Implementation of the Agriculture Improvement Act of 2018, 51639-51645 [2020-17356]

Agencies

• Drug Enforcement Administration
• Department of Justice

[Federal Register Volume 85, Number 163 (Friday, August 21, 2020)]
[Rules and Regulations]
[Pages 51639-51645]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-17356]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration

21 CFR Parts 1308 and 1312

[Docket No. DEA-500]
RIN 1117-AB53


Implementation of the Agriculture Improvement Act of 2018

AGENCY: Drug Enforcement Administration (DEA), Department of Justice.

ACTION: Interim final rule with request for comments.

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SUMMARY: The purpose of this interim final rule is to codify in the 
Drug Enforcement Administration (DEA) regulations the statutory 
amendments to the Controlled Substances Act (CSA) made by the 
Agriculture Improvement Act of 2018 (AIA), regarding the scope of 
regulatory controls over marihuana, tetrahydrocannabinols, and other 
marihuana-related constituents. This interim final rule merely conforms 
DEA's regulations to the statutory amendments to the CSA that have 
already taken effect, and it does not add additional requirements to 
the regulations.

DATES: Effective August 21, 2020. Electronic comments must be 
submitted, and written comments must be postmarked, on or before 
October 20, 2020. Commenters should be aware that the electronic 
Federal Docket Management System will not accept comments after 11:59 
p.m. Eastern Time on the last day of the comment period.

ADDRESSES: To ensure proper handling of comments, please reference 
``RIN 1117-AB53/Docket No. DEA-500'' on all correspondence, including 
any attachments.

[[Page 51640]]

     Electronic comments: The Drug Enforcement Administration 
encourages that all comments be submitted electronically through the 
Federal eRulemaking Portal, which provides the ability to type short 
comments directly into the comment field on the web page or attach a 
file for lengthier comments. Please go to https://www.regulations.gov 
and follow the online instructions at that site for submitting 
comments. Upon completion of your submission, you will receive a 
Comment Tracking Number for your comment. Please be aware that 
submitted comments are not instantaneously available for public view on 
https://www.regulations.gov. If you have received a Comment Tracking 
Number, your comment has been successfully submitted, and there is no 
need to resubmit the same comment.
     Paper comments: Paper comments that duplicate the 
electronic submission are not necessary and are discouraged. Should you 
wish to mail a paper comment in lieu of an electronic comment, it 
should be sent via regular or express mail to: Drug Enforcement 
Administration, Attn: DEA Federal Register Representative/DPW, 
Diversion Control Division; Mailing Address: 8701 Morrissette Drive, 
Springfield, VA 22152.

FOR FURTHER INFORMATION CONTACT: Scott A. Brinks, Diversion Control 
Division, Drug Enforcement Administration; Mailing Address: 8701 
Morrissette Drive, Springfield, Virginia 22152; Telephone: (202) 598-
2596.

SUPPLEMENTARY INFORMATION:

Posting of Public Comments

    Please note that all comments received are considered part of the 
public record. They will, unless reasonable cause is given, be made 
available by the Drug Enforcement Administration (DEA) for public 
inspection online at https://www.regulations.gov. Such information 
includes personal identifying information (such as your name, address, 
etc.) voluntarily submitted by the commenter. The Freedom of 
Information Act (FOIA) applies to all comments received. If you want to 
submit personal identifying information (such as your name, address, 
etc.) as part of your comment, but do not want it to be made publicly 
available, you must include the phrase ``PERSONAL IDENTIFYING 
INFORMATION'' in the first paragraph of your comment. You must also 
place all of the personal identifying information you do not want made 
publicly available in the first paragraph of your comment and identify 
what information you want redacted.
    If you want to submit confidential business information as part of 
your comment, but do not want it to be made publicly available, you 
must include the phrase ``CONFIDENTIAL BUSINESS INFORMATION'' in the 
first paragraph of your comment. You must also prominently identify the 
confidential business information to be redacted within the comment.
    Comments containing personal identifying information and 
confidential business information identified as directed above will 
generally be made publicly available in redacted form. If a comment has 
so much confidential business information or personal identifying 
information that it cannot be effectively redacted, all or part of that 
comment may not be made publicly available. Comments posted to https://www.regulations.gov may include any personal identifying information 
(such as name, address, and phone number) included in the text of your 
electronic submission that is not identified as directed above as 
confidential.
    An electronic copy of this document and the complete Economic 
Impact Analysis, to this interim final rule are available in their 
entirety under the tab ``Supporting Documents'' of the public docket of 
this action at https://www.regulations.gov under FDMS Docket ID: DEA-500 
(RIN 1117-AB53/Docket Number DEA-500) for easy reference.

