Episode 39: Changing Regulations in the CBD Industry



Joe: On this episode of the "CBD University Podcast," the latest from the industry regarding the DEA issuing its new interim rule. We're sorting out the details and what it means for you, plus what's next on the regulation front in the CBD industry. We'll shine some light on what may be pending. This is the "CBD University Podcast," and it starts right now.

I'm Joe Agostinelli, host of the "CBD University Podcast." If you are a returning listener, welcome once again back to our podcast. If you are a new listener, we are glad you found us on your podcast platform of choice. And as a reminder, if you are listening you can always catch full episode videos on the Global Widget YouTube channel and the YouTube channels of our brands. And you will notice once again a couple episodes ago we did this and we are back with another one of our Zoom podcast episodes. And this time, I welcome back to the podcast who I think now is the only guest to appear on an in-studio version, an audio version, and a Zoom version, industry advocate and attorney Rod Kight who's joining us from Asheville, North Carolina. Hope you and the family are staying safe and healthy up there.

Rod: We are, Joe. Thanks for having me again. And it's nice to have the full array of platforms to appear on, always like to talk with you and it's always fun. So this is a good platform, it's kind of the COVID platform, I think is the deal, so we're all getting used to it.

Joe: Exactly. And we're talking the latest, excuse me, in federal regulations on this episode, as I mentioned. And, Rod, you've been a very busy man recently, thanks in part to the recent intern rule drops by the U.S. Drug Enforcement Administration. And first of all, let's just clear something up for some of the listeners. We have talked so much with you and with our chief compliance officer Margaret Richardson in past episodes, primarily about the FDA when it comes to the industry. So where does the DEA come into play now?

Rod: Yeah, sure. So when we talk about federal agencies and statutes, different federal agencies are charged with the duty of enforcing regulating statutes that Congress puts out there. And so the statute we're talking about the law is the 2018 farm bill which legalized hemp, and all of its extracts, cannabinoids, derivatives, so on and so forth broadly and that statute implicates potentially several different federal agencies. The number one agency is the USDA, and that is the agency that governs the production of hemp. You mentioned the FDA which regulates foods, drugs, dietary supplements that are intended for human or animal use, and the FDA has not issued any rules although it has made its position known about hemp and CBD. But you've been asking about the DEA, that's the Drug Enforcement Administration. The Drug Enforcement Administration regulates the Controlled Substances Act, which has to do with drug compounds that are regulated in some way, shape, or form. The DEA contends that it also regulates or is involved with the 2018 farm bill to the extent that they are cannabis compounds or cannabis that does not meet the definition of hemp. And that's because marijuana is a schedule one, which is the highest or strictest level controlled substance under the Controlled Substances Act. So that's a long legal lawyer way of saying that the Drug Enforcement Administration has its hands involved in hemp, at least to the extent that it contends that there are compounds that are from cannabis but don't arise from the hemp plant itself which is lawful.

Joe: And we mentioned this but for those who would like to read more about this, Rod has a two-part blog series on his website at cannabusiness.law/articles, some interesting details in the rule. But want to hit on a couple of high points here to spell out some of the confusion that may have been created by this. First off the farm bill of 2018, which you just alluded to says hemp and its extracts are not controlled substances, but the DEA seems to think otherwise in this interim rule?

Rod: Well, the DEA to be clear has indicated that it's rule, at least on its face, it says it does not change anything, it's not creating law, there's some disputes about that. But with respect to hemp here the farm bill specifically removed from the Controlled Substances Act, meaning it made broadly lawful cannabis with no more than 0.3% Delta-9-THC concentrations on a dry weight basis, including all of its extracts, derivatives, cannabinoid, CBD is a cannabinoid, isomers and so on and so forth. And so it means hemp and the things that are derived from hemp. And so to your point, the DEA is not changing that, one of the main things at issue is that the DEA has said that extracts of hemp that exceed 0.3% Delta-9-THC fall within the classification of marijuana again, which is a control one scheduled substance.

Joe: And another point we want to stress and this is a question we get a lot, we, you know, get it from consumers and even some of our retail partners always want to double-check on educational information, the difference between hemp and marijuana?

Rod: Yeah, exactly. So there's...when talk from a botanical standpoint, there's the plant and it's cannabis sativa L, just like you...but like you have roses, some are red, some are pink, some are white, there are all sorts of different strains. From a legal standpoint, the difference between hemp and marijuana which are just legal terms is that hemp has no more than 0.3% Delta-9-THC concentrations on a dry weight basis. That Delta-9-THC, by the way, is probably the most notable compound, it's the one that has psychoactive effects and can get you high. CBD is another cannabis compound, it does not get you high. But any event hemp is no more than 0.3% THC, marijuana is cannabis that has more than 0.3% THC. So again, cannabis is the sort of the overarching and there's legal and illegal forms and then there's hemp and marijuana.

