Hallelujah, Hemp is Legal.
Christmas came early this year as yesterday the President of the United States signed the long awaited 2018 Farm Bill into law, officially ending the federal prohibition of hemp. Overall, the 2018 Farm Bill is a big win for hemp businesses nationwide and marks a pivotal moment for the entire cannabis industry. Below are five key takeaways from the new legislation:
- The 2018 Farm Bill broadly defines “hemp” as the “plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis” (emphasis added). Therefore, hemp AND any extracts or derivatives from hemp (including CBD) are now excluded from the Controlled Substances Act. The law takes effect immediately, which means that federal authorities are now required to treat hemp like any other agricultural commodity. Additionally, the Federal and State governments are prohibited from bringing criminal enforcement against any hemp producer for negligently violating any hemp regulations, which means hemp producers cannot be prosecuted for negligently growing “hot” seeds or plants. However, it is important to note that any hemp producer that negligently commits three violations of the hemp regulations within a five-year period will be banned from producing hemp for five years.
- The 2018 Farm Bill also allows for interstate commerce of hemp and expressly prohibits any State or Indian Tribe from preventing or disallowing the transportation or shipment of hemp. Now hemp producers in Oregon can freely transact business with buyers in different states without fear that any federal or state authority will seize their product. However, if you are entering into a commercial transaction to buy or sell hemp, it would be prudent to ensure that any transactional documents make clear that the seller/buyer across from you is validly authorized and licensed by their respective State to grow or handle hemp, just to be safe.
- The 2018 Farm Bill will make it much easier for hemp farmers to operate and sustain their businesses. The new legislation allows farmers to obtain access to federally backed farm support programs, including crop insurance, federal water accessand low-interest loansfor new farmers. In addition, hemp businesses should be entitled to patent and trademark protections under federal law, but we will wait to see how that process develops.
- The U.S. Department of Agriculture (USDA) is given the sole authority to regulate hemp on the federal level, and the Secretary of the USDA is directed to come up with rules “as expeditiously as possible.” States and Indian Tribes may submit their own plans for regulating hemp to the Secretary of the USDA, and any such plan must be approved or disapproved within 60 days of receipt of any such plan.
- The U.S. Food and Drug Administration (FDA) retains the power to regulate any hemp product that is used in the production of food, drugs or cosmetics through its authority under the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301et seq.). Using that authority, the FDA approved Epidiolex in June of 2018, the first cannabis derived prescription. With the passage of the 2018 Farm Bill, we expect that the FDA will contribute more time to evaluating the approval certain hemp-derived food products, cosmetics, dietary supplements, and drugs.
This is a big step forward for the cannabis industry. There are always unforeseen consequences when new legislation is passed, and there will likely be complications as marijuana remains a Schedule I controlled substance under the Controlled Substances Act. We will be watching closely to see how the new legislation unfolds and we are available to answer any questions you may have about how the 2018 Farm Bill will affect your business.