Executive Summary

    The Agriculture Improvement Act of 2018, Public Law 115-334 (the 
AIA), was signed into law on December 20, 2018. It provided a new 
statutory definition of ``hemp'' and amended the definition of 
marihuana under 21 U.S.C. 802(16) and the listing of 
tetrahydrocannabinols under 21 U.S.C. 812(c). The AIA thereby amends 
the regulatory controls over marihuana, tetrahydrocannabinols, and 
other marihuana-related constituents in the Controlled Substances Act 
(CSA).
    This rulemaking makes four conforming changes to DEA's existing 
regulations:
     It modifies 21 CFR 1308.11(d)(31) by adding language 
stating that the definition of ``Tetrahydrocannabinols'' does not 
include ``any material, compound, mixture, or preparation that falls 
within the definition of hemp set forth in 7 U.S.C. 1639o.''
     It removes from control in schedule V under 21 CFR 
1308.15(f) a ``drug product in finished dosage formulation that has 
been approved by the U.S. Food and Drug Administration that contains 
cannabidiol (2-[1R-3-methyl-6R-(1-methylethenyl)-2-cyclohexen-1-yl]-5-
pentyl-1,3-benzenediol) derived from cannabis and no more than 0.1% (w/
w) residual tetrahydrocannabinols.''
     It also removes the import and export controls described 
in 21 CFR 1312.30(b) over those same substances.
     It modifies 21 CFR 1308.11(d)(58) by stating that the 
definition of ``Marihuana Extract'' is limited to extracts ``containing 
greater than 0.3 percent delta-9-tetrahydrocannabinol on a dry weight 
basis.''
    This interim final rule merely conforms DEA's regulations to the 
statutory amendments to the CSA that have already taken effect, and it 
does not add additional requirements to the regulations. Accordingly, 
there are no additional costs resulting from these regulatory changes. 
However, as discussed below, the changes reflected in this interim 
final rule are expected to result in annual cost savings for affected 
entities.

Changes to the Definition of Marihuana

    The AIA amended the CSA's regulatory controls over marihuana by 
amending its definition under the CSA. Prior to the AIA, marihuana was 
defined in 21 U.S.C. 802(16) as follows:

    The term ``marihuana'' means all parts of the plant Cannabis 
sativa L., whether growing or not; the seeds thereof; the resin 
extracted from any part of such plant; and every compound, 
manufacture, salt, derivative, mixture, or preparation of such 
plant, its seeds or resin. Such term does not include the mature 
stalks of such plant, fiber produced from such stalks, oil or cake 
made from the seeds of such plant, any other compound, manufacture, 
salt, derivative, mixture, or preparation of such mature stalks 
(except the resin extracted therefrom), fiber, oil, or cake, or the 
sterilized seed of such plant which is incapable of germination.

    The AIA modified the foregoing definition by adding that the ``term 
`marihuana' does not include hemp, as defined in section 1639o of Title 
7.'' 21 U.S.C. 802(16)(B). Furthermore, the AIA added a definition of 
``hemp'' to 7 U.S.C. 1639o, which reads as follows:

    The term `hemp' means the plant Cannabis sativa L. and any part 
of that plant, including the seeds thereof and all derivatives, 
extracts, cannabinoids, isomers, acids, salts, and salts of isomers, 
whether growing or not, with a delta-9 tetrahydrocannabinol 
concentration of not more than 0.3 percent on a dry weight basis.

    Taken together, these two changes made by the AIA limit the 
definition of marihuana to only include cannabis or cannabis-derived 
material that contain more than 0.3% delta-9-tetrahydrocannabinol (also 
known as [Delta]\9\-THC) on a dry weight basis. Thus, to fall within 
the current CSA definition of

[[Page 51641]]

