March 11, 2019

Legalized Industrial Hemp Production is Coming (But It's Not Here Yet)

Holland & Knight Alert
Taite R. McDonald | Michael Obeiter

HIGHLIGHTS:

  • The U.S. Department of Agriculture (USDA) has provided some limited but important clarity on the road ahead for the legalization of industrial hemp production, although some questions still remain.
  • The USDA will host a listening session, in the form of a public webinar, on March 13, 2019. USDA has said that its intention is to issue regulations this fall, in order to provide certainty to states, growers and other industry participants in time for the 2020 planting season.
  • From permissible procedures on extracting and testing for THC to how states and growers should dispose of non-compliant product, there is still ample opportunity to inform USDA's rulemaking and help shape the ultimate regulations.

When the 2018 Farm Bill was signed into law last December, there was a good deal of excitement about the legalization of industrial hemp production. However, as we have noted before (see Holland & Knight's alert, "The Road Ahead for Cannabis-Derived Goods," Jan. 28, 2019), a number of open questions would need to be resolved before growers could begin cultivating hemp, and the timeline was uncertain at best. The month-long government shutdown didn't help matters, either. But on Feb. 27, 2019, the U.S. Department of Agriculture (USDA) provided some limited but important clarity on the road ahead. Here's a brief rundown of what we know now and what questions remain.

Who Will Oversee the Industrial Hemp Program?

When the 2014 Farm Bill authorized limited hemp production for research purposes, the National Institute of Food and Agriculture administered the program. And until regulations are promulgated for implementing the hemp provisions in the 2018 Farm Bill (more on that below), that will remain unchanged. In the meantime, the Agricultural Marketing Service's Specialty Crops Program has begun collecting information to inform a future rulemaking, and that program will also be charged with writing the implementing regulations and reviewing state plans.

What Will USDA's Regulations Entail?

For states that are interested in establishing their own industrial hemp program, the 2018 Farm Bill lays out specific requirements for what a state plan needs to contain. These include procedures regarding land to be used for planting, testing, effective disposal of plants and products, compliance with law enforcement, annual inspections and submission of information to USDA. Over the coming months, USDA will solicit input from stakeholders to help inform the rules that will govern these aspects of industrial hemp production.

What Happens Next?

USDA will host a listening session, in the form of a public webinar, on March 13, 2019. USDA has said that its intention is to issue regulations this fall, in order to provide certainty to states, growers and other industry participants in time for the 2020 planting season. This is a fairly aggressive timeline, given that the agency must publish a proposed rule, allow for public comment and then incorporate that feedback into a final rule, all over the next six to nine months.

There are reasons for optimism, though, and none more important than the fact that states are champing at the bit to put their own industrial hemp programs into place. Kentucky submitted its proposed plan the day the Farm Bill was signed into law by President Donald Trump, and other states aren't too far behind. But USDA won't approve any state plans until its regulations have gone into effect, underscoring the need for an accelerated rulemaking timeline.

It is worth noting that states do not need to issue their own plans for producers within those states to grow hemp. So long as hemp production is not explicitly prohibited by state law, the 2018 Farm Bill authorizes USDA to accept production plans from individual producers; the forthcoming regulations will also include a federal plan, which will dictate how the agency will issue licenses in those instances.

What Don't We Know?

In short, it is still not certain what USDA's regulations will look like, so it is also unclear what an acceptable state plan will look like. From permissible procedures on extracting and testing for THC to how states and growers should dispose of non-compliant product, there is still ample opportunity to inform USDA's rulemaking and help shape the ultimate regulations.

Additionally, keep in mind that USDA is charged with administering how industrial hemp is grown and processed. Cannabis-derived goods that are marketed for consumption or that make claims of therapeutic benefits are still governed by the U.S. Food and Drug Administration


Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.


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