Grading the Presidential Candidates on Marijuana: Michael Bloomberg

Last fall, we ran a 13-part series taking a hard look at each of the 2020 presidential candidates’ history and views related to marijuana. We assigned each candidate a letter grade corresponding with our analysis (for the final summary post, go here). In that popular series, grading criteria was as follows:

  • Current stance on marijuana: What have they recently said about marijuana legislation? When did they adopt this stance? We awarded higher grades to candidates who currently support legalizing marijuana and even better grades if they have openly supported legalization for more than just the past couple years.
  • Website and social media: Did the candidate include marijuana on their website? How often do they mention marijuana on social media? We used the candidates’ websites and social media as a litmus test of their dedication to the legalization of marijuana. While most candidates have expressed support for legalization, some only speak on the issue when prompted or have very few statements on the matter. If a candidate does not actively advocate for marijuana, we doubt their conviction.
  • Past legislative history: How many marijuana-related bills did this candidate introduce, sponsor or sign? Did this candidate legislate the War on Drugs? How much opportunity did this candidate have to legislate bills? We considered the legislative history of each candidate to determine whether they would be likely to take real action to legalize marijuana as president.
  • Past rhetoric: What has the candidate said about marijuana over the course of their political career? What about the War on Drugs? The views of most candidates have evolved over time, but we gave lower grades to candidates with a history of strong anti-marijuana remarks.

Many candidates have since dropped out of the race, but a handful remain. After we concluded the series, businessman and former NYC mayor Michael Bloomberg announced his entry in to the race. Bloomberg’s summary is below.

Grade: D-

Stance on marijuana: This past December, Bloomberg’s campaign told the Wall Street Journal that he supports the decriminalization of marijuana. However, he does not mention marijuana reform on his social media nor on his campaign website. Bloomberg’s website paints the former NYC mayor as a long-time advocate for criminal justice reform, but his past rhetoric and legislative history tell a much different story.

History with marijuana legislation: In 2001, Bloomberg was elected mayor of New York City as a Republican. He won reelection in 2005 and again in 2009. In 2018, Bloomberg registered as a Democrat and in November of 2019 his announced he was running for president.

The topic of cannabis was first addressed publicly by Bloomberg in 2001, when he was asked in an interview if he had smoked marijuana. Bloomberg replied: “You bet I did. And I enjoyed it.”

Despite this lighthearted admission, Bloomberg was opposed to marijuana legalization throughout the course of his mayoral career, in the past referring to cannabis as a “narcotic”, asserting that it reduces IQ, and refusing to acknowledge the possibility of its medicinal use. His time as mayor also coincided with a spike in arrests for cannabis possession. In fact, the number of arrests for possession under Bloomberg exceeded that of the previous three mayors combined. In 2011, Bloomberg also opposed a bill proposed by state senators that reduced the penalty for possession of small amounts of cannabis.

To his credit, Bloomberg softened his stance on marijuana a bit in 2012, when he vocally supported a proposal to end arrests for possessing marijuana in public view. In 2013, the then-mayor also supported a proposal that would change marijuana possession from a misdemeanor to a violation.

Bloomberg’s presidential campaign website presents his time as mayor as successful at criminal justice reform, citing reduced murder rates and reduced incarceration during his time as mayor. Arguably the most memorable aspect of Bloomberg’s mayorship, however, was the expansion of New York City’s “stop-and-frisk” program, which allowed police officers to detain and search members of the public without probable cause. This policing strategy undoubtedly resulted in many arrests and convictions for marijuana possession.

In 2013, a judge ruled that the implementation of this program by the NYPD to be unconstitutional, as blacks and Latinos were disproportionately frisked. Despite this express finding of racial profiling, Bloomberg long maintained his support for the program, vetoing policing reform bills as mayor and claiming that stop-and-frisk was an effective method of crime reduction years after he had left office. This past November, Bloomberg finally admitted that stop-and-frisk had done more harm than good, but this apology comes far too late.

Conclusion: We award Bloomberg a “D-” grade because he does not support the legalization of marijuana and because of his history of anti-marijuana rhetoric and policies. As mayor of New York, Bloomberg actively obstructed attempts to reform the criminal justice system and fully supported a racist policing tactic, even after a judge ruled that its implementation had been unconstitutional.

The Sale of CBD Foods Is Legal in the UK (For Now)

Last week, the Food Standard Agency (“FSA”), the agency responsible for protecting public health in relation to food in England, Wales and Northern Ireland (collectively, the “UK”), cleared a path for the sale of CBD-infused food for the next 12 months.