Joe: And obviously, as an industry leader that Global Widget is with all our brands and products and when it comes to the quality and compliance of our manufacturing, distribution and testing processes, in this era of so many companies, and it's a topic we've talked about on past episodes, and I think almost now hard to believe a year ago when we were talking about 2020 predictions when 2020 was, you know, able to be predicted, we talked about the thousands of companies way back when, lots has changed since then. But we've talked about the thousands of companies that have entered this industry as we see more and more regulations like this, is this where we start to see some of what you had talked about in that episode of those companies not being able to keep up with changing regulations and is this just a step in that direction for those companies?

Rod: That's exactly right. You know, the hemp and CBD industry has emerged very rapidly, and by and large, it's been difficult for lawmakers and regulators to keep up with all of the dynamic shifts whether they be economically, the rapid construction of the supply chain from farmer to end product, and also regulations regarding how hemp-based products are made and because of that, it allowed an entry into the market for a lot of companies that didn't feel bound by regulations because, in fact, a lot of regulations weren't there, or they were gray or you know, there's a way to play it played out. But to your point, yeah, as we see regulations coming down the board, whether they be from the DEA, the FDA, the USDA, state regulators, and so on and so forth, it is gonna be harder and harder for companies that were sort of fly by night, who didn't have the resources and or the expertise to employ good manufacturing practices and good agricultural practices to keep up. It really is that time where the compliant operators are going to excel, and the ones that can't be compliant or unwilling to do so are gonna begin to fall by the wayside.

Joe: And, you know, it segues into the next question, you talk about the industry and how often and how quickly things do change and we mentioned the FDA earlier, what's next on the federal regulation side of the CBD industry? What should our audience be on the lookout for?

Rod: Yeah, sure a lot of moving parts in the hemp and CBD industry. For one, we're expecting at some point that the FDA will issue some firm guidelines regarding hemp and CBD products, so that could come next week, next month, or next year. We've been waiting for quite a while for the FDA, so we don't know. The USDA has issued its interim final rule a little bit less than a year ago regarding again the production of hemp, which by and large means the cultivation of hemp and that rule received a lot of comments, and the FDA has reopened its comment period. So I think it's important that if you didn't have an opportunity to comment on the USDA rule the last go-round now is your opportunity, and it's really important to do that. The DEA is issued a rule and right now it's accepting comments on that rule and I think it's really important to step up and make your comments known.

And then finally from a legislative standpoint, there are two different bills right now in the House of Representatives, the U.S. House, regarding CBD, they're a lot alike in that both of them are providing a law track for CBD to be specifically lawful for human ingestion but they also differ in small and various ways. But we could see the Congress override the FDA and say this is how it's going to be, for example, with respect to hemp and CBD, and that may pass but probably not before the election. So we still have I think sometime before we see some major changes but again, this industry is always evolving rapidly. And so if you're gonna participate in the industry, it's just incumbent upon you to stay on top of those rules and regulations and changes and interpretations and everything else.

Joe: And a great way to stay on top of all that, obviously, is to stay tuned to our podcast. If anything happens more on the regulation side, we'll certainly have you back on. And then I do invite our guests as I mentioned earlier to subscribe to your blog at your website, that's cannabusiness.law/articles. You'll get some great delivery into your inbox of all of Rod's blog. And Rod I'm sure we'll have you back on the podcast maybe in person that next time, we'll see how things go.

Rod: I would love that.

Joe: Yeah, that would be great to see you again and I want to obviously thank you for taking time out of your busy schedule to appear remotely on the "CBD University Podcast." My best to you and your family.

Rod: Thanks, Joe, you too. It's always good to talk with you and certainly I'd love to see in person and that nice sunny Florida weather in the winter is nice. So in any event, have a great afternoon and we'll talk soon I'm sure.

Joe: Sounds good. Industry advocate and attorney Rod Kight, my guest on this episode of the "CBD University Podcast." And I thank you for tuning into this episode of the "CBD University Podcast". If you have not yet done so I invite you to subscribe to our podcast on your favorite podcast platform of choice. And don't forget full video episodes of our podcast on the Global Widget YouTube channel and the YouTube channel of our brands, you can also subscribe there. And no matter where you subscribe, you'll get notifications each week when new episodes are published. I'm Joe Agostinelli, the host of the "CBD University Podcast". Thanks for tuning in.

These statements have not been evaluated by the Food and Drug Administration. The CBD products are not intended to treat, cure, or prevent any disease or condition. Always consult your personal physician about CBD and using CBD products. CBD should never be used by anyone under the age of 18. This content is not intended to provide legal advice regarding the legal status of CBD and CBD products.