marihuana, cannabis and cannabis-derived material must both fall within 
the pre-AIA CSA definition of marihuana and contain more than 0.3 
percent [Delta]\9\-THC on a dry weight basis. Pursuant to the AIA, 
unless specifically controlled elsewhere under the CSA, any material 
previously controlled under Controlled Substance Code Number 7360 
(marihuana) or under Controlled Substance Code Number 7350 (marihuana 
extract), that contains 0.3% or less of [Delta]\9\-THC on a dry weight 
basis--i.e., ``hemp'' as that term defined under the AIA--is not 
controlled. Conversely, any such material that contains greater than 
0.3% of [Delta]\9\-THC on a dry weight basis remains controlled in 
schedule I.
    In order to meet the AIA's definition of hemp, and thus qualify for 
the exception in the definition of marihuana, a cannabis-derived 
product must itself contain 0.3% or less [Delta]\9\-THC on a dry weight 
basis. It is not enough that a product is labeled or advertised as 
``hemp.'' The U.S. Food and Drug Administration (FDA) has recently 
found that many cannabis-derived products do not contain the levels of 
cannabinoids that they claim to contain on their labels.\1\ Cannabis-
derived products that exceed the 0.3% [Delta]\9\-THC limit do not meet 
the statutory definition of ``hemp'' and are schedule I controlled 
substances, regardless of claims made to the contrary in the labeling 
or advertising of the products.
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    \1\ See FDA, Warning Letters and Test Results for Cannabidiol-
Related Products, https://www.fda.gov/NewsEvents/PublicHealthFocus/ucm484109.htm.
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    In addition, the definition of hemp does not automatically exempt 
any product derived from a hemp plant, regardless of the [Delta]\9\-THC 
content of the derivative. In order to meet the definition of ``hemp,'' 
and thus qualify for the exemption from schedule I, the derivative must 
not exceed the 0.3% [Delta]\9\-THC limit. The definition of 
``marihuana'' continues to state that ``all parts of the plant Cannabis 
sativa L.,'' and ``every compound, manufacture, salt, derivative, 
mixture, or preparation of such plant,'' are schedule I controlled 
substances unless they meet the definition of ``hemp'' (by falling 
below the 0.3% [Delta]\9\-THC limit on a dry weight basis) or are from 
exempt parts of the plant (such as mature stalks or non-germinating 
seeds). See 21 U.S.C. 802(16) (emphasis added). As a result, a cannabis 
derivative, extract, or product that exceeds the 0.3% [Delta]\9\-THC 
limit is a schedule I controlled substance, even if the plant from 
which it was derived contained 0.3% or less [Delta]\9\-THC on a dry 
weight basis.
    Finally, nothing in the AIA or in these implementing regulations 
affects or alters the requirements of the Food, Drug, & Cosmetic Act 
(FD&C Act). See 7 U.S.C. 1639r(c). Hemp products that fall within the 
jurisdiction of the FD&C Act must comply with its requirements. FDA has 
recently issued a statement regarding the agency's regulation of 
products containing cannabis and cannabis-derived compounds, and DEA 
refers interested parties to that statement, which can be found at 
https://www.fda.gov/newsevents/Newsroom/PressAnnouncements/ucm628988.htm.

Changes to the Definition of Tetrahydrocannabinols

    The AIA also modified the listing for tetrahydrocannabinols under 
21 U.S.C. 812(c) by stating that the term tetrahydrocannabinols does 
not include tetrahydrocannabinols in hemp. Specifically, 21 U.S.C. 
812(c) Schedule I now lists as schedule I controlled substances: 
``Tetrahydrocannabinols, except for tetrahydrocannabinols in hemp (as 
defined under section 1639o of Title 7).''
    Therefore, the AIA limits the control of tetrahydrocannabinols (for 
Controlled Substance Code Number 7370). For tetrahydrocannabinols that 
are naturally occurring constituents of the plant material, Cannabis 
sativa L., any material that contains 0.3% or less of [Delta]\9\-THC by 
dry weight is not controlled, unless specifically controlled elsewhere 
under the CSA. Conversely, for tetrahydrocannabinols that are naturally 
occurring constituents of Cannabis sativa L., any such material that 
contains greater than 0.3% of [Delta]\9\-THC by dry weight remains a 
controlled substance in schedule I.
    The AIA does not impact the control status of synthetically derived 
tetrahydrocannabinols (for Controlled Substance Code Number 7370) 
because the statutory definition of ``hemp'' is limited to materials 
that are derived from the plant Cannabis sativa L. For synthetically 
derived tetrahydrocannabinols, the concentration of [Delta]\9\-THC is 
not a determining factor in whether the material is a controlled 
substance. All synthetically derived tetrahydrocannabinols remain 
schedule I controlled substances.
    This rulemaking is modifying 21 CFR 1308.11(d)(31) to reflect this 
statutory change. By this rulemaking, 21 CFR 1308.11(d)(31) is being 
modified via the addition of subsection (ii), which reads: 
``Tetrahydrocannabinols does not include any material, compound, 
mixture, or preparation that falls within the definition of hemp set 
forth in 7 U.S.C. 1639o.''

Removal of Schedule V Control of FDA-Approved Products Containing 
Cannabidiol

    Previously DEA, pursuant to 21 CFR 1308.15, separately controlled 
in Schedule V drug products in finished dosage formulations that have 
been approved by FDA and that contain cannabidiol (CBD) derived from 
cannabis and no more than 0.1 percent (w/w) residual 
tetrahydrocannabinols (under Controlled Substance Code Number 7367). 
The FDA-approved substances described under Drug Code 7367 are no 
longer controlled, by virtue of the AIA. As a result, DEA is removing 
the listing for ``Approved cannabidiol drugs'' under schedule V in 21 
CFR 1308.15.
    Note that CBD in a mixture with a [Delta]\9\-THC concentration 
greater than 0.3% by dry weight is not exempted from the definition of 
``marihuana'' or ``tetrahydrocannabinols.'' Accordingly, all such 
mixtures exceeding the 0.3% limit remain controlled substances under 
schedule I.

Removal of Import/Export Provisions Involving FDA-Approved Products 
Containing CBD

    Previously DEA, pursuant to 21 CFR 1312.30, required import and 
export permits pursuant to 21 U.S.C. 811(d)(1), 952(b)(2), and 
953(e)(3) for the import and export of drug products in finished dosage 
formulations that have been approved by FDA and that contain CBD 
derived from cannabis and no more than 0.1 percent (w/w) residual 
tetrahydrocannabinols. Because such substances are no longer controlled 
substances, DEA is likewise removing the import and export permit 
requirement for these substances. The regulation is revised to delete 
Sec.  1312.30(b).