Specifically, the FSA is giving the CBD industry until March 31, 2021 to submit valid novel food authorization applications to ensure these products meet specific safety standards. Following the March 31, 2021 deadline, only products for which a valid application has been submitted will be allowed to remain on the market.

Although the UK recently severed its ties with the European Union, the FSA has opted to align its policy with that of the European Food Safety Authority (“EFSA”). The EFSA guidance on cannabinoids strongly echoes the U.S. Food and Drug Administration (“FDA”)’s in that it mandates that all food products infused with hemp or its derivatives should receive a pre-market approval under the European Union “novel food” regulation because these products were not significantly used as a food or food ingredient before May 15, 1997.

According to the reporting of Hemp Industry Daily, CBD companies wishing to sell into the UK market will send approval plans to the EFSA through the end of 2020, at which point all applications will be transferred to the FSA.

So for now, the sale of CBD-infused foods is lawful in the UK so long as these products are:

  1. Properly labeled, including free of health claims;
  2. Safe to consume; and
  3. Do not contain THC or other controlled substances.

Despite the fact that the FSA gave the green light on the sale of CBD-infused foods, the agency also warned consumers about its potential side effects.

Based on a scientific report issued by the country’s Committee on Toxicity of Chemicals in Food, Consumer Products and the Environment (“COT”), the FSA guidelines warn pregnant and nursing women “not to consume CBD products” and recommends that healthy adults limit their daily dosage to no more than 70 milligrams, which is the equivalent of 28 drops of 5% CBD oil.

After reviewed scientific data of Epidiolex previously used by European and foreign health authorities, including the FDA, for the approval of the drug, the COT concluded that because the data was intended for pharmaceutical and not over-the-counter use, the “trade-off between risks and benefits that does not apply to food.”

Therefore, in drafting this new policy, the FSA opted for a pragmatic approach that balances the consumer demand for CBD-infused food products with the protection of public health and provides much needed clarification about the legality of selling and marketing CBD-infused foods. Nevertheless, the guidelines also create some serious challenges for the industry. Indeed, the novel food application process is a demanding and onerous process. Unless a blanket authorization will cover each end-form of CBD (this issue has yet to be clarified by the FSA), this would mean that only a handful of CBD companies could afford applying. This, in turn, would consolidate these products and offer a monopoly to the companies that manage to secure an approval.

Nevertheless, the FSA guidelines are a step in the right direction, as they  encourage the Hemp-CBD industry to work together, educate and advise, which, hopefully, will inspire the FDA in forging a clear path for the sale and marketing of these products within U.S. borders, too.

ICYMI: Trump Dumps on Medical Cannabis (Again)

At this point, it probably feels to most people like the federal government is standing down when it comes to state-legal cannabis and cannabis businesses. It started back in 2013 with the Cole Memo when U.S. Deputy Attorney General James M. Cole opined in a memorandum that U.S. attorneys shouldn’t really prioritize federally illegal cannabis activities in states that robustly regulated cannabis and cannabis businesses (so long as eight main enforcement priorities were honored by the states).

This hands off approach was amplified by the 2014 FinCEN guidelines, which opened the doors on cannabis banking, a huge, positive development for the industry at the time. Then there was a bit of a downturn in January 2018 when then acting U.S. Attorney General rescinded all Department of Justice (DOJ) guidance (including the 2013 Cole Memo) regarding any federal enforcement position on state legal cannabis, fully returning to all U.S. Attorneys to go after state-legal cannabis according to the resources and priorities in their own jurisdictions.

Notably, none of the foregoing had any impact on actual federal law–enforcement memos do not represent changes in law and don’t do anything to amend the law. However, way back in 2014, Congress passed on omnibus budget bill that contained hard-fought-for language around protections for state medical cannabis laws. Section 538 of this budget bill contained the following language:

None of the funds made available in this Act to the Department of Justice may be used, with respect to the States of Alabama, Alaska, Arizona, California, [every other medical marijuana state], to prevent such States from implementing their own State laws that authorize the use, distribution, possession, or cultivation of medical marijuana.

Many legal experts and scholars speculated that Section 538 wouldn’t have too much of an impact on state legal medical cannabis businesses since the exact language, on its face, really only stops the DOJ from spending money on “interfering” with the enumerated states’ ability to implement their medical cannabis programs (notably, the law ignores adult-use cannabis programs and businesses).

