The U.S. Department of Veterans Affairs (VA) has rejected a veteran’s application for recognition of his hemp products company, writing in a denial letter this week that the business’s involvement in “products derived from the same genus of plant (cannabis) as marijuana” would amount to “a federal agency endorsing a Schedule I controlled substance.”
The rejection appears to be yet another example of confusion around the federal status of hemp, which is legal under U.S. law and defined as cannabis or its derivatives containing less than 0.3 percent THC. Cannabis products with higher concentrations of THC remain illegal under the Controlled Substances Act.
The business in question is Florida–based Holistic Serendipity LLC, which does business as Native Ceuticals Tampa. It operates under a licensing agreement with Native Ceuticals, headquartered in North Carolina. The Florida affiliate company, owned by Marine veteran Zack Zindler, is seeking certification as a service-disabled veteran-owned small business (SDVOSB), a designation that enables a company to compete for certain federal contracts.
While many federal agencies allow businesses to self-certify as SDVOSBs, VA requires verification through its Center for Verification and Evaluation (CVE). In the department’s letter denying Zindler’s application, CVE Director John Perkins wrote that verification “would grant the firm the ability to use the VA SDVOSB trademark and therefore may give the appearance that the VA is endorsing a company that promotes the use of a Schedule I controlled substance.”
The letter is clear that Native Ceuticals Tampa is a hemp company. “Based on the documentation submitted and online research, the applicant sells hemp derived products,” it says, after a summary of company information that repeatedly refers to hemp.
But Perkins nevertheless refers to the federal prohibition of marijuana and insists VA recognition of Native Ceuticals Tampa could create the appearance that the department condones cannabis use:
“If Holistic Serendipity LLC DBA Native Ceuticals Tampa were verified as a SDVOSB, it would be listed on the VA’s Vendor Information Pages (VIP) database as a verified SDVOSB and would receive access to the VA’s SDVOSB trademark for use on its marketing materials and website. Marijuana is still a controlled substance under federal law. Holistic Serendipity LLC DBA Native Ceuticals Tampa is engaging in the sale, growth, or distribution of products derived from the same genus of plant (cannabis) as marijuana. For this reason, the VA cannot verify Holistic Serendipity LLC DBA Native Ceuticals Tampa as a SDVOSB, which would grant the firm the ability to utilize the VA SDVOSB trademark and therefore may give the appearance that the VA is endorsing a company that promotes the use of a Schedule I Controlled Substance.”
It’s not entirely clear that VA’s letter reflects a position that hemp products are federally illegal (which would be incorrect). Despite referencing marijuana numerous times, Perkins doesn’t directly address the legal status of hemp or CBD, and he repeatedly cites the potential “appearance” of VA’s endorsement of Schedule I controlled substances. It’s possible the department is concerned that simply verifying a hemp business through the SDVOSB program could create confusion over its stance on THC.
In response to an email from Marijuana Moment about Native Ceuticals Tampa and VA’s position on the legality of hemp in general, a department spokesperson reiterated that marijuana remains federally illegal.
“Federal law classifies marijuana as a Schedule I Controlled Substance and is illegal,” the VA representative, Joe Williams, said. “If a business concern elects to implicitly or explicitly include in its marketing material or pursues contracting opportunities relating to the production and/or endorsement of marijuana and simultaneously applies to become a verified Service-Disabled Veteran-Owned Small Business or Veteran-Owned Small Business, VA and, in turn, the Center for Verification and Evaluation, will not approve such applications.”
VA’s response did not directly address hemp or even acknowledge the distinction in federal law between hemp and marijuana.
Hemp became legal under federal law through the 2018 Farm Bill, building on an existing hemp pilot program. The law defines hemp as cannabis containing less than 0.3 percent THC by weight, though a bill filed in Congress earlier this year would increase the THC limit to 1 percent.
At the law enforcement level, the U.S. Drug Enforcement Administration recently said even marijuana seeds are considered legal hemp provided they don’t exceed the THC cap.
Despite no longer being illegal, however, hemp and its various cannabinoids—most notably CBD—remain in a precarious regulatory position. There are currently no regulations from the U.S. Food and Drug Administration (FDA) about how hemp and CBD dietary supplements can be marketed and sold. Last year Reps. Kurt Schrader (D-OR) and Morgan Griffith (R-VA) filed a bill aimed at resolving the issue.
