By Agustin Rodriguez and Dascher Pasco 

On Tuesday, July 21, 2020, the U.S. Food and Drug Administration (FDA) issued “Cannabis and Cannabis-Derived Compounds: Quality Considerations for Clinical Research, Draft Guidance for Industry.” This is the first draft guidance from the FDA regarding the cannabis industry, and while nothing stated was surprising to those within the industry, it does provide insight into FDA’s current thinking on clinical research in the course of the development of drugs containing cannabis or cannabis-derived compounds. The draft guidance covers topics such as sources of cannabis for clinical research, information on quality considerations and recommendations regarding calculating delta-9 tetrahydrocannabinol (THC) levels. The draft guidance also introduces key FDA regulatory concepts to stakeholders who may be less familiar with the FDA and the FDA’s authorities.

The FDA’s draft guidance begins with a review of the effects of the 2018 Farm Bill, which decriminalized hemp, defined as cannabis with a concentration of THC at or below 0.3 percent on a dry weight basis. Accordingly, hemp is now legal at the federal level and subject to the control of the United States Department of Agriculture (USDA) and FDA. Marijuana, defined as cannabis with more than 0.3 percent THC, remains federally illegal and is subject to the Controlled Substances Act (CSA) and the authority of the Drug Enforcement Administration (DEA) and other criminal law enforcement agencies.

With that background in mind, the draft guidance makes it clear that research on cannabis will be held to the same baseline regulatory standards as research on any other botanical raw material, drug substance or drug product. Accordingly, existing FDA guidance governing those issues should be consulted. While cannabis is held to the same regulatory standards as other botanical products in many respects, the draft guidance does emphasize certain distinctions. First, it identifies specific principles and documents for pursuing drug development using cannabis or cannabis-derived compounds. These resources emphasize the need for consistency among products, safety considerations and other requirements governing botanical materials as well as drugs and devices.[1]Second, it emphasizes that published studies should not be relied upon in place of a full toxicological program. This requirement highlights the FDA’s desire to ensure a thorough understanding of the effects of cannabis in all contexts. Third, it calls out distinctions in research requirements for hemp and marijuana.

The FDA’s draft guidance notes that, for many years, cannabis could only be sourced from the National Institute on Drug Abuse (NIDA) Drug Supply Program (DSP), but as a result of the removal of hemp from the CSA, researchers can source hemp from cultivators who produce their product pursuant to a state, tribal, or other USDA approved plan. As for marijuana, NIDA DSP remains the only domestic federally legal source of cannabis over the 0.3 percent THC limit for clinical research; however, the DEA is in the process of allowing additional growers to register with the agency to produce and distribute cannabis for research purposes.

This is not the first federal guidance that highlights the DEA’s continued role in the regulation of cannabis due to the continued illegality of marijuana. The USDA’s interim final rule required that hemp growers have their product tested by a DEA-registered lab and that non-compliant plants were to be disposed of through a DEA-registered reverse distributor or law enforcement. While the USDA delayed these requirements, they were not abandoned, and this FDA draft guidance reinforces that the DEA will continue to play a key role in the regulation of the cannabis industry to ensure that hemp products do not exceed the 0.3 percent THC concentration threshold.

Further highlighting the FDA’s emphasis on the importance of the 0.3 percent THC concentration limit is the draft guidance’s relatively detailed discussion of what constitutes hemp. The FDA states unequivocally that activities related to growing and manufacturing cannabis for use as an investigational drug for research must comply with CSA and DEA requirements. The draft guidance requires that THC levels be tested at each phase of development during the research process, highlighting concerns about THC levels not only in raw forms of cannabis (i.e. hemp and marijuana plants), but in all forms of cannabis-derived products. This includes, for example, where a manufacturing process generates materials, such as intermediates or accumulated by-products, that exceed the 0.3 percent THC threshold even if the source material or finished product does not exceed the threshold.

The practical result of this requirement is that cannabis and cannabis derivatives must maintain a THC level at or below 0.3 percent at all times, and with no identified margin of error. This can be difficult to ensure because THC levels are susceptible to outside influences, some of which may be beyond growers, researchers, or manufacturers’ control. It also answers in the negative a question that some have been asking: is a product that contains THC in excess of 0.3 percent, that itself comes from extracts derived from legal hemp, still lawful? Section 297A of the 2018 Farm Bill defines “hemp” as “the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not,with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis” (emphasis added). The language of the definition appears to require hemp derivatives to also maintain a THC level at or below 0.3 percent.

Given the demand for cannabis and cannabis derivatives is growing, the FDA’s focus on the level of THC at every step of the research process will not comfort investors or researchers. Because researchers are required to test THC levels in their products throughout the research process, there is a higher likelihood that they will run across a “hot” product incident.  Researchers encountering levels of THC above the 0.3 percent threshold are encouraged by FDA to contact the DEA in advance. The suggestion to contact DEA rather than to immediately dispose of the product in a manner consistent with the guidance found in the USDA interim rule suggests that DEA may be willing to negotiate certain process controls and “hot” product incidents may not result in the immediate destruction of the product.

Short of that, the draft guidance requirement for testing of cannabis and cannabis-derivatives throughout the research process drives more cost into supply chains and study controls because it requires researchers to strictly control for THC in product at all points along the research protocol. This must be done both to avoid contamination of their data and to avoid potential criminal liability. As a result, investors are forced to contend with both a higher price tag on the research and the threat of the destruction of the product.

Assuming implementation of this draft guidance, researchers should ensure they conduct appropriate due diligence when sourcing their materials. This includes reviewing growers’ licenses and testing results to make sure all raw cannabis materials are compliant with USDA requirements. Furthermore, given the suggestion that DEA may be willing to negotiate certain controls, appropriate protocols should be in place to contact DEA in the event a products tests above the 0.3 percent level.

Ultimately, FDA’s draft guidance does not necessarily provide comfort for researchers and investors hoping to reduce the risk of investing behind research in cannabis and cannabis-derivatives. Nevertheless, additional clarity into FDA’s expectations, even if incremental, helps industry put in place testing and due diligence to mitigate that risk. The draft guidance comment period is open until September 21, 2020. It is likely that, as with the USDA interim rule, we will see industry comments pushing back on the strict THC threshold level that leaves so little room for error in the cannabis supply chain.

About The Co-Author

Dascher Pasco is a member of the firm’s Government and Regulatory group. She earned her Juris Doctor from the University of Virginia School of Law where she served as the president of Virginia Law Women and the Jewish Law Student Association, and an editor of the Virginia Journal of International Law.

After law school, Dascher clerked for the Honorable Norman K. Moon of the United States District Court for the Western District of Virginia.

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[1]Specifically, FDA identifies a number of chapters found in the United States Pharmacopeia and the National Formulary governing tests, equipment, analytical methods for drug quality aspects such as identification, excipients, impurities, and microbiological controls for sterile as well as nonsterile products. FDA also highlights a number of rules and regulations regarding drugs and devices including those governing container closure systems.