Drug Code 7350 for Marihuana Extract

    The current control status of marihuana-derived constituents 
depends upon the concentration of [Delta]\9\-THC in the constituent. 
DEA is amending the scope of substances falling within the Controlled 
Substances Code Number for marihuana extract (7350) to conform to the 
amended definition of marihuana in the AIA. As amended, the Drug Code 
7350 definition reads:

    Marihuana Extract--meaning an extract containing one or more 
cannabinoids that has been derived from any plant of the genus 
Cannabis, containing greater than 0.3 percent delta-9-
tetrahydrocannabinol on a dry weight

[[Page 51642]]

basis, other than the separated resin (whether crude or purified) 
obtained from the plant.

21 CFR 1308.11(d)(58). The drug code 7350 became effective on January 
13, 2017. 81 FR 90194.

Regulatory Analysis

Administrative Procedure Act

    An agency may find good cause to exempt a rule from certain 
provisions of the Administrative Procedure Act (APA) (5 U.S.C. 553), 
including those requiring the publication of a prior notice of proposed 
rulemaking and the pre-promulgation opportunity for public comment, if 
such actions are determined to be unnecessary, impracticable, or 
contrary to the public interest.
    DEA finds there is good cause within the meaning of the APA to 
issue these amendments as an interim final rule and to delay comment 
procedures to the post-publication period, because these amendments 
merely conform the implementing regulations to recent amendments to the 
CSA that have already taken effect. DEA has no discretion with respect 
to these amendments. This rule does no more than incorporate the 
statutory amendments into DEA's regulations, and publishing a notice of 
proposed rulemaking or soliciting public comment prior to publication 
is unnecessary. See 5 U.S.C. 553(b)(B) (relating to notice and comment 
procedures). ``[W]hen regulations merely restate the statute they 
implement, notice-and-comment procedures are unnecessary.'' Gray 
Panthers Advocacy Committee v. Sullivan, 936 F.2d 1284, 1291 (D.C. Cir. 
1991); see also United States v. Cain, 583 F.3d 408, 420 (6th Cir. 
2009) (contrasting legislative rules, which require notice-and-comment 
procedures, ``with regulations that merely restate or interpret 
statutory obligations,'' which do not); Komjathy v. Nat. Trans. Safety 
Bd., 832 F.2d 1294, 1296 (D.C. Cir. 1987) (when a rule ``does no more 
than repeat, virtually verbatim, the statutory grant of authority'' 
notice-and-comment procedures are not required).
    In addition, because the statutory changes at issue have already 
been in effect since December 20, 2018, DEA finds good cause exists to 
make this rule effective immediately upon publication. See 5 U.S.C. 
553(d). Therefore, DEA is issuing these amendments as an interim final 
rule, effective upon publication in the Federal Register.
    Although publishing a notice of proposed rulemaking and soliciting 
public comment prior to publication are unnecessary in this instance 
because these regulations merely implement statutory changes over which 
the agency has no discretion, DEA is soliciting public comment on this 
rule following its publication. For that reason, DEA is publishing this 
rule as an interim final rule and is establishing a docket to receive 
public comment on this rule. To the extent required by law, DEA will 
consider and respond to any relevant comments received.

Executive Orders 12866 (Regulatory Planning and Review), 13563 
(Improving Regulation and Regulatory Review), and 13771 (Reducing 
Regulation and Controlling Regulatory Cost)

    This interim final rule was developed in accordance with the 
principles of Executive Orders (E.O.) 12866, 13563, and 13771. E.O. 
12866 directs agencies to assess all costs and benefits of available 
regulatory alternatives and, if regulation is necessary, to select 
regulatory approaches that maximize net benefits (including potential 
economic, environmental, public health, and safety effects; 
distributive impacts; and equity). E.O. 13563 is supplemental to and 
reaffirms the principles, structures, and definitions governing 
regulatory review as established in E.O. 12866. E.O. 12866 classifies a 
``significant regulatory action,'' requiring review by the Office of 
Management and Budget (OMB), as any regulatory action that is likely to 
result in a rule that may: (1) Have an annual effect on the economy of 
$100 million or more or adversely affect in a material way the economy, 
a sector of the economy, productivity, competition, jobs, the 
environment, public health or safety, or State, local, or tribal 
governments or communities; (2) create a serious inconsistency or 
otherwise interfere with an action taken or planned by another agency; 
(3) materially alter the budgetary impact of entitlements, grants, user 
fees, or loan programs or the rights and obligations of recipients 
thereof; or (4) raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the E.O.
    The economic, interagency, budgetary, legal, and policy 
implications of this interim final rule have been examined and it has 
been determined that it is not a significant regulatory action under 
E.O. 12866 because it is a non-discretionary action that is dictated by 
the statutory amendments to the CSA enacted by the AIA. While not 
determined to be a significant regulatory action, this action has been 
reviewed by the OMB.
    As explained above, DEA is obligated to issue this interim final 
rule to revise its regulations so that they are consistent with the 
provisions of the CSA that were amended by the AIA. In issuing this 
interim final rule, DEA has not gone beyond the statutory text enacted 
by Congress. Thus, DEA would have to issue this interim final rule 
regardless of the outcome of the agency's regulatory analysis. 
Nonetheless, DEA conducted this analysis as discussed below.

