Tag Archives: schedule 1

Hoban Law Group Files Lawsuit Against DEA

By Aaron G. Biros
2 Comments

The Hoban Law Group filed a petition on behalf of three clients against the DEA in the U.S. Court of Appeals for the Ninth District on January 13th, according to a press release. The clients represented by Hoban Law Group in the suit are Hemp Industries Association, RMH Holdings, LLC and Centuria Natural Foods, Inc. The companies are based in California, Colorado and Nevada respectively and are all active in the legal hemp trade. The press release says RMH Holdings “sources its products from industrial hemp lawfully cultivated pursuant to the Agricultural Act of 2014 (also known as the Farm Bill).”

San Francisco's United States Court of Appeals for the Ninth Circuit Photo: Ken Lund, Flickr
San Francisco’s United States Court of Appeals for the Ninth Circuit
Photo: Ken Lund, Flickr

In December, the DEA published a ‘Final Rule’ that classifies cannabis-derived extracts, such as CBD oil, in their own category with a code number to “better track these materials and comply with treaty provisions.” The announcement by the DEA ultimately serves to make any cannabis extract a Schedule 1 narcotic. “Extracts of marihuana will continue to be treated as Schedule I controlled substances,” says the document.

BobHobanAttorney
Bob Hoban, managing partner

Bob Hoban, managing partner of Hoban Law Group says the action is clearly beyond the DEA’s authority. “This Final Rule serves to threaten hundreds, if not thousands, of growing businesses, with massive economic and industry expansion opportunities, all of which conduct lawful business compliant with existing policy as it is understood and in reliance upon the Federal Government,” says Hoban.

The lawsuit states that they want a judicial review of the DEA’s actions “on the grounds that the Final Rule is (1) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law, e.g. the CSA, the Farm Bill, and the DEA’s regulations; (2) contrary to constitutional right, power, privilege, or immunity; (3) in excess of statutory jurisdiction, authority, or limitations; and, (4) without observance of procedure required by law.” The suit also claims that the ‘Final Rule’ conflicts with other federal laws like the Data Quality Act, Regulatory Flexibility Act and Congressional Review Act.

According to Garrett Graff, associate attorney at Hoban Law Group, the entire Cannabis genus is not unlawful and the DEA is overstepping its authority. “As the Ninth Circuit found in 2003 and 2004 there are certain parts of the plant like the stalk and seed that are congressionally exempted from the Controlled Substances Act and thus the DEA’s rulemaking authority,” says Graff. “By creating a drug code for ‘marihuana extract’, the DEA is saying that they are a controlled substance, but that goes against a number of existing laws.”

Garrett Graff, associate partner at Hoban Law Group
Garrett Graff, associate partner at Hoban Law Group

The definition of ‘marihuana extract’ under the ‘Final Rule’ also references extracts containing one or more cannabinoids, which goes beyond the realm of cannabis altogether, according to Graff. “The DEA and many other sources have acknowledged and confirmed that cannabinoids can be derived from other varieties of flowers, cacao and other sources, making it virtually impossible to distinguish which cannabinoids would be subject to this drug code,” says Graff. “The DEA’s rule effectively makes the presence of cannabinoids a determinative factor of a controlled substance, which is inconsistent with what Congress has said.”

The petition filed is essentially the initiation or commencing of a lawsuit. Graff says their case is rooted in statute. “We hope to accomplish a striking of the rule, permanent injunction of the rule and for the DEA to engage in the appropriate processes and procedures when making rules in the future,” says Graff. “Alternatively, an amendment to the rule to make the definition of ‘marihuana extract’ consistent with existing law and reflect those portions and varieties of the plant which are in fact lawful could be considered.” It may still be roughly 30 days before the DEA responds with briefing and possibly an oral argument to follow on the various issues surrounding the petition, says Graff. The Ninth Circuit petition, including briefings and hearings, is likely to take at least several months.

Biros' Blog

2016 Year in Review: Why the Cannabis Industry Needs Resiliency

By Aaron G. Biros
No Comments

2016 was a tumultuous, but productive year for the cannabis industry. Larger companies began to take interest in the fledgling market, like Microsoft and Scotts Miracle-Gro. This year brought major innovations in technology like market data tools, advances in LED tech, efficient cultivation tech and patient education tools. The Supreme Court set an important precedent by shutting down a challenge to Colorado’s cannabis market.

Voters legalized cannabis in 8 states last month Photo: Nicole Klauss, Flickr
Voters legalized cannabis in 8 states on Election Day.
Photo: Nicole Klauss, Flickr

Election Day brought a renewed sense of vigor to the market with voters in eight states legalizing forms of cannabis. California, Nevada, Maine and Massachusetts passed recreational cannabis measures, making legalization’s momentum seem exponential.

But November 8th also gave Donald Trump the presidency, and his cabinet appointments, namely Sen. Jeff Sessions as Attorney General, gave many a feeling of uncertainty for the future of federal legalization. Adding insult to injury, the DEA repeatedly stood by their antiquated and ludicrous judgment for cannabis to remain a Schedule 1 narcotic.

Gage Skidmore, Flickr
Trump nominated Sen. Jeff Sessions (R) for Attorney General Photo: Gage Skidmore, Flickr

A lot of the fervor surrounding public safety could be described as overdramatic or somewhat unwarranted. 2016 was the year of misinformation. Fake news spread like wildfire with people sharing stories like this or this that turned out to be very misleading or just downright false.

