Cannabis Litigation Update – October 2022 | Quinn Emanuel Urquhart & Sullivan, LLP

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Ninth Circuit Declares Delta-8 THC Vape Products Legal Under Farm Bill

In recent years, interest in delta-8 THC (“delta-8”) has grown exponentially, and companies now offer a slew of delta-8-infused products, including e-cigarettes and vaping products. . Eric C. Leas, et al., Public Interest in ∆8-tetrahydrocannabinol (Delta-8-THC) Iincreased in US states that restrict the use of ∆9-tetrahydrocannabinol (delta-9-THC), 101 INT’L J. DRUG POL’Y 103557 (2022); CENTERS FOR DISEASE CONTROL AND PREVENTION, INCREASE IN AVAILABILITY OF CANNABIS PRODUCTS CONTAINING DELTA-8 THC AND CASES OF ADVERSE EVENTS REPORTED (September 14, 2021). However, despite the widespread availability of delta-8 products, there was significant disagreement over the federal legality of these products, until recently. In May of this year, the Ninth Circuit settled that dispute with its decision in AK Futures v. Boyd Street Distro, LLC, asserting that vaping products containing delta-8 are legal “hemp” under the 2018 Farm Bill. 35 F.4e 682 (2022). Furthermore, the court went so far as to note that legal “hemp” also includes all “derived products”.[s]extract[s]or cannabinoid[s] from the cannabis plant” as long as they contain no more than 0.3% delta-9 THC.

What is Delta-8 THC?

Delta-8 is one of approximately 100 cannabinoids found in the cannabis plant and is similar to delta-9 THC, the compound primarily responsible for the psychoactive effects of cannabis. ALCOHOL AND DRUGS FOUNDATION, WHAT ARE CANNABINOIDS?, https://adf.org.au/drug-facts/cannabinoids/ (last visited August 4, 2022). Compared to delta-9 THC, delta-8 has less potent psychoactive effects, likely due to delta-8’s lesser ability to bind to human cannabinoid receptors. Michael Tagen and Linda E. Klumpers, Delta-8-Tetrahydrocannabinol Review (Δ8-THC): Pharmacology compared with Δ9-THC, 179 BRIT. J. PHARMACOLOGY 15, 3915, 3915 (2022). In terms of the manufacturing process, the majority of delta-8 sold to consumers is not extracted directly from the cannabis plant and is instead obtained by converting CBD through chemical reactions into delta-8, which is then added to products. of vaping. Identifier. at 3916.

So, in sum, delta-8 is one of the substances derived from the cannabis plant that has psychoactive effects other than delta-9 THC.

The dispute underlying AK Futures v. Boyd Street Distro, LLC and the District Court Decision

With this background on delta-8 in mind, we can now turn to AK Futures v. Boyd Street Distro, LLC, the dispute behind the Ninth Circuit’s decision to detain delta-8 is legal “hemp.” In Futures AK, a manufacturer of electronic cigarette products designed the brand name “Cake” in October 2020 and began selling delta-8 products under the brand. 35 F.4th at 686. However, in the summer of 2021, the manufacturer learned that a wholesaler was selling counterfeit Cake products in packaging “nearly identical” to the manufacturer’s products. Identifier. at 686-87.

As a result, the manufacturer sued the wholesaler for, among others, trademark infringement of its unregistered Cake trademark and sought a preliminary injunction to restrain the wholesaler from selling counterfeit Cake products Id. at 687. The district court granted the preliminary injunction, finding that the manufacturer was liable to prevail on its claim for trademark infringement because, among other things, the manufacturer owned a valid trademark. Identifier.

Wholesaler Appeals, Ninth Circuit Rules Delta-8 Is Legal “Hemp” Under Farm Bill

Dissatisfied with the district court’s decision, the wholesaler appealed. Identifier. On appeal, the wholesaler argued that the manufacturer’s mark was invalid because “[o]Only lawful use in commerce can give rise to trademark priority,” and the manufacturer’s trademark was used to sell delta-8 products, which the wholesaler claimed to be illegal. Identifier. at 688-89.

