In December 2018, the U.S. Farm Bill became law. This new law has many aspects to it, but the section of most interest to the cannabis industry relates to changes in U.S. law concerning certain varieties (cultivars) of cannabis. However, it is important to note that this is a limited change.
To better understand what changed, it’s important to understand the different varieties of cannabis. While the terms “cannabis” and “marijuana” are often used interchangeably, “marijuana” is more commonly used to refer to the cannabis varieties with a higher level of THC, the main psychoactive chemical that provides a “high,” while “hemp” often refers to varieties of cannabis with lower THC levels (less than 0.3%) and is generally used for paper, textiles, clothing, rope and other commercial uses (both marijuana and hemp are varieties of Cannabis sativa L.). Hemp is generally considered easier to cultivate, with plants growing closer together and in less controlled environments, while marijuana, whether for medicinal or recreational purposes, generally requires greater spacing between plants and more controlled environments.
So what did the 2018 Farm Bill legalize in the United States? Basically, states are now authorized to regulate the cultivation of hemp. Further, hemp was essentially categorized like most other agricultural products, eligible for insurance and protected in interstate commerce. Prior to this new law, there was little difference between hemp and marijuana from the perspective of the DEA, with both plants being treated as Schedule I substances. This significantly complicated the efforts to grow hemp, explore its commercial and medicinal uses and utilize CBD in a wide array of products. While there was some confusion under a 2014 Farm Bill that seemed to legalize CBD and CBD-based products, the 2018 Farm Bill now makes it much clearer that hemp-based CBD is clearly out of reach for the DEA.
Does this mean that it’s now a free-for-all with regard to CBD, which can be sourced from hemp? While the 2018 Farm Bill certainly improves the environment for CBD-based products, allowing for the legal cultivation of hemp and the research into the many uses for hemp-based products, such as CBD, the U.S. Food and Drug Administration recently made clear that it intends to regulate the inclusion, use and advertising of certain CBD and CBD-based products, just like any other regulated drug. Additionally, the 2018 Farm Bill removed hemp from the federal Controlled Substances Act, but placed regulation of the cultivation of hemp on individual states, allowing each state to decide if hemp cultivation is legal within its borders and charging those states with creating a state-level regulatory framework.
So is the 2018 Farm Bill that legalized the cultivation of hemp a game-changer for the cannabis industry? In many ways, the answer is yes. Companies that operate solely in hemp and hemp-based CBD products no longer need to fear federal prosecution for violations of the Controlled Substances Act. Also, these companies should see other changes to the operations of their businesses, such as the ability to access traditional banking and insurance services that have long been out of reach.
The 2018 Farm Bill is definitely a step in the right direction for the entire cannabis industry. While this bill did not legalize all types of cannabis, it did legalize hemp (with less than 0.3% THC), removing this variety of cannabis from the schedule of controlled substances. This shows that the political landscape is slowly following the social changes taking place in the U.S. with regard to acceptance of the utility of cannabis. This also allows for the more widespread cultivation of hemp, as well as research into the uses for hemp. This may be another step toward changes at the federal level regarding marijuana and continued research into the medical and commercial uses of this particular type of cannabis.
The cannabis industry continues to evolve and provides great opportunity for companies with the right products at the right time and place. This recent change in federal law regarding hemp is unlikely to be the last significant change in this exciting industry. The efforts to remove the classification of marijuana as a Schedule I controlled substance will continue. The legalization of hemp is likely to help in this effort as it not only treats hemp and hemp-based products like many other agricultural products, but also allows for research into the use of hemp for medicinal and commercial products, which will help highlight the potential that the cannabis family of plants has to offer.
Tom Zuber is the managing partner of Zuber Lawler & Del Duca LLP, a firm of 40 attorneys with offices in California, Illinois and New York. He holds a law degree from Columbia Law School, a master’s degree in public policy from Harvard University and a biomedical engineering degree from Rutgers University, where he graduated with highest honors. He can be reached at tzuber@zuberlaw.com.