2018 Farm Bill Primer: Hemp Cultivation and Processing

2018 Farm Bill Primer: Hemp Cultivation and Processing

January 30, 2019
2018 Farm Bill Primer: Hemp Cultivation and Processing
The enacted 2018 farm bill (Agriculture Improvement Act
Puerto Rico, any other territory or possession of the United
of 2018, P.L. 115-334) includes a number of provisions that
States, and Indian tribes. The enacted farm bill authorizes
facilitate the commercial cultivation, processing, marketing,
appropriations of “such sums as are necessary” to carry out
and sale of industrial hemp in the United States. It expands
the provision that establishes this regulatory framework.
upon hemp-related provisions enacted in the 2014 farm bill
(Agricultural Act of 2014, P.L. 113-79) and includes
The new regulatory framework for hemp cultivation would
provisions that originated from congressional bills, such as
involve either a USDA-approved state or tribal government
the Hemp Farming Act of 2018 (S. 2667, H.R. 5485).
plan or a plan established by the agency. States, territories,
and tribal governments wanting to have primary oversight
Expanded Definition of Hemp
of hemp production within their jurisdictions must submit a
The 2018 farm bill expands the definition of hemp,
plan to USDA and obtain the agency’s approval (AMA,
originally established in statute as part of the 2014 farm bill
§297B). Such a plan would cover, for example, information
(7 U.S.C. §5940(b)(2)), codified in Section 297A of the
about grower location, procedures for testing, inspections,
Agricultural Marketing Act of 1946 (AMA). The amended
licensing, background checks, disposal of hemp that does
definition defines hemp to mean:
not meet the legal definition, and enforcement of violations.
USDA is required to approve or reject a submitted plan
the plant “Cannabis sativa L. and any part of that
plant, including the seeds thereof and all
within 60 days after its receipt.
derivatives, extracts, cannabinoids, isomers, acids,
salts, and salts of isomers, whether growing or not,
Alternatively, if the USDA rejects or revokes prior approval
with a delta-9 tetrahydrocannabinol concentration
of a submitted state or tribal plan, hemp production in that
of not more than 0.3 percent on a dry weight basis.
state or tribal domain would fall under USDA’s
jurisdiction. In this case, such hemp activities would be
Legalized Hemp Production and Sale
subject to a plan established by USDA to monitor and
The 2018 farm bill amends the Controlled Substances Act
regulate hemp production (AMA, §297C). Accordingly, the
(CSA, 21 U.S.C. 802(16)) to exclude hemp from the
enacted farm bill requires USDA to develop an agency
statutory definition of marijuana. For hemp to be excluded
plan(s) covering requirements such as recordkeeping,
from the CSA, it must contain no more than a 0.3%
testing, disposal procedures, and a licensing process and
concentration of delta-9 tetrahydrocannabinol (THC),
provides that USDA may require additional practices and
which is marijuana’s primary psychoactive chemical. This
procedures. USDA’s plan(s) would be implemented in
provision thus removes hemp—as defined in statute and
states and tribes that do not have a USDA-approved plan.
subject to oversight by the U.S. Department of Agriculture
Without such a license issued by USDA, it would be
(USDA)—from the CSA and from being regulated as a
unlawful to produce hemp in that state or tribal domain.
Schedule I drug. This provision effectively legalizes the
cultivation, processing, marketing, and the sale of hemp and
USDA must collect, maintain, and make accessible to
any cannabinoid if it is derived from hemp that is produced
federal, state, territorial, and local law enforcement real-
by a licensed grower and produced in a manner that is
time information regarding the status of a license or other
consistent with the 2018 farm bill, including any associated
authorization for all hemp producers, whether participating
USDA regulations and applicable state regulations. All
under a state, tribal, or USDA plan. USDA is also required
other cannabis and cannabis-derived products produced in
to report any unlicensed hemp production to the U.S.
any other setting remain a Schedule I substance under
Attorney General and is required to share certain other
federal law and are thus subject to the CSA’s strictest
information with law enforcement. The 2018 farm bill
regulations (except for certain drug products approved by
clarifies, however, that USDA has the sole authority to
the Food and Drug Administration [FDA]).
issue guidelines and regulations regarding hemp production
The enacted 2018 farm bill contains an “interstate
(AMA, §297D). It further clarifies that the enacted law does
commerce” provision that prohibits states and Indian
not affect or modify the regulatory authority granted to
tribes
FDA under the Federal Food, Drug, and Cosmetic Act (21
from interfering with the transport of hemp or hemp
U.S.C. §§301 et seq.) or Section 351 of the Public Health
products produced in accordance with the new USDA
Service Act (42 U.S.C. §262), including for hemp-derived
requirements through their jurisdictions.
products.
Created New Regulatory Framework
The 2018 farm bill creates a USDA-administered hemp
Eventual Repeal of Hemp Pilot Program
program under the AMA (7 U.S.C. §1621 et seq.),
The 2018 farm bill provides that the hemp pilot program
establishing a regulatory framework to monitor compliance
established under the 2014 farm bill (P.L. 113-79, §7606)
and regulate hemp production. It also expands eligibility to
include farmers in all states, the District of Columbia,
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2018 Farm Bill Primer: Hemp Cultivation and Processing
will be repealed one year after USDA establishes its
limited to “institutions of higher education” and “state
regulatory plan to oversee U.S. hemp production. The 2014
departments of agriculture” as long as it is allowed under
state laws where the institution or state department of
2018 Farm Bill Provisions Addressing Hemp
agriculture is located.

