Tag Archives: Farm Bill

USDA Issues Guidance on Importation of Hemp Seeds

USDA has issued its first guidance since the passage of the 2018 Farm Bill. Because the Farm Bill removed hemp from the Controlled Substances Act, the importation of hemp seeds will now be regulated by USDA as an agricultural product, not DEA.  USDA stated that by removing hemp from the CSA, the Act “removed hemp and hemp seeds from DEA authority for products containing THC levels not greater than 0.3 percent. Therefore, DEA no longer has authority to require hemp seed permits for import purposes.” Importation of hemp seeds from international sources will now be permitted if accompanied by the appropriate phytosanitary certification and will be subject to inspection by Customs and Border Patrol.

The reference to DEA authority is significant and confirms that DEA no longer has jurisdiction over hemp or products derived from hemp such as CBD oil.  DEA  needs to update its own guidance documents in light of the 2018 Farm Bill. USDA is working on regulations to implement the state cultivation program provisions of the Farm Bill.  They are expected to be in place in time for the 2020 growing season.

CBD’s Big Week – Now Walgreens to Sell in Select States

Seth Goldberg
Seth A. Goldberg

Last week, I wrote about CVS Pharmacy’s decision to sell hemp-derived CBD products in eight states, Alabama, California, Colorado, Illinois, Indiana, Kentucky, Maryland and Tennessee.  Today, one of its competitors, Walgreens announced a similar decision – Walgreens will be entering the hemp-derived CBD space Walgreens in Oregon, Colorado, New Mexico, Kentucky, Tennessee, Vermont, South Carolina, Illinois and Indiana, where it will sell CBD creams, patches and sprays in nearly 1,500 stores.

As with CVS, Walgreen’s decision to sell hemp-derived in CBD in select states, as opposed to rolling those products out nationally, is likely the result of the still developing federal regulatory framework for hemp, which includes forthcoming regulations and guidance from USDA and FDA, and differences in the laws pertaining to hemp and hemp-derived CBD products from state-to-state.

Notwithstanding the challenging regulatory environment, the mass marketing of hemp-derived CBD, now that hemp is no longer a federal controlled substance, provides a lucrative opportunity for the hemp-derived CBD supply chain – cultivators, processors, and retailers, including the major pharmacy chains.  However, the “select state” approach Walgreens and CVS have taken demonstrates that careful is analysis of the federal and state laws and regulations at play is necessary before entering the hemp-derived CBD market.

 

No Hemp Transport Through Idaho

A recent decision by a Federal Magistrate Judge for the United States District Court for the District of Idaho upheld the seizure of an industrial hemp shipment in January after the enactment of the 2018 Farm Bill.

On January 24, 2019, Big Sky, a Colorado-based company, shipped industrial hemp from Oregon thorough Idaho on its way to Colorado. The hemp was seized in Idaho and the driver arrested for illegal transportation of marijuana. The crime carries a 5 year mandatory sentence. Big Sky sued for a temporary restraining order to release the hemp under the 2018 Farm Bill. The Court found that because no plan from the State of Oregon had been approved by the Department of Agriculture, the seized hemp was not produced in accordance the 2018 Farm Bill. The Court held that at this point time, without USDA approval of a state hemp plan, the Interstate Commerce Clause provisions of the Farm Bill do not apply.  A Temporary Restraining Order was denied on 2/2 and the Preliminary Injunction was denied on 2/20. Big Sky Scientific LLC v. Idaho State Police et al., No. 1:19-cv-00040-REB (D. Idaho, February 2, 2019). The case is on expedited appeal to the Ninth Circuit. Opening brief is due 3/20.

This decision is contrary to the intent, if not the letter, of the Farm Bill. It creates confusion about the what is permissible now, prior to USDA regs and approval of state plans.

Final 2018 Farm Bill Proposed… Hemp to be Removed from CSA – CBD Derived from Hemp to Be Regulated by the States

Seth Goldberg
Seth A. Goldberg

Update: The Senate passed this bill on December 11, 2018; the House of Representatives passed it on December 12, 2018. It was signed into law on December 20, 2018. 
Duane Morris will be following further developments and issuing updates.

Key Points:

  • The 2018 Farm Bill removes hemp from the Controlled Substances Act;
  • The 2018 Farm Bill confers on the Department of Agriculture (“DOA”) authority over hemp, including CBD derived from hemp;
  • States desiring to have primary regulatory authority over hemp must submit a plan to DOA pursuant to which the state will establish hemp regulations to provide for the growth and use of hemp, including CBD derived from hemp;
  • No laws will be erected to prohibit the interstate transportation of hemp, or CBD derived from hemp;
  • The Food and Drug Administration may intensify its involvement with CBD as more products for human consumption hit the market;
  • Banking and insurance for hemp derived CBD products should become increasingly available as those products are no longer “unlawful”; and
  • CBD derived from unlawful marijuana is still unlawful.

Analysis:

Earlier this year the U.S. Drug Enforcement Administration (DEA) affirmed that cannabidiol (CBD), the non-psychoactive chemical produced by strains of the cannabis plant credited with providing therapeutic health benefits, is unlawful if it is extracted from the parts of the cannabis plant that fall within the definition of marijuana.  This pronouncement added another layer of confusion to a regulatory structure many had trouble understanding.  CBD can also be extracted from industrial hemp and industrial hemp has been lawful since the enactment of the 2014 Farm Bill, provided it is grown pursuant to a state industrial hemp agricultural program.  The 2014 Farm Bill did not include explicit provisions pertaining to the commercialization of CBD derived from industrial hemp, or the interstate transportation of industrial hemp.  The former was left to the states that established industrial hemp programs, and the latter was later passed on by the DEA, which permitted the interstate transport of industrial hemp finished products.  Consequently, the distinction between CBD derived from industrial hemp and CBD derived from unlawful marijuana was narrow enough to impede the development of industrial hemp derived CBD products because of a concern that federal prosecution could follow.

