By Arthur Hoffmann and Chris Gismondi

Cannabidiol (CBD) is a compound found in the plant Cannabis sativa L. and is thought to have therapeutic properties. However, CBD derived from marijuana is an illegal controlled substance under the Controlled Substances Act, 21 U.S.C. §§801, et seq.(CSA). This has led to growing interest in the use of genetic engineering to produce synthetic CBD as well as other cannabinoids.  Some of the efforts involve genetic modification of the cannabis plant itself. Others genetically modify microorganisms resulting in organisms able to produce CBD in large quantities without the expense of growing a Cannabis sativa L. crop.  However, the legal status of synthetic CBD produced by these bioengineered organisms is not entirely clear.

CBD is a cannabinoid, a class of naturally occurring compounds found in the Cannabis sativa L. plant that bind to and act upon specific cell surface receptors present in the central nervous system.  More than 100 cannabinoids have been identified, the most abundant of which are delta-9-tetrahydrocannabinol (THC) and CBD.  THC is psychoactive and is responsible for the cannabis “high.”  CBD, as well as other cannabinoids, is generally considered to be non-psychoactive.  Marijuana is a variety of the Cannabis sativa L. plant which contains high concentrations of THC, as compared to hemp which is a variety of the plant with very small concentrations of THC.

Federal law relating to CBD is complicated and evolving.  Departing from long-established law, the Agriculture Improvement Act of 2018 (Public Law 115-334) (the Farm Bill) makes the cultivation of hemp, and CBD extracted from hemp, legal at the federal level.  This, however, does not address how CBD maybe sold.

The US Food and Drug Administration (FDA) retains the authority to regulate products containing cannabis or cannabis-derived compounds pursuant to the Food, Drug, and Cosmetic Act, 21 U.S.C. §§301, et seq. and thePublic Health Service Act, 42 U.S.C. §351. CBD derived from marijuana remains a controlled substance under the CSA.  Marijuana is listed as a Schedule I drug, the highest controlled substance category under the CSA, 21 C.F.R. 1308.11(d) (23)) and the manufacture, possession, distribution, or dispensing of marijuana is unlawful.  21 U.S.C. §§841(a), 844.  The CSA definition of marijuana focuses on the Cannabis sativa L. plant itself, rather than on any psychoactive properties it or its components may have, and provides as follows:

‘all parts of the plant Cannabis sativa L., whether growing or not; the seeds thereof; the resin extracted from any part of such plant; and every compound, manufacture, salt, derivative, mixture, or preparation of such plant, its seeds or resin.  Such term 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 U.S.C. §802 (16).’

THC is also separately and specifically identified in the CSA as a Schedule I controlled substance. THC is defined as “[m]eaning tetrahydrocannabinols naturally contained in a plant of the genus Cannabis (cannabis plant), as well as synthetic equivalents of the substances contained in the cannabis plant, or in the resinous extractives of such plant, and/or synthetic substances, derivatives, and their isomers with similar chemical structure and pharmacological activity to those substances contained in the plant….” 21 C.F.R. 1308.11(d) (31).  Thus, a synthetic cannabinoid that mimics the effect of THC is encompassed by the definition of THC and is itself a Schedule I controlled substance.  CBD and other cannabinoids are not separately identified in the CSA.

In December 2016, in an effort facilitate more accurate tracking of compounds used in scientific and medical research and to bring U.S. drug definitions in line with other countries, the US Drug Enforcement Administration (DEA) issued a rule establishing a new Controlled Substance Code Number (7350) for “marijuana extract.”  That rule makes extract a Schedule 1 controlled substance and provides as follows:

Marijuana Extract — Meaning an extract containing one or more cannabinoids that has been derived from any plant of the genus Cannabis, other than the separated resin (whether crude or purified) obtained from the plant.