Nonetheless, Section 538 proved to be hugely important in the Ninth Circuit courts of the United States (which make up a large portion of the medical cannabis states in America). The impact of the United States v. McIntosh cannot be overstated.  The Ninth Circuit Court of Appeals interpreted Section 538 to mean that the DOJ could not prosecute the individual principals of state law-compliant medical cannabis businesses. And the effect of that case produced the result in the MAMM case, the notorious Kettle Falls Five case, and was very likely responsible for the DOJ’s dismissal of the Harborside forfeiture case. The bottom line? Section 538 has real power to protect medical cannabis businesses from enforcement actions by the federal government.

Congress has consistently renewed Section 538 in some form in its annual budget bills (it’s changed names a couple of times from the Rohrabacher-Farr Amendment to the Rohrbacher-Blumenauer Amendment, named for the Congressional leaders who championed it and continued to keep it alive). Now though, Section 538 faces a new threat of elimination by President Trump, indicating that maybe the Feds aren’t really done with state-legal cannabis enforcement.

Notably, Trump has tried to delete Section 538 before (and so did Obama) but he’s been routinely ignored by Congress. In his 2021 budget proposal, Trump is at it again–section 538 is omitted from the white houses’s budget proposal. Only time will tell if members of Congress will fight against the proposed deletion. We imagine that they will, given the number of Americans that are now in favor of cannabis legalization generally and where hundreds of jobs and robust state revenue has been created on the back of cannabis legalization– including for medical applications.

The other positive boon here is the fact that the sitting U.S. Attorney, Bill Barr, made clear when testifying before Congress that spending time, money, and resources going after state-legal cannabis businesses isn’t really within the DOJ’s current interests, and that the DOJ would continue to adhere to the principles contained in the 2013 Cole Memo (so far, that seems to have held true).

It’s troublesome to see Trump go back and forth on medical cannabis (and legalization) and to watch him try to end the only real federal protection that exists for any form of cannabis business in the country. What’s clear to us though is that cannabis enforcement isn’t necessarily a priority one way or the other for this administration, and we can’t know yet if that’s ultimately a good or a bad thing. So, stay tuned.

Will China Really Buy More U.S. Hemp? There is No Guarantee

Two major President Trump-centric events have been unfolding these past few weeks, and each has alternatingly claimed the limelight and been overshadowed by the other. First, we have the ongoing Senate impeachment hearings, which began January 16, and second, phase one of the U.S.-China trade deal, which was signed and made public on January 15.

With respect to the trade deal, certain commentators have highlighted the appearance of hemp in the agreement. One prominent marijuana publication published an article the day after the trade agreement was made public, on January 16, claiming that, “China Must Import More Hemp From U.S. Under New Trade Deal.” That is an overly generous interpretation. We’ll investigate and clarify that optimistic claim below. The short gloss is that China may buy more hemp from the U.S. under the new trade deal, but China is definitely not obligated to buy more (or any) U.S. hemp as a result of the trade deal.

Even though China has been both officially and unofficially producing hemp for centuries, U.S. hemp is, like most U.S. products and even agricultural commodities, attractive to Chinese businesses and consumers. Like many sectors where China is working a 996 schedule to catch up and overtake the U.S. as the global economic superpower, China and Chinese companies are actively pursuing ethical and unethical ways to acquire U.S. technology and know-how, including our best agricultural practices, trade secrets, and the best crops our hemp geneticists can produce.

As I noted in a prior blog post, China has an outsized role in global hemp production, and Chinese companies own approximately half of the global cannabis patents. But it is interesting that China has not yet matured in large-scale way from the labor-intensive growing and processing of hemp to the technology-intensive production of cannabinoids (like CBD, CBG, and CBN) and cannabinoid-derived products. Currently, China only accounts for about 11% of the CBD produced globally, but as more global markets and consumers open up to hemp-derived products, China will exert its influence. Frankly, it is likely impossible for China to house 1/7 of the world’s population and not affect global markets by the mere discussion of a change in government support for China-based industries, companies, and products.

Now to the terms of the trade agreement. The phase one portion of the trade agreement covers the general categories of intellectual property (including pharmaceutical-related intellectual property that is rapidly becoming ground zero for the battle between big pharma/biotech and natural products companies), forced technology transfers, trade in food and agricultural products, agricultural biotechnology, financial services, macroeconomic policies and exchange rate matters, expanding trade generally, and bilateral evaluation of the trade relationship and dispute resolution.

Many commentators have expressed doubts that the trade agreement is good for the U.S. or that it will do anything beyond merely extending the rollout of the next round of tariffs post-the November presidential election on the way toward near-total decoupling between the U.S. and China. But if we take the terms of the trade agreement at face value, in 2020, China must increase its importation of “agricultural goods . . . no less than $12.5 billion above the 2017 corresponding baseline,” and in 2021, “no less than $19.5 billion above the 2017 corresponding baseline.” Also, a footnote in the agreement says, “At the request of the United States, China will strive to purchase and import $5 billion per year of the U.S. agricultural products…in addition to the minimum amounts set forth herein.”