Summary of Benefits and Costs

    This analysis is limited to the provisions of the AIA that are 
being directly implemented by this DEA interim final rule. DEA has 
reviewed these regulatory changes and their expected costs and 
benefits. Benefits, in the form of cost savings realized by DEA 
registrants handling previously controlled substances, will be 
generated as a direct result of the publication of this interim final 
rule. DEA does not expect there to be any costs associated with the 
promulgation of this interim final rule. The following is a summary; a 
detailed economic analysis of the interim final rule can be found in 
the rulemaking docket at https://www.regulations.gov.
    The AIA's revised definitions of marihuana and 
tetrahydrocannabinols effectively decontrol hemp as defined under the 
AIA. DEA's regulatory authority over any plant with less than 0.3% THC 
content on a dry weight basis, and any of the plant's derivatives under 
the 0.3% THC content limit, is removed as a result. It is important to 
note, however, that this does not mean that hemp is not under federal 
regulatory oversight. The AIA directs the U.S. Department of 
Agriculture (USDA) to review and approve commercial hemp production 
plans developed by State, territory, and Indian tribal agencies and to 
develop its own production plan. 7 U.S.C. 1639p, 1639q. Until these 
regulations are finalized, State commercial hemp pilot programs 
authorized under the 2014 Farm Bill are still in effect and current 
participants may proceed with plans to grow hemp while new regulations 
are drafted.\2\ DEA expects the USDA to assess the costs and benefits 
of this new regulatory apparatus once those rules are finalized. For 
these reasons, DEA considers any potential costs or benefits broadly 
related to changes in the domestic industrial hemp market due to the

[[Page 51643]]

decontrol of hemp, including but not limited to the expansion in the 
number of producers, consumer products, and the impact on supply chains 
to be outside the scope of this analysis.
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    \2\ See USDA, Hemp Production Program Questions and Answers, 
https://www.ams.usda.gov/publications/content/hemp-production-program-questions-and-answers.
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    To determine any cost savings resulting from this decontrol action, 
DEA analyzed its registration, import, and export data. The removal of 
DEA's regulatory authority over hemp as defined under the AIA will 
impact only DEA registrants that currently import viable hemp seed 
intended for germination. Viable hemp seed was classified as a schedule 
I controlled substance prior to the amendments to the CSA enacted by 
the AIA. The importation and exportation of controlled substances 
requires an importer or exporter to first register with DEA, and then 
apply and obtain a permit to import or export controlled substances for 
each shipment.\3\ The decontrol of hemp with this interim final rule 
means that viable hemp seed is no longer subject to those schedule I 
requirements, as long as the material contains less than the 0.3% 
limit.
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    \3\ See 21 CFR 1312.11(a), 1312.21(a).
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    Based on the number of import and export permits issued, DEA 
estimated the number of import and export permit applications that 
would no longer be needed. DEA reviewed internal data tracking the 
number of imports and exports for hemp seed over a three year period 
beginning January 1, 2016 and ending December 31, 2018.\4\ During this 
three year period, there was an average of 88 import permits issued for 
hemp seed per year, and no exports. These import permits were issued 
only to participants in state commercial hemp pilot programs, including 
state departments of agriculture and higher education institutions, 
which are considered ``fee exempt'', and do not pay the $1,523 annual 
importer registration fee.\5\ However, fee-exempt institutions are 
still required to obtain a DEA registration and renew that registration 
annually by filling out and submitting DEA form 225a. DEA expects these 
institutions to relinquish their schedule I importer registrations as a 
result of the promulgation of this interim final rule.
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    \4\ DEA import data is organized by drug code. Hemp seed falls 
within drug code ``7360--Marihuana''.
    \5\ See 21 CFR 1301.21(a)(1).
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    DEA estimates the average annual cost savings attributable to the 
elimination of import permits for hemp seed, and the elimination of 
annual registration renewals for hemp seed importers to be $3,225.\6\ 
This cost savings is realized entirely by DEA registrants. Since the 
anticipated reduction in import permits and registration renewals being 
processed is negligible relative to the total amount of permits and 
renewals processed by DEA annually, DEA is not expected to experience a 
measurable decrease in workflow or use of resources, and therefore, 
will incur no cost savings. The results of this analysis are summarized 
below:
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    \6\ Rounded down to the nearest whole dollar.

