States can still opt out of allowing hemp production
Democrat Michael Bennet and Republican Cory Gardner — both Colorado senators — expressed great delight when the U.S. House and Senate announced they finally agreed in principle on the substance of the 2018 Farm Bill. Bennet said his goal was to get a bipartisan Farm Bill passed before 2019 — and he met his goal.
Within the new Farm Bill, Senate Majority Leader Mitch McConnell (R-Kentucky) managed to include a provision legalizing the cultivation and distribution of hemp on the federal level.
On Dec. 20, 2018, President Trump signed the bill, which allows individual states to decide whether to implement a regulatory scheme for legal hemp. With that, the Farm Bill includes an explicit “no-preemption” clause, allowing states to opt out of allowing hemp production within their boundaries. However, the Farm Bill provides a safeguard for interstate commerce that bars states from prohibiting the transportation or shipment of hemp and hemp products.
The language of the bill removes cannabis plants with 0.3% THC or less from the Controlled Substances Act entirely (and yes, that means the THC derived from these plants will also be removed from the Controlled Substances Act).
Although the 2018 Farm Bill will be an industry-changer in the right direction for hemp, compliance with both federal and state law will be key to success in this industry. It is important to remember hemp and its derivatives would appear to become legal, but that is not to say hemp-derived CBD products are automatically legalized on the federal level from this legislative action alone. The bill states it will not have any effect on the Federal Food, Drug, and Cosmetic Act, nor Section 351 of the Public Health Service Act. The Food and Drug Administration (FDA) currently allows only the fiber and oil from hemp seeds to be used in food products; the FDA prohibits the use of CBD as a food ingredient or dietary supplement.
The Farm Bill also provides for testing requirements. Although Colorado has significantly progressed in the area of testing, the science is far from perfected, and the accuracy of different testing methods is heavily debated. It is foreseeable that differentiating between CBD and THC derived from plants with 0.3% THC or less and those that have been derived from plants with higher THC concentrations will be problematic for regulators and industry operators. Compliance will continue to be a legal gray area, continuously evolving at different paces on the state level. However, the bill will open many doors for this area of the law and should foster the development of the science behind testing.
Perhaps the biggest game-changer of the Farm Bill is the effect of descheduling hemp entirely; the current restrictions on importing and exporting hemp and hemp products would be lifted, subject to compliance with regulatory requirements. Prior to the new law going into effect, the U.S. hemp market was chiefly dependent on imported hemp plant parts and finished hemp products, primarily from Canada and China. Industry reports estimate hemp product sales are worth almost $700 million each year for the U.S. market. With the president signing off on the Farm Bill, that number should skyrocket into the billions within the next decade.
Currently, hemp is treated the same as marijuana by the federal government and is classified by the DEA as a Schedule I narcotic. Colorado legalized industrial hemp when it legalized the recreational use of marijuana in 2012, with state law defining industrial hemp as cannabis that yields 0.3% THC or less. In effect, Colorado has differentiated between marijuana plants and hemp plants based on the THC content.
It may seem as though federal law legalizing hemp is irrelevant to Colorado’s perceived lenience on the production of hemp for the past six years; however, that is just not the case. While the federally illegal status of hemp has remained, so have the restrictions and unavailability of crop insurance and loans typically available to any farmer growing traditional cash crops. Hemp legalization at the federal level is a game-changer for farmers and would cause many previously reluctant individuals to feel comfortable entering the hemp industry.
The exact terms of the 2018 Farm Bill are critical to hemp farmers wishing to produce CBD extracts — or any other product for that matter — and it should be expected this industry will be heavily regulated at both the state and federal level. Knowing the law and what it really means will continue to be critical for those seeking to operate legally in the hemp industry.
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.