Are Hemp Derived CBD Oil Products Legal?

The most popular question we get is whether CBD oil products derived from hemp are federally legal.

Basically the popular thinking goes like this: the 2014 Farm Bill made hemp and hemp derived products federally legal.  So if one can get CBD oil from hemp, then that CBD oil must be legal even if CBD oil from marijuana is federally illegal.

Through a series of rules adoptions and clarifications, the DEA has said if a product consists solely of parts of the cannabis plant excluded from the Controlled Substances Act definition of marijuana, then the product is not part of the drug code for marijuana or marijuana extract and therefore does not violate federal law, even if the product contains trace amounts of cannabinoids.

However, in the same series of rules and clarifications, the DEA says that according to the scientific literature, cannabinoids are not found in the parts of the cannabis plant that are excluded from the CSA definition of marijuana.  It seems clear that the DEA does not believe CBD can be derived from hemp because hemp does not contain CBD.

So where does the CBD from hemp actually come from?  It seems that the DEA believes that there is a bit of alchemy going on in the hemp world with manufacturers turning lead (hemp) into gold (CBD).

At first, I thought that maybe manufacturers were being a little less than truthful:  “We are getting our CBD from hemp (wink).”  “No really (wink), we are getting it from hemp (wink).”  But it seems that the truth is that over time, growers have been selectively breeding hemp to contain significant amounts of CBD.  This would also explain how we are seeing more hemp CBD products and business models compared to the very few we saw immediately after legalization of cannabis in Colorado.

We see this phenomenon often in agriculture.  If we want tomatoes or corn to have more of the traits we like in these products – size or flavor, for instance – we breed them so that they have more of these characteristics.  It may be true that a tomato can only get so big in nature, but over a period of time we can breed them to an optimally larger size.  If we wish that hemp had more CBD in it, we can breed it to be so.

However, I don’t believe that that is the end of the analysis.  If the DEA wanted to, it could make the argument that Congress intended to approve hemp without CBD for the purpose of making clothing, ropes and milk, and did not intend to legalize CBD or other cannabinoids simply if they came from hemp.  It is clear from the DEA continuing to cite the scientific literature that it believes that the industry has taken advantage of what was intended as a very narrow exception.

I think this would be a powerful argument.  No one is making the argument that other drugs are exempt from federal enforcement simply because they have been derived from a legal source.  The DEA would further argue that the fact that Congress is contemplating specifically legalizing CBD derived from hemp is tantamount to an admission that Congress did not intend to legalize it in the 2014 Farm Bill.

However, at this point, it seems unlikely that the DEA would even make these arguments or pursue prosecution.  The proposed 2018 Farm Bill would specifically exclude CBD derived from hemp from the definition of the marijuana plant, making the whole point moot.  So even if the DEA currently believes it could prosecute folks for possessing, growing, or manufacturing CBD derived from hemp, by the time any court battle would be decided, new legislation is likely to have cancelled the argument.

I still believe that CBD derived from hemp will not be widely adopted until the 2018 Farm Bill is approved, but in the meantime, it is very unlikely we will see federal enforcement in this area.

Michael Weiner

Michael Weiner

Michael is a partner in Dorsey's Corporate Group and the head of the Corporate department in Denver. His practice focuses on the representation of emerging growth companies in the areas of corporate formation, mergers and acquisitions, venture capital and angel finance, and securities regulation.

You may also like...