A new bill on Capitol Hill, removing a page from the alcohol playbook, intends to regulate cannabis through the Alcohol and Tobacco Tax and Trade Bureau (TTB) while delegating hemp regulatory duties to the FDA.
South Carolina Republican MP Nancy Mace introduces the State Reform Act during a November 15 press conference at the U.S. Capitol.
The US MP Nancy Mace, RS.C. Sponsored States Reform Act (SRA), would end the federal cannabis ban, introduce a 3% cannabis excise tax, regulate interstate trade, and provide for automatic overturning of nonviolent cannabis convictions, among other provisions.
The legislation also aims to give cannabis and hemp separate primary regulatory agencies, with dividing a plant based on THC potency.
But with the recent clashes between hemp industry stakeholders – especially those with ties to the CBD market – and the U.S. Food and Drug Administration, regulatory tasks have become an important dialogue in federal discussions.
Many cannabis advocates have publicly opposed the idea that their segment of the industry will be regulated by the FDA following the introduction of the Cannabis Administration and Opportunity Act (CAOA), another bill to end the federal ban put forward by Sens. Chuck Schumer, DN., Sponsored .Y., Ron Wyden, D-Ore., And Cory Booker, DN.J.
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And if the cannabis industry can bypass the FDA as the primary regulatory agency under federal legalization, then the question arises: should the hemp industry stay clear?
Vicente Sederberg | vicentesederberg.com
Shawn Hauser, partner at Vicente Sederberg LLP, co-chair of the law firm’s hemp and cannabinoids division, compared the potential regulatory divide in the SRA to the alcohol industry, where beer, wine and spirits are regulated by the TTB, while beverages like kombucha that fall below the threshold of 0.5% alcohol by volume are subject to the guidelines of the FDA.
With regard to cannabis and hemp, the differentiation threshold is 0.3% THC, as defined in the Farm Bill 2018.
“In general, for hemp, [industry stakeholders] are now concerned and concerned about FDA oversight, especially when cannabis is subject to this TTB structure, and maybe there is some benefit in regulating the entire plant in this way, “Hauser said. “I think this is an important discussion to have. What is the right approach for the entire system? “
With regards to the TTB and FDA authorities, there is a need to consider whether the THC and THC-rich versions of the plant should be treated differently, Hauser said.
The hemp industry has been in “a lot of regulatory purgatory” with the FDA since the 2018 Farm Bill legalized hemp production, she said.
“It has postponed regulation of finished products to the FDA, which has yet to be finalized,” said Hauser. “And that was a real barrier to the hemp industry. And one of the things the Mace Bill does differently than that [CAOA] is really like regulating cannabis like alcohol by giving TTB the primary regulatory agency for cannabis. ”(The CAOA would give primary authority to the FDA, TTB, and the Bureau of Alcohol, Tobacco, Firearms and Explosives.)
Perhaps most notably, Maces SRA would waive the use of the Federal Food, Drug and Cosmetic Act (FD&C Act) drug exclusion formulations applied to cannabis or hemp.
The current drug exclusion provision for CBD states that once a substance has been studied or approved for use in a drug, the same substance can no longer be used as an ingredient in a food or dietary supplement, Hauser said.
In this provision lies, in part, the collision between CBD stakeholders and the FDA. Citing CBD’s own approval as an active ingredient in Epidiolex, a pharmaceutical epilepsy drug, the FDA has ruled that non-pharmaceutical CBD cannot be marketed as or in a dietary supplement based on the language of drug exclusion.
“This provision is why the FDA is taking the position that CBD in foods and dietary supplements is illegal,” said Hauser. “The State Reform Act would remove the exclusion of cannabis and hemp, but regulate hemp products under the FDA’s purview as food and dietary supplements, while cannabis products like alcohol would be largely regulated by TTB.
“And that can create a structure in which the regulation for cannabis products is clearer or more permissive or less burdensome and costly than the regulation for hemp [products] because of the level of FDA oversight. “
More focused efforts to remove the language of drug exclusion from FD&C law are included in the current legislation of Congress.
