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CBD’s Uncertain Future: Raids or Riches?

CBD's Uncertain Future: Raids or Riches?

It began when U.S. postal workers in Alaska spotted an unidentified substance oozing from several packages. Upon inspection they found 1,000 leaky vials, some labeled, others not, of hemp-derived cannabidiol (CBD) oil. A call went out to Alaska’s Alcohol and Marijuana Control Board.

Concerned about the quality of unregulated products intended for human consumption and the potential risk to public safety, the Control Board came down hard on Alaska’s fledgling network of marijuana dispensaries that retailed CBD hemp oil products. On February 9, 2017, law enforcement officers raided every cannabis storefront in Alaska — seven in the Anchorage area, one in Kenai, and two in Wasilla — seizing an assortment of hemp-derived CBD merchandise, including chocolate bars, chewing gum, and syringe-style applicators filled with dark, viscous oil.

Two G-men paid an uninvited visit to a shop called the Green Jar in Wasilla and cleared the shelves of $1000 worth of Charlotte’s Web CBD hemp oil. “They took our product. They didn’t give me any paperwork for anything they took,” said Caleb Saunders, co-owner of the Green Jar, which had been selling CBD hemp oil for half a year without government interference.

Some 1,500 CBD products were seized during the multicity anti-drug dragnet. The problem, according to state officials, is that these CBD oil products ran afoul of state law, which requires that all cannabis commodities be manufactured, tested, and marketed in accordance with seed-to-sale tracking rules as stipulated under Alaska regulations. The hemp-derived CBD came from out of state and was not packaged or labeled correctly.

Alaska, like other states where marijuana is legal for therapeutic and/or adult use, maintains that all cannabis products must be grown, manufactured, and consumed within its own borders. Cannabis products aren’t supposed to be imported or exported, and it’s illegal for the U.S. postal service to transport federally proscribed substances across state lines.

No one was arrested during the raids, but the cannabis industry in Alaska was spooked. Retailers are still confused. No one told them that hemp-derived CBD oil is illegal in Alaska. Had they been informed, they would have removed these products from the shelves. The Marijuana Control Board deems that CBD oil products are a form of marijuana and that retailers ought to know whether their products are legal or not.

Yet it’s still not difficult to obtain CBD products with a trace of tetrahydrocannabinol (THC), marijuana’s psychoactive component, from other outlets in Alaska, such as grocery stores or natural food shops. Alaskan law enforcement, citing a lack of resources, has thus far refrained from taking action against CBD oil retailers that are not marijuana dispensaries. Unwilling to risk a police raid, some of these stores have voluntarily pulled their CBD oil products.

In recent months, CBD oil storefronts in several other states have been raided by law enforcement personnel. Here are some examples:

• Kentucky: On the afternoon of February 7, 2017, officers and detectives with the Pennyrile Narcotics Task Force raided the Princeton Smoke Shop in Princeton, Kentucky. The store owner, Pankajkumar G. Patel, was cited to appear in court to face charges of marijuana trafficking after CBD edible gummies and cash were seized at his shop. It was his first offense. Although Kentucky is not a medical marijuana state, it has legalized the therapeutic use of CBD and the cultivation of industrial hemp. But the Princeton Smoke Shop was not licensed by the state to distribute CBD oil products.

• Missouri: In August 2016, Missouri Attorney General Chris Koster sued two Kansas City retailers, charging them with illegal sales of hemp-derived CBD oil, which can only be marketed by licensed care centers. Koster had previously sent letters to some 30 unlicensed stores across the Show-Me State, warning them to stop selling CBD hemp oil. All but four stores, including the two KC outlets that were raided, dropped their CBD product lines. In the lawsuits, the Missouri Attorney General asserted that Vapor West and the Main Smoke and Gift Shop were not licensed to sell CBD oil. In addition to seeking a court injunction against the disobedient retailers, the Missouri lawsuits called for unspecified civil penalties and restitution for CBD customers who purchased CBD oil from these stores.

