American Bar Association’s Business Law Today May Month-In-Brief: Business & Regulated Industries - June 2024

On May 16, 2024, the Drug Enforcement Administration (DEA) released the proposed rule (Proposed Rule) to reschedule marijuana from Schedule I to Schedule III under the Controlled Substances Act (CSA). The rule was published in the Federal Register on May 21, 2024, kicking off the notice and comment period. Comments must be submitted by July 22.

“Marijuana” under the CSA is defined as “all parts of the plant Cannabis sativa L., whether growing or not,” in addition to seeds, resin, and other derivatives of the plant. However, the definition exempts hemp (cannabis with less than 0.3 percent delta-9 tetrahydrocannabinol (delta-9 THC)) and seeds incapable of germination or the stalks of the plant. The Proposed Rule will move marijuana from Schedule I to Schedule III but will not change the definition in the CSA.

Both marijuana and hemp are different forms of cannabis. The delineating factor is the presence of delta-9 THC at the time of cultivation. The 2018 Farm Bill legalized hemp by removing it from the definition of marijuana under the CSA. The Farm Bill defined hemp to include all derivatives from hemp, including cannabinoids from hemp.

The term “tetrahydrocannabinols” is defined in DEA regulation, and the Proposed Rule tweaks the definition to mean all tetrahydrocannabinols natural or synthetic, but not those occurring in marijuana or hemp. Interestingly, under the Proposed Rule, tetrahydrocannabinols would remain in Schedule I, although these compounds derived from marijuana would be Schedule III and those from hemp would continue to remain outside the Schedules of the CSA.

The Proposed Rule would create a new term, “naturally derived delta-9-tetrahydrocannabinols,” meaning all delta-9 THC that is occurring in the plant naturally, other than those from hemp or the seeds and stalks of the plant. These items would be placed in Schedule III.

The term “marijuana extract” is not defined in the CSA but is defined in DEA regulation and currently listed in Schedule I. It is defined as “an extract containing one or more cannabinoids that has been derived from any plant of the genus Cannabis, containing greater than 0.3 percent [delta-9 THC] on a dry weight basis[.]” This definition does not create a carve-out for extracts from hemp. The DEA rule defining marijuana extracts was finalized in 2016, prior to the passage of the 2018 Farm Bill. The definition was opposed by the burgeoning hemp industry, and the DEA clarified that the term marijuana extract did not encompass hemp, despite there being no distinction in actual regulation. Unlike the amended definition of tetrahydrocannabinols and the new “naturally derived delta-9 tetrahydrocannabinols,” the Proposed Rules does not exempt hemp from the definition of marijuana extract.

The Proposed Rule may be amended during the notice and comment period. Time will tell whether the DEA changes the current definition of marijuana extract, and this will likely be a point of emphasis during this process.

Reprinted with permission from the American Bar Association’s Business Law Today May Month-In-Brief: Business & Regulated Industries.