Is CBD Legal?: The Complicated Legal World of Hemp & Cannabis CBD

Written by Orion Inskip, Attorney at Gleam Law, PLLC.

Cannabis laws are rapidly evolving across the world. This has been no less true when it comes to cannabidiol, more popularly known as CBD. CBD is a naturally occurring compound found in cannabis that does not have the psychoactive effect typically associated with marijuana, which is caused by tetrahydrocannabinol (THC). It has, however, been purported to provide a host of benefits, including reducing anxiety, alleviating some forms of pain, and helping prevent seizures. The current legal reality of CBD is complicated and varied, both domestically state-to-state in America and from country to country.

First, although CBD comes from the Cannabis sativa plant, the law separates the Cannabis plant into two subclasses based either on the THC level in the plant or on the parts of the plant, depending on the definition. These subclasses are marijuana (Marihuana) and hemp. Under most State Marijuana laws, marijuana is considered cannabis with more than 0.3% THC. Hemp, on the other hand, may either be the parts of the Cannabis plant excluded from the definition of Marijuana in the Controlled Substances Act (“CSA”), or the whole Cannabis plant with less than 0.3% THC. CBD may be extracted from either hemp or marijuana.

Broadly speaking, under state marijuana laws, CBD derived from marijuana can be broken down into three major categories: fully legal, medicinally legal, and strictly controlled. CBD is fully legal, meaning it is available for purchase to the general public, in only nine states. This leaves thirty-seven states that allow CBD for qualifying medical conditions, and four states in which CBD is strictly controlled (illegal). An extreme minority of countries have fully legalized CBD and include Colombia, Jamaica, Mexico, the Netherlands, Spain, and Uruguay. Significantly more countries allow medical CBD (Australia, Canada, Chile, Czech Republic, France, Guam, Israel, Macedonia, Puerto Rico, Romania, United Kingdom), but many countries still classify CBD as marijuana or have not specifically regulated it.

As noted above, hemp and marijuana are both the same species of plant: Cannabis sativa. However, hemp contains a significantly lower concentration of THC. To be classified as hemp, the plant must contain less than 0.3% THC by weight. With this low of a level of THC, hemp is not psychoactive and consumption of it or its derivatives doesn’t produce the high typically associated with marijuana. In marijuana, THC levels can be significantly higher (reportedly as high as 30% by weight). Many states that allow medical marijuana also place limits on the level of THC content allowed in the final extract.

In the United States, the 1970 Controlled Substances Act (CSA) classifies psychoactive marijuana as a schedule one drug; this is the most restrictive classification a drug can receive. Because of this classification, which specifically controls the leaves and resin from which CBD is derived, CBD was illegal for many years. While the CSA does have a specific exemption for parts of the plant that CBD may be derived from, such as the mature stalks, the legal view became that to get the (legal) mature stalks, one would have had to have been in possession of the (illegal) immature components of the plant. This essentially forced the production of actual hemp out of the United States and made the market rely on importation of fabrics and derivatives of the mature, CSA-excluded parts of the plant.

Starting in 2003, a series of three lawsuits brought against the DEA by the Hemp Industries Association (HIA), a group of companies who bought and sold consumable products containing sterilized hemp seeds and oil, helped further define the legality of CBD in the US. The DEA had banned all naturally occurring THC, even that found in hemp seeds and oil. In the first case on appeal, the court held that the HIA had grounds to object and that the DEA had failed to follow the requirements in the Administrative Procedure Act (APA). The DEA’s first attempt to ban hemp containing any THC failed on procedural grounds.

In 2004, the HIA brought a second suit against the DEA. This time, the DEA had properly enacted rule changes prohibiting the possession or sale of products containing hemp seed or oil illegal if they contained even trace amounts of non-psychoactive THC. In the end, the court of appeals held that the DEA’s position directly contravened the unambiguously expressed intent of Congress. In essence, by including the non-psychoactive THC found in hemp products with the psychoactive THC found in marijuana (or synthetic THC), the DEA had gone against what Congress had intended when they included an exception in the Controlled Substances Act. The final holding was that the DEA’s regulation could only apply to synthetic THC and naturally occurring THC from plants fitting the schedule one definition of “marijuana.” This ruling made an unequivocal space for the mature stalks and seeds from Cannabis.

The Agriculture Act of 2014 granted states the ability to regulate their own approaches growing, cultivating, or marketing hemp. In essence, states were able to allow hemp to be grown under Industrial Hemp Pilot Programs. In 2016, the DEA, FDA, and USDA released a statement saying the hemp was not, in their opinion, excluded from the CSA and that only the parts of the plant excluded from the CSA were open to processing, marketing, and sale.

In 2018, the HIA brought a third lawsuit against the DEA, objecting to another DEA rule change. It was dismissed on procedural grounds and has no definitive legal effect. However, the court did go out of their way to say that since the 2014 Agricultural Act came after the DEA’s proposed rule, the Agricultural Act supersedes the DEA’s new marijuana extract code. The DEA tried to clarify, ultimately softening their position on imported hemp by saying it was not a controlled substance. However, the DEA was silent on the topic of hemp grown domestically through the Industrial Hemp Pilot Programs, which leaves the legal status of domestic hemp, and CBD derived from it, up in the air.

Currently, the saving grace for domestic hemp and hemp-based CBD is in the Consolidated Appropriations Act. This act prohibits the Department of Justice or Drug Enforcement Agency from spending money to prohibit the transportation, processing, sale, or use of industrial hemp, grown in accordance with the 2014 Agricultural Act, within or outside the state where the hemp was grown or cultivated. In essence, even if the DEA wanted to intervene with hemp grown under a state’s pilot program, they could not because they can’t spend any federal funds on it.

Currently, the Hemp Farming Act of 2018 is set to redefine hemp and legalize it for agricultural production. Importantly, if passed, the change in definition would not only remove hemp (with less than .3% THC by weight) from the CSA, but also give hemp farmers access to water rights, federal grants, and crop insurance. The changes to the industry would be staggering, opening the market to potentially billions of dollars of demand.

As the popularity of CBD grows domestically and internationally, it seems inevitable that it will become less restricted and more available. CBD derived from hemp is, arguably, legal across the nation, while CBD derived from marijuana is only legal in a few states. The market exists and as knowledge of the benefits of CBD grows, so too will demand and, hopefully, legal access.