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FDA Chief Warns CBD Rulemaking Could Take Years Without Congressional Action

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The outgoing head of the Food and Drug Administration (FDA) suggested on Tuesday that it would take several years for the agency to come up with rules around allowing hemp-derived cannabidiol (CBD) in food products—unless Congress steps in.

At a Brookings Institution event, FDA Commissioner Scott Gottlieb recognized that there’s strong interest among the cannabis industry and lawmakers in developing a regulatory framework through which CBD from hemp could be extracted, sold and introduced into the food supply. The problem is that “CBD didn’t previously exist in the food supply, and it exists as a drug under the statute.”

“It can’t just be put into the food supply,” he said, arguing that current law only allows the FDA to “contemplate putting a drug that wasn’t previously in the food supply into the food supply if it goes through a rulemaking process.”

That rulemaking process can take two to three years for conventional products, and so because CBD is “more complex”—due to its association with marijuana—and has already been approved by the FDA as a drug to treat epilepsy (in the form of Epidiolex), it could theoretically take much longer to develop those regulations.

“We’ve never done this before,” Gottlieb said. “It would be a highly novel rulemaking process.”

In the meantime, the FDA is putting together a “high-level work group” that will work to identify “some potential legislative pathways might be to create a framework for allowing CBD into the food supply.”

Gottlieb said he expects the group to release some recommendations by the summer, as Business Insider first reported.

The commissioner said the work group will be formally announced within the next week and would involve a public meeting to solicit comments from stakeholders.

While Congress might have intended to permit the marketing of hemp-derived CBD through the 2018 Farm Bill, the commissioner indicated that additional legislation that specifically addresses CBD regulations would be necessary to allow the ingredient in the food supply. He said there’s precedent for such actions, citing legislation around human growth hormone and fish oil.

“I think you need to come up with a framework that defines concentration levels, where you would create some kind of cut off, and that would be up to the agency to do,” he said. “Congress would obviously give directions to the agency to do that.”

“CBD in high concentrations isn’t risk-free, and in low concentration, it probably is safe—I don’t want to make a declaration here. It’s also a question of whether it’s providing any kind of therapeutic benefit in those concentrations, although people seem to believe that it has some value. But this is a process that the agency would have to work through. I think the most efficient way to get to a pathway would be through legislation, probably that would just be legislation that would specifically address CBD.”

Gottlieb made similar comments in response to questions from members of a House Appropriations subcommittee last month, where he announced that the agency would hold a public meeting in April to gather input from stakeholders on CBD regulation.

In the new comments, the commissioner also added that he felt the Drug Enforcement Administration (DEA) would have to “formally de-schedule” hemp-derived CBD before moving forward with regulatory changes, in spite of the fact that the agriculture legislation shifted regulatory responsibility for the crop and its derivatives from the Justice Department to the U.S. Department of Agriculture.

“I think the prevailing view is that the plain language of the statute [of the Farm Bill] intended for that, but I’m not sure that DEA has done that yet,” he said. “But that’s another step that would have to take place. DEA would have to formally de-schedule CBD derived from hemp.”

The desire for clarity around CBD’s legality post-Farm Bill passage has been widespread. For example, the U.S. Postal Service issued an advisory earlier this month spelling out rules for mailing hemp-derived CBD. Representatives from state agriculture departments also heard talk about “alternative approaches” to regulating the compound at a conference last month.

In his remarks at Brookings, Gottlieb announced that the CBD work group would be co-chaired by Amy Abernethy, FDA’s principal deputy commissioner, and Lowell Shiller, the agency’s acting associate commissioner for policy.

In the meantime, it is clear that lawmakers want FDA to move on the issue.

“Every meeting I go into on Capitol Hill, almost every meeting, I get asked about this,” Gottlieb said.

U.S. Postal Service Issues Advisory On Mailing Hemp-Derived CBD

Photo courtesy of YouTube/Brookings Institution.

Marijuana Moment is made possible with support from readers. If you rely on our cannabis advocacy journalism to stay informed, please consider a monthly Patreon pledge.

Kyle Jaeger is Marijuana Moment's Los Angeles-based associate editor. His work has also appeared in High Times, VICE and attn.

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Congressman Says Marijuana Could Be Legal Sooner If Trump Stops Tweeting

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The plan to federally legalize marijuana is well underway, Rep. Earl Blumenauer (D-OR) said in a new interview. But it’d be moving a lot quicker if it weren’t for distractions emanating from the president’s Twitter account, he joked.

Blumenauer gave a status update on his plan to end federal cannabis prohibition during a Sunday KATU-TV interview in which he was asked whether he felt Congress was still on track to legalize marijuana by year’s end.

“We are in really great shape. We’ve had a number of votes in the House. The things I’ve put in the blueprint are moving forward,” the congressman said, adding that the Judiciary Committee held a major hearing on legalization legislation in July.

