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CBD is Not A Controlled Substance – The “Source Rule” Applies

An Urgent Request from Bob Hob​an – Hoban Law Group

As you may know, the Hob​an Law Group (HLG) appeared before the Ninth Circuit Court of Appeals (in February, 2018) in San Francisco – Hemp Industry Association, et al. vs. DEA (“HIA Suit”) –concerning the issue of CBD extraction from hemp, and the legality of industrial hemp, generally.  In addition, at the very same time, HLG represented the HIA against the DEA in a contempt action (“HIA Contempt”) relating to the legality of cannabinoids (CBD is one cannabinoid) from non-psychoactive hemp material.

In HIA Suit, the Court issued a ruling which was in effect a home run for the U.S.-based hemp industry.  And in HIAH Contempt, a settlement was mediated between the DEA and the HIA.

Unfortunately, both of these significant events have been misreported.  I am writing you today to make sure there is clear and accurate language utilized in future stories about this issue.

Because of the FDA drug approval decision this week concerning GW Pharmaceuticals Epidiolex medication, we think there is a clear and present danger of wide misreporting and confusing these issues once again.   We’d like to make some suggestions of language and advisement for this very dicey legal dance for your viewers & readers.  This is important as it affects the entire hemp and cannabis industry.

Please read carefully important wording suggestions and clarifications below.

This is a direct request that all journalists do their due diligence and be extremely careful when reporting on this week’s news about GW Pharmaceutical ruling from the FDA ( and not confuse issues about hemp, cannabis, the extraction of CBD oil,and its source and what the Controlled Substance Act does NOT include.

In the HIA Suit, the Court unequivocally determined that hemp (and its derivatives) produced domestically under the ‘Farm Bill’ is not a controlled substance.  In fact, the Court found that the Farm Bill (as it relates to hemp) “preempts” the Controlled Substances Act; Congress created an exception for hemp from the Controlled Substances Act (CSA).  Farm Bill hemp is not a controlled substance.

But what about CBD (or other cannabinoids)?  The DEA’s briefing clearly states that the DOJ does not “seek to control cannabinoids,” and that only cannabinoids derived from marijuana (e.g., flowers and resins of a cannabis plant above .3% THC) are controlled (under the Controlled Substances Act).  And the Court recognized the same.  In other words, CBD (or other cannabinoids) are controlled substances only if derived from marijuana.  Farm Bill hemp is not a controlled substance – without debate.

Taken further, in HIA Contempt, a Stipulation was reached(on May 22, 2018) whereby the DEA issued a directive to federal agencies (Customs and Border Patrol, in particular), which states that cannabinoids are not controlled substances unless they fall under the definition of marijuana, and that the “mere presence of cannabinoids” in any product or derivative does not render it a controlled substance.  Specifically, the DEA issued internal and external directives to Federal agencies, contain agreed-upon language, which clarified that the mere presence of cannabinoids does not render ANY material a controlled substance.  In fact, this directive acknowledges the DEA’s recognition – and advisement to sister agencies to adhere to this.

In other words, cannabinoids (CBD is one) are not controlled substances.

Taken together, these are all very positive things for the hemp industry, and makes it clear that Farm Bill hemp and related cannabinoids are not unlawful, or controlled substances…PERIOD.

In other words, the “Source Rule” governs.  The threshold issue is whether the source of the material is lawfully derived from a lawful portion of the cannabis plant, or from hemp produced under the Farm Bill.  If the source is lawful, then the derivatives or extracts are lawful under the CSA – 100%.

Here are some examples of inaccurate headlines.  Even the industry itself is reporting inaccurately:

Hemp Industry Daily

“Hemp industry won’t appeal DEA case that left CBD status murky”


“CBD Will Continue To Be Illegal Even When Derived From Legal Hemp, Federal Judges State, But There’s a Silver Lining”

As described above, these headlines are not accurate. And we request that all journalists do their due diligence and be extremely careful when reporting on this week’s news about GW Pharmaceutical from the FDA and its relation to hemp and cannabinoids.



Bob Hoban

Bob Hoban

Note: Hoban Law Group intern and Cooley Law Student Tim Saitta assisted with the research for this article.

Bob Hoban is an AV Preeminent rated attorney and seasoned full-service commercial practitioner. He is also Principal and Owner at Solana Business Solutions, which offers comprehensive consulting, management, regulatory, and product solutions services for the entire commercial cannabis industry – serving both THC, CBD and hemp business models.

In 2016, Hoban was selected as a member of the Boulder Colorado inaugural Marijuana Policy Advisory Committee and asked to serve on the Colorado Department of Agriculture’s Industrial Hemp Advisory Committee. Former President of the Cannabis Business Alliance, Hoban was also a member of the Colorado Medical Marijuana Enforcement Division Rules Committee and is currently a member of the National Hemp Association, National Cannabis Industry Association and Colorado Cannabis Chamber of Commerce. In addition, Hoban was involved as a drafter of Colorado’s marijuana regulatory legislation and has drafted over 30 bills for the Colorado General Assembly.

Hoban is a professor at the University of Denver in the Law and Society Program and regularly instructs regarding cannabis and hemp related legal and policy topics. He also teaches government regulations, public policy and research-based policy courses. In 2014, Hoban led a University-sanctioned research practicum concerning the efficacy of marijuana regulation; the first of its kind in the U.S. This course resulted in a publication entitled “Sprung from Night into the Sun: An Examination of Colorado’s Marijuana Regulatory Framework,” published in the December, 2015 edition of the Kentucky Journal of Equine, Agriculture, & Natural Resources Law.

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