Even though this “import” statement is not binding, it could represent additional purchases of agricultural goods. In the agreement, we find “true hemp (cannabis sativa l.), raw or processed but not spun; tow and waste of true hemp (including yarn waste and garnetted stock)” as one of 216 categories of agricultural commodities of which China is required to increase its purchases. If I were a gambler, I would not take those 1/216 odds (less than half of 1%) that China’s increased agricultural purchases are guaranteed to significantly impact the U.S. hemp industry. That 1/216 equals approximately $90 million of increased purchases in 2020, which would account for a roughly 7% increase in the projected 2020 U.S. hemp industry, which overall is projected to grow at 14% compounded annual growth through 2022. Chinese companies could just as easily decide they want to buy $90 million more human hair, which is also one of the 216 agricultural goods on the list with hemp. U.S. companies wanting to export hemp to international markets is an order of magnitude larger than those willing to research and put forth the investment in order to do so.

In a future post I will delve more deeply into the intellectual property implications of the trade deal on the U.S. and world cannabis (including hemp) industries. China has a big head start in cannabis patents compared to every other nation, but I think that western nations, especially the U.S., are particularly good at catching up, especially if Sputnik was any indication of what we are capable of when we are motivated to make significant advancements in any area we see as strategically important. In the meantime, do not hold your breath that this phase one trade deal will be a windfall for U.S. hemp farmers.

If you are interested in keeping up with China-focused legal developments, check us out on our award-winning China Law Blog.

It’s MLK Day. Don’t Forget Cannabis is a Civil Rights Issue.

Happy MLK Day!

For our international readers, Martin Luther King, Jr. Day is a federal U.S. holiday marking the birthday of its eponymous civil rights hero. Dr. King was the chief spokesperson for nonviolent activism in the Civil Rights Movement, which successfully protested racial discrimination in federal and state law. Dr. King was assassinated in 1968, four years after the passage of one of the great U.S. laws of the 20th century, the Civil Rights Act of 1964. His death also came two years prior to one of the 20th century’s most controversial and insidious laws, the Controlled Substances Act of 1970 (CSA).

The CSA is a half-century old this year, and it’s looking much worse for the wear. We have commemorated MLK Day each of the past few years on this blog by examining the status of cannabis and civil rights. In short, things were bad, are bad, and are not improving quickly enough (if at all). Marijuana arrests continue to track upward despite more states legalizing distribution and sale of the plant, and despite broad non-enforcement of federal law.

We did see promising expungement efforts around the country last year, from San Francisco to Illinois to New York. But that is not enough. The War on Drugs persists in insidious ways, particularly with respect to black and Latino Americans. This includes everything from disproportionate incarceration to disenfranchisement under “progressive” new laws, like the 2018 Farm Bill.

In each of 2018 and 2019 we observed that Dr. King died 50 years ago, but his legacy continues to resonate and expand. The year 2020 will be politically momentous: let’s hope that state and federal governments finally turn the corner. Not only should cannabis be decriminalized once and for all, but the leaders among us should strive to make amends for a half-century of failures.

Will the FDA Soon Treat Hemp CBD as a Dietary Supplement?

The Food and Drug Administration (FDA) may soon change its tune on hemp-derived CBD (Hemp CBD) thanks to a bill recently filed by chairman of the House Agriculture Committee, Rep. Collin Peterson (D-MN) and cosponsored by Reps. Thomas Massie (R-KY), James Comer (R-KY) and Chellie Pingree (D-ME).

HR 5587 is an Act “To amend the Federal Food, Drug, and Cosmetic Act [(FDAC)] with respect to the regulation of hemp-derived cannabidiol and hemp-derived cannabidiol containing substances.” As of the time of this writing, the bill’s text is not available on Congress.gov but is provided by Marijuana Moment’s Kyle Jaeger, who wrote a great article on the bill.

If passed in it’s current form, HR 5587 would amend the FDAC’s definition of dietary supplement (21 U.S.C. 321(ff)(3)(B)) as shown below in bold:

The term “dietary supplement” does  not include—

(i) an article (other than hemp-derived cannabidiol or a hemp-derived cannabidiol containing substance) that is approved as a new drug under section 355 of this title, certified as an antibiotic under section 357 of this title, or licensed as a biologic under section 262 of title 42, or

(ii) an article (other than hemp-derived cannabidiol or a hemp-derived cannabidiol containing substance)    authorized for investigation as a new drug, antibiotic, or biological for which substantial clinical investigations have been instituted and for which the existence of such investigations has been made public,

which was not before such approval, certification, licensing, or authorization marketed as a dietary supplement or as a food unless the Secretary, in the Secretary’s discretion, has issued a regulation, after notice and comment, finding that the article would be lawful under this chapter.

