DEA Confirms Cannabis Seeds Are Considered Legal Hemp If Consisting Less Than 0.3% THC The 2018 Farm Bill removed hemp from the definition of marijuana in the Controlled Substances Act (CSA). The US Drug Enforcement Administration (DEA) has confirmed that cannabis seeds fall outside the realm of the Controlled Substances Act (CSA) – regardless of how much THC the plant they turn into could eventually yield – because the seed itself contains less than 0.3% THC on a dry weight basis and thus meets the definition of hemp.
Cannabis Regulatory Update: DEA Says Marijuana Seeds Are Considered Legal Hemp If Below THC Limit, New York, South Carolina, Oklahoma
The 2018 Farm Bill removed hemp from the definition of marijuana in the Controlled Substances Act (CSA).
Marijuana, on the other hand, remains federally prohibited, which can’t be said for the plant’s seed, regardless of how much THC might end up being produced in buds when the seeds were cultivated.
In response to an inquiry from attorney Shane Pennington regarding the legality of cannabis seeds, tissue culture, and “other genetic material” containing no more than 0.3 percent THC, the Drug Enforcement Administration (DEA) recently reviewed the federal statute and implementing regulations, reported Marijuana Moment.
“Marihuana seed that has a delta-9-tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis meets the definition of ‘hemp’ and thus is not controlled under the CSA,” Terrence L. Boos, chief of DEA’ s Drug & Chemical Evaluation Section wrote in the letter, dated January 6.
“Conversely, marihuana seed having a delta-9 tetrahydrocannabinol concentration more than 0.3 percent on a dry weight basis is controlled in schedule I under the CSA as marihuana.”
What the DEA agrees upon is that people can possess cannabis seeds no matter how much THC the resulting plant might produce, as long as the seeds themselves have less than 0.3 percent delta-9 THC.
“In my view, the letter is significant because we continue to see confusion over the source rule—the argument that the legal status of a cannabis product hinges on whether it is ‘sourced’ from marijuana or hemp—influencing legislative proposals even at the federal level,” Pennington told Marijuana Moment.
New York’s $220 Billion Election-Year Budget Stuffed With (Cannabis) Tax Breaks
New York legislative leaders are poised to vote on a budget proposal that includes provisions to let marijuana businesses take state tax deductions that are available to other industries despite an ongoing federal ban.
On Thursday, a framework on which lawmakers and Gov. Kathy Hochul (D) worked to reach a consensus on unrelated issues was unveiled, following an extension of the budget deadline for a week, reported Marijuana Moment.
Both the Assembly and Senate budget measures were expected to pass in advance of an April 1 deadline.
The proposals would carve out an exemption to allow medical and adult-use marijuana companies to make tax deductions for business expenses and claim credits at the state level.
While being obligated to pay taxes, cannabis companies are currently barred from making certain federal tax deductions under an Internal Revenue Code section known as 280E due to conducting activities that consist of “trafficking in controlled substances (within the meaning of schedule I and II of the Controlled Substances Act).”
To help resolve the issue, New York lawmakers in both chambers agreed to include language into their budget proposals and thus oblige the state not to tax cannabis companies for any amount that the federal government disallows under 280E “related to the production and distribution of adult-use cannabis products.”
The move would allow New York marijuana businesses to see significant tax savings.
In anticipation of the launch of New York’s adult-use market, which could happen this year, sales of buds and edibles are already flourishing in Manhattan.
Despite New York cannabis regulators proclaiming marijuana gifting to be illegal in October, stores that sell a product or service to consumers and then giving them cannabis as a “gift” have become a thing in the Big Apple.
This “gifting” practice has come to the attention of the Office of Cannabis Management’s (OCM) Enforcement Unit, which recently sent “cease and desist” letters to more than two dozen businesses it found to be doing just that. Still, unlicensed marijuana dispensaries continue to multiply in New York City.