The Ninth Circuit considered and dismissed the wholesaler’s illegality argument. The court explained that although marijuana and THC are Schedule I controlled substances that would otherwise be illegal, the 2018 Farm Bill legalized “hemp” by removing it “from the definition of marijuana in the statute. on controlled substances. Identifier. at 690. “Hemp,” in turn, is defined by the Farm Bill as follows:

The term “hemp” means the plant Cannabis sativa L. and any part of this plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts and salts of isomers, which they grow or not, with a delta -9 [THC] concentration not exceeding 0.3 percent on a dry weight basis.

Identifier. Taking a plain-sense approach to this language, the Ninth Circuit has interpreted it to mean that legal “hemp” includes “all products derived from the cannabis plant, containing not more than 0.3% delta-9 THC and may be called a derivative”. , extract, cannabinoid or any of the other terms listed. Identifier. Highlighting the breadth of this definition, the court clarified that “the only legal measure to distinguish controlled marijuana from legal hemp is the concentration level of delta-9 THC”, and this definition “extends to products and substances downstream, as long as their delta-9 THC concentration does not exceed the legal threshold. Identifier. at 690-91.

After the legal definition was clarified, the Ninth Circuit ruled that the manufacturer’s delta-8 e-cigarette products met the definition of legal “hemp.” Identifier. at 691. The undisputed evidence showed (1) that the manufacturer’s delta-8 e-cigarette liquid contained less than “0.3%” delta-9 THC and (2) that the delta-8 in question was “derived hemp” and a cannabinoid. Identifier. As a result, e-cigarette liquid meets the definition of legal “hemp” under the Farm Bill because “delta-8 THC in e-cigarette liquid is properly understood to be a derivative, extract, or cannabinoid from the cannabis plant. and containing “not more than 0.3%” delta-9 THC. » Identifier.

Ninth Circuit Rejection of DEA Contrary Interpretations and Congressional Intent Arguments

In ruling that delta-8 is legal under the Farm Bill, the Ninth Circuit also addressed and rebutted two potentially conflicting positions advanced by the Drug Enforcement Agency (“DEA”) and an argument based on congressional intent.

Specifically, in support of the wholesaler’s argument that the delta-8 was illegal, the wholesaler pointed out that the DEA stated “[a]all synthetically derived [THCs] remain Schedule I controlled substances. Identifier. at 692. Thus, the wholesaler argued, because the delta-8 THC in question was “extracted from the cannabis plant and refined by a manufacturing process”, it was “synthetically derived” and illegal under the interpretation from the DEA. Identifier. at 692. The court, however, rejected this argument, holding that the DEA’s interpretation could not override the “unambiguous” language of the Farm Bill, which “does not limit its application to the manner in which” the derivatives, extracts, [and] cannabinoids’ [such as delta-8] are produced.” Identifier. Additionally, the court rejected the wholesaler’s separate argument that delta-8 was illegal because the DEA’s website listed delta-8 as a Schedule I controlled substance. Identifier. at 693. The court held that such a position was contrary to both the language of the Farm Bill and the DEA’s own regulations. Identifier. at 693.

Finally, the court was also unconvinced by the wholesaler’s argument that “Congress wanted the Farm Act to legalize only industrial hemp, not a potentially psychoactive substance like delta-8 THC.” Identifier. In dealing with this argument, the court said it would “allow neither ambiguous legislative history nor speculation about Congress’s intent to ‘muddy’ clear legislative language.” Identifier.

As a result, not only the Ninth Circuit of AK Futures holding delta-8 was legal, but he also refuted key arguments to the contrary and said certain interpretations offered by the DEA, which might otherwise deter companies from entering the delta-8 market, were against the law.

Where That Leaves Delta-8 and Other Cannabinoids

Given the holding AK Futures v. Boyd Street Distroit seems established in the Ninth Circuit that delta-8 is legal under the Farm Bill as long as it comes from the cannabis plant (that’s to say not “produced ‘from materials other than cannabis'”). Identifier. at 692. In addition, the court ruling, which gave effect to the expanded definition of “hemp”, expressly opens the door to the legal sale of other cannabinoids, such as delta-10 THC or THC-O, under the Farm Bill as long as they come from the cannabis plant.

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