Issue: With the 2018 Farm bill establishing a pathway for the legalized
regulation of hemp, the task has now fallen to the U.S. Department of
Agriculture (USDA) to formalize rules and regulations. This will involve
approving state plans where hemp is already legal as well as establishing a
framework to monitor and regulate the production of hemp in states where
hemp was previously contraband.
Impact: One issue that will be a particular focal point for both growers and law
enforcement is the issue of testing hemp crops to avoid “CBD diversion,” or
selling products labeled as hemp or CBD even though it contains more than the
legally permitted 0.3% THC. State agriculture departments currently test hemp
crops to ensure they are under the 0.3% threshold. However, growers can
manipulate these tests by having them conducted at a time in the growth cycle
when THC has not come to full fruition, allowing products that are actually
marijuana to enter the market as hemp. Additionally, to ensure that CBD oil
does not contain THC, extractors must isolate the THC and extract it before
transferring the product. This can lead to gallons of THC being created out of a
hemp crop, which is often sold into the black market rather than destroyed. The
USDA will need to balance the need to facilitate compliance for growers with
law enforcement’s desire to keep illegal products out of the market. One
potential solution is to require testing post-harvest.
Next Steps: USDA expects to finalize rules to address issues involving
sampling processes, testing requirements, disposal of violative plants and
products derived from those plants, inspections, licensing, compliance and
other procedures in the Fall of 2019 to accommodate the 2020 planting season.
The rulemaking will provide for the publishing of a proposed rule, comment
period, and a final rule. State and tribal industrial hemp regulatory plans will
not be reviewed until after the regulations are finalized, but USDA has
committed to reviewing and approving plans within 60 days of their
submission as required by the 2018 Farm Bill.
More information, below:
States such as Louisiana are already pushing back on national legalization by
making all hemp illegal within the state. Currently, CBD-derived from hemp is
legal only if it is produced by a licensed grower in a manner consistent with the
Farm Bill and relevant regulations. All other CBD products are Schedule I
substances except for pharmaceutical-grade CBD products approved by the
FDA. The FDA will convene relevant parties to consider research on CBD’s
longer-term effects on health and form a working group of experts to develop
Crop testing in states where hemp has already been legalized typically involves
growers contacting their state department of agriculture prior to harvest. Some
jurisdictions schedule tests without input from growers, but still often arrive too
early or too late to accurately test the crop, given their limited resources. In
general, the last 10 days of a hemp crop’s lifecycle is the correct window for
testing and detecting THC derivatives.
On March 13th, the USDA conducted a listening session for public input on
hemp regulation. The discussion touched on the regulatory timetable,
consistent sampling and testing, transportation protocols, federal interagency
cooperation, equal treatment of industrial hemp under Federal programs, and
education of state and local law enforcement with respect to industrial
hemp’s legal status versus cannabis’s continued Schedule I status.
Stakeholders also pushed for USDA to work with the Food & Drug
Administration (FDA) to verify and validate nutritional and medical products
Please contact ACG Analytics for more information.