USDA Issues Opinion on Several Hemp-Related Provisions of the 2018 Farm Bill

McDermott Will & Emery

McDermott Will & Emery

On May 28, 2019, the United States Department of Agriculture (USDA) issued a legal opinion to address questions raised by several hemp-related provisions of the Agricultural Act of 2018, better known as the 2018 Farm Bill. The USDA opinion clarifies four areas of the 2018 Farm Bill:

  1. the removal of hemp as a controlled substance and schedule I drug became effective upon enactment of the 2018 Farm Bill;
  2. following the publication of implementing regulations, states and Indian tribes cannot prohibit interstate transportation and shipment of hemp and hemp-based products, and the USDA confirmed that this preemption also covers hemp produced under the 2014 Farm Bill;
  3. pending certain exceptions, individuals with certain controlled substance felony convictions will be barred from producing hemp; and
  4. following the enactment of the 2018 Farm Bill, states and Indian tribes still retain the ability to regulate hemp production, including the ability to grow or cultivate hemp in that state or territory.

1. Removal of Hemp from the Controlled Substance Act

Under the 2018 Farm Bill, “hemp” is the cannabis plant and any part of that plant—including the seeds and all derivatives, extracts and cannabinoids—with a delta-9 tetrahydrocannabinol (THC) concentration of no more than 0.3% on a dry weight basis. As of December 20, 2018, the enactment of the 2018 Farm Bill removed hemp as a controlled substance and as a schedule I drug under the Controlled Substances Act (CSA). The 2018 Farm Bill also amended the CSA to exclude the THC in hemp. This removal legalized hemp production within the parameters of the statute while still allowing states and Indian tribes the authority to enact and enforce laws more stringent than federal law regarding the regulation of the production of hemp.

The new USDA opinion confirms that these changes were self executing, meaning that while implementing regulations to the 2018 Farm Bill are forthcoming, these removals went into effect on December 20, 2018, and are not dependent on the enactment of regulations nor any further legislative or administrative action. In other words, USDA rejected the theory put forth by some that the THC in hemp remains on schedule I because regulations identifying THC as a schedule I substance remain on the books.

In a tantalizing footnote (#9) within the USDA opinion, the author also suggests that hemp extracts (e.g., cannabidiol a.k.a “CBD,” although the footnote does not specifically mention CBD) also have been removed from schedule I, regardless of any regulations to the contrary.

2. Interstate Transportation and Shipment of Hemp

The 2018 Farm Bill amended the Agricultural Marketing Act of 1946 (AMA) to allow a state or Indian tribe to submit plans to the USDA for approval to act as the primary regulatory authority over the production of hemp in that state or territory. The USDA will establish a Departmental plan for regulation of hemp production in those states and territories that do not apply.

While states and tribes may act as the primary regulatory authority over production, the 2018 Farm Bill specifically prohibits states and tribes from prohibiting the interstate transportation or shipment of hemp lawfully produced under a state, tribal or Departmental plan. Notably, this prohibition is not effective until after the publication of implementing regulations, anticipated for the fall of 2019. This prohibition will effectively preempt any state law currently prohibiting such interstate activity.

The opinion also clarifies that the prohibition on a states’ ability to restrict interstate transportation or shipment of hemp also applies to hemp lawfully produced under the 2014 Farm Bill.

3. Restrictions on Production of Hemp by Certain Felons

Effective December 20, 2018, the 2018 Farm Bill bars any person convicted of a controlled substance-related felony from producing hemp for a 10-year period following the date of conviction. This does not apply to producers that have been lawfully participating in the state pilot program, authorized by the Agricultural Act of 2014, prior to December 20, 2018. Nevertheless, any felony conviction relating to a controlled substance after December 20, 2018—including individuals lawfully participating in the state pilot program prior to their conviction—will trigger a 10-year bar on producing hemp under the AMA, starting from the date of conviction.

4. Retention of State Authority to Regulate

The USDA opinion clarifies that while states and tribes will be prohibited from enacting a prohibition on interstate transportation and shipment of hemp produced in accordance with federal law, the 2018 Farm Bill allows states and tribes to enact and enforce laws regulating the production of hemp that are more stringent than federal laws, including the ability to prohibit growth or cultivation in that state or territory.

Finally, the USDA opinion states the 2018 Farm Bill does not change the authority of the Secretary of Health and Human Services or Commissioner of Food and Drugs to regulate hemp under applicable Food and Drug Administration standards.

A link to the full USDA opinion can be found here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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