C3 S1E1: Rod Kight of Kight Law

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Welcome to Season 1, Episode 1 of the new C3 Podcast from Higher Learning LV™. C3 = Cannabis Commerce+Chemistry™. This text + video series is intended for cannabis industry professionals and transitional employees entering this emerging industry from other spaces.

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This educational series from Higher Learning LV™ provides enterprise professionals with exclusive text articles and video interviews with prominent subject matter experts within the legal hemp and cannabis industries. This week's article focuses on the commerce part of the equation with one of the industry's leading legal thought leaders.

Rod Kight of Kight Law is a cannabis business law attorney who represents legal cannabis businesses throughout the world. He is editor and chief writer of the Kight On Cannabis law blog and author of Cannabis Business Law: What You Need to Know that was published by Aspatore Books in 2015. He is on the advisory board for the American Journal of Endocannabinoid Medicine, a publication for which he writes a legal column.

Cannabis business law attorney Rod Kight

Kight has been quoted on cannabis matters by trade publications and media outlets that include the Wall Street Journal, Time, Politico, and Business Insider. He is part of the legal team in a pending case against the DEA regarding hemp extracts.

Kight is an advocate of cannabis for personal and medical use and used it successfully during chemotherapy treatments for cancer. He resides in Ajijic, Mexico and Asheville, North Carolina with his elementary school sweetheart, Ashley, who is also his office manager.

Curt Robbins: "Hi Rod. Welcome to the C3 podcast. Please tell our readers about your background in legal hemp and the role you currently play in the industry."

Rod Kight: "I am an attorney who has been representing individuals in the hemp industry since 2015. (Congress legalized 'industrial hemp' in the 2014 Farm Bill.) I write a lot about hemp and cannabis, mostly on my blog. I started writing about CBD in 2015 and came up with the 'Source Rule' regarding cannabinoids. It essentially asserts that the source of a cannabinoid determines its legal status.

"For instance, CBD from marijuana is a controlled substance since the legal definition of 'marijuana' includes all parts of the plant. (Technically, chlorophyll from a marijuana plant is a schedule I controlled substance.) However, CBD from hemp is not a controlled substance since the legal definition of 'hemp' includes all parts of the plant. In fact, since CBD has not been scheduled under US federal law, it is not a controlled substance except when it is from marijuana.

"This is all fairly non-controversial now (except for delta-8 THC; see below). However, back in 2015 and 2016, it was groundbreaking. Over the past several years, my primary role as a hemp lawyer has been to help my clients navigate the ever-evolving—and often 'grey' and occasionally conflicting—laws and regulations regarding hemp and its cannabinoids."

CR: "Much talk—and perhaps even more commerce—has transpired around delta-8 THC, the new kid on the block in terms of cannabinoid-based cannabis commerce. What is the legal status of this controversial phytocannabinoid?"

RK: "Well, the truth is, no one knows the legal status of delta-8 (D8) right now​​—at least at the federal level and under the laws of most states. I mean that in a literal sense. Plenty of people and government agencies have opined on D8's legal status, but the law has never been clarified by Congress, most state legislatures, or any courts.

"I strongly contend that D8 from hemp is not a controlled substance under federal law for the reasons set forth in the legal position statement that I wrote for the Hemp Industries Association. As for state law, things break down, broadly, into three categories:

"(1) States that have enacted laws or specific regulations regarding D8. In these states, we can safely know whether D8 is lawful or not.

"(2) States in which an agency (usually the department of agriculture or attorney general) have issued legal opinions on D8 and/or address D8 in an FAQ section on their webpages. This usually muddies the water since a lot of the opinions are poorly written, do not adhere to the state's statutes, and are not enforceable as a matter of law. Additionally, what weight should be given to an agency’s legal opinion on a matter that the agency is not charged with regulating? For instance, if a state's department of agriculture opines that D8 is an illegal controlled substance under state law, does that carry any weight since departments of agriculture generally do not enforce or otherwise regulate controlled substances?

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"(3) States that have not addressed D8 at all. This is the situation for most states. In these jurisdictions, we look to see how 'hemp' is legally defined under state law and what types of hemp products are allowed in the state. In states with hemp laws that mirror the 2018 Farm Bill and that do not prohibit most hemp products, we usually contend that D8 is lawful for the same reasons that we contend it is lawful under federal law (see HIA position statement link above).

"Finally, determining whether D8 is 'legal' requires us to consider more than just whether it is a controlled substance. What does the Food, Drug & Cosmetic Act say about it? This will depend, to a large degree, on how it is marketed. Is it a gummy, a vape, or a cosmetic product? This is obviously a very complicated subject."

CR: "Many media outlets and thought leaders are predicting federal legalization of adult-use cannabis in the United States in the near future. What is your opinion?"

RK: "I think marijuana will be removed from the federal controlled substances act within Biden's current term. Most likely, cannabis will primarily be regulated by the individual states, much like alcohol is now."

CR: "Our audience is business professionals and enterprise organizations in the cannabis and hemp industries. Where should these organizations and executives focus their resources in the next one to three years to best ensure sustainable success?"

RK: "Cannabis medicine is at the proverbial 'beginning of the beginning' and we will see lots of patents and cannabinoid medications over the next 10 to 20 years. Additionally, we will likely see precision fermented cannabinoids (i.e., synthetically derived cannabinoids) control large sectors of the market. International cannabis markets will continue to open."

CR: "What can small to medium sized cannabis and hemp businesses do now to help fortify themselves for the competitive onslaught that will occur when U.S. federal legalization of adult-use cannabis occurs?"

RK: "This is a great question and one that I am constantly talking about with clients. It will not be long before the large, multinational public companies will enter the cannabis market. They will mostly start with CBD and move from there.

"Current participants in the cannabis and hemp markets must either (a) position themselves to be desirable acquisition targets for the multinationals or (b) carve out a very specific niche that will survive the 'Wal-Martization' of cannabis and hemp.

"Most closely held businesses (which describes 90+% of the current hemp and cannabis industries) cannot compete with the multinationals. So, if they are not good acquisition targets or have a niche that the multinationals cannot (or will not) fill...they will be out of business."

Learn More

To learn more, enroll in the Higher Learning LV™ live online seminar Understanding Cannabis. This two-hour lecture and Q&A session teaches the basics of cannabinoids, flavonoids, terpenes, and how these phytomolecules interact with the human endocannabinoid system.