USDA issues long-awaited hemp rule

31 October 2019 Reed Smith Client Alerts

Page d'accueil Perspectives USDA issues long-awaited hemp rule

On October 29, 2019, the USDA submitted its interim final rule for the production of hemp in the United States. The rule provides requirements for all state and tribal hemp production plans including requirements for testing hemp, licensing growers, disposing of non-compliant hemp, and collecting and storing information related to hemp production. The rule does not change FDA’s stance on the prohibition of cannabidiol (CBD) in foods and dietary supplements.

Auteurs: Cori Annapolen Goldberg Adam D. Brownrout

On October 29, 2019, the United States Department of Agriculture (USDA) released its long-awaited draft rule establishing a domestic hemp production plan, providing clarity to growers and ancillary businesses about how the USDA will regulate the hemp crop. The USDA, under authority provided by the 2018 Agricultural Improvement Act (2018 Farm Bill), was tasked with promulgating regulations and guidelines to establish and administer a program for the production of hemp in the United States. This rule has now arrived and will soon be formally published in the Federal Register and opened for a 60-day public comment period.

Under the USDA rule, states and tribes will have the option of either submitting a proposed hemp regulation plan to the USDA for approval or agreeing to submit to the USDA’s general requirements. All state and tribal plans must include certain provisions, including but not limited to:

Land used for production: State and tribal plans must identify a process for collecting, storing, and maintaining relevant information regarding land used for growing hemp in the state. This includes information regarding the description, acreage, and boundaries of the farm land.
Sampling and testing for delta-9 tetrahydrocannabinol (THC): State and tribal plans must implement testing procedures to ensure that plants do not exceed THC levels above .3 percent (as provided in the 2018 Farm Bill). All testing facilities must be DEA approved, as non-compliant product with THC levels over .3 percent would be considered “marihuana” and a schedule 1 substance under the Controlled Substances Act of 1970 (CSA). Additionally, laboratories will be required to report a “measure of uncertainty” in their testing, designed to provide a buffer for the potential variation in sampling and testing procedures. Accordingly, plants testing higher than .3 percent THC but still within the “measure of uncertainty” will be considered compliant.
Disposal of non-compliant products: States and tribes must develop a procedure for destroying non-compliant cannabis containing more than .3 percent THC. Because non-compliant product is considered a controlled substance, all product must be disposed of in a manner consistent with the CSA. Therefore, product must be collected and destroyed by a DEA agent or law enforcement officer.
Inspection of hemp producers: States and tribes must develop procedures for inspecting hemp producers on an annual basis and also for inspecting random samples. The state must also develop procedures to identify and attempt to correct certain negligent acts such as not obtaining licenses or producers exceeding acceptable hemp THC levels.
Information sharing: State and tribal plans must include procedures for reporting information to the USDA. This information must be provided to the USDA within 30 days of receipt from the hemp producers and includes contact information for all hemp producers in the state, legal descriptions of the land used for hemp production, and the license status of all hemp producers in the state.

In states and tribes without an approved or proposed plan, hemp producers will be subject to the USDA general plan. The general plan also provides similar requirements for the testing and sampling of hemp. The USDA will provide licenses directly to hemp producers in states without an approved or submitted plan as some states may not want to have primary regulatory authority of hemp. These states will essentially hand over regulatory responsibility to the USDA. These licenses will be available by application 30 days after the final rule is published. Notably, the draft USDA rule also provides that states and tribes are restricted from prohibiting the transportation or shipment of hemp or hemp products produced under a state plan, tribal plan, or a license issued under the FDA. The interstate commerce provision should put an end to the arrests of those transporting legally produced hemp from one state to another. For example, in July 2019, a trucker was arrested and charged with felony possessions of marijuana and intent to distribute while transporting legally grown hemp through South Dakota (South Dakota still considers hemp a controlled substance).

Although the USDA rule will greatly contribute to the expansion of legally grown hemp in the United States, it is important to note that this rule does not apply to hemp-derived substances and products, including CBD. The 2018 Farm Bill left intact FDA’s authority to regulate the sale and marketing of CBD foods, dietary supplements, drugs, and cosmetics, as those product types fall under FDA’s purview generally. FDA has allowed the sale of CBD cosmetics, with certain restrictions. However, it has maintained that the addition of CBD to foods and dietary supplements is illegal. The USDA rule does nothing to change the legal status of CBD products absent additional guidance from FDA. However, the rule does appear to put pressure on FDA and states that if “FDA does not provide clarity about their plans for future regulation of CBD, there will continue to be uncertainty and downward pressure on the CBD portion of the hemp market.” Regardless, this is a large step forward for the hemp industry and one that Reed Smith will be monitoring closely.

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