Legal Law

Perils Of The Dry-Weight Foundation Threshold

The Drug Enforcement Agency’s hemp Interim Final Rule (the DEA Rule) continues to keep the hemp industry up at night.

If you recall, the DEA Rule suggests that in-process hemp extract is a schedule I controlled substance during any point at which its tetrahydrocannabinol (THC) concentration exceeds 0.3% on a dry-weight basis. “Any point” includes even fleetingly during the processing phase and includes situations where the THC percentage is brought back into legal compliance for the finished product.

But the DEA Rule also raises the concern of whether any of the finished hemp extracts currently on the market — not merely intermediary hemp – in fact comply with the 0.3% on a dry-weight basis threshold.

The Agriculture Improvement Act of 2018 (the 2018 Farm Bill) legalized hemp by differentiating the crop, its derivatives, cannabinoids, and extracts from marijuana based on a subjectively determined 0.3% THC threshold. If the plant materials contain no more than 0.3% THC on a dry-weight basis then they are treated as hemp. However, if the same plant materials exceed this 0.3% THC limit, they are deemed marijuana, and thus, are illegal under federal law.

Therefore, the precise and accurate calculation of THC concentration is paramount to the legal operation of a hemp business. Nevertheless, much uncertainty remains around THC testing methods and how the dry-weight basis requirement applies to liquid substances such as finished hemp extract.

The 2018 Farm Bill and the U.S. Department of Agriculture’s hemp Interim Final Rule (the USDA Rule) provide for the regulation of raw hemp and impose, among other things, pre-harvest testing requirements. The federal law and regulations do not regulate the processing of hemp into finished liquid forms. Moreover, the pre-harvest testing requirements and dry-weight basis concept do not translate to liquid hemp extracts.

According to the USDA Rule, the term “dry-weight basis” means:

The ratio of the amount of moisture in a sample to the amount of dry solid in a sample. A basis for expressing the percentage of a chemical in a substance after removing the moisture from the substance. Percentage of THC on a dry weight basis means the percentage of THC, by weight, in a cannabis item (plant, extract, or other derivative), after excluding moisture from the item.

As you can see, the definition does not explain how labs must report the THC concentration of an extract on a dry-weight basis. Yet, references to “extracts,” “other derivatives,” and “excluding moisture from the item” suggest that the USDA, as well as the DEA — the DEA strongly influenced the drafting of the USDA Rule and provides in its own Rule that “any derivative of the hemp plant that contains more than .3% THC on a dry weight basis is considered a federally illegal marijuana extract, even if it was derived from legal hemp” (emphasis added) — expect this testing process to apply beyond the testing of raw hemp.

The lack of federal guidance regarding the calculation of dry weight for hemp extracts means that labs are free to adopt their own calculation methodology. This, in turn, means that certificates of analysis (COAs) do not necessarily reflect accurate results of the THC concentration “on a dry weight basis” found in a finished hemp extract, making it impossible for anyone in the industry to ensure their finished hemp extracts comply with federal law.

Following the enactment of the 2018 Farm Bill, a growing number of states adopted THC testing methodologies imposed on finished hemp products, including hemp extracts. Oregon, for instance, mandates that the THC concentration be reported as dry weight, and be calculated as follows: “P total THC(dry) = P total THC(wet) / (1-(P moisture/100)).” This methodology does not require labs to actually dry the hemp extract. Instead, labs must apply a mathematical formula that accounts for and simulates the removal of the moisture present in the tested substance to obtain its THC concentration on a “dry weight basis.”

This methodology also seems to align with a nonbinding guidance issued by the FDA (Guidance) for companies engaged in the clinical research of cannabis-derived drugs. Although the guidance strictly pertains to drug products, this THC calculation may be indicative of the manner in which the FDA may eventually propose to test hemp-derived finished products.

Nevertheless, even if the FDA adopted the Guidance as part of its regulatory framework of hemp-derived products, the DEA may contend that using a mathematical formula to assume the difference in moisture content is not sufficient and may, instead, mandate that labs physically pull the moisture out of liquid hemp products by some chemical process — that may or may not yet exist.

Therefore, the DEA Rule continues to show the need for Congress and all relevant federal agencies to clarify statutory and regulatory gaps surrounding the production of finished hemp products, but also that until the U.S. adopts a uniform THC testing standard, hemp stakeholders will be unjustly vulnerable to federal scrutiny, criminal charges, and arrests.

Nathalie practices out of Harris Bricken’s Portland office and focuses on the regulatory framework of hemp-derived CBD (“hemp CBD”) products. She is an authority on FDA enforcement, Food, Drug & Cosmetic Act and other laws and regulations surrounding hemp and hemp CBD products. She also advises domestic and international clients on the sale, distribution, marketing, labeling, importation and exportation of these products. Nathalie frequently speaks on these issues and has made national media appearances, including on NPR’s Marketplace. For two consecutive years, Nathalie has been selected as a “Rising Star” by Super Lawyers Magazine, an honor bestowed on only 2.5% of eligible Oregon attorneys.  Nathalie is also a regular contributor to her firm’s Canna Law Blog.

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