------------------------------------------------------------------------
 
------------------------------------------------------------------------
Average Annual Import Permit Application (DEA Form 357)
 Cost Savings
    Estimated hourly wage ($/hour): \7\                           $45.54
    Load for benefits (percent of labor rate): \8\                   43%
    Loaded labor rate ($/hour): \9\                               $65.06
    Average hourly burden, per application:                         0.25
    Average annual # of import permit applications for                88
     hemp seed:
    Average annual hemp seed import permit application         $1,431.32
     labor costs: \10\
    Average annual mailing cost of hemp seed import            $1,579.50
     permit applications: \11\
Annual Registration Renewal Application (DEA Form 225a)
 Cost Savings
    Estimated hourly wage ($/hour): \12\                          $59.56
    Load for benefits (percent of labor rate): \13\                  43%
    Loaded labor rate ($/hour): \14\                              $85.09
    # of Importers no longer requiring registration:                  21
    Average hourly burden, per application: \15\                    0.12
    Average annual registration renewal application              $214.43
     labor cost: \16\
                                                         ---------------
        Total Annual Cost Savings:                             $3,225.25
------------------------------------------------------------------------

    This interim final rule removes FDA-approved products containing 
CBD from schedule V control, including controls over the importation 
and exportation of this class of drugs. There is currently only one 
drug that meets these criteria for decontrol.\17\ To determine any cost 
savings resulting from this decontrol action, DEA analyzed its 
registration, import, and export data. DEA believes all entities that 
currently handle FDA-approved CBD products also handle other controlled 
substances. This means the decontrol of this product will not allow 
these DEA registrants to benefit from any registration-related cost 
savings. However, like importers of viable hemp seed, importers and 
exporters of FDA-approved CBD products will no longer be required to 
obtain import and export permits from DEA.
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    \7\ Median hourly wage, Bureau of Labor Statistics, Occupational 
and Employment and Wages, May 2018, 11-3071 Transportation, Storage, 
and Distribution Managers (https://www.bls.gov/oes/current/oes_nat.htm). The DEA considers this occupational category to be 
representative of the type of employee that is likely to fill out 
and submit import permits on behalf of a DEA registered importer.
    \8\ Bureau of Labor Statistics, ``Employer Costs for Employee 
Compensation--March 2019'' (ECEC) reports that average benefits for 
private industry is 30% of total compensation. The 30% of total 
compensation equates to 42.86% (30% / 70%) load on wages and 
salaries.
    \9\ $45.54 x (1 + 0.4286) = $65.06.
    \10\ ($65.06 x 0.25) x 88 = $1,431.32.
    \11\ 91% of import permits are submitted via paper form and 
delivered to DEA by an express carrier with respondent-paid means 
for return delivery. The estimated cost burden is $19.50 per 
response: 2 x $9.75 = $19.50. $9.75 is based on a major express 
carrier's national 3-day flat rate for envelopes. The DEA assumes 
that 91% of import permits submitted in any given year incur this 
mailing cost.
    \12\ Estimates are based on the population of the regulated 
industry participating in these business activities. The DEA assumes 
that a general and operations manager (11-1021, 2018 Standard 
Occupational Classification) will complete the form on behalf of the 
applicant or registrant.
    \13\ Bureau of Labor Statistics, ``Employer Costs for Employee 
Compensation--March 2019'' (ECEC) reports that average benefits for 
private industry is 30% of total compensation. The 30% of total 
compensation equates to 42.86% (30% / 70%) load on wages and 
salaries.
    \14\ $59.56 x (1 + 0.4286) = $85.09.
    \15\ The DEA assumes all forms are submitted online.
    \16\ ($85.09 x 0.5) x 21 = $214.43.
    \17\ See FDA, Regulation of Cannabis and Cannabis-Derived 
Products: Questions and Answers, https://www.fda.gov/news-events/public-health-focus/fda-regulation-cannabis-and-cannabis-derived-products-questions-and-answers#approved.
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    DEA analyzed its internal import and export data to identify the 
average

[[Page 51644]]

number of permits issued for FDA-approved CBD products over a three 
year period beginning January 1, 2016 and ending December 31, 2018. 
During this period there was an average of 52 import permits and one 
export permit issued per year, the elimination of which will result in 
an average annual cost savings of $1,814.\18\ This cost savings is 
realized entirely by DEA registrants. Since the anticipated reduction 
in import and export permits being processed is negligible relative to 
the total number of permits processed by DEA annually, DEA is not 
expected to experience a measurable decrease in workflow or use of 
resources, and therefore, will incur no cost savings. The results of 
this analysis are summarized below:
---------------------------------------------------------------------------

    \18\ Rounded down to the nearest whole number.

