CBDs May Not Be As Legal As You Think

UPDATE: Since the passage of the 2018 Farm Bill, industrial hemp is now legal to cultivate, provided it is cultivated in compliance with a state or tribal regulatory program. Hemp has also been removed from the Controlled Substances Act and from the definition of marijuana. That being said, the status of CBDs derived from hemp is still in doubt. And to be specific, as stated below, it is illegal to sell consumable products that contain CBDs (for example, seltzer water, beer, wine, food) or make health claims about products containing CBDs. In addition, due to the uncertain status of CBDs, companies that sell CBD products may have difficulty finding banking services.

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There may be regulations on how CBDs can be sold. For example, Indiana has a very strict product labelling law. CBD products must bear a QR code, which when scanned directs the consumer to detailed information, including the product’s batch number, expiration date, ingredients, and independent lab analysis. CBD products sourced from another state with a Farm Bill program may not be packaged properly for sale in Indiana. Retailers who fail to comply face fines of up to $10,000, and could lose their retail license.

Another state-specific wrinkle is California. While medical and adult-use marijuana are now legal in California, the state Department of Public Health has ruled that CBDs, even if sourced from industrial hemp, cannot be added to any food or beverage product, whether for human or pet consumption. So forget about that CBD beer, or chewing gum.

Note, also, that the federal Food and Drug Administration (FDA) has taken the position that it is illegal to “introduce or deliver for introduction into interstate commerce any food (including any animal food or feed) to which THC or CBD has been added.” Consequently, while the DEA may not pursue sellers of food/beverage products containing CBDs, the FDA is another matter. The FDA also has sent cease and desist letters to CBD manufacturers and sellers that have made medical claims about CBD products.

If you’re confused, don’t feel bad. It’s very confusing. The bottom line is, if you are going to be involved in this industry, whether legal cannabis or CBDs, make sure you do your homework.

Legal Cannabis and Immigration

This is my very first repost of another lawyer’s material. I’m sharing a blog posting by Christopher Pogue, an immigration attorney, on the intersection of legal cannabis and immigration law, particular with respect to immigration from Canada:

U.S. Customs and Border Protection (CBP) enforces the laws of the United States and U.S. laws will not change following Canada’s legalization of marijuana. Requirements for international travelers wishing to enter the United States are governed by and conducted in accordance with U.S. Federal Law, which supersedes state laws.

Although medical and recreational marijuana may be legal in some U.S. States and Canada, the sale, possession, production and distribution of marijuana or the facilitation of the aforementioned remain illegal under U.S. Federal Law.

Consequently, crossing the border or arriving at a U.S. port of entry in violation of this law may result in denied admission, seizure, fines, and apprehension.

Generally, any arriving alien who is determined to be a drug abuser or addict, or who is convicted of, admits having committed, or admits committing, acts which constitute the essential elements of a violation of (or an attempt or conspiracy to violate) any law or regulation of a State, the United States, or a foreign country relating to a controlled substance, is inadmissible to the United States.

A Canadian citizen working in or facilitating the proliferation of the legal marijuana industry in Canada, coming to the U.S. for reasons unrelated to the marijuana industry will generally be admissible to the U.S.

HOWEVER, if a traveler is found to be coming to the U.S. for reason related to the marijuana industry, they may be deemed inadmissible.

Reposted with permission from Christopher Pogue

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One of the points Attorney Pogue stressed to me today is this – if someone involved in the legal cannabis industry has an immediate family member (parent, spouse, child) or member of the household who is not a US citizen, their immigration status could be in jeopardy. When applying for residency in the US, the non-citizen is at serious risk because even if cannabis is legal under certain states’ laws, it remains illegal at the federal level. Consequently, if you are a stockholder, director, officer, manager, or employee in a legal cannabis business, or are contemplating being involved, and you have an immediate family member or household member that is not a US citizen, it is recommended that you raise this issue with an attorney.

Trump Makes Commitment to Protect State-Legal Cannabis Programs

Senator Cory Gardner (R-Colorado) released a statement on April 13 that he has obtained a commitment from President Trump that Department of Justice will not target Colorado’s (and presumably other states’) legal recreational marijuana industry. As you may recall, Attorney General Jeff Sessions issued a memorandum in January that effectively rescinded the Cole Memorandum, and gave individual US Attorneys the discretion to pursue state-legalized recreational marijuana businesses. Pursuant to the Rohrabacher-Blumenauer Amendment, the federal government is already restricted from devoting resources to prosecute medical marijuana businesses that are in compliance with state law. In response, Senator Gardner put a senatorial hold on approximately 20 of Trump’s Justice Department nominees, freezing the approval process for these nominees.

According to Senator Gardner, in a phone call last week President Trump assured Gardner that the Colorado recreational marijuana industry would not be targeted. Based on this assurance, Senator Gardner is allowing the DOJ nominees to move forward. Also, Senator Gardner stated that “President Trump has assured me that he will support a federalism-based legislative solution to fix this states’ rights issue once and for all.” Senator Gardner indicated that he is working with colleagues on a bipartisan legislative solution to embody this notion of federal non-interference with states that have legalized marijuana.

Whether Trump will follow through with his assurances remains to be seen, as he has a pattern for reversing positions and commitments. Also, this commitment may be nothing more than Trump expressing his continuing displeasure with Attorney General Sessions.

Trump Administration Jeopardizes Legal Cannabis Industry

News sources are reporting that Attorney General Jeff Sessions plans on rescinding the Cole Memo, an Obama-administration policy statement that essentially took a federal hands-off approach toward cannabis businesses that are legal and compliant under state law. The Cole Memo provided a moderate amount of predictability for these medical and recreational cannabis businesses, allowing them to operate without too much concern that DEA agents would roll up their operations. Marijuana is still classified as a Schedule 1 drug, and therefore is illegal under federal law. According to the news reports, the new approach will allow federal prosecutors in states where cannabis is legal decide how aggressively they want to enforce federal laws relating to marijuana.

As of September 14, 2017, 29 states plus the District of Columbia had legalized marijuana in some form. Most of those states had legalized medical marijuana, but 8 states have legalized marijuana for recreational use. California’s recreational marijuana law became effective January 1, 2018. Ohio, which recently legalized medical marijuana, has already started evaluating and issuing permits for cultivation, processing, and retail. According to Arcview Market Research, legal marijuana sales in North America were approximately $9.7 billion in 2017, an increase of 33% over 2016. Arcview also predicts that the entire legal cannabis market could reach $24.5 billion in sales by 2021. In Colorado, where recreational marijuana is legal, sales now exceed $1 billion a year, and thousands of people have jobs in cannabis-related businesses. Moreover, a Gallup poll released in October 2017 indicates that 64% of Americans support legalizing marijuana for both recreational and medicinal use. That includes support from 51% of Republicans, an increase from 43% Republican support during the previous year’s poll.

Consequently, the new action jeopardizes an economic sector that is showing dramatic growth and potential. Even if federal prosecutors decide to pursue more important priorities, like illegal opioid sales, the uncertainty could chill potential investment in cannabis-related businesses. For example, a Legal 1 cultivator application fee for Ohio costs $20,000. The initial Level 1 cultivator license fee is $180,000, and the annual license renewal fee is $200,000. Investors are going to be reluctant to commit that level of funds to an operation that could be raided by an overly-zealous federal prosecutor.