Zindler said he started Native Ceuticals Tampa in May 2021 to provide alternatives to narcotics and pharmaceuticals for military service members recovering from physical injuries or mental health conditions such as PTSD.
“Being an injured veteran myself and having been prescribed different medications for what I was dealing with,” he said in a statement on Wednesday, “I experienced firsthand how hemp helped to regulate and process my emotions, and also helped with physical ailments, without the dependency or side effects.”
In an effort to reach more service members, Zindler applied for a federal contracting program last August. As part of that process, he sought VA verification as an SDVOSB.
The federal Controlled Substances Act is one of two areas of non-compliance cited in the VA rejection letter of Zindler’s application. The other is Native Ceuticals Tampa’s licensing relationship to the North Carolina company Native Ceuticals. Perkins’s letter says that while VA has confirmed that Zindler meets the definition of a service-disabled veteran, his company’s licensing agreement means that non-veterans exercise control over the company.
The Tampa company is an affiliate of Native Ceuticals, and its Facebook page links to an affiliate area of the parent company’s website. A press release from Native Ceuticals Tampa also links to the Native Ceuticals website for more information about the business.
Zindler is currently filing an appeal of the VA decision and is considering other legal options, according to a company release. A representative for Native Ceuticals Tampa said the company expects to be able to satisfy the issue of veteran control, but even if he does, the Controlled Substances Act finding will still stand.
Abigail Nath, a Pennsylvania–based cannabis lawyer and consultant for the company, said that if the rejection comes down to the sole issue of hemp’s legality under federal law, the VA position is flat-out wrong.
“Putting aside that the CVE has granted this certification to other companies specializing in CBD, the VA is not abiding by the most recent definition of cannabis as defined by the federal government,” Nath said. She added that the rejection letter’s reference to marijuana “is an obsolete and moot point, as Zack’s company only sells products that are derived from hemp, a federally legal plant.”
Zindler said he even obtained a hemp food permit from the Florida Department of Agriculture and Consumer Services, which is required to sell CBD and other hemp products in his home state.
Walter Tribolet, CEO of Native Ceuticals, the North Carolina-based with which Zindler’s company has a licensing agreement, said the company’s products are fully compliant with federal law.
“We ensure we are in accordance with every law and regulation in order to grow and distribute hemp,” Tribolet said. “Every Native Ceuticals product is tested to comply with government standards of scientific certainty that all our products are THC free or comply with the federal maximum of 0.3 percent or less.”
In the aftermath of the decision, the U.S. Hemp Roundtable, an industry group, sent a letter Thursday to CVE Director Perkins imploring him to reconsider the decision, which the group says “will deny benefits to veteran-owned hemp businesses and deny consumers access to legal hemp products.”
“The Center based its denial, in significant part, on the incorrect belief that Holistic Serendipity sells illegal marijuana,” the letter says. “Hemp is not marijuana, but rather is non-intoxicating and a legally and scientifically distinct subspecies of the cannabis plant. As you may know, the 2018 Farm Bill—federal law for more than three years—legalizes the production of hemp throughout the United States, removes hemp and tetrahydrocannabinols in hemp from the federal controlled substances schedules, and protects hemp and hemp products in interstate commerce. The federal legality of hemp, including all derivatives, extracts, and cannabinoids of the plant, is not in question.”
Veterans, despite their history as one of the most vocal groups of advocates for cannabis legalization, have regularly encountered obstacles at VA. The department has long warned veterans that the drug remains federally illegal and for years prevented its doctors from issuing medical marijuana recommendations to patients, even in states with legal cannabis.
While current policies now allow VA doctors to discuss cannabis, the change could be further codified through federal legislation introduced in March by U.S. Rep. Seth Moulton (D-MA). Under Moulton’s bill, veterans would be “encouraged” to discuss medical cannabis with their doctors without fear of losing their federal benefits.
The state–federal conflict around cannabis has also caused headaches for some veterans working in the marijuana industry who said they were blocked from receiving VA home loans. The department clarified in 2020 that it does not automatically block cannabis industry participants from receiving home loans, although it said that conflicting laws make it “difficult to prove the stability and reliability of cannabis-derived income,” which are key factors in determining loan eligibility.
Read the VA”s full denial letter to the hemp company below: