DEA Reschedules FDA-Approved CBD

As soon as the Food and Drug Administration (FDA) approved Epidiolex as the first cannabis-derived prescription, we knew this day would come. Epidiolex was the first approval for a purified drug substance derived from marijuana plants, after all, and marijuana is classified as a Schedule I controlled substance in the federal Controlled Substance Act (CSA). The CSA considers marijuana to be among the most dangerous controlled substances known to man– so dangerous that a doctor cannot prescribe marijuana to treat any disease or ailment. This classification obviously would not work for Epidiolex.

Last Thursday, the Drug Enforcement Administration (DEA) rescheduled “approved cannabidiol [(CBD)] drugs” to Schedule V of the CSA. Schedule V substances have the lowest potential for abuse of all the schedules. The DEA now defines approved CBD drugs as follows:

Approved cannabidiol drugs. A drug product in finished dosage formulation that has been approved by the U.S. Food and Drug Administration that contains cannabidiol . . . derived from cannabis and no more than 0.1 percent (w/w) residual tetrahydrocannabinols.

This definition creates three conditions for a product to be an approved CBD drug. As such, it must:

1. Be FDA approved;
2. Be derived from cannabis; and
3. Have less than .1% THC.

This definition is obviously limited. Right now the only CBD approved drug is Epidiolex. CBD product like oils, tinctures, lattes, and other foods are not approved CBD drugs. Why? They are not FDA approved.

Many of these CBD products are derived from cannabis. Some come from marijuana (Marijuana-CBD). Marijuana-CBD remains a Schedule I substance. Marijauna-CBD products may be legal under state law in states like Washington, Oregon, and California but their sale is only permitted through a states regulated marijuana market. These products come from licensed producers, are developed by licensed processors or manufacturers, and are sold to the public through licensed retailers or dispensaries. Marijuana-CBD products are only legal in states where they were cultivated and these products are heavily regulated at all stages of production, from seed-to-sale. Marijuana-CBD products may also contain significant levels of THC.

There is another classification of cannabis derived CBD products relevant here: CBD derived from industrial hemp (Hemp-CBD). These products arguably do not fall under Schedule I, or any other Schedule, as they are not governed by the CSA. This is because the cultivation of industrial hemp was legalize by Section 7606 of the Agricultural Act of 2014 (the 2014 Farm Bill). Industrial hemp is defined as the cannabis plant with less than .3% THC. The 2014 Farm Bill also requires that industrial hemp is cultivated under a state agricultural pilot program. This usually means that a state will issue a license or other authorization that permits the cultivation of industrial hemp. Some states also require a license to process industrial hemp into other products like Hemp-CBD.

The distribution of Hemp-CBD products is arguably legal under federal law because the 2014 Farm Bill does not explicitly limit distribution. However, the DEA, FDA, and other federal agencies issued guidance in 2016 stating that the 2014 Farm Bill did not permit the interstate transfer or commercial sale of industrial hemp. Despite this, the DEA has rarely taken any enforcement action against distributors of Hemp-CBD, because Congress has limited the DEA’s ability to use federal funds to do so and because the DEA would have to establish that the CSA does in fact cover Hemp-CBD. In oral arguments during HIA v. DEA, the DEA admitted that the 2018 Farm Bill preempted the CSA with regards to industrial hemp. Several states like Idaho prohibit the distribution of Hemp-CBD. Other states like Ohio, Michigan, and California significantly restrict the distribution of Hemp-CBD.

Even though Hemp-CBD does not fall within the CSA, Hemp-CBD products have not been approved by the FDA. This is also true of Marijuana-CBD. This means that even cannabis derived Marijuana-CBD and Hemp-CBD products containing less than .1% THC are not approved CBD drugs for lack of FDA approval. As such, it’s likely that this recent development will have little impact on business distributing CBD, other than for GW Pharma, the makers of Epidiolex who has already seen its stock value surge.

Still, there is always some risk of enforcement action against Hemp-CBD distributors, as the budgetary restriction that prevented the DEA from using funds to prosecute industrial hemp distributors expires on September 30. However, that seems unlikely given the fact that there is a strong argument that industrial hemp is not prohibited by the CSA. It is also possible that the FDA could take a more aggressive approach to limit the distribution of CBD products, but that decision seems to have little relation to the reschedule of approved CBD drugs.

If anything, the DEA’s latest CBD-action is a sign of how the times-are-a-changin’. It’s the first time a cannabis derived product has fallen outside of Schedule I, after all.