This new rule provoked questions from the public, leading the DEA to issue a “clarification.”  In its clarification, the DEA retained the focus on the Cannabis sativa L. plant and explained that the new drug code “does not include materials or products that are excluded from the definition of marijuana set forth in the [CSA].”  Rather, the DEA stated, the rule “includes only those extracts that fall within the CSA definition of marijuana.”

The DEA went on to explain that the rule describes “a subset of what has always been included in the CSA definition of marijuana.”  As noted above, that definition is focused on the Cannabis sativa L. plant itself and the clarification went on to note “that there may be some misunderstanding about the source of cannabinoids in the cannabis plant.”  This led the DEA to identify the following “botanical considerations:”

As the scientific literature indicates, cannabinoids, such as tetrahydrocannabinols (THC), cannabinols (CBN) and cannabidiols (CBD), are found in the parts of the cannabis plant that fall within the CSA definition of marijuana, such as the flowering tops, resin, and leaves.  According to the scientific literature, cannabinoids are not found in the parts of the cannabis plant that are excluded from the CSA definition of marijuana, except for trace amounts (typically, only parts per million) that may be found where small quantities of resin adhere to the surface of seeds and mature stalk. Thus, based on the scientific literature, it is not practical to produce extracts that contain more than trace amounts of cannabinoids using only the parts of the cannabis plant that are excluded from the CSA definition of marijuana, such as oil from the seeds…. However, as indicated above, if a product, such as oil from cannabis seeds, consisted solely of parts of the cannabis plant excluded from the CSA definition of marijuana, such product would not be included in the new drug code (7350) or in the drug code for marijuana (7360), even if it contained trace amounts of cannabinoids.  [footnotes omitted]

In view of the foregoing, prior to passage of the Farm Bill, the DEA clearly considered cannabis plant-derived CBD, as well as other plant-derived cannabinoids, to be a controlled substance. The fact that CBD is generally considered to be non-psychoactive did not alter the DEA’s analysis.

A bioengineered microorganism that produces CBD would appear to avoid the problem posed by the CSA definitions of “marihuana” or “marihuana extract” as it is not derived from the cannabis plant.  The term “manufacture,” which is used as part of the definition of marijuana (21 U.S.C. 802(16)), would not seem to alter this conclusion.  The CSA defines the term “manufacture,” in pertinent part, as “the production, preparation, propagation, compounding, or processing of a drug or other substance, either directly or indirectly or by extraction from substances of natural origin, or independently by means of chemical synthesis or by a combination of extraction and chemical synthesis….”  21 U.S.C. 802(15).  The CSA’s definition of marijuana requires that the “manufacture” must be of the cannabis “plant, its seeds or resin;” a bioengineered microorganism that produces CBD does not meet that description.

The question remains, however, whether a bioengineered microorganism that produces CBD that is chemically indistinguishable from CBD derived from marijuana can be considered an analogue of “marijuana extract” and thereby be determined to be a “controlled substance analogue.”  The CSA treats a controlled substance analogue the same as the controlled substance itself.  Controlled Substance Analogue Enforcement Act, 21 U.S.C. §813.  (“A controlledsubstance analogue shall, tothe extent intended for human consumption, be treated, for the purposes of any Federal law as a controlled substance in schedule I.”).

A controlled substance analogue is defined in the CSA, in pertinent part, as a substance,\

• the chemical structure of which is substantially similar to the chemical structure of a controlled substance in schedule I or II;
• which has a stimulant, depressant, or hallucinogenic effect on the central nervous system that is substantially similar to or greater than the stimulant, depressant, or hallucinogenic effect on the central nervous system of a controlled substance in schedule I or II; or
• with respect to a particular person, which such person represents or intends to have a stimulant, depressant, or hallucinogenic effect on the central nervous system that is substantially similar to or greater than of a controlled substance in schedule I or II. 21 U.S.C. §802 (32).

