On January 19, 2021, the United States Department of Agriculture (USDA) put forth a final rule to concretely establish a domestic hemp production program. This final rule becomes effective on March 22, 2021, and puts forth structured rules, regulations, and guidelines regarding the production of hemp nationwide. The USDA’s final rule is a provisional response to the Agriculture Improvement Act of 2018 (the 2018 Farm Bill), which permitted states and tribal nations to participate in hemp production programs and removed hemp from the Controlled Substances Act’s (CSA) definition of marijuana. Until the issuance of this final ruling, the USDA had previously only released an interim final rule, which was open to public comments and suggested revisions. Below, we break down the distinguishing and notable provisions the USDA incorporated into this new framework.
Although Texas has a medical marijuana program, as established by the Texas Compassionate Use Act in 2015, only three “Dispensing Organizations” have been granted licenses by the Texas Department of Safety (“DPS”) to cultivate, process, and dispense low-THC cannabis (up to a 0.5 percent THC limit as of the date of this blog) in Texas to prescribed patients. See 37 Tex. Admin. Code § 12.1. Texas is a vertically integrated state, meaning that the Dispensing Organization must cultivate, process, package, and dispense the medical marijuana.
The Agricultural Improvement Act of 2018 (the “2018 Farm Bill”) established that hemp is to be treated similarly to other legal agricultural commodities and traded in standard interstate commerce as a raw material. However, the 2018 Farm Bill governs only state production programs and specifically permits states to enact more stringent regulations than those contained in the Bill. As a result, legal hemp has facilitated the emergence of a wide array of consumer products and uses. Specifically, smokable hemp has made a significant presence in the cannabis and hemp markets and continues to grow despite the increasing legality of other forms of cannabis that often include higher concentrations of tetrahydrocannabinol (“THC”). Below, we discuss the smokable hemp industry and the legal challenges it faces as it comes to fruition.
Yesterday, our office filed a lawsuit against the Texas Department of State Health Services (“DSHS”) on behalf of our client, Crown Distributing LLC (“Crown”), challenging the smokable hemp bans in Texas. A copy of our filed Petition can be accessed here.
In June of 2020, the Financial Crimes Enforcement Network (“FinCEN”) issued updated guidance regarding the Bank Secrecy Act/Anti-Money Laundering (“BSA/AML”) regulations for hemp-related business consumers. Financial institutions must do their due diligence for customers, but especially for hemp-related businesses, as the legalities and recommended practices are continually changing. Additionally, the National Credit Union Administration (“NCUA”) recently put forth further guidance for credit unions serving hemp-related businesses. As the hemp industry continues to progress, the banking industry is actively organizing their expectations and guidelines to keep up and simplify hemp-related interactions. Below, we summarize each of these resources to give you the straightforward essentials.
The booming cannabidiol (CBD) industry is expanding at a rapid rate and shows no signs of slowing down. The legal cannabis industry also continues to make new strides, as cannabis advocates, reform groups, lobbyists, and lawyers remain active in legislative efforts. As time progresses, more states are adapting and adjusting their respective policies. Cannabis and hemp products, including those which contain hemp-derived CBD, are becoming less taboo and these products are now more legally accessible than ever before.
The Texas Department of State Health Services (“DSHS”) adopted and published its final rules governing the Texas consumable hemp program (the “DSHS Final Rules”) to the Texas Register. The DSHS Final Rules become effective on August 2, 2020. Any potential changes to the statute governing our hemp program will not occur until the Texas Legislature reconvenes in January of 2021.
To the detriment of many in the Texas hemp industry, the DSHS Final Rules only slightly diverge from the DSHS Proposed Rules. Our prior blog series on the DSHS Proposed Rules provided an in-depth analysis of the proposed DSHS rules. This blog focuses on the changes made by DSHS in the adopted Final Rules.
Our hemp attorneys recently sat down to identify seven issues with the Texas Department of State Health Services (“DSHS”) Proposed Rules for Texas’ consumable hemp program. If you are a consumable hemp manufacturer, processor, distributor, or retailer, it is not too late to submit your comments directly to DSHS. Comments can be submitted to DSHS until June 7, 2020.
If you joined us for Parts I through III of this Series, you will know that the Texas Department of State Health Services (“DSHS”) published its proposed rules to govern the Texas consumable hemp program (the “DSHS Proposed Rules”) in the Texas Register on May 8, 2020. The DSHS Proposed Rules are open for public comment for 31 days, meaning the public comment period closes on June 7, 2020. To provide comment on any of the draft rules, you can submit your comments directly to DSHS via email to [email protected]. When emailing comments, you will need to indicate “Comments on Proposed Rule 19R074 Hemp Program” in the subject line. Written comments may also be submitted to Rod Moline, Ph.D., R.S., Section Director, Mail Code 1987, Texas Department of State Health Services, P.O. Box 149347, Austin, Texas 78714-9347.
On June 10, 2019, Texas Governor Greg Abbott signed HB 1325, legislation pertaining to hemp growth and consumable hemp products, into law in the state of Texas. To conform with Texas Health and Safety Code, Chapter 443, as amended by HB 1325, Texas Department of State Health Services (“DSHS”) has published its proposed rules to govern the Texas consumable hemp program (the “DSHS Proposed Rules”) in the Texas Register. Under the DSHS Proposed Rules, a “consumable hemp product” is defined as