Month: December 2016

Statement on DEA new ‘rule’ on marijuana extract

cbdFriends:

This week, the DEA issued a new rule concerning “marihuana extract” (see attached).

This has raised deep concerns in the hemp industry, particularly concerning the potential impact on CBD. Several news stories have alleged that this rule poses an existential threat to the industry: this widely circulated piece from International Business Times states that DEA “set new cannabis extract laws” and that “CBD and all other extracts derived from the cannabis plant (psychoactive or not) will come under Schedule 1 drugs…and cannot cross state lines.”

This interpretation is manifestly inaccurate.

No doubt, this very confusing new rule raises some serious issues and potentially signals an even more aggressive anti-CBD approach by DEA. The various associations in the industry are carefully studying this rule, and I will share with you their thoughts as soon as I receive them.

But to allay the growing fears that many of you have expressed to me over the past 48 hours – as well as to prevent the gossip and clickbait articles from chilling critical work in the hemp industry — let me share a few initial thoughts:

• Top aides to some of hemp’s most powerful congressional champions have been consulting with DEA, and their preliminary read is that the rule is ministerial in nature: DEA tells them that by introducing a new code into the registry, DEA can better track what’s being done and help the U.S. comply with UN-tracking standards.

• OK, as an attorney who’s fought the DEA in federal court, I know better than take everything the agency says at face value. But whatever the agency’s intent, this is clear:

• DEA cannot make or change the law. That is Congress’ function.

• Federal law – via the 2014 Farm Bill and 2016 Omnibus Law – emphatically mandates that industrial hemp grown as part of state-sanctioned pilot programs is exempted from the Controlled Substances Act, and that federal agencies (such as the DEA) are prohibited from interfering with pilot programs and/or the interstate sale or transport of hemp products that are produced in pilot programs.

• For decades, federal law (as confirmed by the 9th Circuit Court of Appeals) has permitted the import and U.S. sale of foreign-grown hemp products.

Ultimately, this again counsels the industry to secure passage of the Industrial Hemp Farming Act in the next Congress, a step which would make all of this discussion moot.

I will continue to update you the more we learn details. But in the meantime, if you have any questions or thoughts, please don’t hesitate to contact me.

Best,

Jonathan

Jonathan S. Miller
Attorney at Law | Frost Brown Todd LLC

Lexington Financial Center, 250 W. Main Street, Suite 2800 | Lexington, KY 40507-1749
859.244.3218 Direct | 859.231.0000 Main | 859.231.0011 Fax
jmiller@fbtlaw.com | www.frostbrowntodd.com

PA Hemp Program – Epic Fail

disappointmentThis certainly isn’t the post we expected to be making after waiting for months for the Department of Agriculture to release the parameters for participation in the PA Hemp Program.  To say we are disappointed would be an understatement. It is so restrictive and cost prohibitive that we see no clear way for the average farmer or small business to participate. The very people that we fought for to get this legislation passed. It was supposed to be something positive for the farmers, the people, the state, the economy and the environment. What we got does not meet any of those goals.

There are so many flaws in the program its difficult to know where to start. So rather than go into all the details of the inconsistencies, erroneous interpretations of both the state and federal legislation and conflicted statements amongst their supporting documents we will jump straight to the deal breakers.  You can review the application and supporting documents here:

http://www.agriculture.pa.gov/Protect/PlantIndustry/Pages/Industrial-Hemp-.aspx

1)  5 acre maximum, only 30 permits.

We can accept the 30 permits for the first year considering the late date and rapidly approaching planting season.  However the arbitrary 5 acre maximum makes it impossible to see any way a participant could produce enough product to recoup the excessive fee structure especially considering the strict limits on commerce.

2) Excessive fees

$250 application fee. $3000 ‘administrative fee’ for approved applications. $100 per hour, including travel time, for each time the Department deems it necessary to do a site survey or monitor the field. $200 per THC testing with no definition of how often they would intend to do that. There are also provisions for hidden fees that would make it impossible for a participant to be able to know exactly what they were getting themselves into from a financial standpoint. While we do understand that the Department received no funding to support this program, at $3000 per permit and all expenses being born by the participant, for the 30 allowed permits that is $90,000 for the department. We fail to understand how it could possibly be any more work or cost any more money for the Department if a pilot is 5 acres versus 500. One project is one project.

3) Commerce restrictions

While there seems to be some very vague provisions for sale of product it explicitly says no sales for ‘general commerce’ without any definition of what that actually means. What is the difference between commerce and ‘general commerce? But in light of the 5 acre maximum, there is no room for anyone to produce enough product to recover costs let alone make a profit if they should reconsider the strict limits on commerce.

4) No CBD of any kind

They claimed that “CBD for medical purposes is not permissible” – but made no statement about CBD that is used widely today as a daily human and animal supplement.  No matter how you look at it, by making that statement, they have created a bigger problem for Pennsylvanians. Will every CBD product now available in PA stores be removed? They also state that CBD can be converted into THC.  News to us.  The fact is that this Commonwealth allows, today and everyday, CBD products to be sold and distributed from locations within the Commonwealth and,  also allows, separately,  hundreds of bottles, concentrates and other forms of CBD to be imported daily from Europe and other States into all parts of PA.  These sales represent hundreds of thousands of dollars annually.  We just can’t produce it here.

5) Fiber and Seed only

Ok, maybe this one wouldn’t be a complete deal breaker if everything else was acceptable. Yet in their own example of a legitimate research project they use animal bedding. Problem is, they would have to reject their own example considering animal bedding is made from the hurd and not fiber or seed.

Bottom Line

This program is worthless to anyone with perhaps the exception of Penn State.  Pennsylvania has already lost a 5 million dollar investment. Other investors that have been waiting for PA to come out with the program have decided to set up in KY or NY instead. A business in western PA is moving. No one is going to build a processing plant in PA with this program. Without processing, particularly for fiber, we are not sure what product research they expect to be possible. Oh and as an extra little kick, while other states do feel bad for us, they are also high fiving all around as they know they now have several more years before PA is any kind of competition.

tho9fhj4txWe ask that all of you stand with us in rejecting this program.  But it won’t be enough if no one applies and then we all remain silent about it. We ask that everyone contact both the Department of Agriculture and the Governor’s Office and express your disappointment and outrage at this attempt to thwart the will of the people. Please be respectful and professional but be firm.

The Governor’s office is required to respond to every comment made at this link:

www.governor.pa.gov/contact    Phone: 717-787-2500

Secretary Russell Redding – rredding@pa.gov  Phone: 717-772-2853

Please email and call!!