The long-anticipated 2018 Farm Bill finally made its way to the President’s desk and Trump made hemp fans ecstatic when he signed it into law on December 20. With a provision legalizing the cultivation and distribution of hemp on the federal level, many are left wondering what the Act means for cannabis industry operators.
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What It Means
The language of the Bill removes cannabis plants with .3% THC or less from the Controlled Substances Act (CSA) entirely and designates such as the definition of hemp. The specific provisions also create an exception to THC derived from hemp plants—meaning THC derived from hemp is also no longer a federally controlled substance pursuant to the CSA.
And what is perhaps the greatest effect of de-scheduling hemp entirely? Import and export restrictions are now lifted on hemp and its products. No longer will the US have to depend on Chinese and Canadian imports to foster the legal hemp market in the ‘States. However, this privilege is subject to all the traditional export regulatory requirements governed by various federal agencies, such as the Department of Commerce and the Food and Drug Administration.
It must be cautioned: hemp is not legal everywhere.
The language of the Act is strongly rooted in federalist principle, and explicitly designates the states as lead decision-makers regarding the regulation of hemp within that state’s boundaries. If a state was already a part of the pilot program governed by the 2014 Agricultural Act, that is not enough. The 2014 Act is out, and the prior authorizations went with it. The Act’s language requires states who wish to exercise primary regulatory authority over the production of hemp to submit to the Secretary of Agriculture a plan under which the state “monitors and regulates that production.” Such a plan is required to include a means to track the land being used to produce hemp, mandatory testing procedures to ensure plant levels are less than .3% THC, procedures for disposal of noncompliant plants and plant products, enforcement procedures, annual inspection procedures, procedures for submitting information to the Secretary, and certification the state has the resources to implement its regulatory scheme.
On the other hand, the Act does allow states to opt-out of participating in the regulation of a legal hemp market through an explicit “no-preemption” clause written into the Act. The Act positions it will not prevail over state laws that are more stringent than those expressed by Congress on the regulation of hemp. In effect, a state may choose to keep the production and sales of hemp a criminal offense under the laws of that state.
The Act does however offer a safeguard to interstate commerce. A provision in the Act bars a state from prohibiting the transportation or shipment of hemp and hemp products, meaning even if a state chooses not to participate in the legal hemp market, it cannot deny transport through its boundaries.
Another important limit arises in a felony provision clause. “Any person convicted of a felony relating to a controlled substance under State or Federal law before, on, or after the date of enactment of this subtitle shall be ineligible, during the 10-year period following the date of the conviction” to participate in a state program and to produce hemp. This provision could be troubling for those currently operating a state-licensed marijuana business (with marijuana now federally defined as THC with a THC level exceeding .3%) but it cannot be said for sure whether the intent of this provision is to control for dual licensing, considering the language of the Act is a person convicted of a felony related to a controlled substance under Federal law. The likelihood of risk for marijuana businesses seeking to get licensed for hemp production is low because the language of the Act is not specific enough to cover those only in violation of federal law, as opposed to those who have already been previously convicted of a drug offense. However, the important thing to be cautious of will be the way in which the state chooses to implement its licensing scheme and how accessible the state chooses to make entry into its hemp market.
So, What About CBD?
Hemp and its derivatives will become legal in approved states, but hemp-derived CBD products are not automatically legalized on the federal nor state levels from this single legislative action. The Act does not have any effect on the Federal Food, Drug, and Cosmetic Act, nor section 351 of the Public Health Service Act. The FDA currently prohibits the use of CBD as a food ingredient or dietary supplement, allowing only the fiber and oil from hemp seeds to be used in food products. In addition, section 351 lays out strict licensing rules for the regulation of biological products, such as hemp.
The Main Take-Away
If you are eager to get into the hemp industry, do not get ahead of yourself—hemp-lovers alike. It is important to remain patient and wait and see whether your state decides to participate and the way in which they choose to do so. Then, only act once you are properly licensed.
Charles Feldmann is an experienced international cannabis attorney who has focused his practice on assisting marijuana and hemp business clients around the globe in creating and operating 100% compliant operations.
He uses his past experience as a Marine Corps federal prosecutor, DEA Drug Task Force Commander and Colorado state narcotics prosecutor to assist his clients in establishing strict regulatory compliance protocols at the state, federal and international levels. Read his full bio at Feldmann-Nagel.com.