South Carolina Medical Cannabis Legalization Bill Heads To House Floor Following Committee’s Approval
Considered to be one of the most restrictive medical cannabis laws in the country, South Carolina’s measure that would legalize the plant passed a key House committee on Thursday.
The green light from the lawmakers came days after the panel heard hours of testimony on the reform.
The House Medical, Military, Public, and Municipal Affairs Committee advanced the legislation in a 15–3 vote, which is now heading to the House floor, Marijuana Moment writes.
Sponsored by Sen. Tom Davis (R), the bill was already passed by the Senate in February, on a bipartisan vote.
The Democrat-led committee decided to dismiss several out of over 100 amendments to the bill offered by Rep. Vic Dabney (R) on the grounds of being unfriendly and would likely only stall action on the legalization bill itself. Most of the amendments were subsequently pulled by Dabney himself.
However, the one amendment that the committee passed adds to the measure’s packaging and labeling requirements, requiring that, among other things, marijuana products be labeled as Indica, Sativa or hybrid.
Several Republican members of the panel expressed concerns that legalizing medical marijuana would degrade society.
“My concern is, across the nation, wherever these bills have passed, a lot of problems develop,” Dabney said. A friend in Washington State, he continued, told him that it “ruined” the state, with “people laying around on the streets…just stoned all the time.”
Rep. Ryan McCabe (R) stressed that his “concern with this bill is that it encourages people to use marijuana to deal with their problems.”
Still, another Republican lawmaker, Rep. Jonathon Hill (R), who supported the measure, challenged his colleagues to patients in their districts.
“Just imagine for a moment how much more afraid they must be, and it is literally a choice of life or death for them. Ask yourself: Why are you here if it’s not to do right by them?”
Oklahoma Gives Support To Cannabis Legalization Ballot Initiative Following Legal Challenge By Competing Campaign
The Oklahoma Supreme Court has rejected a lawsuit challenging a marijuana legalization initiative that activists seek to place before voters on the 2022 ballot, reported Marijuana Moment.
New Approach PAC-backed marijuana activists kicked off 2022 by filing a marijuana legalization initiative that would allow adults 21 and older to purchase and possess up to one ounce of cannabis, grow up to six mature plants, and six seedings for personal use.
Jed Green, director of Oklahomans for Responsible Cannabis Action (ORCA) – a separate campaign that filed a pair of 2022 ballot initiatives to legalize adult-use marijuana and remodel the state’s existing medical cannabis program in October – sued the campaign supported by the New Approach PAC.
He claimed that it’s unconstitutional under a single-subject law for ballot initiatives and that the summary that would be presented to voters is misleading.
“State Question No. 820 is legally sufficient for submission to the people of Oklahoma. Petitioner Jed Green has failed to meet his burden in establishing that State Question No. 820 is clearly or manifestly unconstitutional and that the gist of State Question No. 820 is misleading,” a majority of the justices said. “The Court assumes original jurisdiction and denies Petitioner’s challenge to the constitutionality and sufficiency of State Question No. 820.”
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
BENZINGA CANNABIS CONFERENCE
Meet the biggest cannabis industry players and make deals that will push the industry forward.
Featuring live company presentations, insider panels, and unmatched access to networking, the Benzinga Cannabis Capital Conference is where cannabis executives and entrepreneurs meet.
DEA defines cannabis seeds with less than 0.3% THC as hemp and as legal
The US Drug Enforcement Administration (DEA) has confirmed that cannabis seeds fall outside the realm of the Controlled Substances Act (CSA) – regardless of how much THC the plant they turn into could eventually yield – because the seed itself contains less than 0.3% THC on a dry weight basis and thus meets the definition of hemp.
The official determination could eventually have widespread consequences, but for now it is most likely going to be limited to easing transportation across state lines and an uptick in the sale of cannabis seeds to consumers. However, companies selling seeds need to be wary about how they market products to consumers in order to avoid falling foul of other cannabis prohibition regulations.