 Conforming Changes to the CSA (§12619)—Amends the
Other Hemp-Related Provisions
CSA (21 U.S.C. §802(16)) to exclude hemp and hemp-derived
Other hemp-related provisions in the 2018 farm bill would
products from the statutory definition of marijuana.
make hemp producers eligible to participate in federal crop
 Interstate Commerce (§10114)—Prohibits a state or Indian
insurance programs and make hemp production eligible for
tribe from interfering with the “transportation or shipment of
certain USDA research and development program grants.
hemp or hemp products” (as defined in statute and subject to
See a summary of the 2018 farm bill provisions in text box.
USDA oversight) through the state or tribal domain.
 Hemp Production (§10113)—Creates a new Subtitle G
Further Considerations for Congress
under the AMA (7 U.S.C. §1621 et seq.), expanding the
The 2018 farm bill takes major steps toward treating
statutory definition of hemp, expanding eligibility to include
industrial hemp similar to any other agricultural commodity
tribes and territories, and establishing a regulatory framework
to monitor compliance and regulate production.
that is subject to USDA oversight and eligible to benefit
from a range of USDA farm support programs. However,
AMA §297A: Expands definition of hemp and establishes
certain challenges and uncertainties remain.
certain restrictions related to applicants convicted of a felony
involving a control ed substance. Specifies requirements
regarding the approval of state and tribal government plans
As USDA develops the overall regulatory framework for its
and sets any corrective actions for plan violations. Allows
new hemp program, many stakeholders are closely
USDA to provide technical assistance to develop plans.
anticipating the agency’s proposed regulatory requirements,
AMA §297B: Authorizes states and tribal governments
industry guidance, and next steps. Often regulatory
wanting primary regulatory authority over hemp production
development can take years, depending on the complexity
to submit a plan to USDA for approval (covering grower
of the issue. Among the complexities inherent in expanding
location, licensing, procedures for testing, inspections,
the use of hemp are: How will federal and state authorities
background checks, disposal, enforcement of violations, and
effectively differentiate between hemp (as defined in statute
other requirements). If a state or tribal government plan is
and now under USDA’s jurisdiction) and all other types of
denied or revoked, USDA is responsible for hemp oversight.
cannabis (defined as marijuana), which continue to be
AMA §297C: Requires USDA to develop an agency plan(s)
subject to the CSA and the jurisdiction of the Drug
to be implemented in states and tribal territories that forego
Enforcement Administration? A closely related issue is how
submitting a plan to USDA. Requires USDA to report any
will federal and state regulatory authorities effectively
unlicensed hemp production to the U.S. Attorney General
enforce the statutory threshold for hemp in terms of both
and requires other information sharing to law enforcement.
hemp production (at the field level) and its use in a range of
AMA §297D: Requires USDA to promulgate regulations
hemp-derived value-added and manufactured products?
and guidelines “as expeditiously as practicable.” Clarifies that
Some industry advocates have indicated a desire to raise the
USDA has sole authority to issue guidelines and regulations
current statutory limit of 0.3% THC to 1% THC. This could
regarding hemp production and that FDA’s authority under
its laws and jurisdiction is unchanged.
reduce the difficulty of differentiating hemp from other
cannabis without resulting in a psychoactive product, such
AMA §297E: Authorizes appropriations of “such sums as
as marijuana. A bill (H.R. 3530) introduced in the 115th
are necessary” to carry out Subtitle G.
Congress proposed a higher hemp threshold of 0.65% THC
 Legitimacy of Hemp Research (§7605)—Requires USDA
for research purposes.
to conduct a study of agricultural pilot programs and assess the
economic viability of the domestic production and sale of hemp.
Repeals 2014 hemp pilot program one year after USDA
There are also questions regarding the role of FDA
establishes a plan under AMA §297C.
oversight of certain cannabis-derived therapeutic products,
such as cannabidiol (CBD). For example, how will hemp-
 Critical Agricultural Materials Act Grant Program
(§7501)—Expands eligibility of program to include hemp.
derived CBD be differentiated from other cannabis-derived
CBD? And what FDA product requirements apply
 Supplemental and Alternative Crops (§7129)—Expands
depending on whether a hemp-derived product is marketed
eligibility of program to include hemp.
as a food product, a dietary supplement, a cosmetic or body
 Crop Insurance Definitions (§11101, §11119)—Makes hemp
product, or a pharmaceutical drug?
eligible for federal crop insurance and adds hemp to the
statutory definition of agricultural commodity.
Other hemp-related policy questions include: What might
 Insurance Period (§11106)—Adds hemp to the crops for
federal crop insurance policies regarding hemp look like,
which post-harvest losses may be covered by federal crop
and how will these be developed given limited market
insurance, which for most crops is generally prohibited.
information and price-discovery mechanisms? Other
 Submission of Policies/Materials to FCIC Board (§11113,
introduced legislation in the 115th Congress relating to
§11121)—Authorizes FCIC to waive certain viability and
hemp was not included in the 2018 farm bill. These bills
marketability requirements for reimbursement of research and
development relating to a policy to insure hemp production.
included provisions that addressed certain therapeutic and
medicinal uses of hemp and also banking and federal water-
use restrictions related to its production.
farm bill established an agricultural pilot program allowing
hemp cultivation under certain conditions for research
Renée Johnson, Specialist in Agricultural Policy
purposes only. Under the pilot program, hemp cultivation is
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2018 Farm Bill Primer: Hemp Cultivation and Processing

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