At the federal level, cannabis and derivative products with a THC concentration over 0.3 percent are Schedule I substances under the Controlled Substances Act (CSA) of 1970. Therefore, cannabis and cannabis products exceeding this threshold are illegal to grow, possess, or sell under federal law. This includes medical marijuana. Though a rare occurrence, the federal government can prosecute people who are otherwise protected under state medical marijuana laws, subjecting defendants to fines, prison time, or both.

The 2018 Farm Bill made cannabis and its products legal to grow, possess, and sell, as long as they do not exceed a maximum threshold of 0.3 percent THC (Pub. L. No. 115-334). The Farm Bill defines these items as hemp. (For more information regarding The Farm Bill, see Practice Note, Hemp and the 2018 Farm Bill.) However, even when a cannabis product qualifies as hemp, its lawfulness may still be determined by whether it satisfies other product safety requirements. For example, while the Food and Drug Administration (FDA) has explicitly permitted or approved for specific purposes the use of some hemp plant parts or components in foods, its use must still be established as legal and safe in other contexts.

The tension between hemp and existing product regulation is also evident with popular hemp derivative cannabidiol (CBD). CBD, when added to foods, beverages, and dietary supplements, leaves manufacturers vulnerable to an enforcement action by the FDA. For more information regarding CBD, see Practice Note, CBD: Overview. For more information on CBD in foods, dietary supplements, and cosmetics, see Practice Note, FDA Regulation of Foods, Dietary Supplements, and Cosmetics Containing CBD.

There is a conflict between federal classification under the CSA, which criminalizes all marijuana-related activities, and state marijuana laws, some of which:

Marijuana's status as a Schedule I substance at the federal level has significant ramifications for cannabis policy at the state level. For example, as a rule, cannabis businesses must pay taxes on all their revenue without the benefit of using their business expenses to reduce their taxable income under Section 280E of the Internal Revenue Code. Section 280E states that businesses engaging in the trafficking of a Schedule I or II controlled substance are prohibited from taking tax deductions or credits. Additionally, many cannabis businesses in "legal states" must operate as cash-only enterprises, since some banks are wary of transacting with businesses that are not in compliance with federal law.

This Toolkit serves as a guide to Practical Law's library of resources on legal issues arising out of the possession, sale, cultivation, and trade of cannabis and cannabis-related products in a variety of contexts. Topics addressed include marijuana in the workplace, access to the bankruptcy code, cannabis in interstate commerce, antitrust issues, and counseling a cannabis-related business.