Blumenauer issued a memo to his party’s leadership last year—which he called a “blueprint”—in which he laid out a step-by-step plan by which House committees could advance incremental cannabis legislation while building up to the eventual federal legalization of marijuana by the end of 2019.

“We’ve got things keyed up. I think there’s a great chance of doing it this Congress—maybe even this fall—depending on how crazy things get,” he said in the TV interview.

“Every time I turn around, there’s some other national catastrophe or Trump is out there with Twitter storms,” he cautioned. “It’s not a manageable situation, but the issues dealing with cannabis are on the right track.”

“We can get it wrapped up this Congress, maybe even this year.”

Watch Blumenauer’s marijuana comments, starting at about 9:35 into the video below:

While the 116th Congress is by many measures the most cannabis friendly in history, advocates hoped that reform legislation would move more expeditiously, especially in the Democratic-controlled House.

For example, a bipartisan bill that would protect banks that service marijuana businesses from being penalized by federal regulators cleared the House Financial Services Committee in March, but it didn’t get a full House floor vote before the August recess like advocates anticipated.

That said, companion legislation did get a somewhat unexpected hearing in the Senate Banking Committee even after the panel’s chair indicated it wouldn’t advance as long as cannabis remains federally illegal.

Blumenauer also said in the interview that voters are ahead of Congress on the issue, moving forward with state-level legalization efforts while legislative action on Capitol Hill crawls ahead. And beyond the U.S.’s border, the congressman mentioned that Mexico will be implementing legalization this fall.

Bernie Sanders Calls For Legalization Of Marijuana And Safe Injection Sites

Photo courtesy of KATU 2.

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Credit Unions Can Bank Hemp Businesses, Federal Agency Announces

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A federal financial agency released updated guidelines on banking in the hemp industry on Monday, following up on requests from multiple lawmakers to provide clarity on the issue.

The National Credit Union Administration (NCUA) said in its interim guidance that providing banking services to hemp businesses is allowable since the crop and its derivatives were federally legalized under the 2018 Farm Bill. The notice also emphasized the economic potential of hemp and the role credit unions can play as the industry continues to develop.

“Lawful hemp businesses provide exciting new opportunities for rural communities,” NCUA Chairman Rodney Hood said in a press release. “I believe today’s interim guidance keeps with the mission of the nation’s cooperative credit system to serve people who have been overlooked and underserved.”

“Many credit unions have a long and successful history of providing services to the agriculture sector,” he said. “My expectation is that credit unions will thoughtfully consider whether they are able to safely and properly serve lawfully operating hemp-related businesses within their fields of membership.”


In a letter sent to Sen. Michael Bennet (D-CO) last month, which the presidential candidate’s Senate office shared exclusively with Marijuana Moment, Hood noted that NCUA was “working on possible future guidance to financial institutions” but that such guidance would be subject to change depending on what regulations the U.S. Department of Agriculture (USDA) ultimately develops.

In the meantime, the new interim guidance notes that “growth in hemp-related commerce could provide new economic opportunities for some communities, and will create a need for such businesses to be able to access capital and financial services” while clarifying that credit unions “may provide the customary range of financial services for business accounts, including loans, to lawfully operating hemp related businesses within their fields of membership.”

While NCUA said that it is “generally a credit union’s business decision as to the types of permissible services and accounts to offer,” it highlighted the need to comply with the Bank Secrecy Act (BSA) and with Anti-Money Laundering (AML) requirements, in particular:

—Credit unions need to maintain appropriate due diligence procedures for hemp-related accounts and comply with BSA and AML requirements to file Suspicious Activity Reports (SARs) for any activity that appears to involve potential money laundering or illegal or suspicious activity. It is the NCUA’s understanding that SARs are not required to be filed for the activity of hemp-related businesses operating lawfully, provided the activity is not unusual for that business. Credit unions need to remain alert to any indication an account owner is involved in illicit activity or engaging in activity that is unusual for the business.

—If a credit union serves hemp-related businesses lawfully operating under the 2014 Farm Bill pilot provisions, it is essential the credit union knows the state’s laws, regulations, and agreements under which each member that is a hemp-related business operates. For example, a credit union needs to know how to verify the member is part of the pilot program. Credit unions also need to know how to adapt their ongoing due diligence and reporting approaches to any risks specific to participants in the pilot program.

—When deciding whether to serve hemp-related businesses that may already be able to operate lawfully–those not dependent on the forthcoming USDA regulations and guidelines for hemp production–the credit union needs to first be familiar with any other federal and state laws and regulations that prohibit, restrict, or otherwise govern these businesses and their activity. For example, a credit union needs to know if the business and the product(s) is lawful under federal and state law, and any relevant restrictions or requirements under which the business must operate.

“Hemp provides new opportunities for communities with an economic base involving agriculture,” the notice states. “The NCUA encourages credit unions to thoughtfully consider whether they are able to safely and properly serve lawfully operating hemp-related businesses within their fields of membership.”

