Roughly every five years, Congress passes a package of legislation known as the Farm Bill. Farm Bills generally touch on several aspects of our agricultural economy, including trade, commodity pricing, crop insurance, conservation, development, research, forestry, energy, and many more.
On December 12, 2018, Congress passed the Agriculture Improvement Act of 2018, the 2018 Farm Bill. The Bill is currently before the President awaiting his signature. While there are several elements of the Bill what warrant discussion, the most interesting changes concern the cannabis plant. If enacted, the Bill removes industrial hemp from the Controlled Substances Act, opening the door for a massive overhaul of federal policy.
For decades, federal law has not differentiated hemp from other forms of the cannabis plant. All forms of cannabis have effectively been illegal since 1937 under the Marihuana Tax Act. Later, and more formally, under the 1970 Controlled Substances Act. Over the last several years, the United States has allowed for various pilot programs to study cannabis in limited ways. Most notably, the 2014 Farm Bill provided for limited cultivation of industrial hemp for research purposes. However, such cultivation was limited to state departments of agriculture or educational institutions. And all cultivation was further limited by the Controlled Substances Act and any other federal law. Given that the Controlled Substances Act did not distinguish between industrial hemp and marijuana, these limitations prevented industrial hemp from expanding into a federally approved commercial industry.
If enacted, the 2018 Farm Bill will specifically define industrial hemp and distinguish hemp from other forms of marijuana. This distinction is based on the concentration of tetrahydrocannabinol (“THC”) found in the plant. Under the Bill, a plant containing a THC concentration of not more than 0.3% on a dry weight basis will be considered industrial hemp. The Bill does this by defining “hemp” and creating an exception to the Controlled Substances Act. Unlike the 2014 Farm Bill, the 2018 Bill clearly excludes hemp from other forms of marijuana. Effectively, all parts of a plant, including its cannabinoids, derivatives, and extracts derived from those plants, that containing the appropriate THC concentration are not considered controlled substances. Opening the door to commercial cultivation and sale of hemp and hemp derived products. Further, the Bill creates specific exemptions from the Controlled Substances Act if hemp crops test higher than the .3% THC restriction, giving farmers an opportunity to remedy the situation before facing CSA penalties.
While this is a massive step for the legalization of the Cannabis sativa L plant, industrial hemp will still be a highly regulated crop. Before you go out and start growing a crop of your own, remember that this is federal law’s first significant step in decriminalizing the cannabis plant. We are a long way from treating industrial hemp like flowers, tomatoes, or other legal crops.
First, while industrial hemp is explicitly excluded from the Controlled Substances Act, any plant containing more than the THC limit is still considered marijuana, and therefor is a Schedule 1 controlled substance. While there are some built in protections for industrial hemp cultivators with “hot” plants, plants containing too much THC could be grounds for penalty and punishment. Further, all current marijuana cultivators are offered no new legal protection under the proposed Bill.
Second, industrial hemp cultivation will be subject to a shared state-federal regulatory program. The United States Department of Agriculture (USDA) will have the authority to regulate commercial hemp production in coordination with a state’s department of agriculture. Should a state desire it, a state can act as the primary regulatory authority over hemp activities within its jurisdiction. To do so, the state must submit a plan for regulation and receive USDA approval for the program. The USDA will ensure the proposed program meets minimum standards, and work with the state to implement the program.
If a state does not choose to head its own program, industrial hemp cultivators within that state can still apply for licensure directly to the USDA. Ultimately, regardless of your state’s desired participation level, cultivators will be required to obtain a license from a regulatory agency before engaging in legal industrial hemp cultivation.
Hemp regulations are likely to vary from one state to another, but all programs will be required to implement certain aspects. These regulations will include locational restrictions, testing procedures for THC, disposal requirements, and mandatory inspections of operators. Failure to obtain a cultivation license or comply with applicable regulations could result in loss of licensure and both financial and criminal punishment. Expect industrial hemp to start out as a highly regulated operation, not unlike the licensing requirements expected of commercial marijuana operators under state programs.
If enacted, it will be about a year before the USDA will adopt the requisite regulations necessary to begin a licensing program. Industrial hemp research programs established pursuant to the 2014 Farm Bill will remain in effect.
The 2018 Farm Bill makes it clear that industrial hemp cultivation will allow for commercial activity. Hemp derived products will be considered legal under federal law. Will the potential legalization of industrial hemp at the federal level, we will also soon see an expansion of protections and services to hemp cultivators. This is expected to have a major impact on the availability of advertising and marketing rights, access to banking and other financial services, and open the door to other federally backed farm support programs, including crop insurance, federal water access and low-interest loans for new farmers.
Finally, the 2018 Farm Bill is expected to create significant change to the legal status of cannabidiol (CBD) products. However, to be clear, the 2018 Farm Bill does not technically remove CBD from the Controlled Substances Act. Instead, if CBD product that is derived 100% from industrial hemp cultivated by a licensed and regulated industrial hemp cultivator, subject to all applicable federal and state regulations, then that product will not be considered a Schedule 1 substance under federal law. Until this law passes, and the USDA or your state establishes a licensing program pursuant to the 2018 Farm Bill, CBD products are still subject to current federal and state laws.
While this might be seen as a slight setback, the 2018 Farm Bill is an important first step in changing federal policy surrounding both hemp and cannabis in general. Amending the Controlled Substances Act will allow other federal agencies to expand opportunities to the industrial hemp and CBD markets. Soon, we may see policy expansions in agencies such as the Drug Enforcement Administration, Food and Drug Administration, United States Patent and Trademark Organization, and many more. As our federal departments expand services and protections to industrial hemp, we continue to set the state for the future decriminalization and expansion of protections for the greater marijuana industry.