On Tuesday, the United States Department of Agriculture (“USDA”) Office of General Counsel published the first federal agency guidance document related to the 2018 Farm Bill legislation that legalized the production of industrial hemp plants for commercial purposes. The guidance document, available here, provides insight into the federal agency’s interpretation of the legislative changes associated with passage of the bill. While guidance is not legally binding, the conclusions of agency officials will remain in effect absent a challenge to the legal conclusions contained in the document.
The first key issue addressed in the memo relates to the legal status of industrial hemp, as the agency has determined that the Farm Bill legislation removed industrial hemp from Schedule I of the Controlled Substances Act. To be clear, the law defines industrial hemp as a cannabis sativa l. plant containing less than .03% THC on a dry weight basis, which means you should conduct third-party laboratory testing prior to shipping and transporting hemp products across state lines. While the removal of industrial hemp under the CSA is a big win for the industry overall, USDA officials have not implemented federal regulations for oversight of industrial hemp plans proposed by States and Indian Tribes.
One of the key provisions contained in the Farm Bill included the requirement that states and Indian tribes obtain USDA approval with respect to any proposed plans for regulation of industrial hemp within the local jurisdiction. In order to begin reviewing and approving proposed plans, the agency must first promulgate regulations governing the review, evaluation, and approval process for plans submitted by states and Indian tribes. As the guidance document notes, states and Indian tribes cannot prohibit the transportation and shipment of industrial hemp and industrial-hemp-derived products in interstate commerce. The 2018 Farm Bill contains a provision that explicitly prohibits states and Indian tribes from prohibiting shipment and transportation of industrial hemp products if the products and/or plants are sold and transported in accordance with a USDA-approved plan.
Additionally, the USDA has concluded that the 2014 Farm Bill also permits the shipment and transportation of industrial hemp plants and products in interstate commerce if the plants or products are manufactured pursuant to a research program conducted by an agricultural pilot program or higher education institution. This finding is a big win for the industry because there have been numerous reports of state and local law enforcement officials seizing hemp-derived products containing trace amounts of THC. Thankfully, it appears the USDA is taking a rather proactive and assertive approach to interpretation of the 2018 Farm Bill, likely in order to quell localized enforcement efforts.
It is important to emphasize that this guidance document does not legalize the cultivation, shipment, and transportation of industrial hemp plants and products at the federal level. The guidance document, as well as the language of the 2018 Farm Bill legislation, make it very clear that anyone participating in these activities must act in accordance with all applicable state (or Indian tribe) regulations governing the production of industrial hemp. Oregon has one of the most advanced and robust industrial hemp regulatory regimes in the country as of today, so please be mindful of the requirements as they exist now and don’t hesitate to reach out to us for insight on this ever-evolving regulatory climate.