Shane Pennington, a lawyer specialising in cannabinoid regulatory issues, wrote to the DEA in November of last year seeking clarification on product legality. The administration’s response to Pennington’s inquiry acknowledges that, under current rules, the potential amount of THC a cannabis plant might produce is not important; all that matters is that the seed contains less than 0.3% THC on a dry weight basis.
“As soon as the story went out, I got a lot of calls,” Pennington told CBD-Intel. “People are starting to use this letter in various ways, and I am sure changes will be seen pretty soon.”
Pennington expects cannabis companies to start using the DEA’s letter in court and in front of state regulators to prove that what the companies do is legal. Tax implications and intellectual property claims on products which can now be sold legally are among the changes the DEA pronouncement is likely to effect in the industry.
“We are going to see how different regulators and courts will respond,” he said. “I would say we will start seeing this in the next month or so.”
Federal law rules, though states can go further
Currently, transport is the area most affected. The DEA decision means cannabis seeds should be permitted into and out of the US as well as across internal state lines.
“If the DEA decides to treat seeds, extracts and genetic material below 0.3% as hemp, which it logically should, then it should be the case that there are no import/export requirements on this stuff either,” Pennington said. “The question is you just never know until you see it in action.”
We could see seeds follow a similar precedent to the medical drug Epidiolex, which, after it was approved by the US Food and Drug Administration (FDA), the DEA eventually moved from Schedule 1 to Schedule 5 classification before removing it from the schedules altogether following the passage of the 2018 Farm Bill.
At the state level, the official position means there should not be any federal interference with transport of items such as seeds, extracts and genetic material that meet the THC threshold for the hemp exemption.
But states can still forbid a substance that is not regulated by the CSA and is therefore legal under federal law. This means that states will still be able to prevent the transport of what they consider as illegal cannabis material through their territories.
States though, Pennington said, tend to shape their drug laws based on the DEA’s decisions, which will probably lead to eventual changes at the state level. “It’s conceivable that this determination could have some level of influence to change state laws in the not too distant future,” he said.
It may also lead to challenges against protectionist laws that prohibit the import or sale of cannabis material from other states, Pennington said. These technically contravene the Dormant Commerce Clause and discriminate against producers in other states, but there has traditionally been little appetite to challenge them because previously there was no legal commerce of cannabis material whatsoever.
“Now it’s clear that this is legal under federal law, there is a question about whether those laws, the ones that discriminate against other states’ sellers, are constitutional,” Pennington added, citing a recent case in Maine where licences for medical cannabis were subject to residency requirements. “This is something that is being litigated a lot right now.”
Selling seeds while managing marketing
For retailers selling cannabis seeds, the position puts their business practice in the clear. But it could lead to an entanglement under other laws. While the sale of the seeds is legal, participating in the manufacturing of a controlled substance such as cannabis remains illegal, according to cannabis business lawyer Rod Kight.
“As an advocate for cannabis, I think that any development by law enforcement that allows for a broader interpretation of law is generally good,” Kight told CBD-Intel. “But I think the biggest change here is that this is going to be perceived as an open door to companies who are selling cannabis seeds to really advertise them as cannabis seeds with high THC potential, so I think that’s maybe a trap.”
Promoting cannabis seeds’ potential, such as a particular genetic strain which is known to produce plants with high THC levels, would make them more appealing to buyers, but at the same time it may be considered by authorities as conspiracy to commit a crime.
“You can sell cannabis seeds, but of course there is not a very large profit for just cannabis seeds,” Kight told CBD-Intel. “When my clients call me, they are interested in marketing their qualities, and I tell them not to do that as that would get them into trouble.”
According to Kight, given the DEA’s long history of opposing any reforms in the direction of loosening cannabis regulations, the agency’s letter on cannabis seeds should be met with scepticism: “When the DEA says something that appears to be positive for cannabis, you might want to question that.”