The bill would also amend the FDAC to clarify that federal law does not prohibit a person from introducing Hemp CBD into interstate commerce, as shown by the proposed amendments to 21 U.S.C. 331(ll):

The introduction or delivery for introduction into interstate commerce of any food to which has been added a drug approved under section 355 of this title, a biological product licensed under section 262 of title 42, or a drug or a biological product for which substantial clinical investigations have been instituted and for which the existence of such investigations has been made public (other than hemp-derived cannabidiol or a hemp-derived cannabidiol containing substance)[.]

This would be a significant change as the FDA has long held that Hemp CBD cannot be classified as dietary supplement because the FDAC’s definition of dietary supplement explicitly exempts any article that is approved or investigated as a drug unless the article was marketed as a dietary supplement or food prior to being publicly investigated as a drug. The FDA’s view is that Hemp CBD was not marketed as such prior to the investigation of CBD as a drug. The FDA could deal with this through regulation, as the FDAC does grant the FDA Secretary the authority to regulate around the definition of dietary supplement. That hasn’t happened, though, and it appears that the FDA is running out of time.

HR 5587, as currently drafted, only would apply to Hemp CBD, not other cannabinoids such as CBN or CBG. The 2018 Farm Bill encompasses all hemp-derived cannabinoids in its definition of “hemp” so HR 5587 could encompass more than just CBD without having to amend the Farm Bill. It’s likely that this bill was drafted in light of the CBD craze over the last few years so it isn’t all that surprising that CBD is the only cannabinoid listed. If HR 5587 picks up steam, it will be interesting to see whether the language is revised to encompass other, less popular cannabinoids, in order to prevent recurring problems.

In addition to removing obstacles related to making Hemp CBD a dietary supplement, the bill would also require the US Department of Agriculture (USDA), in consultation with other federal agencies, to submit to Congress a study on the following:

  • the costs and requirements for establishing and operating a hemp testing program, including the costs and requirements for operating or contracting with a laboratory approved by the Drug Enforcement Agency;
  • the costs and requirements for the destruction of hemp crops determined to be in excess of 0.3 percent delta-9 tetrahydrocannabinol or opportunities for remediation or alternative uses;
  • the feasibility of producer compliance with sampling timetables;
  • the feasibility of producer compliance with reporting requirements; and
  • other known or potential challenges by the participation of States or producers in the domestic hemp production program.

It’s probably too early to tell whether this HR 5587 has a chance to become law. It was presented with bipartisan support but the legislative process can be unpredictable. Even if this bill does eventually become law, it will likely be subject to significant changes along the way. We simply don’t have enough information at this point to know what will happen.

We do know, however, that HR 5587 sends a clear message to the FDA, and to a lesser extent to the USDA, that lawmakers are not pleased with the treatment of hemp. For the FDA, this seems to be based on the agencies continued hostility towards Hemp CBD. For the USDA, it seems that lawmakers have heard the backlash against the USDA’s testing requirements including the need to test for total THC at DEA-certified labs.

Remember, federal agencies only exist because of federal lawmakers. They are creatures of statute, statutes that were crafted by lawmakers in Congress. If agencies fail to interpret a statute in the way the legislature wants, it has the unique power to amend the statute. That’s what is happening here.

This may seem like an outright rebuke, but in all fairness to the FDA, former commissioner Dr. Scott Gottlieb has told Congress that a legislative change may be needed in order for the FDA to regulate Hemp CBD in a timely manner.  In addition, the USDA has publicly stated that testing hemp for THC content has proved challenging.

We’ll keep an eye on HR 5587 and all things Hemp CBD. 2020 is likely going to be another big year for cannabis, especially at the federal level. Stay tuned.

The Future of Hemp is Genetics

Hemp was legalized federally just over a year ago. During the run-up, legislators from Mitch McConnell to Ron Wyden said things like “[b]y removing hemp from the federal list of controlled substances, farmers can explore the bright future of this versatile crop, found in everything from a coffee mug to your car dashboard.” One planting season in, however, farmers aren’t doing so much “exploring” with respect to hemp: instead, the Brightfield Group estimates that 87% of 2019 hemp acreage was planted for CBD extraction. Among the many hemp farmers our law firm represents in Oregon, Washington and California, that number feels closer to 100%.

