Half-Baked: An Overview Of Current Cannabinoid Laws & Regulations

• Published date: 13 December 2022
• Subject Matter: Food, Drugs, Healthcare, Life Sciences, Cannabis & Hemp, Food and Drugs Law
• Law Firm: Butler Snow LLP
• Author: Ms Caroline C. Loveless and Allison Simpson

Over 50 years ago President Nixon declared a "War on Drugs," leaving housewives over the country proclaiming marijuana¹ to be the devil's lettuce and urging sweet Billy to steer clear of the gateway drug. However, as time has progressed, marijuana's use and presence in society has become less taboo. Some credit public acceptance of the three leafed plant commonly referred to as ganja or hemp to medical advances and promises of the drug's potential to soothe pain, ease anxiety, and ease the effects cancer. Perhaps the drug's popularity (or notoriety depending on one's perspective) developed lyrically through Willie Nelson's infamous "Roll Me Up and Smoke Me When I Die," or Afroman's four little words "Because I Got High." Others find comfort in Mary Jane's economic benefits, citing its exponential positive impact on tax revenue, generation of jobs, sources of potential investment, or enforcement funds returning to the Fed's piggy bank. Whatever the source, there is no debate individual determinants of support for marijuana are extremely personal and range widely.

While smoking marijuana, either medically or recreationally, may be socially tolerated, the drug is nonetheless illegal pursuant to federal law. Under the Controlled Substances Act, marijuana, in any form, is prohibited for consumption, production, processing, and sale. However, most states have legalized the use of cannabinoids in some form. Here we discuss the cannabinoid legal landscape, including conflicting federal and state laws and regulations, two unanticipated' yet controlling' federal acts, hurdles affecting business operations, and pending legislative bills urging the federal government to "Just Say Yes."

Alright, Alright, Alright²

What are Cannabinoids?

Cannabinoids are a group of substances found in the cannabis plant.³ While there are around 540 chemical substances found in the cannabis plant, the two most common cannabinoids are cannabidiol ("CBD") and tetrehydrocannabinoil ("THC").⁴ CBD is the main non-psychoactive cannabinoid in cannabis.⁵ CBD may be derived from hemp or non-hemp plants, which is any part of the cannabis satvia plant with less than 0.3% of THC.⁶ As long as CBD products contain less than 0.3% THC, they are legal under federal law.⁷ CBD may be ingested in multiple ways'just ask Martha Stewart as she "preheat[ed] the oven" for the Silent Generation and Baby Boomer's acceptance of cannabinoids with her line of CBD products.⁸ CBD may be consumed through inhalation, via vapors or smoke, through aerosol spray into the cheek, by mouth as capsules or as a liquid solution.⁹

"Cannabis," on the other hand, refers to all products derived from the cannabis sativa plant. "¹⁰ Different forms of cannabis contains different levels of THC'with higher levels of THC producing a stronger effect. Claimed by Willie Nelson to have "saved his life," "marijuana" refers to all parts of the cannabis sativa plant that contain substantial amounts of THC' the main psychoactive cannabinoid that gives consumers a "high" feeling.¹¹ Marijuana may be smoked as a cigarette, referred to as a joint, in a pipe or bong, or through electronic vapes.¹² It may also be mixed with foods, brewed as teas, or infused with candies.¹³

Forty-seven states allow for the use of CBD and low THC products, while thirty-seven states and four territories allow the medical use of cannabis products.¹⁴ Nineteen states and three territories have implemented laws allowing for non-medical, recreational adult cannabis use.¹⁵ Currently, Idaho, Nebraska, and Kansas have no public cannabinoid access program available.¹⁶

Indisputably, both cannabis and CBD have incredible potential to generate revenue. Over 48 million people, or 18% of Americans, report kissing the sky with marijuana in 2019.¹⁷ Colorado became one of the first states to legalize recreational marijuana in 2012. Since the state's legalization of marijuana, sales totals for medical and retail marijuana exceed $13 billion and the state has collected over $2 billion in sales tax.¹⁸ Nevada, a state that legalized recreational marijuana in 2017, reported $152,334,798 in total cannabis excise tax revenue, including the state wholesale and retail tax, for its 2022 fiscal year.¹⁹ The state's taxable sales reported by adult-use retail stores and medical dispensaries blaze higher at $965,091,123.²⁰ In the United States, CBD sales reached 4.6 billion in 2020, and the industry shows no signs of slowing down.²¹ CBD sales are expected to reach $15 billion by 2024 and $20 billion in 2025.²²

