Reed Smith Client Alerts

Last week, Congress passed the Agricultural Improvement Act of 2018 (2018 Farm Bill). The Bill needs only the President’s signature before becoming law and President Trump is expected to sign it this week. This legislation legalizes production of hemp (with tetrahydrocannabinol (THC) concentration of 0.3% or lower) by allowing a person or a company to receive approval from a state, Indian tribe, or the United States Department of Agriculture (USDA) to grow hemp without violating the Controlled Substances Act. However, food and dietary supplement companies must be cautious because the 2018 Farm Bill does not amend the Food, Drug, and Cosmetic Act (FDCA), and the Food and Drug Administration (FDA) will likely continue to assert that products containing cannabidiol (CBD) are unlawful under FDCA. We explain below the notable sections of the legislation.

State, tribe, or federal USDA regulation of hemp production

The 2018 Farm Bill allows1 states and Indian tribes to submit an application to the USDA to self-regulate hemp production within their own jurisdictions.

The application must address, among others, (1) how the state or tribe will maintain information about the land on which hemp is being grown, (2) how the state or tribe will test for THC levels, and (3) other procedures such as inspections verifying compliance and effective disposal of violative plants (that is, psychoactive marijuana). Once a state or tribe submits an application, the USDA must either approve or deny the application within 60 days. If approved, the state or tribe then can license individuals to grow hemp.

In addition, if a state or tribe has not received an approval from the USDA, the legislation authorizes the USDA to license hemp production in such a state or tribe, as long as the state or tribe does not have a law that prohibits hemp production, and as long as the grower can comply with USDA’s federal requirements.2 While it may take some time for the USDA to promulgate the specific federal requirements, the requirements are likely to be similar to the application requirements outlined above for states and tribes.