Will people get rich farming hemp for CBD? It’s hard to say, given the newness of that market, apparent oversupply issues and pricing volatility for CBD. Assuming long-term and robust demand for CBD products, though, it’s likely that large family farms will eventually dominate output, just as in U.S. agriculture generally. It also seems likely that the margins for these large farms will expand and contract similarly to margins for other crops, based on many complex factors. Today’s small hemp-CBD start-ups growing from 1 to 99 acres will likely diminish in profitability and prevalence.

And that’s where genetics come in. If hemp is to be like other crops, it seems probable that the truly big money will not be in hemp production, but in the creation and licensing of proprietary plant material. Along those lines, Oregon’s biggest hemp company already is a seed company called Oregon CBD. That oufit is approaching $1 billion in annual revenues after just a few short years in operation.

If you want a certain CBD-rich strain–or a CBG strain, or a CBN strain, or any other kind of hemp strain–you would go to a seed company. You would do this even though seed certification is not addressed under the 2018 Farm Bill because you want to be sure that you get females and those females do not germinate into 0.3%+ THC plants. You would do this because you want proven genetics and you want warranties around those genetics. And eventually, you would do this because you want to be sure your hemp seeds are designed for production with certain types of herbicides in mind, a la Roundup Ready corn.

The federal regulatory environment is shaping up to facilitate success for firms with valuable hemp genetics. Currently, hemp genetics firms are able to formally register and protect their intellectual property, design products with specified epigenetic factors in mind (i.e. approved pesticides), and count on clear federal parameters for their business models. Some of these are helpful, others less so. Each crucial plank is briefly summarized below.

  1. Intellectual Property.  Earlier this year, USDA’s Plant Variety Protection Office (PVPO) began accepting applications of seed-propagated hemp for protection under the Plant Variety Protection Act. PVPO examines new applications and grants certificates that protect varieties for 20 years. Elsewhere, the U.S. Patent and Trademark Office (USPTO) already has granted its first hemp plant patent, with more in the pipeline. Plant patents afford similar protections to protected plant varieties with respect to duration and scope. (For a good explanation of the interplay and differences between plant variety and patent protection for plants, go here.)
  2. Epigenetics.  Last month, the Environmental Protection Agency approved a list of ten pesticides to be used in hemp production. This means that firms creating and registering hemp plant media will have crucial guidelines for seed design. It seems very likely that hemp strains eventually will be built with the application of certain chemical agents in mind, again like Roundup Read corn, if this type of research and development is not underway already.
  3. Crop Insurance.  The USDA’s Risk Management Agency (RMA) recently announced a pilot insurance program for hemp growers. Farmers will now have greater incentive to grow hemp at scale and to innovate, which, in turn, means a more lucrative and dependable market for seed genetics firms. In the bigger picture, the USDA itself will also encourage cultivation by providing a federal plan for producers in states or tribal territories without their own USDA-approved plans.
  4. Crop Testing Rules.  The problematic total THC testing protocol in USDA’s final interim rule will create demand for innovation in genetics– unless we see major changes following the close of public comment on January 29. But wherever we end up, seed firms will strive to create and refine cultivars that: a) express certain cannabinoids predominantly and b) pass testing strictures. It has already been argued, for example, that the current testing rules could eliminate the viability of current CBD strains altogether. Time to innovate.

In all, some farmers will do well growing hemp, particularly the larger family farms. Others will inevitably fail. But the big money will be made in plant genetics, including the design, sale and licensing of intellectual property. As certain hemp cultivars move to the fore, the next few years will be crucial. And the owners of those cultivars stand to profit handsomely.

Will the FDA’s Ban on E-Cigarettes Affect CBD Vaping Devices?

On January 2, the Food and Drug Administration (“FDA”) issued non-binding guidance (“Guidance”) in which the agency explains how it intends to prioritize enforcement actions to tackle the growing increase in youth use of electronic nicotine delivery systems (“ENDS”)–more commonly and broadly referred to as “e-cigarettes”–as well as to address vaping-associated lung injuries. According to a press release by the U.S. Department of Health and Human Services, the FDA intends to ban flavored cartridge-based ENDS that appeal to children, including fruit and mint flavors, beginning 30 days from the publication of the notice of availability of this guidance in the Federal Register.

Specifically, the agency intends to prioritize enforcement against:

  • Any flavored, cartridge-based ENDS product (other than a tobacco- or menthol-flavored ENDS product);
  • All other ENDS products for which the manufacturer has failed to take (or is failing to take) adequate measures to prevent minors’ access; and
  • Any ENDS product that is targeted to minors or whose marketing is likely to promote use of ENDS by minors.

