Among the two most widely reported federal changes to cannabis regulation are the Department of Justice’s (DOJ) proposed regulation for the federal rescheduling of marijuana (the Proposed Rescheduling) and amendments to the 2018 Agricultural Improvement Act (the Farm Bill). The Proposed Rescheduling would result in the transfer of marijuana from Schedule I[1] of the Controlled Substances Act (CSA) to Schedule III[2] of the CSA.[3] The proposed amendments to the Farm Bill would change the definition of “hemp” to remedy a loophole currently utilized by hemp manufacturers who manufacture and sell intoxicating cannabis products.

However, the true impact of these changes will be most apparent when they are understood in conjunction with state cannabis regulation. Using the pending legislation in North Carolina as an example, this article will highlight key points related to the proposed federal changes and explain how state action, or inaction, may have wide-reaching implications for the cannabis industry.

Key Points Regarding Federal Changes

Importantly, the Proposed Rescheduling would not make marijuana federally legal. Instead, the state medical-marijuana programs currently active across 38 states would likely remain unchanged. These programs have and will likely continue to operate under the Rohrabacher-Farr Amendment, which prohibits the DOJ from spending funds to interfere with the implementation of state medical marijuana programs and is renewed yearly.[4]

Similarly, the changes to the Farm Bill would render intoxicating hemp products marijuana, which remain federally illegal (even if rescheduling is successful). The Mary Miller Amendment, recently passed by the House Agricultural Committee, would change the definition of “hemp” from:

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.[5]

to:

the plant Cannabis sativa L. and any part of the plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a total tetrahydrocannabinol concentration (including tetrahydrocannabinolic acid) of not more than 0.3 percent on a dry weight basis.”[6]

This new definition will remedy a loophole currently utilized by hemp manufacturers who manufacture and sell intoxicating hemp products. Intoxicating hemp products are derived from hemp-created CBD (a naturally occurring and nonintoxicating cannabinoid found in cannabis) that contains tetrahydrocannabinolic acid (THCa). Upon decarboxylation (a process that activates psychoactive compounds) THCa becomes delta-9 THC, which is the intoxicating cannabinoid in cannabis.

Intoxicating hemp-product manufacturers have had the opportunity to create these products by utilizing the loophole pertaining to the “delta-9” language in the current version of the Farm Bill, which does not limit the amount of THCa contained in hemp. Changing the definition to include THCa will stop the sale and manufacturing of intoxicating hemp products.

The North Carolina Legislation and Its Impact

House Bill 563 (North Carolina Legislation[7]) is currently pending in the General Assembly of North Carolina. It would regulate the sale and distribution of hemp-derived consumable products as well as medical marijuana.

In North Carolina, “hemp” is defined as “the plant Cannabis sativa (L.) … with a delta-9 tetrahydrocannabinol concentration of not more than three-tenths of one precent (0.3%) on a dry weight basis).”[8] The North Carolina Legislation does not change the definition of hemp, but imposes a regulatory framework through which hemp-derived products, including intoxicating hemp products can be manufactured, sold, and distributed.

The North Carolina Legislation also enacts the North Carolina Compassionate Care Act to provide for the sale of cannabis and cannabis-infused products to qualified patients with a debilitating medical condition through a regulated medical cannabis supply system.

If the North Carolina Legislation does not become law, intoxicating hemp products (which will likely soon be considered marijuana under federal law) will continue to be legally sold under state law as “hemp” products without any regulatory framework governing their sale, but will be considered marijuana on a federal level. Additionally, without passage of the North Carolina Compassionate Care Act, there will be no state medical marijuana program.

The result? North Carolina would allow products federally defined as marijuana to be sold in an unregulated manner, allowing intoxicating products to remain on convenience store shelves. As noted above, the Rohrabacher-Farr Amendment prevents federal funds from being expended on state medical marijuana programs. Similarly, the DOJ has largely focused its enforcement efforts on criminal networks involved in the illicit marijuana trade rather than carefully crafted state-regulated recreational marijuana programs. However, the unregulated sale of marijuana in a state with no regulatory framework for marijuana of any type may warrant scrutiny from the federal government.

[1] Schedule I drugs are believed to have a high potential for abuse, no currently accepted medical use in treatment in the U.S., and lack of accepted safety for use under medical supervision or the level of psychological or physical dependance could result from abusing the drug.

[2] Schedule III drugs have a lower potential for abuse when compared to drugs in Schedule I and I, have currently accepted medical use for treatment in the U.S., and their abuse may lead to moderate or low physical dependence or high psychological dependance.

[3] Jean E. Smith-Gonnell and Michael Lafleur, “Cannabis Rescheduling: A Potential Watershed Moment That Comes with Many As-Yet Unanswered Questions for the Marijuana Industry,” May 20, 2024, available at https://www.cannabisbusinessexecutive.com/2024/05/cannabis-rescheduling-a-potential-watershed-moment-that-comes-with-many-as-yet-unanswered-questions-for-the-marijuana-industry/.

[4] Consolidated Appropriations Act, 2024, Pub. L. No. 118-122, (2024) available at https://www.congress.gov/bill/118th-congress/house-bill/4366/text.

[5] 7 U.S.C. § 5940(a)(2) (emphasis added).

[6] Amendment to H.R. 8467, Offered by Mrs. Miller of Illinois, available at https://docs.house.gov/meetings/AG/AG00/20240523/117371/BILLS-118-HR8467-M001211-Amdt-35.pdf

[7] Found here: HB 563v8 (ncleg.gov)

[8] N.C.G.S. § 90-87(13a).