Enter the 2018 Farm Bill, known as the “Agriculture Improvement Act of 2018,” set forth  in final form in a Conference Report yesterday, and which will be voted on as early as this week and could be signed into law next week.  The 2018 Farm Bill defines hemp as follows:  The term ‘hemp’ means 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.  It goes on to explicitly remove hemp from the Controlled Substances Act, as follows:

SEC. 12619. CONFORMING CHANGES TO CONTROLLED SUBSTANCES ACT.
(a) IN GENERAL.—Section 102(16) of the Controlled Substances
Act (21 U.S.C. 802(16)) is amended—
(1) by striking ‘‘(16) The’’ and inserting ‘‘(16)(A) Subject to
subparagraph (B), the’’; and
(2) by striking ‘‘Such term does not include the’’ and inserting
the following:
‘‘(B) The term ‘marihuana’ does not include—
‘‘(i) hemp, as defined in section 297A of the Agricultural
Marketing Act of 1946; or
‘‘(ii) the’’.
(b) TETRAHYDROCANNABINOL.—Schedule I, as set forth in section
202(c) of the Controlled Substances Act (21 U.S.C. 812(c)), is
amended in subsection (c)(17) by inserting after
‘‘Tetrahydrocannabinols’’ the following: ‘‘, except for
tetrahydrocannabinols in hemp (as defined under section 297A of
the Agricultural Marketing Act of 1946)’’.

The 2018 Farm Bill confers on the DOA the regulation of hemp, and contemplates federal regulations that would allow for states to become the “primary regulator” of hemp.  Importantly, the 2018 Farm Bill explicitly provides for the interstate transportation of hemp and prohibits states from restricting the interstate transportation of hemp, stating “nothing in this title or an amendment made by this title prohibits the interstate commerce of hemp (as defined in section 297A of the Agricultural Marketing Act of 1946 (as added by section 10113)) or hemp products…No State or Indian Tribe shall prohibit the transportation or shipment of hemp or hemp products produced in accordance with subtitle G of the Agricultural Marketing Act of 1946 (as added by section 10113) through the State or the territory of the Indian Tribe, as applicable.”

The passage of the 2018 Farm Bill is expected to result in a quick proliferation of the already expanding CBD product market, as companies that have been developing and marketing CBD products should now feel less constrained by risk to deepen their investment, and companies that have been “waiting to see” may now jump in. Because many of these products are for consumption in food-related products, and/or claim to have therapeutic benefit, the FDA is likely to intensify its involvement with CBD regulation.

Significantly, the 2018 Farm Bill does not remove CBD derived from THC-containing marijuana from the Controlled Substances Act.  Consequently, the DEA’s pronouncement as described above is still in effect, CBD derived from unlawful marijuana is still unlawful.  However, there is now clarity.  CBD derived from “hemp,” as defined in the 2018 Farm Bill, and grown pursuant to state regulations established pursuant to the 2018 Farm Bill, is lawful and may not be the subject of federal prosecution.

Banking:  It should be underscored that banks and other financial institutions, such as investment firms and insurance companies, that have been cautious or reluctant about CBD products because of their connection to unlawful marijuana may view the 2018 Farm Bill as a green light for banking, investing and insuring hemp derived CBD products as hemp and CBD derived from hemp are no longer “unlawful.”

Most importantly, the 2018 Farm Bill does not eliminate the regulation of hemp or CBD derived from hemp.  Rather, it envisions the promulgation of additional federal regulations and state regulations intended to promote its growth and use, and federal agencies like the FDA may increase their involvement with CBD.  Those interested in participating in the hemp and hemp derived CBD markets should retain counsel well-versed in the pertinent state and federal regulations to provide guidance that will allow for the achievement of business objectives.

One last point, there is currently pending in Congress bi-partisan legislation that would confer on states the authority to regulate marijuana.  The 2018 Farm Bill, which confers on states the authority to regulate hemp, could be a precursor and a good model for such states’ rights marijuana legislation.

 

 

David Feldman

Hemp Growing Again on Mount Vernon

In a rather symbolic moment in the march to the legalization of industrial hemp, the caretakers at George Washington’s Mount Vernon farm announced in May (although it has only recently received news attention) that they have planted a small crop of industrial hemp. They are doing so under Virginia law and say they are going to use the plant  “as an interpretative tool to help better tell the story of Washington’s role as a farmer.

As many know, hemp was a critical crop in Colonial times and some states, including Virginia, actually required farmers to grow it. Hemp was used particularly to make rope, thread, canvas and sailing cloth. Washington’s primary crop actually was hemp. Thomas Jefferson grew hemp as well.

The Mount Vernon farmers intend to use the hemp they grow to give fiber-making demonstrations at the site, which is owned by the Mount Vernon Ladies Association of the Union. They bought the site from Washington’s descendants in 1858 for $200,000 and now about a million visitors each year tour the facility. Many do not realize that Mount Vernon is not owned by the Federal government and is not a national park.

Hemp, while derived from the cannabis plant, contains no THC and has no psychoactive effects.  In June, the Senate passed a farm bill that included language effectively legalizing industrial hemp. However, the House version of the bill is silent on hemp, and a conference to deal with the differences is being arranged. Senate Majority Leader Mitch McConnell (R-KY) is a strong supporter of legalizing hemp, which many believe will help sway some skeptical House Republicans to support those provisions.