The Drug Enforcement Administration (DEA) has recognised cannabis seeds as hemp as long as they don’t exceed the THC limit of 0.3%. This clarification In response to an attorney inquiry, the DEA recently confirmed that seeds and other parts of the cannabis plant with less than 0.3 percent THC (the federal limit separating hemp and marijuana) have been legal since 2018’s Farm Bill ended federal hemp prohibition. Cannabis Banking Financial Network
Marijuana seeds are legal in the U.S. as long as they don’t exceed the THC limit for hemp
The Drug Enforcement Administration (DEA) has recognised cannabis seeds as hemp as long as they don’t exceed the THC limit of 0.3%. This clarification makes them legal under the 2018 Farm Bill and it means that seeds can be shipped legally to anywhere in the country, which opens up a wide range of possibilities for the spreading of the genetic diversity of cannabis across the nation’s markets.
Marijuana may currently be banned by the federal government, but the Drug Enforcement Administration (DEA) has effectively recognised that the plant’s seeds are legal, regardless of how much THC they may end up producing when grown.
This means that cannabis growers can get their seeds from anywhere without having to worry about breaking federal law. Previously, and due to the federal ban, cannabis seeds were restricted to the state where they were produced, so a variety bred and grown in one state couldn’t legally go beyond the limits of that state.
The DEA recently conducted a review of the federal statute in response to a query from attorney Shane Pennington, who inquired about the legality of cannabis seeds and cuttings, and tissue cultures or ‘other genetic material’ containing no more than 0.3% THC.
After the passing of the 2018 Farm Bill, hemp was excluded from the definition of marijuana in the Controlled Substances Act (CSA), which means that currently all parts of the Cannabis sativa L. plant are not controlled, but only as long as they don’t exceed 0.3% THC.
“As a result, those marijuana seeds with a delta-9-tetrahydrocannabinol concentration of no more than 0.3% in dry weight meet the definition of ‘hemp’ and are therefore not controlled by the CSA”, states Terrence L. Boos, head of the DEA’s Drug and Chemical Evaluation Section, in a letter dated 6th January 2022. This comment was made in response to the issues raised by Shane Pennington, who has an extensive history of litigation against the agency on cannabis matters and drug policy.
Both hemp and marijuana seeds generally contain low THC levels, which don’t exceed the legal threshold, and so the DEA essentially permits the purchase of cannabis seeds, no matter how much THC the resulting plant may produce, provided the seeds themselves contain less than 0.3% delta-9 THC.
Nevertheless, it’s important to say that the use of any cannabis seeds with the intention of growing marijuana remains illegal at federal level, since the plant is still banned.
Was it illegal to sell marijuana seeds before?
Until now, cannabis strains have been isolated in the regions where they have been created or where they’ve arrived from other countries, as they couldn’t be transported beyond state borders. For example, although recreational marijuana is legal state-wide in both California and Oregon, moving a plant from one of those states to another is illegal at federal level. This forces cannabis growers and breeders to operate within the limits of the state.
Many cannabis breeders and seed banks sell seeds throughout the U.S. but operate in a legal ‘grey area’. Generally, the labels show that the seeds are sold as a collector’s item or a souvenir, which provides a way to circumvent the law. But if authorities find cannabis seeds in the mail, they may seize them and arrest the sender or recipient, although this is not common. However, all of that could have changed in 2018 without anyone actually knowing about it.
Definition of ‘source’ as opposed to ‘material’
In 2018, the U.S. Congress passed a Farm Bill for the legalisation of hemp in the country. ‘Hemp’ was defined as any cannabis plant with a THC level below 0.3%. With this bill, hemp can be grown and used for industrial purposes. The 2018 bill also permits hemp production for the creation of cannabinoids other than THC, such as CBD or delta-8 THC.
Cannabis seeds have always been considered illegal because they come from plants with high THC levels. As the source of the seeds has THC levels over 0.3%, anything that comes from those plants (including the seeds) has also been considered illegal cannabis.
But in November 2021, Shane Pennington, attorney at the law firm Vicente Sederberg LLP in New York, wrote to DEA officials asking for clarification on the definition of growing cannabis seeds, clones, and tissue cultures. Mr. Pennington argued that it’s not the source of the material but the material itself that determines its legality, which means that a cannabis seed with less than 0.3% THC should be classified as hemp. And if the seeds are hemp, then they’re not a controlled substance, and are therefore legal at federal level.
What implications does this have for the cannabis industry?