------------------------------------------------------------------------
 
------------------------------------------------------------------------
Average Annual Import Permit Application (DEA Form 357)
 Cost Savings
    Estimated hourly wage ($/hour): \7\                           $45.54
    Load for benefits (percent of labor rate): \8\                   43%
    Loaded labor rate ($/hour): \9\                               $65.06
    Average hourly burden, per application:                         0.25
    Average annual # of import permit applications for                52
     FDA-approved CBD:
    Average annual FDA-approved CBD import permit                $845.74
     application labor costs: \19\
    Average annual mailing cost for import permit                $916.50
     applications: 11 20
Average Annual Export Permit Application (DEA Form 161)
 Cost Savings
    Estimated hourly wage ($/hour): \7\                           $45.54
    Load for benefits (percent of labor rate): \8\                   43%
    Loaded labor rate ($/hour): \9\                               $65.06
    Average hourly burden, per collection:                           0.5
    Average annual # of export permit applications for                 1
     FD-approved CBD:
    Average annual FDA-approved CBD export permit                 $32.53
     application labor costs: \21\
    Average annual mailing cost of export permit                  $19.50
     applications: \11\
                                                         ---------------
        Total Annual Cost Savings:                             $1,814.27
------------------------------------------------------------------------

    This interim final rule amends the definition of marihuana extract 
to conform to the revised definitions of marihuana and 
tetrahydrocannabinols. This revised definition now includes the 0.3%-
THC content limit for the extract, meaning hemp-derived extracts 
containing less than 0.3%-THC content are also decontrolled along with 
the plant itself. As discussed previously, the production of hemp and 
its extracts as defined under the AIA now falls under the same 
regulatory oversight shared between the States, territories, and Indian 
tribal agencies, and the USDA. The FDA also affirms its regulatory 
oversight over cannabis-derived compounds, such as CBD, whether or not 
these compounds are ``classified as hemp under the 2018 Farm Bill.'' 
\22\ For these reasons, DEA considers any potential costs or benefits 
broadly related to changes in the markets for domestic hemp extracts 
due to their decontrol, including but not limited to the expansion in 
the number of producers, consumer products, and the impact on supply 
chains to be outside the scope of this analysis.
---------------------------------------------------------------------------

    \19\ ($65.06 x 0.25) x 52 = $845.74.
    \20\ 52 x .91 = 47 (rounded down) permits mailed per year; 47 x 
$19.50 = $916.50.
    \21\ ($65.06 x 0.5) x 1 = $32.53.
    \22\ Ibid.
---------------------------------------------------------------------------

    Like FDA-approved CBD products and viable hemp seeds, entities no 
longer require a DEA registration or import and export permits to 
handle hemp extract that does not exceed the statutory 0.3% THC limit. 
DEA's import and export data does capture a minimal number of instances 
of the importation and exportation of CBD; however, this data does not 
detail whether or not the CBD was derived from Cannabis sativa L. 
plants containing less than 0.3% THC content. For this reason, DEA does 
not have a good basis to estimate the annual number of imported or 
exported hemp-derived extracts that no longer require permits as a 
result of the promulgation of this interim final rule, but after 
reviewing its data, believes this number to be minimal. Therefore, DEA 
concludes that this provision of the interim final rule is likely to 
result in a minimal benefit to DEA registrants, but DEA does not have a 
good basis to quantify this amount.
    As part of its core function, DEA's Diversion Control Division is 
responsible for managing over 1.8 million DEA registrations, processing 
new and renewal registration applications, processing registration 
modification requests, issuing certificates of registration, issuing 
import and export permits, issuing renewal notifications, conducting 
due diligence, maintaining and operating supporting information 
systems, etc. Therefore, DEA does not anticipate it will realize any 
measurable cost savings to the government as a result of the negligible 
decreases in registrant services resulting from the promulgation of 
this interim final rule.
    As described above, DEA estimates the average annual benefit in the 
form of cost savings to DEA registrants as a result of the promulgation 
of this interim final rule to be $5,039.\23\ DEA calculated the present 
value of this cost savings over a 20 year period at a 3 percent and 7 
percent discount rate. At a 3 percent discount rate, the present value 
of benefits is $74,968, while the present value of costs is $0, making 
the net present value (NPV) $74,968. At a 7 percent discount rate, the 
present value of benefits is $53,383, the present value of costs is $0, 
making the NPV is $53,383.\24\ The table below summarizes the present 
value and annualized benefit calculations.
---------------------------------------------------------------------------

    \23\ The total average annual cost savings resulting from the 
decontrol of viable hemp seed ($3,225) and FDA-approved CBD products 
($1,814).
    \24\ See Office of Mgmt. & Budget, Exec. Office of the 
President, OMB Circular A-4, Regulatory Analysis (2003).

------------------------------------------------------------------------
 
------------------------------------------------------------------------
Discount Rate...........................              3%              7%
Annual benefit ($)......................           5,039           5,039
Present value of benefits ($)...........          74,968          53,383
Present value of costs ($)..............               0               0
Years...................................              20              20

[[Page 51645]]

 
Net present value ($)...................          74,968          53,383
------------------------------------------------------------------------
Figures are rounded.

