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Look, But Don’t Touch: Big Box Stores And ‘Hemp CBD’

Media recently reported on Target’s short-lived effort at selling cannabis-based CBD products online. By the end of the day on which the reporting was made, the major retailer had already removed the product from its website. The Phoenix New Times quoted Target spokesperson Kate Decker as saying, “We started carrying Charlotte’s Web hemp extract items last week on Target.com. After further review, we have decided to remove it from our assortment.”

Many online retailers (including WalMart, Groupon, and Amazon) sell or have sold CBD online. This is in part because of the complex legal status of CBD. The Drug Enforcement Agency’s (DEA) current stance is that CBD (and other cannabinoids derived from cannabis) is a Schedule I substance under the Controlled Substances Act (CSA). Last year, the DEA created a rule defining “marihuana extract” as an extract “containing one or more cannabinoids derived from any plant of the genus Cannabis,” as marijuana, a Schedule I controlled substance. Use of “any” means it applies to any derivative of the cannabis plant, including CBD and other cannabinoids found in cannabis. This far-reaching definition purports to make illegal parts of the cannabis plant that were seemingly legal.

Setting aside that DEA rule, there are three scenarios in which CBD is arguably legal even under federal law. The first being when CBD is derived from the “mature stalk” of the cannabis plant, because the CSA’s definition of marijuana “does not include the mature stalks of such plant, fiber produced from such stalks, oil or cake made from the seeds of such plant, any other compound, manufacture, salt, derivative, mixture, or preparation of such mature stalks (except the resin extracted therefrom), fiber, oil, or cake, or the sterilized seed of such plant which is incapable of germination.” 21 USC § 802(16).

The DEA clarified that its new CBD rule does not include those portions of the plant specifically exempt from the CSA’s definition of marijuana, but it also maintains that products containing any more than nominal amounts of CBD can be derived from the mature stalks and would therefore constitute unlawful marijuana derivatives.

The second scenario is when CBD is extracted from industrial hemp lawfully grown in compliance with section 7606 of the 2014 U.S. Farm Bill. The Farm Bill allows states to enact pilot programs for cultivating hemp for research and scientific purposes without a permit from the DEA. Under the Farm Bill, CBD extracted from hemp should be legal in the state in which it was derived, though the sale of this product in other states is not explicitly allowed under the Farm Bill.

The final scenario is when CBD is derived from imported hemp. In the early 2000s, two cases out of the Ninth Circuit, Hemp Indus. Ass’n v. DEA, 357 F.3d 1012 (9th Cir. Cal. 2004) and Hemp Indus. Ass’n v. DEA, 333 F.3d 1082 (9th Cir. 2003) determined the DEA cannot restrict or outlaw possessing or using hemp products simply because they contain trace amounts of THC. This is because some portions of the cannabis plant are explicitly outside the scope of the CSA, and the DEA was not permitted to expand its scope of enforcement to encompass those CSA-exempt parts of the plant.

At the time of these rulings, the Farm Bill did not exist, so these rulings only applied to hemp imported from outside the U.S. Cultivation of hemp in the United States (outside of the Farm Bill) requires a permit from the DEA (which the agency pretty much never issues to anyone). However, these Ninth Circuit holdings could also apply to hemp grown pursuant to the Farm Bill, making CBD from Farm Bill-grown hemp with only trace amounts of naturally occurring THC lawful under the Ninth Circuit’s ruling as well.

The Hemp Industries Association sued the DEA over the “marijuana extract” rule and that case is still pending. Until that case is decided, uncertainty remains as to the legality of CBD products. The DEA may very well lose in this newest lawsuit because its rule appears to conflict with the Farm Bill and the Hemp Industry cases from the early 2000s.  Nonetheless, despite potential legal flaws, the DEA’s marijuana extract rule is currently in place, and anyone who distributes “marijuana extracts,” including CBD, is a potential target of the DEA. This is likely why online retailers like Target have flirted with selling CBD products online, but usually end up pulling the products from shelves.

Hilary Bricken

Hilary Bricken

Hilary Bricken is an attorney at Harris Bricken, PLLC in Los Angeles and she chairs the firm’s Canna Law Group. Her practice consists of representing marijuana businesses of all sizes in multiple states on matters relating to licensing, corporate formation and contracts, commercial litigation, and intellectual property. Named one of the 100 most influential people in the cannabis industry in 2014, Hilary is also lead editor of the Canna Law Blog. You can reach her by email at [email protected].

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