DEA Wins Final Rule CBD Lawsuit

May 2nd. 2018 – A federal appeals court this week dealt a blow to makers of CBD-rich cannabis
extracts who were trying to stop the Drug Enforcement Administration from considering their products as dangerous drugs.

On April 30th, the Ninth Circuit appeals court judges ruled against the Hemp Industries Association in their bid to overturn a move by the Drug Enforcement Agency to classify CBD as a Schedule I substance under the Controlled Substances Act. The new rule took effect Jan. 13, 2017.

The panel of judges for the 9th U.S. Circuit Court of Appeals shot down the hemp industry’s challenge of a DEA rule that established a drug code for marijuana extracts.

DEA officials had said the code was intended to track cannabis derivatives used in research and to meet treaty obligations, adding that these extracts and byproducts remain Schedule I substances that the government says have no accepted medical use, such as heroin, LSD, peyote and ecstasy.


The judges concluded that the rule does not conflict with the 2014 Farm Bill because the notice of the rule change – July 5, 2011 – predates the Farm Bill.

Represented by Denver-based cannabis law firm Hoban Law Group, the Hemp Industries Association and other hemp businesses challenged the DEA’s rule and alleged the agency overstepped its bounds by essentially scheduling substances — notably cannabinoids — that were not classified as illicit in the Controlled Substances Act. Additionally, they argued, the hemp-derived extracts rich in CBD, or cannabinol, are protected under state laws and Farm Bill provisions.

The rule could be misinterpreted by other federal and local agencies, lead to unlawful product seizures and chill a booming multibillion-dollar hemp products industry, Hoban attorneys had said.

Bob Hoban from Hoban Law said “Though we appreciate the Court’s finding in favor of the legitimacy of the Farm Bill’s hemp amendment, we are still disappointed with the Court’s findings that the Final Rule does not interfere with lawful, hemp-related business activities, as even 29 members of Congress confirmed in their Amicus Brief to the Court. Given the pervasive confusion and irreconcilable conflicts of the law that have led to product seizures, arrests and criminal charges against those involved in the lawful hemp industry, the Petitioners believe that the Final Rule must be invalidated, absent the Court clarifying and further resolving these conflicts and their severe consequences.”

In the opinion, issued Monday, the 9th Circuit judges said Hoban Law Group’s clients had an opportunity to comment during the DEA’s rule-making process but failed to do so. As a result, the bulk of their challenge was moot.

Separately, the judges said the DEA’s final rule did not violate the Agricultural Act of 2014 (Farm Bill), which contained provisions allowing for industrial hemp, defined as cannabis sativa L. plants with less than 0.3 percent concentration of psychoactive tetrahydrocannabinols.

“The Agricultural Act contemplates potential conflict between the Controlled Substances Act and pre-empts it,” the judges wrote.

That’s the silver lining for hemp businesses, said Garrett O. Graff, an attorney with Hoban.

“The sky is not falling, based upon this decision,” he said.

The court’s view of the Farm Bill, coupled with DEA statements last year indicating there was no intent to regulate cannabinoids, should give the hemp industry some solace, Graff said.

“These are all positives that the industry can take as yet another arrow in the quiver of legitimacy,” he said.

But there remain broader concerns about the safety and security of those who make and sell hemp extracts, he said.

Hoban Law Group will be working with the Petitioners to carefully weigh their options, including a re-hearing, which must be requested from the Court within 45 days.



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