In October 2019, the United States Department of Agriculture (USDA) released its long-awaited interim final rule establishing a domestic hemp production plan in the United States. The USDA rule allows states and Indian tribes the option of either submitting to the USDA for approval a proposed hemp regulation plan or agreeing to follow the USDA's general requirements. The interim rule is effective from October 31, 2019, through November 1, 2021, at which point it will be replaced by a final rule. Although many have applauded the USDA's issuance of comprehensive hemp production rules, there are six key issues that stakeholders in the hemp industry have repeatedly identified as barriers (or potential future barriers) to the industry. As described in further detail below, stakeholders are concerned with various elements of the testing requirements included in the USDA rule, and the concerns raised make clear that further Agency thought is warranted to determine whether the testing requirements are feasible, practical, and equitable.
1. The 15-day sampling/testing/harvesting window is too short
Under the USDA rules, "within 15 days prior to the anticipated harvest of cannabis plants, a Federal, State, local, or Tribal law enforcement agency or other Federal, State or Tribal designated person shall collect samples from the flower material from such cannabis plants for delta-9 tetrahydrocannabinol concentration level testing."
Many in the industry have pushed back against the USDA's required 15-day window for testing, citing concerns that 15 days is an insufficient amount of time to harvest, collect, sample, and test the hemp crop. This is particularly true for large hemp growth operations that cover multiple acres of land and take multiple days to harvest. The timing issue is further compounded by confusion as to whether the 15-day timer starts running at the beginning or the end of the hemp's harvest. Hemp not tested within the 15-day window is deemed noncompliant and subject to immediate destruction.
2. Flower-only sampling is inequitable
The USDA rules currently require the THC testing of "samples from the flower material." Many in the industry have taken issue with the "flower-only" testing method as it is not consistent with language in the 2018 Farm Bill (the bill legalizing the production and processing of industrial hemp) and leads to higher THC results. Under the 2018 Farm Bill, hemp is defined 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). Thus, the Farm Bill focuses on the THC content of the whole plant, not just the flower. However, because the flower of the cannabis plant contains a higher concentration of THC than the rest of the plant, there is concern that flower-only testing will raise the standards for compliance and result in more noncompliant crops.
3. The crop sampling requirement is burdensome
In conjunction with the interim rule, the USDA has issued additional guidance on how hemp crops must be sampled for testing. However, many have raised concerns regarding the amount of sampling needed under the USDA requirements. In many states, representative or random sampling is the standard. However, USDA guidance requires the sampling of one crop per acre for smaller grows, and the sampling requirements increase exponentially for lots over 10 acres. For example, a 100-acre lot would require 76 plant samples under the USDA rules. Conversely, under California's sampling requirements, only five plant samples would be required. Thus, concerns have been raised due to the increased burden on farmers to collect samples, particularly when the 15-day testing window is already tight.
4. There is a lack of DEA-registered laboratories
The USDA rules require that "all samples tested for THC concentration levels be conducted in DEA registered laboratories." This requirement was deemed necessary by the USDA since any plant containing more than the .3 percent THC limit would be considered marijuana and thus an illegal, controlled substance. Currently, there are 44 DEA-registered laboratories, and there is concern that these labs will not be able to meet the ever-increasing market demands and could result in delayed testing - an issue for farmers who are already cutting it close on their 15-day testing window. Although the USDA is working with the DEA to register additional labs, the process for DEA licensing can take substantial time.
5. THC testing is inconsistent
The USDA rules call for total THC testing, as opposed to D-9 THC testing (the standard used in most states). Total THC testing often results in a higher THC amount than D-9 THC testing and thus increases the chance of a failed test and noncompliant crop. Therefore, hemp and hemp products previously subject to and compliant with D-9 THC testing may be deemed noncompliant under the USDA rules.
6. There is a need for retesting and remediation rules
One final concern with the USDA rules, as currently written, is that there is currently no plan for the retesting or remediation of noncompliant hemp. That is, under the USDA rules, noncompliant hemp must be immediately destroyed and disposed of. There is currently no procedure for retesting the plant. This can be an expensive problem for farmers, as crop insurance would not cover noncompliant product. Furthermore, farmers would not have the opportunity to repurpose the noncompliant plant for fiber or building materials.
The USDA is taking public comment on the interim rules until January 29, 2020. So far, over 2,000 comments have been received. Although the USDA has not indicated which rules, if any, might be altered, it is likely that stakeholder feedback will play an important role in shaping the eventual final rules. Attorneys from Reed Smith's Cannabis Law Team will be monitoring these developments closely and are able to assist with any of your cannabis regulatory needs.
Client Alert 2020-032
