We work with numerous clients in the hemp industry and sub-industries, such as the cannabidiol and food markets. Because of the ambiguity and, at times, conflict between federal and state law regarding hemp, it is of tantamount importance that you retain competent counsel to advise you for your hemp or CBD business.
What is hemp?
On December 20, 2018, the Agricultural Act of 2018 (“Farm Bill”) was signed into law.
Section 297 (a) of the Act amended the federal definition of hemp:
“the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.”
Congress expanded the definition of hemp in the 2018 Farm Bill to include the following language: “including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers…” This language was included to clarify the status of popular cannabinoids derived from hemp, such as cannabidiol. Through this definition and specific use of the term cannabinoids, Congress clarifies that all cannabinoids found within the hemp plant, along with extracts and other derivatives, fall under the Act’s definition of hemp.
How Can I Get a License to Grow Hemp?
Section 297 (b) establishes new procedures for submitting a plan for hemp cultivation programs for both States and Indian Tribes. The Act provides that these entities must include the following within their plan submissions:
- A plan to maintain information regarding the land on which the hemp will be grown, including a legal description of the land, for at least three years;
- Procedures for testing THC levels, by using post-decarboxylation or other reliable testing methods;
- A procedure for disposal of hemp or products in violation of the Act (example: a hemp plant containing more than .3% dry weight THC); and
- A procedure to comply with the enforcement procedures of the Act.
The submitted plan may include any other practice or procedure for regulating the growth of hemp, as long as such practices are consistent with the Act. The Secretary of Agriculture must approve the plan no later than sixty (60) days after receipt of the submitted plan, if it complies with the requirements noted above. If the plan is disapproved, the applicant may submit an amended plan. The Secretary may also provide technical assistance in developing the plan.
If a hemp producer negligently violates a provision within its State’s plan or Tribal plan, the State department of agriculture or Tribal government may provide for a corrective action plan to ensure the hemp producer’s compliance. If the hemp producer commits three violations within a five year period, their ability to produce hemp is revoked for a period of five years, beginning on the date of their third violation. Lastly, Sunder Section 297(d), the Secretary of Agriculture has sole authority to issue federal regulations and guidelines relating to the production of hemp.
Keep in mind that each State has the right to elect whether to participate or not. Under the concept of dual sovereignty, States are free to continue to outlaw hemp and hemp products or derivatives. For example, Texas currently does not permit growth of hemp.
Felony Convictions for Owners or Employees of Hemp Cultivators
Under the Act, if you have been convicted of a controlled substance felony under State or Federal law, you may not participate in (such as through employment) or engage in the cultivation of hemp for a ten year period following the date of your conviction. For those already working in the hemp industry, the Act contains an exception for any person who was already growing hemp lawfully under a program established pursuant to the 2014 Farm Bill.
Crop Insurance for Hemp
Section 11106 of the Act amended the Federal Crop Insurance Act and establishes that hemp is an agricultural commodity eligible for federal crop insurance. Amendment of Section 508(a)(2) of the Federal Crop Insurance Act (7 U.S.C. 1508(a)(2)) ensures that hemp is eligible for coverage both pre and post-harvest.
Controlled Substance Act Amendments
The most notable change in the 2018 Farm Bill is the amendment of the Controlled Substances Act. Section 12619 of the Act amends the Controlled Substances Act as follows: “the term ‘marihuana’ does not include hemp as defined in section 297A of the Agricultural Marketing Act of 1946.” The definition of tetrahydrocannabinols is specifically modified to “except for tetrahydrocannabinols in hemp (as defined under section 297A of the Agricultural Marketing Act of 1946)’’.
No Interference with Interstate Transportation of Hemp
Section 10114 of the 2018 Farm Bill is a rule of construction, meaning that this rule governs how courts and other agencies shall interpret the Act. The rule of construction provides that nothing in the Act authorizes interference with the interstate commerce of hemp or hemp products. The Act specifically provides that “No State or Indian Tribe shall prohibit the transportation or shipment of hemp or hemp products produced in accordance with subtitle G of the Agricultural Marketing Act of 1946 (as added by section 10113) through the State or the territory of the Indian Tribe, as applicable.” This would include interference with transportation or shipment of hemp or hemp products across state lines by the DEA.
Unfortunately, agencies such as the Food and Drug administration already appear to be taking stances contrary to the text of the 2018 Farm Bill. If you are in the industrial hemp business, it is important that you have an understanding of federal law, your state’s relevant law, and the enforcement climate in your own locale. Laws and regulations change rapidly in this area of law and it is important to retain an attorney who has knowledge of hemp laws, regulations, the plant itself, and the industry. At Ritter Spencer, we assist our hemp clients with many issues, from formation to intellectual property protection to compliance and more.