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The recent release of a DEA letter on the federal legality of cannabis seeds (the DEA Seed Letter) has gotten the industry talking.

Back in November 2021, Shane Pennington, a fellow cannabis attorney who for the past three years has been at the cutting edge of cannabis and drug policy litigation against the government, asked the DEA to weigh in on the control status of “cannabis seeds, tissue culture and other genetic material” containing no more than 0.3 percent THC.

In its response letter, the DEA stated that because the Agriculture Improvement Act of 2018 (the 2018 Farm Bill) legalized any part of the cannabis plant, including the seeds, with a delta-9-tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis (i.e., hemp), that:

“[a]ccordingly marihuana seed that has a delta-9-tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis meets the definition of ‘hemp’ and thus is not controlled under the CSA,” and, “[c]onversely, marihuana seed having a delta-9 tetrahydrocannabinol concentration more than 0.3 percent on a dry weight basis is controlled in schedule I under the CSA as marihuana.”

In other words, the DEA publicly conceded that these cannabis materials are lawful regardless of their source. This is significant for two reasons:

This second point has led a section of the cannabis legal community to infer that the Source Rule is altogether dead. I, along with others, disagree with this conclusion. Here is why.

The Source Rule is a legal theory authored by pioneer cannabis attorney Rod Kight that has guided the hemp industry since the passage of the Agricultural Act of 2014 (the 2014 Farm Bill). In a nutshell, the Source Rule is a method used to assess the legality of a cannabis material based on where the material comes from. If the material is derived from hemp, it is legal. On the other hand, if the material comes from marijuana, even if the material contains less than 0.3 percent THC, it is deemed unlawful.

In the context of cannabis seeds, the Source Rule was significant under the 2014 Farm Bill because the federal law did not exclude hemp (then known as industrial hemp) from the federal Controlled Substances Act (the CSA)’s definition of “Marihuana,” which expressly includes “seeds thereof.” As such, hemp producers and handlers who were licensed in accordance with a state hemp pilot program had to ensure their seeds were not derived from marijuana — even if the seeds met the 0.3 percent THC limit — to avoid criminal prosecution.

Following the enactment of the 2018 Farm Bill, however, the Source Rule became less relevant in assessing the legality of seeds used in the cultivation of hemp for two reasons:

Nevertheless, the Source Rule remains well and alive in the context of cultivating, harvesting, and processing hemp, including manufacturing finished hemp products intended for human consumption.

Pursuant to the 2018 Farm Bill, only hemp grown in accordance with an approved state plan is legal. Moreover, though the 2018 Farm Bill does not address the processing of hemp into finished products, most USDA-approved state plans regulate the processing of hemp as well as the manufacture, sale, and marketing of finished products intended for human consumption, all of which must be derived from lawfully cultivated and processed hemp in accordance with the laws and regulations imposed by their state or country of origin. For example, Colorado requires that manufacturers of food products, dietary supplements, and cosmetics be able to demonstrate that their hemp ingredient comes from an “approved source.” An approved source includes hemp or hemp products from a state or from a country that has an established and approved hemp program.

For these reasons, the Source Rule is not dead.

Therefore, while the DEA Seed Letter might confirm that hemp growers have the ability to source seeds derived from marijuana plants that contain no more than 0.3 percent THC on a dry weight basis, it does not suggest that they are no longer obligated to maintain a chain of title for the hemp or hemp material they produce or handle. Ensuring that harvested and processed hemp comes from a legal source (i.e., licensed producers and processors) remains critical in shielding the hemp industry from federal criminal prosecutions, as well as federal, civil, and administrative proceedings arising under the CSA.

Nathalie Bougenies focuses her practice on health and wellness, in addition to corporate transactions and regulatory compliance. For the past three years, Nathalie has helped clients navigate the complex regulatory landscape of hemp products intended for human consumption and advises domestic and international clients on the sale, distribution, marketing, labeling, and importation of these products. Nathalie frequently speaks on these issues and has made national media appearances, including on NPR’s “Marketplace.” She also authors a weekly column for “Above the Law” that features content on cannabis policy and regulation. For three consecutive years, Nathalie has been named Rising Star by Super Lawyers.

Cannabis, Hemp, Marijuana, Nathalie Bougenies, Source Rule

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