In the House of Representatives, US MPs Kurt Schrader, D-Ore., And Morgan Griffith, R-Va., Reintroduced the Consumer Protection and Market Stabilization Act for Hemp and Hemp-Derived CBD (House Bill 841), which is the language of Drug exclusions would only lift for CBD in nutritional supplements, Hauser said.
And U.S. sensors Ron Wyden, D-Ore., Rand Paul, R-Ky., And Jeff Merkley, D-Ore., Filed the Hemp Access and Consumer Safety Act (Senate Bill 1698), which would lift the drug exclusion CBD in both foods and supplements, she said.
SRA would also forego the language for CBD in food and supplements, as well as all cannabis products, Hauser said.
Harris Bricken | harrisbricken.com
Jesse Mondry, an attorney at Harris Bricken who represents clients in the cannabis industry and regularly writes on litigation related to hemp and CBD, also spoke about the FDA’s impact on SRA.
“I think we all in the hemp industry know that the FDA has worked hard to provide guidance on CBD to the industry,” he said. “That had a chilling effect on the growth of the industry. And if that happens and the FDA is authorized, and even directed, to make regulations, hopefully the FDA will sort it out sooner. ”
In addition to the TTB and FDA regulatory indications, the potential impact of the SRA on requirements related to the U.S. Department of Agriculture (USDA) relationship with the hemp industry, as well as opening the doors to new players and industry growth, are other examples of the scope of the legislation, said Mondry.
“In theory, [SRA] should allow the USDA to eliminate or reduce regulatory requirements in the licensing process, as many of them are designed to discourage and punish those who may attempt to grow marijuana under the guise of a hemp license, “he said.
Mondry is based in Oregon, where law enforcement and regulators recently cracked down on illegal cannabis operations camouflaged under hemp licenses.
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“The USDA specifically states that a number of its reporting requirements are so poor that the Farm Service Agency can provide accurate, real-time information to law enforcement agencies, especially federal law enforcement agencies,” Mondry said. “That kind of need and impetus should essentially be eliminated, and … it should result in a reduction in the regulatory burden on hemp farmers.”
A potential domino effect of cannabis being removed as a List I drug from the Controlled Substance Act would also be protection for hemp laboratories, which still fall under the authority of the U.S. Drug Enforcement Administration (DEA), Mondry said.
DEA officials claim that any material containing more than 0.3% Delta-9-THC on a dry weight basis is still classified as a List I substance and therefore certain levels of hemp extraction may be considered non-compliant. During certain refining stages, the THC contents of hemp intermediate materials are concentrated, ie they are above the legal THC limit value, before they are further processed in the extraction process to a THC-compliant end product.
As it stands, the DEA retains some jurisdiction over hemp. According to the USDA’s final guideline, which went into effect in March, hemp testing labs must obtain DEA certification by the end of 2022. So far, laboratories across the country have received this certification.
“I believe the USDA has falsely attempted to impose this DEA certification program on hemp testing laboratories,” said Mondry. That’s just one way of doing that. “
In the broader reform picture, Mondry said an end to the federal cannabis ban “could” lead to increased entry of participants into the hemp market.
“[That includes people] who previously stayed on the sidelines and failed to enter the hemp market due to the connection and association with marijuana, ”he said. “And I’m thinking of Wall Street investment firms, banks, big agribusinesses, big food and beverage manufacturers. So, I think if the State Reform Act were passed we could see the hemp market really pick up and grow really fast. That’s how I see it. “
Mondry said he was more pleased than surprised when Mace, a Republican from the Deep South, introduced state cannabis law. The SRA is representing a growing corps of votes from both sides of the political spectrum to end prohibition, he said.
Hauser said a lot of it.
“I thought it was really positive,” she said of Mace’s introduction to SRA. “I think the bipartisan support is really going to move the needle, and it is representative of where the public stands on supportive regulation and … there is a need for reform and a tax and regulatory system and that is something on both sides of the Ganges to agree. “