Issue: After Congress removed cannabidiol (CBD) from the Controlled Substances Act’s list of Schedule I drugs in the 2018 Farm Bill, government agencies have struggled to adjust their regulations. The Drug Enforcement Agency (DEA) and Customs & Border Protection (CBP) are no exception. CBP still maintains its pre-Farm Bill practice of holding, seizing, and destroying hemp products at the border.
Impact: CBP enforces DEA policy at the border and cannot alter its practices without clarification from the DEA. DEA’s lack of movement is reportedly due to a lack of reliable methods to test the level of THC in products. Products with greater than 0.3% THC content are considered marijuana, which is still a Schedule I drug under the Controlled Substances Act. Even products with laboratory certification of THC levels have been seized by CBP. The DEA has not given any indication that it is seeking input on how to test THC levels in CBD products. This is a problem for both imports and exports, as DEA is not allowed to discriminate by allowing U.S. exports but not imports from other countries.
Next Steps: The uncertainty at the border comes as the House prepares to vote on H.R. 1595, “The Secure And Fair Enforcement (S.A.F.E.) Banking Act,” in the coming weeks. This bill would prohibit Federal regulators from punishing financial institutions that accept deposits from cannabis businesses that are operating legally at the state level. However, this legislation would not affect the DEA’s actions, which is why CBD industry advocates are pushing to combine the SAFE Banking Act with The Strengthening the Tenth Amendment Through Entrusting States (STATES) Act (S. 1028). This bill would exempt any cannabis activity that is in accordance with state laws from The Controlled Substances Act and provide a safe harbor from Federal law enforcement. Both of these bills have bipartisan support, and discussions are underway to bolster GOP support in the Senate. Adding protections for CBD businesses and statutory protection against actions like “Operation Choke Point,” when the Obama Administration investigated banks doing business with firearm dealers, payday lenders, and other companies it believed were high risks for fraud and money laundering, are necessary to get key GOP skeptics on board. However, many Senate Democrats, including Senate Minority Leader Chuck Schumer (D-NY) have abandoned the STATES Act because it does not include provisions such criminal justice reform or de-scheduling of cannabis. With legislative fixes falling victim to the legislative process in a highly polarized Congress, CBD is likely stuck in a legal grey area at the border in the near term.
Please contact ACG Analytics for more information. www.acg-analytics.com