If the DEA and the federal government permit seeds to move freely across the country, anyone would then be able to grow seeds from anywhere in their own state and certain strains would no longer be confined to a specific region. This could potentially trigger interest in investment, the development of a larger industry, and greater acceptance of the plant, as well as the expansion of the area of genetic innovation. The removal of transportation barriers between states would open up the genetic pool of cannabis, which would in turn provide breeders with a greater diversity of strains to work with.
According to Pennington, the federal law seems to be more flexible than expected, and so perhaps the biggest implication is that this sends a clear signal to state regulators. In fact, DEA officials last year clarified to the regulatory authorities that delta-8 THC, an increasingly popular psychoactive cannabinoid, was also not a controlled substance under existing law, because the 2018 Farm Bill that legalised hemp doesn’t explicitly prohibit THC isomers.
The states follow the DEA’s lead by creating their own drug laws, so watching the government agency relax its stance on cannabis seeds could get these states to do the same, thereby breaking protectionist state laws.
However, it’s important to highlight that, even though the DEA calls it ‘an official determination’, it is still not entirely clear whether they are legally bound to this position. For now, the DEA’s recognition that seeds, cuttings, and cannabis tissue cultures are not controlled substances is not a law, but it does signify a big step forward in easing the restrictions on marijuana.
Kannabia Seeds Company sells to its customers a product collection, a souvenir. We cannot and we shall not give growing advice since our product is not intended for this purpose.
Kannabia accept no responsibility for any illegal use made by third parties of information published. The cultivation of cannabis for personal consumption is an activity subject to legal restrictions that vary from state to state. We recommend consultation of the legislation in force in your country of residence to avoid participation in any illegal activity.
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Ask a Stoner: Buying Weed Seeds Is Legal Now?
Dear Stoner: I read a headline that the DEA had just now legalized weed seeds, but I’ve been ordering them to my house in the Springs for almost a decade. Have I been breaking federal drug laws this whole time?
Dear Mike: Short answer: Yes. But you can breath easy now, thanks to hemp.
I technically break federal drug laws almost every day after work and pretty much every weekend. We all do if we smoke, grow or possess cannabis, even in states that have legalized the plant. Federal pot laws had prohibited seeds, too, but prosecuting online seed banks in legal states or other countries was low on the Drug Enforcement Administration’s to-do list. Now that hemp is legal at the federal level, that federal priority has been crossed off entirely.
In response to an attorney inquiry, the DEA recently confirmed that seeds and other parts of the cannabis plant with less than 0.3 percent THC (the federal limit separating hemp and marijuana) have been legal since 2018’s Farm Bill ended federal hemp prohibition. Hemp and marijuana are the same plant with different THC amounts in their blooming flowers, but neither hemp nor marijuana seeds exceed the 0.3 percent THC limit, so there’s virtually no legal difference in them at such an early stage. The DEA also confirmed that it would have nailed you had you been caught before hemp was legalized and that the resulting plants from said seeds are still quite illegal, so count your blessings.
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Is It Illegal To Sell Cannabis Seeds
If cannabis flower is federally illegal because it contains Tetrahydrocannabinol (THC), are cannabis seeds legal because they don’t? It’s a fair question that many people have asked and, while the answer is “no” federally and “it depends” by state, there is an active legal cannabis seed trade occurring every day in the U.S. – and it is rapidly growing. While the legal questions evolve and new legislation surfaces in state capitols and Washington D.C., there is cash tied to the sale of cannabis seeds in need of banking.
Is it legal to sell cannabis seeds?
Cannabis seeds are illegal to sell across state lines due to the ongoing federal prohibition against cannabis and cannabis products. However, depending on state law, consumers may be able to purchase cannabis seeds legally from a breeder, dispensary, or other cannabis business – even if they don’t have a license to sell cannabis products that contain THC.
Cannabis seeds find themselves in a legal grey area because they don’t contain any THC – when a cannabis product contains 0.3% THC content or less, it is considered legal since the signing of the 2018 Farm Bill. However, they remain federally illegal to buy and sell. In states where cannabis is legal, cannabis seeds could sometimes be bought and sold within state borders by licensed businesses only, depending on state law. State laws governing the sale of cannabis seeds can vary from state to state.
Can retailers who sell cannabis seeds get a bank account?
For THC licensees who also sell cannabis seeds, banking is available as it would be for other activities that fall under the scope of that license. In other words, a dispensary would have little trouble adding cannabis seeds to their inventory if they already worked with a cannabis-friendly bank.
