In the Agricultural Improvement Act of 2018 (also known as the 2018 Farm Bill), did Congress authorize hemp producers to handle “hot” hemp — cannabis byproducts that surpass the legal limit of delta-9 tetrahydrocannabinols (THC) — during the hemp production process? Or does such material remain a Schedule I controlled substance subject to U.S. Drug Enforcement Administration (DEA) enforcement? The D.C. Circuit Court of Appeals might soon decide.

On April 19, a D.C. Circuit panel will hear oral arguments in two cases concerning DEA’s final interim rule that conceivably regulates “hot” hemp during the hemp production process. See Hemp Indus. Ass’n v. DEA, No. 21-5111 (D.C. Cir. May 21, 2021); Hemp Indus. Ass’n v. DEA, No. 20-1376 (D.C. Cir. Sept. 18, 2020). The challengers, the Hemp Industries Association and RE Botanicals, Inc., argue that Congress’s 2018 Farm Bill authorized hemp production, and in doing so, authorized the handling of intermediate and waste material that surpasses the 0.3% delta-9 THC limit for hemp. DEA argues that its rule merely conforms its regulations to amendments made by the 2018 Farm Bill, and in practice, the agency “has not sought to control cannabis-derived THC or other cannabis substances that are outside the statutory definition of marijuana.”

Passage of the 2018 Farm Bill paved the way for production of industrial hemp and derivative consumer products, such as CBD products. To be considered “hemp,” Congress made clear the material had to possess limited concentrations of delta-9 THC. Specifically, the statute defined “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.” 7 U.S.C. § 1639o. Congress also removed “hemp” and “tetrahydrocannabinols in hemp” from the Schedule I listings of “marihuana” and “tetrahydrocannabinols” in the Controlled Substances Act (CSA), 21 U.S.C. §§ 802, 812, and granted the Department of Agriculture “sole authority to promulgate Federal regulations and guidelines that relate to the production of hemp,” 7 U.S.C. § 1639r(b).

In 2020, however, DEA published an interim final rule that clarified that cannabis derivatives or extracts that exceed 0.3% delta-9 THC are Schedule I controlled substances even if the plant from which they were derived contained less than 0.3% delta-9 THC.

For industrial hemp producers, this interpretation poses a substantial risk. The process of converting raw hemp with less than 0.3% delta-9 THC into consumer products that also contain less than 0.3% delta-9 THC involves the handling of intermediate-stage material and waste, “which unavoidably exceed 0.3% delta-9 THC.” Appellants’ Revised Opening Brief at 22, Hemp Indus. Ass’n v. DEA, No. 21-5111 (D.C. Cir. Sept. 29, 2021). On its face, DEA’s interim final rule could subject those who handle such intermediate materials to criminal penalties.

Presented with such a risk, the Hemp Industries Association and RE Botanicals, Inc. have challenged DEA’s authority over “hot” hemp in two lawsuits now before the D.C. Circuit. One seeks to have the DEA rule declared unlawful, and the other seeks a remand to the lower court to obtain a declaratory judgment that hemp processors are immune from DEA enforcement.

Lawmakers also have taken notice. Shortly after DEA announced the interim final rule, nine congressmen sent a letter to then-DEA Administrator Timothy Shea, asking him to revise the rule. “Since the Farm Bill legalized hemp along with hemp derivatives, extracts and cannabinoids,” the authors wrote, “it logically follows that the only viable methods for processing hemp into those derivatives, extracts, and cannabinoids would also be legal.” Similarly, a March 2021 letter from two congressman to Attorney General Merrick Garland and Agriculture Secretary Thomas Vilsack underscored that “Congress did not intend the 2018 Farm Bill to criminalize any stage of legal hemp processing,” including with respect to in-process hemp extracts.

Further, a legislative fix is in the works. Earlier this month, Rep. Chellie Pingree of Maine introduced the Hemp Advancement Act of 2022, which clarifies that hemp extracts made during the hemp production process that exceed the THC threshold will still be considered “hemp,” and accordingly, excluded from CSA Schedule I listings and DEA control.

In short, if the Hemp Industries Association and RE Botanicals, Inc. do not prevail in the lawsuits pending before the D.C. Circuit, Congress may soon take steps to safeguard hemp producers from DEA enforcement anyway. Stay tuned.

Our Cannabis Practice provides advice on issues related to applicable federal and state law. Marijuana remains an illegal controlled substance under federal law.