Jamison Sherretts
Apr 18, 20194 min
Published September 30th, 2018
The past week has seen developments on the federal level pertaining to industrial hemp and
it’s control under the Controlled Substances Act (CSA). First, the Drug Enforcement Agency
(DEA) announced a scheduling action for FDA approved drug Epidiolex, marketed by GW
Pharmaceuticals. Second, Congress failed to agree on the 2018 Agricultural Act (known as the
Farm Bill) before expiration of the 2014 Farm Bill on today, September 30th. Both events have
serious implications for the United States hemp industry and hemp farmers. We monitor any
such developments diligently and are issuing the following analysis for public release.
In June, the Food and Drug Administration approved Epidiolex, a drug containing Canabidiol
(CBD) to treat Lennox-Gastaut and Dravet syndom, two rare and severe forms of epilepsy. The
company who markets Epidiolex, GW Pharmacuticals, is based in London and imports the
ingredients and/or final drug into the United States. The DEA was then required to re-evaluate
Epidiolex as a controlled substance under the CSA because it is imported and is legally
recognized as having medical use in treatment. Currently, non-exempt cannabis products are
considered schedule 1 and by definition have no medical use. Since the FDA found medical
uses for Epidiolex and the Department of Health and Human Services (HHS) found a very low
potential for abuse, the DEA decided to place Epdiolex (and only Epdiolex) in schedule V, the
least controlled schedule. This does not apply to any other CBD products.
This action is significant to the broad hemp and CBD industry because; 1) The HHS has
recognized a cannabis-based drug including CBD to have low abuse potential. 2) The DEA has
continued their stance that they are required under treaty obligations (Single Convention on
Narcotic Drugs) to control the importation, sale, and production of all cannabis. 3) Using this
reasoning, the DEA will be confronted with a dilemma when controlling non-approved CBD
products if a new Farm Bill includes the Industrial Hemp Farming Act. 4) The DEA is not
considering recent findings from the World Health Organization on CBD nor are they
considering any studies to more broadly re-schedule CBD products.
This week we also learned that the 2018 Farm Bill would not pass before the expiring of the
2014 Farm Bill on Sunday, September 30th. Partisan bickering and politics have now delayed the
single most consequential hemp legislation since the 1937 Marihuana Tax Act. This is shameful and all elected officials will now need to face their constituents and explain why they were
unable to advance not only hemp farming but our massive agricultural industries.
In 2014, the hemp industry received a gift in the form of research. Section 7606 of the 2014
Farm Bill authorized states to establish a program to study the cultivation, processing, and
marketing of industrial hemp. 40 states have established such programs and have begun
production. The hemp industry and specifically the CBD market has flourished under these
research programs.
This year, Senator Mitch McConnell introduced a provision into the 2018 Farm Bill that would
remove the guise of research and authorize commercial production and marketing of industrial
hemp along with removing hemp (defined as cannabis with less than 0.3% THC) from schedule
1 of the CSA. As discussed above, the DEA uses the Single Convention on Narcotics as
reasoning to continue controlling all cannabis. We do not believe the hemp provision would
completely remove hemp from being controlled under the CSA, instead resulting in a similar rescheduling action.
Nonetheless, the passage of a Farm Bill with the Industrial Hemp Farming Act provision would
provide for a tremendous boost of confidence for consumers, businesses, financial institutions,
and farmers to engage in the hemp industry. It will allow farmers access to crop insurance and
open more markets for the sale of industrial hemp. Businesses that work with hemp will have
easier access to funding and merchant services. Overall, we expect an explosion in all aspects
of the global hemp market.
The failure of congress, and specifically the House of Representatives to negotiate a Farm Bill
before the September 30th deadline is a kick in the gut for farmers who have already
experienced a sharp drop in commodity prices. It will now be until November before the 2018
Farm Bill can possibly be voted on and some representatives are indicating a desire to pass the
bill after elections. While the hemp research programs do not expire nor have a sunset clause
and the industry will be continually protected by Section 7606, farmers and businesses are
making plans for 2019 and require confidence in regulations and markets.
What congress has done in their failure is inexcusable. The Senate was able to pass bi-partisan
Farm Bill and their counterparts in the House of Representatives would not accept this nor
could they work towards a compromised bill. We do understand the nuances and complicated
nature of such large legislation and the fierce battles over SNAP, crop payments, and the
Conservation Stewardship Program. We also understand that these issues had four years to be
sorted out.
There are no excuses good enough to cover for this utter failure on the part of our elected
representatives. We are hopeful for a November passage but extremely disappointed. Please
reach out to your congressional representatives and ask for a swift passing of the 2018 Farm
Bill.
-Kaelan Castetter