However, unlike THC licensees, there is not a clear federal regulatory framework on how to bank money derived from state-compliant cannabis seeds sales from non-THC licensed operators. As a result, this sector of the legal cannabis industry comes with a great deal of uncertainty and risk, every banker’s least favorite combination.
So, for example, a garden shop stocks all types of seeds, including cannabis seeds, which become a substantial portion of the shop’s business. Unlike a licensed dispensary, this garden shop does not deal in other cannabis products, and yet cannabis seeds remain a significant percentage of overall revenue. The regulations that bank examiners use for THC licensees doesn’t necessarily apply to the garden shop and so many bankers remain uncertain how to approach this type of situation (and therefore tend to avoid it).
In this way, cannabis seeds are more like CBD products or Delta-8-THC: largely unregulated from a banking perspective.
The difference between CBD banking and cannabis seeds banking, though, is that while the U.S. cannabis seeds market is expected to eclipse $1.5 billion in total value by 2027, the American CBD industry already drives more than that in sales each year. More niche sectors of the industry like the cannabis seed trade and Delta-8 THC distillates face an even steeper uphill battle in securing compliant banking and merchant processing services than CBD businesses.
That’s not to say banking isn’t available for these sectors. However, bankers generally tend to be less informed about cannabis seeds than THC licensees or even CBD businesses. At any time, a bank could take a closer look at sectors like cannabis seeds or Delta-8-THC and decide the uncertainty is too great and the business opportunity too small (relative to broader markets like CBD) to take the risk – at any time, a bank could choose to terminate these accounts and suspend merchant processing services.
Cannabis seeds businesses might be legal in your state but remain federally illegal – and without a THC license, it’s not exactly clear to bankers how to compliantly manage your account. However, unlike THC licensees, federal bank examiners have produced no real guidance on how to bank profits earned through the purchase and sale of cannabis seeds. While THC licensees handle a federally illegal product, bankers have guidance, and therefore more certainty, on how to bank them in a compliant manner. There is no such assurance when it comes to cannabis seeds businesses.
This has led many cannabis seeds businesses to mischaracterize their operations to their bank, posing as an agricultural company under some obscure name and withholding information about cannabis-related operations. Not only does this carry significant business consequences, it appears that law enforcement is cracking down on fraud in cannabis banking and payment processing. This approach is not only obsolete but puts your business at a competitive disadvantage. Yesterday was the best time to transition to transparent, compliant cannabis banking, but right now is the second-best time.
How to find a stable banking relationship for cannabis seeds businesses
Cannabis entrepreneurs know few things are certain and those that are won’t be for long. The same is true for cannabis banking, but you can take certain steps to improve your chances of finding, retaining, and maintaining a stable relationship with your bank.
The first and most important step is to identify a cannabis-friendly bank and approach them in full transparency. That can be easier said than done. Many cannabis-friendly banks don’t openly advertise the fact that they work closely with the industry. Even if they embrace the industry and the business opportunities that come along with it, many remain cautious about the optics of being associated with a federally illegal product.
That’s where banking networks like Fincann come in. We’ve been doing the hard work in the trenches for years, forging relationships with financial institutions that are ready and willing to work with the legal cannabis industry, including cannabis seeds businesses. As of April 2021, Fincann’s Cannabis Banking Financial Network™ offers compliant cannabis banking and merchant processing services for every sector of the industry in all 50 states.
What banking services are available to cannabis seeds businesses?
Once you and your new bank have been introduced, including a full review of business operations and financials, you’ll know you have a banking partner that understands and supports your business. And, if you’re in need of merchant processing services, there are several legitimate, compliant options available to all sectors of the cannabis industry: merchant processing accounts, “PayPal-style” e-wallets, closed-loop and loyalty cards, high-profit ATMs, and ACH-based apps and transfers.
Merchant processing accounts support in-person debit transactions, allowing customers to make cannabis purchases using their checking account and PIN number. ACH transfers support an online payment functionality for e-commerce stores. Customers simply input their routing and account number and confirm their payment to checkout online. Both methods are 100% legally compliant and transparent with the facilitating bank.
Cannabis banking made better with Fincann
There is no longer any need for a business in any state or sector of the legal cannabis industry to lie to their bank or use illegal payment processing workarounds. With banking networks like Fincann and payment processing solutions like merchant processing accounts and online ACH transfers, cannabis businesses have effective, legal, and straightforward options. The future of the cannabis industry is legal and transparent; don’t fall behind, call Fincann and transition to better cannabis banking today.