A Colorado-based hemp trade organization is suing the Drug Enforcement Administration over a new laboratory-testing policy that members of the hemp industry fear could hurt future CBD production.
The Hemp Industries Association (HIA) and RE Botanicals, a hemp-product manufacturer out of South Carolina, filed a lawsuit against the DEA in the U.S. Court of Appeals for the District of Columbia Circuit on September 18, asking the court to review the DEA's interim final rule in response to the 2018 Farm Bill, which legalized hemp at the federal level.
The rule, announced and implemented in August, clarified that hemp products exceeding the federal limit of 0.3 percent THC at any time are a Schedule I substance. The HIA believes that the rule's language could be interpreted to include hemp extracts during the manufacturing process.
When extracting CBD from hemp, other cannabinoids, including THC — the cannabis plant's main intoxicating compound — are also extracted and concentrated. According to hemp extractors such as RE Botanicals, the 0.3 percent THC limit is almost always exceeded during the production process, and then the THC is removed from the final product and disposed of before lab testing.
Under the DEA's new rule, hemp and CBD companies worry they're now breaking federal laws during their standard manufacturing process, which could force hemp extractors "out of business overnight," RE Botanicals CEO Janel Ralph says.
There haven't been any reports of DEA crackdowns since the rule was implemented, and the DEA has stated it doesn't plan to start enforcement actions. However, HIA president Rick Trojan argues that the rule should be changed "to ensure hemp remains an agricultural crop, as Congress intended."
"When Congress passed the 2018 Farm Bill, it explicitly carved hemp and its derivatives out of the Controlled Substances Act so that hemp can be regulated as an agricultural commodity," Trojan says in a statement. "The DEA’s interim final rule could create substantial barriers to the legal manufacturing of hemp-derived products, a critical component of the hemp supply chain, and devastate the entire hemp industry."
The HIA is represented by Vicente Sederberg, a Denver-based law firm that specializes in hemp and marijuana policy, as well as attorneys at Yetter Coleman LLP in Texas. Hoban Law Group, another firm of Denver-based attorneys specializing hemp, and Knight Law Office of North Carolina are representing RE Botanicals.
According to the suit, the DEA is overstepping its rulemaking authority by inserting itself into lab-testing directives; the United States Department of Agriculture, the department designated by the Farm Bill for regulating industrial hemp production, should be making that call in conjunction with respected state ag departments, the suit suggests. It also argues that acting DEA administrator Timothy Shea issued the rule without giving hemp industry stakeholders enough notification.
"The DEA implemented this rule without following proper rulemaking procedures, such as providing the public with notice and the opportunity to comment," says Shawn Hauser, Vicente Sederberg attorney and chair of the firm's hemp and cannabinoids practice.
This isn't the first point of contention between the hemp industry and the DEA since the Farm Bill passed. The USDA created a set of federal hemp laws but also allowed states to craft their own hemp rules, subject to USDA approval. Before the Colorado Department of Agriculture submitted a plan in June, hemp farmers and state officials were pushing for less restrictive rules than what the USDA had proposed, including the DEA's involvement in THC potency testing.
The USDA rejected that first draft in August. Neither the USDA nor the CDA would comment on why the original draft is now undergoing revisions.
Here's the HIA lawsuit:
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