• Wisconsin: In June 2016, police officers seized the entire inventory of CBD oil products at a store called Vaporlicious in Milwaukee. The police maintained that CBD oil is contraband and they refused to return any of it. Prior to the bust, undercover cops bought a bottle of CBD Drip from Vaporlicious and tested it. They found evidence of THC in the oil, but the screening didn’t reveal how much THC was present. The police field tests could only yield a yes-or-no response regarding THC content. Store proprietors John and Janet Frazen didn’t realize they were selling a controlled substance. They had been misled by the California-based distributer of CBD Drip, which claimed it was legal to sell and purchase in all 50 states. The Frazens were not charged with a crime.

 West Virginia: On February 21, 2017, police seized CBD hemp oil products from a vape store called Glass Gone Wow in Morgantown, West Virginia. Later the same day, the police returned the products to the store. Although West Virginia has yet to legalize CBD or medical marijuana, no one at the store was cited or charged with engaging in criminal activity. But the store owners were warned that they risked incurring the wrath of federal law enforcement if they continued to sell CBD oil. Alyssa Morris, general manager of Glass Gone Wow, lamented that the raid hurt their clientel: “A lot of these people have made a lifelong commitment to no longer be on prescription drugs and to use more holistic remedies like CBD.”

• Massachusetts: On July 17, 2015, a SWAT team with masked personnel in flak jackets wielding automatic weapons descended upon the home of Bill Downing in the Boston suburbs. Boston police simultaneously executed a search warrant at Downing’s store, CBD Please!, which sold CBD hemp oil products in a state where marijuana and CBD were legal for therapeutic use. Downing himself was a certified medical marijuana patient and his personal supply of cannabis and hashish was seized along with several computers, more than $100,00 in cash, and about $3,000 worth of CBD product inventory. The raids were the culmination of a nine-month police investigation that began shortly after the well-publicized opening of Downing’s store. On eight occasions, undercover cops purchased PlusCBD Gold, a cannabidiol oil extract, from CBD Please! — a sting operation that became the basis of criminal charges against Downing. The charges were eventually reduced to civil citations. In exchange for pleading that he was “responsible” for the citations, Downing got his money returned, but the cops kept the medical marijuana, and several of his personal and business computers were somehow “lost” while in police custody. As of May 2016, according to Downing, a dozen retailers of CBD oil products in Massachusetts were touting their wares on Leafly, the online cannabis locator service. Why, then, was CBD Please! singled out by law enforcement? A past president of NORML’s Bay State chapter and chief organizer of the annual Boston Freedom Rally for cannabis law reform, Downing maintains that his business was targeted because of his high profile activism for several decades as an outspoken marijuana legalization advocate.

Legal limbo

Are these sporadic raids the death throes of a drug war dinosaur thrashing its tail? Or are they a foretaste of what’s to come as the Trump cabal threatens to put the brakes on nationwide efforts to legalize cannabis? Local law enforcement officers have targeted a small number of CBD retailers in states where medical marijuana is legal; in states that have legalized only CBD products for therapeutic use; and in states that have yet to legalize either CBD or medical marijuana. The common thread in all these cases is confusion about CBD’s lawful status, which remains a point of contention in the United States even though cannabidiol is not intoxicating and has no abuse liability per se (albeit, drug interactions and poor quality products are a concern).

Confusion about CBD’s legality has been fostered by both cannabis detractors and promoters. Mixed messages from industrial hemp entrepreneurs have muddied the waters regarding the legitimacy of foreign versus domestic sources of CBD oil. Some maintain that CBD oil is legal if it’s extracted from the stalk and seeds of industrial hemp grown abroad — in much the same way that fiber hemp products and nutritional hempseed protein powder are legal to import and obtain in the United States. Today one can purchase hemp-infused soap and hemp protein supplements at grocery stores nationwide thanks to the Hemp Industries Association’s successful litigation against the Drug Enforcement Administration (DEA), which culminated in a 2004 Ninth Circuit of Appeals ruling that rejected the DEA’s attempt to ban hemp food commerce.

But the legal status of cannabidiol was not affected by this court decision. (CBD was never actually mentioned in the judge’s ruling.) Because it resides within the resin of the cannabis plant, CBD remained an illegal Schedule I substance along with THC, which is also found in the resin. While the Controlled Substances Act exempts cannabis stalk and seed from the official definition of marijuana, the resin, wherever it is found on the plant, is explicitly proscribed, even the minuscule amount of CBD-containing resin on the stalk. That’s been the law ever since the passage of the 1937 Marijuana Tax Act.

