Legal Ambiguity
[dropcap class=”kp-dropcap”]L[/dropcap]ast month, the Washington legislature approved and sent House Bill 2334 to Gov. Jay Inslee for signature. HB-2334 would allow licensed cannabis producers and processors to add cannabidiol (CBD) from sources outside the Washington State regulatory regime to their cannabis products in order to increase the CBD concentration, a departure from current policy, which requires that all CBD be obtained from other producers or processors licensed by the Washington State Liquor and Cannabis Board (LCB). There are, of course, requirements that would have to be met in order to utilize CBD additives from non-licensed sources.
The bill defines a “CBD product” as “any product containing or consisting of cannabidiol.” Under this legislation, for the purpose of enhancing the CBD concentration of any product authorized for production, processing or sale, cannabis producer and processor licensees may use CBD obtained from a source not licensed by the LCB so long as the following requirements are met:
- The product has a THC level of 0.3 percent or less on a dry weight basis; and
- The product has been tested for contaminants and toxins by a testing laboratory accredited by the state and in accordance with the same testing standards that apply to cannabis licensees.
The LCB may promulgate additional rules pertaining only to laboratory testing and product safety standards for CBD products included as additives in cannabis products.
HB-2334 is an interesting regulatory departure for the Washington cannabis market, which is a completely closed system. If a licensee is caught purchasing or selling cannabis from or to an unlicensed entity, the LCB may immediately cancel their license; One of the principal goals of Washington’s regulatory regime is to prevent the diversion of cannabis outside the regulated market.
Even if Gov. Inslee signs the bill and licensees are allowed to utilize CBD additives from unlicensed sources, there remains a great deal of ambiguity as to the legality of CBD from a federal law perspective. There is an argument that CBD from outside Washington’s regulated market could be considered legal because products containing CBD derived from “industrial hemp” are excluded from the federal Controlled Substances Act’s (CSA) definition of “marijuana” and are legal under federal law.
Section 7606 of the 2014 Farm Bill allows states to develop pilot programs for hemp research purposes, and defines “industrial hemp” as cannabis with a THC concentration of less than 0.3 percent on a dry weight basis. Although Washington has an industrial hemp research program, it is underfunded. But in any case, HB-2334 does not specify that CBD used as an additive must come from an entity operating pursuant to such a program, and the sale of products derived from such a program are not explicitly allowed. Ostensibly, under this legislation, a licensee could procure CBD from a source outside of Washington, or even outside the country. The legislation places no limitations on sourcing beyond those listed above.
Interestingly, HB-2334 makes no mention of what constitutes “legal” CBD outside the state’s licensing regime, nor does it explicitly require such CBD to be “legal.” This is likely because doing so would open a “Pandora’s Box” of debate surrounding what actually constitutes “legal CBD,” and at this point, no one seems to have a clear answer. While this bill would provide security and flexibility to those licensees wishing to utilize CBD additives from unlicensed sources, until the law is adopted and regulations are implemented, producers and processors who are using outside CBD additives are likely placing their licenses in jeopardy.
