attorney Rod Kight thinks:

“…the DEA has explicitly placed CBD squarely in its crosshairs. Not only does the Rule go to pains to define marijuana extract as an “extract” that “contains cannabinoids”, a category into which CBD unqualifiedly falls, it goes on to address CBD specifically in the Comments section of the Rule. I won’t mince words. The DEA clearly contends that CBD is a Schedule I drug (the most restrictive schedule) under the Controlled Substances Act (“CSA”), regardless of its source or whether it comes in isolate form or in combination with other cannabinoids.

Some experts don’t even think what the DEA did was legal and within their authority.  Colo. cannabis attorney Bob Hoban writes:

“The feeling is that this is an action beyond the DEA’s authority and we believe this is unlawful and we are taking a course of action for our clients. This Final Rule serves to threaten hundreds, if not thousands, of growing businesses, with massive economic and industry expansion opportunities, all of which conduct lawful business in reliance upon the Federal Government also acting pursuant to law, and as ordered by the Ninth Circuit in 2003 and 2004. We will see the Federal Government in court.”

No one is mincing words.  If you want a deeper-dive on the legal side of the ledger (including discussions of Federal law, Federal court cases, and the International Drug treaties, check out those links).  I don’t necessarily agree with all of the arguments, but my final result is the same: this action is likely to be overturned through lawsuits.

Chess Versus Checkers

If the action is so flawed, if Congress is likely to intervene, if the courts are likely to strike this down, if it offends so many state laws and lawmakers, why do this?  Good question.

Anyone reading this blog knows that the DEA has not been an honest broker with regards to this industry, so we have no reason to take them at their word.  Why would they create this new category now, just weeks from a new President, five years after the rule was first proposed?

This was not a benign DEA action, but we don’t know their end game.  Will they start arresting business owners of the biggest hemp-based CBD oil companies?  Maybe.  Will this cause Southeastern states to rethink and expand their low-THC cannabis oil laws?  Ideally.  But who really benefits from this?  Maybe, just maybe, this makes sense in the distorted realities of the cannabis industry.  When you combine the potential FDA approval of GW’s Epidiolex (a “marihuana extract”), and the unenforced proliferation of “CBD oil” knockoffs, perhaps this DEA move is anticipating the next step: FDA-approved marijuana.  Maybe the DEA is looking to shore-up it’s enforcement authority before Congress pushes rescheduling of marijuana.

Maybe the DEA was just going through the motions and a low-level staffer realized that marijuana extracts should have their own DEA code for bureaucratic reasons?  No, no, and no.  This was deliberate, and now we will all wait to see what the DEA’s next move will be.

NY adds chronic pain, MN adds PTSD, Will Illinois Keep Up?

The biggest medical cannabis news since the Nov. 8 elections has been the expansion this week of two of the country’s most restrictive medical cannabis programs: New York and Minnesota.

New York has been on a bender lately, expanding (and improving) their small medical cannabis industry.  Last month New York’s Department of Health added registered nurse practitioners to the list of who can certify medical cannabis patients, and now they will be moving forward with adding physician assistants to the authorized medical professionals that can add a patient to the NY program.  That’s significant, but the move that will propel New York into the category of robust medical cannabis states is the decision to add chronic pain as a stand-alone qualifying condition:

“Medical marijuana is already helping thousands of patients across New York state, and adding chronic pain as a qualifying condition will help more patients and further strengthen the program,” state Health Commissioner Howard Zucker said in a statement.

The health department said it developing a proposed regulatory amendment to the law that took effect in January that legalized medical marijuana in New York in non-smokeable forms and for specific medical conditions.

As many of you know, a defining feature of a robust versus struggling medical cannabis states is the inclusion of chronic pain to the list of qualifying medical conditions.  Chronic pain accounted for over 85% of medical cannabis patients in Colorado before it became recreational-use (almost 130,000 patients in 2013), there are nearly 90,000 medical marijuana patients in Arizona.  Compare that to a state like Illinois with the population of CO and AZ combined, where we have only 12,000 medical patients.  New York has just broken the 10,000 patient mark, but adding chronic pain will exponentially grow their program.  Way to go, NY!

Minnesota’s Department of Health also made the decision this week to add PTSD to their small medical marijuana program.

Minnesota veterans and other residents suffering post-traumatic stress disorder will be allowed to use medical marijuana starting in August, the state’s Department of Health announced Thursday as it expanded the slim list of conditions that qualify for the program.

The state will also loosen its restriction on how medical marijuana can be taken, allowing manufacturers to sell topical patches, creams and lotions come August, in addition to the oils, capsules and vapors that are currently sold. The law passed in 2014 explicitly bans smoking or using the full plant.

This change is welcome news for the two businesses authorized to cultivate and sell the cannabis there, and will help expand the program to those who might medically benefit from cannabis use.  But it won’t blow the doors open like NY’s chronic pain decision.

Where does that leave my home state of Illinois and it’s fledgling medical cannabis program?

We’ve covered the continuing lawsuits from patients trying to add new conditions in Illinois.  Currently, Chronic Post-Operative Pain and Irritable Bowel Syndrome are pending review in Illinois appellate courts, with a number of other conditions awaiting renewed IL Department of Health review after judicial orders.  PTSD was added to Illinois’ program this Fall after agreement by the state legislature and Governor, despite being earlier denied by the IDPH Director following a recommendation by the IL Medical Cannabis Advisory Board to add it.  So what the heck is going to happen?

The obvious part of the answer is that IDPH and IL Governor Rauner are all but certain to oppose expansion of the medical cannabis program.  Unlike MN and NY, there is no reason to think IDPH will voluntarily add new medical conditions, or expand the category of medical professionals that can certify new medical cannabis patients.  The Rauner Administration has been consistent in their opposition (Guv probably dislikes marijuana just a tick less than he hates unions), but I would expect the legislature to push new bills this coming Spring that would address some of these issues.  The Appellate court decisions will be interesting, and I wouldn’t be surprised to see the courts rule in either direction.  As always, stay tuned, keep pushing for change, and thanks for setting a great example, New York and Minnesota!