Compared to high-resin marijuana, industrial hemp is a low-resin plant, and there’s hardly any resin (and therefore hardly any CBD or THC) present on the stalk and none at all on the seeds. Thus, neither hemp stalk nor hempseed are viable sources of CBD oil. It’s obvious that the CBD oil has to be extracted from the resin bearing parts of the plant – the flower tops and to a lesser extent the leaves – which weakens the contention that imported hemp oil extracts are legal.

All-American hemp

Industrial hemp advocates who favor domestic sources of CBD oil are on firmer ground because of the 2014 Farm Bill, which defined hemp, as distinct from marijuana, as any cannabis plant with a THC level of less than 0.3%. In effect, the Farm Bill was designed to perpetuate marijuana prohibition while carving out an exception for U.S. farmers to grow industrial hemp for CBD oil extraction and other purposes.

The vast therapeutic and economic benefits of CBD-rich products have catalyzed a rebirth of industrial hemp farming in the United States. The Farm Bill requires farmers in states that legalize hemp to cultivate their crop as part of a state-sponsored or university-affiliated pilot research program. But the scope of the Farm Bill is interpreted differently by different regulatory agencies. Hemp is an agricultural commodity, not a drug, and the DEA insists that the Farm Bill does not authorize commercial production of CBD oil.

But it’s happening anyway. And consumer demand for CBD is growing, despite the DEA’s suborn refusal to acknowledge that CBD-rich cannabis – or any kind of cannabis – can confer medical benefits.

In December 2016, the DEA issued a new tracking code specifically for cannabis oil extracts, including hemp-derived CBD oil concentrates and isolates. This administrative tweak rebutted the claims of online CBD vendors and their suppliers that cannabidiol is legal in all 50 states. The DEA’s latest missive didn’t make CBD illegal — it was already federally illegal under the Controlled Substances Act because CBD comes from the resin of the plant. Hemp stalk and seed might be legal, but the resin, where CBD resides, is not legal, according to the DEA.

Back to court

On January 13, 2017, the Hemp Industries Association (HIA) filed a judicial review petition in federal court against its perennial nemesis. The HIA lawsuit maintains that the DEA’s latest administrative ruling failed to recognize the legal distinction between cannabis and hemp, as defined in the 2014 Farm Bill.

The HIA argues that the DEA overplayed its hand by nixing CBD oil extracted from domestic hemp grown in compliance with the Farm Bill. Moreover, a recent spending bill in Congress stripped the Department of Justice and the DEA of their ability to allocate funds to prevent the transportation of domestically grown hemp across state lines or to otherwise interfere with industrial hemp farming in states that are Farm Bill compliant.

Project CBD supports the legal cultivation of industrial hemp for many uses, including the production of whole plant CBD-rich oil extracts, in accordance with the guidelines set forth in the Farm Bill. We encourage farmers, if possible, to seek out high-resin CBD-rich cannabis cultivars, as these are much better suited for medicinal oil extraction than low-resin fiber hemp.

Currently, the most prolific source of cannabidiol is high-resin CBD-rich cannabis that slightly exceeds the 0.3% limit for THC, so technically it doesn’t qualify as hemp. But the debate over sourcing CBD from cannabis rather than hemp will soon become moot, as plant breeders succeed in developing high-resin cannabis varietals that satisfy the Farm Bill’s criteria for industrial hemp – with CBD levels topping 20% by dry weight and THC measuring less than 0.3%. Instead of choosing between cannabis or hemp, the key conflict looming on the horizon pits single-molecule CBD against whole plant, full spectrum CBD-rich extracts.

Pharma versus farmer

At this critical juncture, the DEA may actually pose less of a threat to hemp-derived CBD commerce than the Food and Drug Administration (FDA), which is not bound by the same budgetary constraints that prohibit the Justice Department from using federal money to thwart state medical marijuana programs. Like the DEA, the FDA has long since forfeited any claim to credibility with respect to cannabis, which remains a Schedule I drug despite the recent study by the National Academy of Sciences, which unequivocally asserts that marijuana has medical value.

