Marijuana Control Board rules on CBD oils

Regulators ruled on Alaska's CBD seizures on Feb. 17, maintaining that the products are indeed marijuana, not hemp, and therefore under control of the Marijuana Control Board. The seized CBD products will not be destroyed, but rather the board will retain them until a hemp legalization bill moves through the Legislature. The owners of the shops from which they were seized will not be disciplined. 

The Marijuana Control Board met with Alcohol and Marijuana Control Office enforcement officers and director Sara Chambers on Feb. 17 to invite representatives from each of the raided stores. Board members then called a closed meeting with legal counsel and Chambers to deliberate.

"In a unanimous vote, the Marijuana Control Board determined the CBD (cannabidiol) oil seized last week by the Alcohol and Marijuana Control Office (AMCO) to be marijuana product, except that which is labeled as made exclusively from seeds and that does not also include the term 'CBD,'" reads a press release from AMCO. "However, in light of Senate Bill 6, a proposal currently before the Alaska State Legislature that would legalize industrial hemp and modify the definition of marijuana in AS 17.38, the board voted to retain possession of the inventory until the end of the current legislative session. Otherwise, in accordance with 3 AAC 306.830, the board would be forced to destroy the seized items. The board also elected not to pursue further action on Notices of Violation that were issued by AMCO staff." 

Each company was issued a violation for activity not allowed in a marijuana store, and having product that is manufactured outside the state of Alaska, not in the state tracking system, not tested in state, and not packaged or labeled as required by Alaska regulation.

Company representatives either apologized and pled ignorance or stuck by their claim that industrial hemp products are perfectly legal and not under the control of the Marijuana Control Board, an argument firmly dismissed by AMCO director Sara Chambers.

“Just so we’re all clear, we all know that hemp products aren’t marijuana products, right?” said Craig Aglietti, co-owner of Dankorage, during an interlude.

“Yes, according to state statute, they are,” answered Chambers.

Several had issues with how marijuana enforcement handled the seizures.

“These were not seized from a licensed company,” claimed Aaron Ralph, owner of Alaska Cannabis Exchange, through which many of the raided stores received their CBD products.

Though cited for violating regulation, Alaska Cannabis Exchange did not have their products seized from their licensed store, though they may have intended eventually to receive and sell them. U.S. Postal Service workers alerted AMCO when boxes of CBD product were leaking. The products were addressed to Geneva Cowen, owner of ACE Holdings, which has a licensing agreement with Alaska Cannabis Exchange for CBD products. Cowen herself is the wife of an affiliate of an Alaska Cannabis Exchange licensee.

Enforcement officers acknowledged that the violation letter, which was a boilerplate letter sent to each company, was an “oversight” on the part of AMCO and could have been worded better.

Others claimed a similar scenario applied to them, in which officers seized product for a non-marijuana store. Kerby Coman’s seizures happened in a non-marijuana business, Green Degree, that was attached to a licensed marijuana facility. Coman’s non-marijuana business markets itself under the name Green Degree but is owned under a separate LLC name.

Many of the testifiers were apologetic to the board, claiming they would not have sold the products if they had known they were under MCB control.

“We no longer sell any CBD or hemp containing products, and will not do so,” said Caleb Saunders, co-owner of Green Jar. “It was never our intention to violate any of the regulations. We were fully under the impression that the hemp products did not fall under the jurisdiction of MCB.”

Saunders explained that he bought the product from a Colorado industrial hemp pilot program through ACE Holdings by way of Alaska Cannabis Exchange. 

“These products have been available at health food stores for many years, so we did not assume there would be a problem,” said Craig Aglietti from Dankorage, an Anchorage retail store. “We will not stock this product again until is it enforced through METRC (the state’s cannabis tracking system).”

“This was unintentional,” said Jane Stinson, co-owner of Enlighten Alaska. “We didn’t realize hemp grown CBD products were not allowed in the system we’re in.”

Others like Coman, said AMCO’s actions were “morally and legally wrong.”

Kerby claimed to prove that CBD is legal, and then asked to get his products back.

“Legal opinions have told me I have a lawsuit. But that’s not the route I want to go,” he told the board.

Ralph, a member of the Hemp Industries Association, stood by his original claim that nothing illegal happened with his company or the others involved. The seized products, he said, are firmly in line with federal regulations that authorize industrial hemp products and their interstate transport.

“There is a legal and defining difference between hemp and marijuana,” said Ralph. “In my opinion, nobody has broken the law here or should be deserving of a notice of violation.”

CBS oils and extracts have been hurtled into national morass of confusion after the U.S. Drug Enforcement Administration added them to the Schedule I controlled substances category in January. Though widely available as hemp oils online and in department stores, CBD products are as illegal as marijuana under federal law unless obtained through a licensed pilot program.

In Alaska, Chambers says the matter is clear cut becuase Alaska statute does not make hemp legal or distinct from marijuana.

“As defined in statute and regulation products derived from the marijuana plant are regulated under AS 17.38,” reads a release from AMCO following the seizures. “There is no separate provision under state law that allows oil with any particular composition of CBD or THC to be regulated outside of AS 17.38 and 3 AAC 306.”

The definition in statute does include certain parts of the plant, but also does not make a distinction between hemp and marijuana as it does in federal code.

“’Marijuana’ does not include fiber produced from the stalks, oil, or cake made from the seeds of the plant, sterilized seed of the plant which is incapable of germination, or the weight of any other ingredient combined with marijuana to prepare topical or oral administrations, food, drink, or other products,” reads statute.

DJ Summers can be reached at daniel.summers@alaskajournal.com

Updated: 
02/20/2017 - 3:39pm

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