States with legal cannabis came under heavy public scrutiny and addressed problems like consumer education, public safety and lab testing. Pesticides became a highly publicized and persistent issue in a number of areas, with some states regulating it heavily and addressing public health concerns. Plenty of new rules were formed surrounding labeling and testing, with Oregon, Colorado and Washington experiencing some regulatory growing pains.

Those growing pains shed light on the need for regulators to craft rules that allow for changes, adding rules where necessary and getting rid of cumbersome rules that might thwart market growth. Rules need to be able to adapt as the industry grows, much like businesses need to adapt to a changing market climate to stay afloat. This is all the more reason why cannabis businesses need to make their voices heard and work with regulators to move things forward.

Pesticide Use was a major issue of 2016 Photo: Michelle Tribe, Flickr
Pesticide use was a major issue in 2016
Photo: Michelle Tribe, Flickr

With so much uncertainty surrounding the future of legal cannabis in America, the word of the year for 2017 should be resiliency. In a social-ecological context, resiliency is “the capacity of a system to absorb or withstand perturbations and other stressors such that the system remains within the same regime, essentially maintaining its structure and functions. It describes the degree to which the system is capable of self-organization, learning and adaptation.”

img_6245
A warning label for cannabis in Oregon after the October 1st compliance deadline

Self-organization, learning and adaptation are three very important attributes of a resilient system. Without knowing what will happen when Trump’s cabinet takes the reigns of federal agencies, it is important to prepare for the unexpected. Adhering to standards like FOCUS allows cannabis businesses to prepare for unexpected events like recalls or product safety failures.

Those standards could also become the law down the road, as government officials often look to an industry’s voluntary consensus-based standards when deciding how to regulate it. In 2017, a number of state governments will embark on the heavy undertaking of writing the regulatory framework for legal cannabis.

2017 will bring opportunities and challenges to the cannabis industry. The industry’s rapid growth juxtaposed with political, economic and regulatory uncertainties create a climate that requires resilience to be built into the system at all levels. It is critical, now more than ever, that cannabis businesses build strong relationships with industry groups, advocacy groups and regulators to craft the institutional capacity and mutual trust needed to weather the uncertainty ahead.

Aaron_headshot
Biros' Blog

NCIA Guest Post: Waiver Program Could Clear Path for State Legalization

By Aaron G. Biros
No Comments
Aaron_headshot

In last week’s guest post on the National Cannabis Industry Association (NCIA) blog, I discussed The State Marihuana [sic] And Regulatory Tolerance (SMART) Enforcement Act, bill H.R. 3746, and its potential to alleviate a number of problems in the cannabis industry.

The bill would exempt states from the federal prohibition of cannabis via a waiver program. The Attorney General could grant those waivers to states that operate a robust regulatory framework and oversight of the cannabis marketplace. It also has measures in place to help prevent diversion of cannabis into the black market, protecting consumer safety and public health, eliminating criminal enterprise involvement and more.

Cody Stiffler, vice president of Government Affairs at BioTrackTHC, believes this bill could be a panacea for many ailments facing the cannabis market. “They [Congress] plan to give the U.S. Attorney General powers to offer waivers to state governments, exempting that state from federal law regarding cannabis, allowing banks and other institutions to take part in the industry without fear of federal backlash under the Controlled Substances Act,” says Stiffler. Perhaps the most significant effect this bill could have on the cannabis industry is knocking down the burden of the 280E tax code on cannabis businesses primarily because it would exempt states from The Controlled Substances Act. Click here to read the full guest post on the NCIA blog.

DEA To Consider Rescheduling Cannabis, Could Mean Policy Shift

By Aaron G. Biros
No Comments

In a letter sent to lawmakers last week, the Drug Enforcement Agency (DEA) announced plans to make a decision on rescheduling cannabis by mid-2016. The announcement could represent the culmination of a shift in the federal government’s attitude toward cannabis legalization.Dea_color_logo

Currently, cannabis is a Schedule I narcotic, meaning the government views it as lacking medical benefits and have a high potential for abuse. The rescheduling of cannabis has the potential to open the floodgates for research, including much needed clinical trials.

Derek Peterson, chief executive officer at Terra Tech, a cannabis-focused agriculture company, believes this bodes well for the growth potential of the cannabis industry. “From the perspective of quality and safety standards, I find it unlikely that rescheduling it would negatively impact the degree to which cannabis is examined,” says Peterson. “It’s unnecessarily high position on the DEA drug schedule does nothing but limit the industry’s potential for growth, stall any meaningful pharmaceutical testing and increase law enforcement’s ability to prosecute non-violent drug offenders,” adds Peterson.

The rescheduling could also potentially allow for the prescribing of cannabis for patients. Stephen Goldner, founder of Pinnacle Labs and president of Regulatory Affairs Associates, is hopeful this will lead to a greater shift in public attitude towards cannabis. “The DEA’s announcement is a clear message to all States and possibly even to United Nations policy makers: even the DEA is willing to reconsider cannabis,” says Goldner. “Since the DEA is reconsidering cannabis, state politicians and local police departments can also be flexible and move away from prohibition, towards the regulation of cannabis.”

The rescheduling of cannabis could have a tremendous impact on the growth of the cannabis industry, including more clinical trials, medical research and physician participation. It could also open the door for more federal agency involvement, as the Schedule I status inhibits any EPA research on cannabis pesticide use or FDA guidance on food and drug good manufacturing practices. When reached for comment, the FDA’s press office said they could not speculate on any involvement in the matter.