The FDA has declared in no uncertain terms that it does not consider online or over-the-counter CBD products to be legitimate dietary supplements. Food supplements are not subject to pre-market drug approval by the FDA, a federal agency that privileges single-molecule compounds over “crude plant” remedies. The pharmaceutical development of cannabinoid compounds is based upon controlled experimentation with molecular isolates in keeping with the notion that sick people benefit most from predictable, reproducible medicine that never varies. But scientists have shown that pure, single-molecule CBD, while effective at precise high doses in some cases, has a much tighter therapeutic window and is much less potent than whole plant CBD-rich oil. And clinicians and patients are discovering that high CBD oil with little THC isn’t a miracle cure for everyone. People need access to a wide range of cannabis oil options with different amounts of CBD and THC.

CBD oils don’t qualify as food supplements, according to the FDA, because GW Pharmaceuticals, a UK-based drug company, initiated clinical trials with a CBD-rich remedy in the United States before hemp-derived CBD oil became available for popular consumption. (The 1994 Dietary Supplement Health and Education Act stipulates that a compound can’t be marketed as a food supplement if it was previously the focus of still ongoing clinical research.) Thus far, hemp CBD proponents have yet to provide evidence that contradicts the FDA’s conclusion that cannabidiol was not marketed as a food supplement prior to the commencement of clinical research by GW Pharmaceuticals.

If, as expected, GW Pharmaceuticals wins FDA approval of Epidiolex, a CBD medication for seizures, then what? It’s not far fetched to anticipate that when it gets the green light to commercialize Epidiolex, GW will pressure the FDA to move against the CBD “supplement” industry. From a drug company’s perspective, it makes little sense to develop a pricey pharmaceutical when people can buy virtually the same active ingredient (single-molecule CBD) for a fraction of the cost online. Vanquishing over-the-counter hemp CBD commerce may be necessary for Pharma to profit off of CBD isolates.

Political clout

Once CBD becomes an approved pharmaceutical, it will be a matter of enforcement discretion on the part of the FDA as to whether storefronts and online retailers will still be allowed to peddle a plethora of hemp-derived CBD oil products. The FDA has already documented instances of fraud and product mislabeling when it analyzed the content of several CBD hemp oil items. The bad apples – hemp oil extracts with no cannabidiol or excess THC – could be a pretext for the FDA to restrict non-pharmaceutical CBD products.

But there are significant countervailing forces that favor industrial hemp as an abiding source of CBD oil irrespective of the FDA’s pro-Pharma bias. The fledgling domestic hemp industry has the backing of some very powerful DC politicians (Senate Majority Leader Mitch McConnell from Kentucky, for example), who see economic opportunity for hardscrabble farmers in hemp-growing states. The fledgling U.S. hemp industry is buoyed by a groundswell of public support for medical cannabis in general and CBD in particular. Investors are drooling over the prospect of a billion dollar CBD market in the near future – if Uncle Sam doesn’t get in the way.

In March 2017, bipartisan members of the recently formed Congressional Cannabis Caucus filed a package of bills aimed at creating “a path to marijuana reform,” which includes legislation to remove cannabis from Schedule I, a category reserved for dangerous drugs with no medical value, and to de-schedule CBD entirely. Various measures, if enacted, would lift restrictions on cannabis research, end the federal ban on hemp farming, and limit federal interference in states where marijuana is legal for therapeutic and/or adult use, while also addressing issues that are germane to the cannabis industry: banking access, taxes, asset forfeiture, and amnesty for cannabis convicts.

Thus far, forty-four states have legalized some form of cannabis, including eight states (and the District of Columbia) that allow adult use. Twenty-nine states have legalized medical marijuana and 15 other states have legalized CBD (but not the whole plant) for therapeutic purposes. Some states, lacking a homegrown supply of CBD oil products, only provide a safe haven for residents who manage to acquire cannabidiol from international or domestic sources. Absent any significant change in federal law, it’s important for CBD-rich product-makers and retailers to fully understand how CBD is regulated in their state. They should not assume that if Whole Foods or Walmart are carrying CBD products, then it’s okay for anyone to hang a shingle and sell CBD.

Martin A. Lee is the director of Project CBD and the author of Smoke Signals: A Social History of Marijuana – Medical, Recreational and Scientific.

Copyright, Project CBD. May not be reprinted without permission.

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