    E.O. 13771 deregulatory actions are final actions that have totals 
costs less than zero. Also, under E.O. 13771, regulatory actions that 
expand production options, which are considered to be ``enabling 
rules,'' generally qualify as E.O. 13771 deregulatory actions. This 
interim final rule decontrols hemp, hemp extracts and FDA-approved 
products containing CBD, and it results in cost savings to the public, 
as discussed above. Accordingly, DEA has determined that this interim 
final rule is an E.O. 13771 Deregulatory Action.

Executive Order 12988

    This interim final rule meets the applicable standards set forth in 
sections 3(a) and 3(b)(2) of E.O. 12988, Civil Justice Reform, to 
eliminate ambiguity, minimize litigation, establish clear legal 
standards, and reduce burdens.

Executive Order 13132

    This rulemaking does not preempt or modify any provision of State 
law, impose enforcement responsibilities on any State, or diminish the 
power of any State to enforce its own laws. Accordingly, this 
rulemaking does not have federalism implications warranting the 
application of E.O. 13132.

Executive Order 13175

    This interim final rule is required by statute, and will not have 
tribal implications or impose substantial direct compliance costs on 
Indian tribal governments.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) applies to rules that are 
subject to notice and comment under section 553(b) of the 
Administrative Procedure Act (5 U.S.C. 553). As explained in the 
interim final rule, DEA determined that there was good cause to exempt 
this interim final rule from pre-publication notice and comment. 
Consequently, the RFA does not apply to this interim final rule.

Paperwork Reduction Act of 1995

    This interim final rule does not involve a collection of 
information within the meaning of the Paperwork Reduction Act of 1995, 
44 U.S.C. 3501-21.

Unfunded Mandates Reform Act of 1995

    This interim final rule will not result in the expenditure by 
State, local, and tribal governments, in the aggregate, or by the 
private sector, of $136,000,000 or more (adjusted for inflation) in any 
one year, and will not significantly or uniquely affect small 
governments. Therefore, no actions were deemed necessary under the 
provisions of the Unfunded Mandates Reform Act of 1995. 2 U.S.C. 1532.

Congressional Review Act

    This interim final rule is not a major rule as defined by the 
Congressional Review Act (CRA) (5 U.S.C. 804). DEA is submitting the 
required reports with a copy of this interim final rule to both Houses 
of Congress and to the Comptroller General.

List of Subjects

21 CFR Part 1308

    Administrative practice and procedure; Drug traffic control; 
Reporting and recordkeeping requirements.

21 CFR Part 1312

    Administrative practice and procedure; Drug traffic control; 
Exports; Imports; Reporting and recordkeeping requirements.

    For the reasons set forth above, 21 CFR parts 1308 and 1312 are 
amended as follows:

PART 1308--SCHEDULES OF CONTROLLED SUBSTANCES

0
1. The authority citation for part 1308 continues to read as follows:

    Authority: 21 U.S.C. 811, 812, 871(b), 956(b).


0
2. In Sec.  1308.11, paragraphs (d)(31) and (58) are revised to read as 
follows:


Sec.  1308.11  Schedule I.

* * * * *
    (d) * * *
    (31) Tetrahydrocannabinols ......7370
    (i) Meaning tetrahydrocannabinols, except as in paragraph 
(d)(31)(ii) of this section, naturally contained in a plant of the 
genus Cannabis (cannabis plant), as well as synthetic equivalents of 
the substances contained in the cannabis plant, or in the resinous 
extractives of such plant, and/or synthetic substances, derivatives, 
and their isomers with similar chemical structure and pharmacological 
activity to those substances contained in the plant, such as the 
following:

1 cis or trans tetrahydrocannabinol, and their optical isomers
6 cis or trans tetrahydrocannabinol, and their optical isomers
3, 4 cis or trans tetrahydrocannabinol, and its optical isomers


(Since nomenclature of these substances is not internationally 
standardized, compounds of these structures, regardless of numerical 
designation of atomic positions covered.)

    (ii) Tetrahydrocannabinols does not include any material, compound, 
mixture, or preparation that falls within the definition of hemp set 
forth in 7 U.S.C. 1639o.
* * * * *
    (58) Marihuana Extract ......7350
    Meaning an extract containing one or more cannabinoids that has 
been derived from any plant of the genus Cannabis, containing greater 
than 0.3% delta-9-tetrahydrocannabinol on a dry weight basis, other 
than the separated resin (whether crude or purified) obtained from the 
plant.
* * * * *


Sec.  1308.15  [Amended]

0
3. In Sec.  1308.15, paragraph (f) is removed.

PART 1312--IMPORTATION AND EXPORTATION OF CONTROLLED SUBSTANCES

0
4. The authority citation for part 1312 continues to read as follows:

    Authority: 21 U.S.C. 821, 871(b), 952, 953, 954, 957, 958.


Sec.  1312.30  [Amended]

0
5. In Sec.  1312.30, paragraph (b) is removed and reserved.

Timothy J. Shea,
Acting Administrator.
[FR Doc. 2020-17356 Filed 8-20-20; 8:45 am]
BILLING CODE 4410-09-P