[co-author: Hanna Barker Mullin]

Cannabis: In Focus

• FDA Rejects Citizen Petitions, Declines To Regulate CBD as a Dietary Supplement
• Ninth Circuit Affirms Dismissal of Cannabis Company’s RICO Claims
• Tenth Circuit Holds that 2018 Farm Bill Doesn’t Create Private Cause of Action for Hemp Farmers
• US Virgin Islands Legalizes Recreational Cannabis

FDA Rejects Citizen Petitions, Declines To Regulate CBD as a Dietary Supplement

The U.S. Food and Drug Administration (FDA) announced its conclusion that a new regulatory pathway for cannabidiol (CBD) is needed on January 26, 2023, requiring congressional action. FDA denied three citizen petitions asking the agency to conduct rulemaking to allow the marketing of CBD products as dietary supplements.

In a statement, FDA Deputy Commissioner Janet Woodcock reported that a new regulatory pathway for CBD is needed that balances individuals’ desire for access to CBD products with the regulatory oversight needed to manage risks. The agency’s statement also highlighted potential risks and safety concerns related to harm to the liver, interactions with medications, potential effects on the male reproductive system, and concerns with CBD exposure for children and pregnant people. FDA’s statement further noted that the agency is prepared to work with Congress to develop risk management strategies, such as labeling rules, limits on CBD levels, and age restrictions for purchasers. FDA also acknowledged that the forthcoming regulatory pathway could address CBD use in products intended for animals, since consumers could be unknowingly exposed to the cannabinoid through meat, milk, and eggs from animals fed CBD.

Ninth Circuit Affirms Dismissal of Cannabis Companies’ RICO Claims

The U.S. Court of Appeals for the Ninth Circuit affirmed via published opinion an order dismissing federal Racketeer Influenced and Corrupt Organizations Act (RICO) claims by a cannabis cultivator on January 18, 2023. In Shulman v. Kaplan, a cannabis farmer and her related businesses sued a former business under RICO based on alleged harms to their cannabis business and related property through acts of mail and wire fraud.

The Ninth Circuit affirmed the lower court ruling and determined that the cannabis farmer and her related business lacked statutory standing under RICO. Because cannabis was illegal under federal law, RICO did not extend to these business interests, even though they may be legal under state law. Specifically, RICO requires harm to “business or property,” and the court held that Congress did not intend “business or property” to cover cannabis-related commerce.

Tenth Circuit: 2018 Farm Bill Does Not Create a Private Right of Action for Hemp Farmers

The U.S. Court of Appeals for the Tenth Circuit dismissed a suit on January 24, 2023, brought by a grower of hemp against the Denver Police Department over the seizure of his plants at Denver International Airport when he attempted to transport hemp plants on a flight from Colorado to Texas. In Serna v. Denver Police Department, the hemp grower claimed that the 2018 Farm Bill implied a private right allowing hemp farmers to sue states or municipalities prohibiting the transport of cannabis products. The 2018 Farm Bill authorized states to legalize and regulate the production of hemp containing less than 0.3% Delta-9 tetrahydrocannabinol (THC) and barred states from prohibiting interstate transportation of the plant.

The Tenth Circuit found that the 2018 Farm Bill did not create any private right of action to sue state officials for alleged violations of this provision of the 2018 Farm Bill. The three-judge panel also denied the plaintiff’s request to amend his complaint.

Adult-Use Cannabis Is Legalized in the Virgin Islands

U.S. Virgin Islands Governor Albert Bryan Jr. signed the Virgin Islands Cannabis Use Act into law on January 18, 2023, which will legalize adult-use cannabis in the territory. The legislation will also permit new licenses for cannabis retailers plus other licenses for growing and manufacturing products. The new law permits those 21 and older to possess up to two ounces of cannabis, 14 grams of concentrate, and one ounce of other products (such as edibles) for recreational use. The legislation also creates a new Office of Cannabis Regulation, which will oversee the territory’s cannabis market, including rules on product labeling and marketing. The governor also signed a separate proclamation that will allow individuals with simple criminal convictions for possession of cannabis to apply for a pardon.

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