The foregoing definition has an inherent ambiguity, due to the absence of a conjunctive “and” or a disjunctive “or” between criteria (i) and (ii).  However, courts examining this definition are in general agreement that the definition requires meeting criterion (i) and either criteria (ii) or (iii).  SeeU.S. v. Berger, 553 F.3d 1107, 1110 (8th Cir. 2009); U.S. v. Turcotte, 405 F.3d 515, 522-23(7th Cir. 2005); U.S. v. Roberts, 363 F.3d 118, 121 (2d Cir. 2003); U.S. v. Hodge, 321 F.3d 429 (3d Cir. 2003).

The first step in evaluating whether CBD produced by a bioengineered microorganism might be considered a “controlled substance analogue” is to determine whether that CBD has a chemical structure that is “substantially similar” to that of a marijuana extract.  21 U.S.C. §802(32 (i)).  This is a question of chemistry requiring an expert opinion.  If the bioengineered CBD is found to have a chemical structure “substantially similar” to that of a marijuana extract, the analysis turns to whether its chemical structure is “substantially similar” to an illegal marijuana extract.  As noted above, the CSA definition of “marijuana” excludes certain parts of the cannabis plant and materials produced therefrom.  The DEA’s “clarification” of its rule addressing marijuana extract makes clear that if a product produced from extract consisted of parts of the plant excluded from the CSA definition of marijuana, that product would not be considered either “marijuana extract” or “marijuana” itself.  The question then becomes whether the chemical structure of the bioengineered CBD is (a) “substantially similar” to marijuana extract derived from parts of the cannabis plant within the definition of marijuana; (b) substantially similar to extract derived from parts of the plant excluded from that definition; or (c) whether that distinction can even be made (again, a question requiring an expert opinion).

Even if a bioengineered CBD met criterion (i) of 21 U.S.C. §802(32), however, it would not be considered to be a controlled substance analogue unless it also met  criterion (ii) of that section, ie, if it had “a stimulant, depressant, or hallucinogenic effect on the central nervous system” 21 U.S.C. §802(32 (ii)). With its focus on what a particular person represents or intends, criterion (iii) of section 802(32) is not relevant to the analysis.  As CBD derived from cannabis is not considered to have “a stimulant, depressant, or hallucinogenic effect” it is reasonable to expect that a bioengineered CBD with like properties would not have that effect.  Accordingly, it seems likely that a bioengineered CBD would not be found to be a “controlled substance analogue” and would not be considered a controlled substance under the CSA.

The treatment of hemp in the Farm Bill provides additional support for the proposition that bioengineered CBD would not be considered a controlled substance under the CSA.  Until passage of the Farm Bill, hemp was categorized as a Schedule I substance under the CSA, which, as noted above, defined illegal marijuana by reference to parts of the Cannabis sativa L. plant. Thus, CBD derived from hemp was a controlled substance.  The Farm Bill removes hemp, defined as the Cannabis sativa L. plant and “any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids… whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis” from the list of controlled substances under the CSA  This definition shifts the focus from the Cannabis sativa L. plant itself to the THC concentration of the plant, as a result of which CBD derived from hemp is no longer a controlled substance.

If CBD derived from hemp, which is chemically identical to CBD derived from marijuana, is legal under federal law because it does not derive from the THC-containing marijuana plant, it follows that synthetic CBD produced by a bioengineered organism and not from a plant at all should not be considered a controlled substance.

Learn more about this developing area of law by contacting either of the authors.

About The Authors

Arthur Hoffmann, Partner, Litigation, Arbitration and Investigations focuses on complex product liability litigation and the provision of product liability advice, both internationally and in the US. As part of his work in defending manufacturers of tobacco and vape products, he has extensive experience working with scientific and medical experts in a variety of disciplines. He can be reached at [email protected].

Chris Gismondi, is Of Counsel in the Litigation & Regulatory Group of DLA Piper LLP.  Chris regularly defends clients in high-stakes, complex commercial litigation and corporate governance disputes, routinely defending corporate clients against claims for breach of fiduciary duty, breach of contract, violations of the securities laws, and product liability.  He handles cases before state and federal trial and appellate courts, arbitrators and mediators. Chris can be reached at [email protected].