Without a doubt, the cannabis industry is poised to fly high. But the industry faces significant hurdles before full normalization'most notably federal legalization. Knowledge of four federal acts is critical to understanding the legal framework for cannabinoids. These include the Controlled Substances Act ("CSA"), the Agriculture Improvement Act of 2018 (the "Farm Bill"), the Federal Food, Drug, and Cosmetic Act (the "FD&C Act"), and the Federal Trade Commission Act (the "FTCA").

Up in Smoke²³

The Controlled Substances Act

Enacted as an essential component of President Richard Nixon's "War on Drugs," the Controlled Substances Act ("CSA") makes the possession, production, and distribution of marijuana illegal' without exception.²⁴ Under the Act, "Marihuana" is a Schedule I drug, alongside heroin, LSD, and methamphetamine.²⁵ Schedule I drugs are classified by their purported potential for abuse, lack of accepted medical use treatment in the United States, and lack of accepted safety for use under medical supervision.²⁶ Despite cannabis' status as legal under many state laws, the CSA subjects cannabis consumers and businesses to civil and criminal penalties, including the risk of asset forfeiture under federal law.²⁷

To clarify the apparent conflict in federal and state treatment of cannabis, the Department of Justice ("DOJ") has issued several memoranda to federal prosecutors offering guidance concerning marijuana enforcement and prosecution.²⁸ In August 2013, the DOJ confirmed the federal government's treatment of marijuana in the Cole II Memorandum ("Cole II"), noting "Congress has determined that marijuana is a dangerous drug and that the illegal distribution and sale of marijuana is a serious crime that provides a significant source of revenue to large-scale criminal enterprises, gangs, and cartels."²⁹ Despite this statement, Cole II presented eight defined goals of the DOJ, recognizing the need to define its marijuana enforcement priorities amidst state legalization.³⁰ Cole II also emphasized the DOJ's reliance on states to "implement strong and effective regulatory and enforcement systems that will address the threat [legalized marijuana] could pose to public safety, public health, and other law enforcement interests."³¹

In 2018, Attorney General Jeff Sessions rescinded prior guidance, including Cole II. However, in practice, the DOJ continues to follow Cole II, making it clear that while the federal government continues to criminalize the cultivation, distribution, sale, and possession of marijuana, the DOJ's intent is to allow state "prosecutorial discretion" in regulation and enforcement of marijuana-related activity.³²

Pursuant to the CSA, the Attorney General may add, transfer, or remove any drug from any schedule in the CSA through a rulemaking proceeding.³³ As such, marijuana could potentially be removed as a schedule I drug under the Act. Procedurally, in order for this to occur, the Administrator of the Drug Enforcement Administration ("DEA"), the Secretary of Health and Human Services ("HHS") or any interested party may bring a petition.³⁴

Can You Take Me Higher³⁵

Supreme Court Hesitation?

From 1990 to present, the federal government's prohibitive stance on cannabis has been tested several times through litigation. However, federal courts in the United States have yet to rule in opposition of the CSA.

The Supreme Court held in United States v. Oakland Cannabis Buyers Co-op, there are no medical necessity defenses to a violation of the CSA.³⁶ This ruling reinforced the notion that individuals who manufacture and distribute medical cannabis, albeit legally under state law, are still in violation of federal law. In 2005, the Supreme Court, provided guidance on the effect of purely local cultivation and use on interstate commerce in Gonzales v. Raich, finding Congress can enforce the prohibition even when the product does not enter into the interstate market.³⁷ The Ninth Circuit, in Conant v. Walters, held that any doctor prescribing medical cannabis to a patient would be aiding and abetting a violation of the CSA.³⁸ Consequently, a physician in cannabis-legal states may "recommend" cannabis to his or her patients, but may not "prescribe" cannabis.³⁹

Several cannabis cases now...