“Lending to a lawfully operating hemp-related business is permissible.”

After USDA releases its rules for the hemp industry, which are expected to come ahead of the 2020 planting season, NCUA said it “will issue additional guidance on this subject.”

Senate Majority Leader Mitch McConnell, who like Bennet has also pressured federal regulators to clear up confusion around hemp banking, took credit for NCUA’s response and celebrated the new guidance.

“I’m delighted to hear the NCUA has answered my call on behalf of Kentuckians to ensure the legal hemp industry can access much-needed financial services,” McConnell said in a press release. “Although President Trump signed into law my initiative last year to remove hemp from the federal list of controlled substances, many of my constituents have told me about their difficulty receiving loans and other services that are necessary to successfully run a hemp business.”

“Through this guidance by the NCUA, I look forward to more hemp farmers, processors and manufacturers starting or growing their operations with the help of Kentucky’s credit unions,” he said. “As Senate Majority Leader, I’ll continue advocating for Kentucky’s priorities throughout the federal government, and I’m proud of today’s positive news.”

Credit unions have generally been friendlier to the marijuana and hemp industries than have conventional banks, and NCUA has similarly taken a more proactive role in evolving to meet the demands of these burgeoning markets.

For example, the agency’s head clarified earlier this month that credit unions wouldn’t be punished simply for serving hemp businesses so long as they were following standard procedures. NCUA also released a draft rule in July that would allow people with past drug convictions to work at credit unions.

Cannabis banking issues have received significant congressional attention this session, with a bipartisan consensus emerging around creating a legislative fix so that hemp and marijuana businesses are able to access financial services.

The hemp industry in particular has enjoyed bipartisan support since the crop was legalized, but while marijuana remains a federally controlled substance, more lawmakers from across the aisle are expressing interest in affording cannabis businesses the same access in order to increase financial transparency and mitigate public safety risks associated with operating on a largely cash-only basis.

The House Financial Services Committee approved a bill in March that would protect banks that service marijuana businesses from being penalized by federal regulators, and the Senate Banking Committee also held a hearing on the issue last month.

Banking Chairman Mike Crapo (I-ID), who suggested earlier this year that his panel wouldn’t convene to discuss the matter as long as cannabis is federally illegal, has since taken a stance that the issue needs to be resolved.

But while advocates hoped that legislation to address marijuana banking problems would be taken up by the full House ahead of the August recess, that window closed and attention is now turned to a potential hearing in the fall.

Five Federal Agencies Respond To Presidential Candidate’s Hemp Banking Letter

Photo courtesy of Brendan Cleak.

Marijuana Moment is made possible with support from readers. If you rely on our cannabis advocacy journalism to stay informed, please consider a monthly Patreon pledge.
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Marijuana Taxes Differ In Legalized States, Complicating Projections

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The marijuana legalization movement is often described as a state-level experiment—and one aspect of its implementation that’s garnering more attention is how legalized jurisdictions approach cannabis taxes in different ways.

Pew Charitable Trusts has been monitoring taxation in the legal industry and released a report on Monday that explains the challenges of establishing effective tax schemes and accurately projecting revenues, especially considering that experts don’t have a sizable body of historical data on which to base predictions like they do for alcohol and tobacco.

That said, there are some lessons to be taken from recent years since early legalizers implemented their respective programs.

Because tax rates differ significantly for marijuana businesses and consumers depending on the state, revenue from cannabis sales has varied, leaving policymakers in a flux as they work to meet budget goals and predict future trends, Pew reported.

Revenue was 40 percent higher in the first six months of sales than Nevada anticipated, for example, while sales in California were 45 percent lower than initially projected.

Here’s a breakdown of marijuana tax revenue in five adult-use states: 

Via Pew.

Pew also observed that revenue growth is slowing in Colorado and Washington, the first states to legalize for recreational use, as the market evolves.

Via Pew.

“Supporters of legalizing recreational marijuana expected a new revenue source for states, but market uncertainties continue to challenge revenue forecasters and policymakers,” Pew concluded. “The difficulty in forecasting revenue is compounded by the fact that states have only recently begun to understand the recreational marijuana market: the level of consumer demand for recreational marijuana products, the types of users and how much they might pay for the drug, and competition with the black market.”

“States have learned some lessons but continue to grapple with unknowns.”

In order to prevent budget shortfalls that could impact funding for certain programs, policymakers should take caution and bear in mind the differences “between marijuana revenue’s short-term growth and long-term sustainability.”

“While these new dollars can fill immediate budget needs, they may prove unreliable for ongoing spending demands,” Pew said. “Policymakers should look to other, more familiar sin taxes for lessons on how to manage marijuana tax revenue most effectively.”

Federal Health Agency Releases List Of Marijuana Research Priorities

Photo courtesy of WeedPornDaily.

Marijuana Moment is made possible with support from readers. If you rely on our cannabis advocacy journalism to stay informed, please consider a monthly Patreon pledge.
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