Since the enactment of the 2018 Farm Bill, a wide range of hemp-derived CBD (“Hemp CBD”) products have sparked the interest of American consumers, including CBD vaping devices. Despite the growing popularity of CBD smokable products, the FDA has yet to issue regulations for these products. Consequently, the sale of Hemp-CBD-infused smokable products is in a legal gray area, not explicitly allowed nor prohibited under federal law.

The lack of FDA regulation surrounding this issue likely stems from the fact that many of these products are free of tobacco and/or nicotine.

As we previously discussed, federal law gives the agency the authority to regulate the sale, manufacture, and marketing of tobacco products under the 2009 Family Smoking Prevention and Tobacco Control Act (“TCA”). In 2016, the FDA finalized a rule that extended its regulatory authority to all products meeting the TCA’s statutory definition of a tobacco product, including e-cigarettes.

The FDA now oversees all products “made or derived from tobacco that [are] intended for human consumption . . . .” The definition also includes components, parts, and accessories of tobacco products and excludes products that are classified as drugs or devices under the Food, Drug, and Cosmetic Act (“FDCA”), even if those products are made or derived from tobacco.

The FDA has consistently declined to interpret “tobacco products” so broadly as to include products free of nicotine or tobacco. Under this reasoning, it seems to follow that most Hemp-CBD smokable products, which are free of nicotine and tobacco, would not be considered “tobacco products.”

The newly published Guidance seems consistent with this rationale.

The Guidance expressly provides that it “does not address products that are not tobacco products” and that only “[l]iquids that do not contain nicotine or other material or derived from tobacco, but that are intended or reasonably expected to be used with or for the human consumption of a tobacco product, may be components or parts and, therefore, subject to FDA’s tobacco control authorities.” (Emphasis added).

So, while most Hemp-CBD-infused vaping devices don’t fall under the FDA’s jurisdiction, and thus, won’t be affected by this upcoming enforcement effort, industry players should keep in mind that:

  1. Any flavored CBD vaping product that does contain nicotine is subject to this federal ban;
  2. Any CBD vaping product that contains nicotine and for which the manufacturer fails to take adequate measures to limit minors’ access is subject to FDA enforcement actions;
  3. Any CBD vaping product that is targeted at minors or whose marketing is likely to promote the ENDS use by minors falls under the FDA ban; and
  4. The manufacture, sale and marketing of non-flavored, nicotine or tobacco-free CBD vaping products, as well as other smokable hemp products, may nonetheless be banned under certain state laws. Accordingly, manufacturers, distributors and retailers of these products should refrain from selling their products in these jurisdictions to mitigate the risk of local enforcement actions.

The Hemp Standard is 0.3% THC. That Should Be Changed.

We are heading into the first decade of scaled commercial hemp production in the United States since the 1920s. As a law firm that has been helping cannabis businesses succeed since 2010, we couldn’t be more excited. And for good reason: the recreational market is expanding. Hemp is legal. CBD and other cannabinoids are fast becoming (if not already) household names. The international market is taking form and access to banking services is expanding. Public support is increasing. This looks like a great decade for cannabis.

But the USDA’s interim rules governing the production of hemp threaten significantly this economic juggernaut. Perhaps the most dubious rule is the total THC testing standard. To briefly summarize, the 2018 Farm Bill defined hemp as “[t]he plant species Cannabis sativa L. and any part of that plant . . .  with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.” The USDA then adopted a total THC testing requirement by which total THC is the molar sum of delta-9 THC and delta-9 tetrahydrocannabinolic acid (“THCA”). The industry consensus is that the total THC requirement is impractical and likely devastating to cultivators and, therefore, to every business in the hemp supply chain. By way of contrast, several states previously had tested only for a .3 percent concentration of delta-9 THC, which everyone agrees is a more forgiving standard.

But why did the USDA set the dividing line at 0.3 percent anyway? Why not 0.5 percent or 1 percent?

The answer to that question lies in Canada and in the work of Dr. Ernest Small, a research botanist who began studying and writing about cannabis in the 1970s. In 1976, Small and his colleague, Arthur Cronquist, published “A Practical and Natural Taxonomy for Cannabis,” which set a dividing line between hemp and marijuana at 0.3 percent THC for purposes of establishing a biological taxonomy. Dr. Small’s approach is not the only one. Cannabis had been subjected to different taxonomical treatments by Linnaeus in 1753 and Lamarck in 178. Indeed, the proper taxonomical treatment of cannabis is still debated says Antonino Pollio in “The Name of Cannabis: A Short Guide for Nonbotanists.”

