9th District Judges Strike Down Hemp Advocates’ Challenge to DEA Final Rule

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PASADENA, Calif.–A panel of judges in the U.S. 9th District Court of Appeals earlier this week denied a petition filed by hemp industry representatives Hemp Industries Association, R.M.H. Holdings, and Centuria Natural Foods, challenging the Drug Enforcement Administration’s Final Rule, or “Establishment of New Drug Code for Marihuana Extract,” which, in 2016, classified marijuana extracts as Schedule I narcotics.

While THC is the cannabinoid responsible for marijuana’s psychoactive effects, other cannabinoids like CBD do not produce a “high” and are used in various product forms for potential benefits and medicinal applications. Much of the CBD oil used in formulations is derived from hemp plants, a different variety of marijuana than the high potency cannabis strains produced for their THC content.

Federal Schedule I status puts cannabis in all forms in the same designation as hazardous narcotics, like heroin and cocaine, among others. The Denver Post noted the DEA’s argument against the petitioners, and said:

“DEA officials had said the code [Final Rule] 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.”

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Denver-based Hoban Law Group, who represented the petitioners, said the court’s ruling did not signal final defeat for CBD product manufacturers or other cannabis industry producers and that parts of the ruling could be interpreted favorably for hemp industry, if presented with legal obstacles or prosecution by the DEA.

“The Court found Section 7606 of the Agricultural Act of 2014 (the ‘Farm Bill’) pre-empts the Controlled Substances Act, and DEA’s authority.” Hoban Law cited in its media release. “This confirms that where the Farm Bill applies, it supersedes or overrides any conflict with the Controlled Substances Act. Presumably, this principle would also apply to ‘non-psychoactive hemp’ protected by this same Court’s decision in 2004.

“Essentially, the Court’s Order in this case finds that the Farm Bill’s hemp amendment exists separate and apart from DEA’s Final Rule, and that where there is confusion or conflict as to lawful hemp activities, DEA’s Final Rule does not apply. This is good news for the hemp industry,” attorneys added.

Hoban also said that during briefing and oral argument, the DEA “admitted it does not intend to control cannabinoids generally,” and would be superseded by the Farm Bill’s hemp amendment.

Judges also indicated their ruling was influenced by failure on the petitioners’ parts to submit comment on the then-proposed rule to the DEA in 2011, during the notice-and-comment period. Hoban pointed out this indicated a ruling predicated more on procedural grounds, than on the actual merit of the case, also noting some petitioners did not exist in 2011.

Hoban said that the petitioners and its attorneys would look at options to petition for a re-hearing in the next several weeks.

“We remain sensitive to the innumerable accounts of interference by federal, state and local agencies with lawful hemp activities, and that many of these accounts appear to stem from DEA misguidance. As always, we will continue to closely monitor these situations and to work tirelessly on behalf of, and in conjunction with, the hemp industry and its stakeholders to eliminate this interference,” Hoban Law said.

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