Small never intended his 0.3 percent demarcation to have legal significance. In a 2018 interview with the Winnipeg Free Press, Small—who continues to research and write about cannabis—explained:

At that time, when I did that study and published it, I had no idea that that would be used as a practical measure for countries licensing the amount of THC that would be permitted in order to grow it.”

Yet relied on it was. First by the European Union, whose Common Agricultural Policy caps THC concentrations at 0.2 percent to be deemed hemp, and later by the United States, which codified the 0.3 percent dividing line in the 2018 Farm Bill. This was done despite a 2016 article Small published with a colleague in the journal Agronomy in which described 0.3% THC as the “arbitrary threshold at which cannabinoid content is used to distinguish strains of hemp from marijuana.”

Take Action

All is not lost. Laws can be changed—telephone, write, or email your congressional representatives. Regulations can be rewritten—the USDA recently extended the comment period on the interim final rule until January 29, 2020.

Is CBN Legal? What is CBN?

This is the second of a two-part installment on trending cannabinoids. For the previous post on cannabigerol (CBG), go here.

This post concerns CBN (cannabinol). Like CBD and THC, CBN is among the 100+ molecules in the cannabis plant. CBN comes from oxidation and decomposition of THC, meaning that when THC is heated and exposed to CO2 (oxygen), it converts to CBN. The compound is said to have a mild psychoactive effect, slightly more so than CBD but much less than THC. Specifically, it is said to have a sedating effect on most users and to have promising sleep aid applications, similar to melatonin (among other potential uses).

From a regulatory perspective, the legal status of hemp CBN products (like CBG products) may be less problematic than CBD products. The FDA likes to point out that the 2018 Farm Bill explicitly preserved FDA’s authority to regulate products containing cannabis or cannabis-derived compounds under the Food Drug & Cosmetic Act (“FDCA”) and section 351 of the Public Health Service Act. But the marketing of CBN as a dietary supplement may be viable nonetheless, provided that no unapproved health claims are made.

Why is that? First, some context. We have explained on this blog that it is illegal to add CBD to many products, in FDA’s view, due to the “drug exclusion rule.” According to FDA, products containing CBD cannot be sold as dietary supplements because CBD was investigated and approved by FDA as a new drug (Epidiolex). If something is a non-exempt “drug” it cannot be placed in the food stream under the FDCA. We wouldn’t mind seeing someone take a run at FDA for this interpretation with respect to CBD, but right now that’s the framework.

Unlike CBD, CBN not been approved as a drug, and FDA itself has acknowledged that “parts of the cannabis plant that do not contain THC or CBD might fall outside the scope of the [drug exclusion rule].” As with CBG, if CBN is approved as a drug at some point down the line, it also seems likely that the drug exclusion rule would not apply: this is because the rule contains an exception for substances marketed as foods or dietary supplements prior to any FDA clinical investigation. People are already marketing CBN products as foods and dietary supplements.

This domestic legal framework, alongside the fact that CBN can be lawfully produced and extracted from hemp under the 2018 Farm Bill, seemingly gives CBN a viable legal runway. Everything is conditioned on manufacturers and sellers steering clear of unapproved health claims, of course.

The international legal framework seems promising as well. CBN is not listed on the schedules set out in the U.N. Single Convention on Narcotic Drugs of 1961 and does not appear to be controlled by any other international treaty. This means that countries are not required to control CBN, making it both legal under international law and potentially ripe for export.

Before CBN takes off in a major way, two things probably have to happen. The first is that consumers need to take interest. It’s hard to know exactly how that will play out: CBN received a smattering of press in 2019, although it has been covered sporadically in industry media for several years. As with CBG, cannabis companies may now feel incentivized to promote CBN given its potential and the possibility of avoiding FDA entanglements. It is also easier to produce CBN under the 2018 Farm Bill than ever before.

The second development needed is for technology to demonstrate that CBN can be produced at scale. CBN does not present hemp growers with the “Sophie’s choice” of CBG, which requires harvest prior to natural conversion of CBG into other cannabinoids. However, because CBN-rich strains of cannabis do not exist, CBN must be mechanically converted from other cannabinoids–namely, THC. Note that hemp cannot contain more than 0.3% THC by law, making CBN more difficult to produce at scale than CBD or even CBG. That said, recent claims have surfaced of CBN distillation from “full spectrum hemp extracts.”

We will continue to track CBN (and other “minor cannabinoids”) as they are discovered and developed in commerce. For now, it seems that this cannabinoid may have a promising role to play and that hemp industry companies should take a hard look at CBN this year.