USDA Releases Interim Hemp Rules

  • October 31, 2019
  • /   Tara Tedrow & Ferran Arimon
  • /   Articles,Cannabis & Controlled Substances,Featured
hemp rules

By: Tara Tedrow & Ferran Arimon

On October 29, 2019, the United States Department of Agriculture (“USDA”) established the U.S. Domestic Hemp Production Program through an interim final rule. This action was mandated by the Agricultural Improvement Act of 2018 (“2018 Farm Bill”), which further clarified the classification of hemp as a non-controlled substance and was signed into law on December 20, 2018. The interim final rule outlines provisions for the USDA to approve plans submitted by States and Indian Tribes for the domestic production of hemp and establishes a Federal plan for producers in the States that do not have their own USDA-approved plan. Thus, State plans such as Florida’s, await review and approval from the USDA. Further, the program includes provisions for maintaining production information, testing levels of THC, and disposal of plants that do not meet requirements. The USDA specifically focused on the domestic hemp industry and clarified that should there be sufficient interest in exporting hemp in the future “the USDA will work with industry and other Federal agencies to help facilitate the process.”

Under the interim final rule, a State or Indian Tribe that wants primary regulatory authority over production of hemp in that State/territory must submit to the Secretary of Agriculture a plan for the regulation and monitoring of such production. Certain requirements must be met by all hemp producers, including: licensing requirements; maintaining information on the land on which hemp is produced; procedures for testing the THC concentration levels for hemp; procedures for disposing of non-compliant plants; compliance provisions; and procedures for handling violations. The State and Tribal plans must prohibit any person convicted of a felony related to a controlled substance after the commencement of the 2018 Farm Bill from participating for 10-years following the date of such conviction. States and Tribes are encouraged to contact the USDA during the plan development process for any technical assistance in developing plan specifics. Once a plan has received approval from the USDA, it will remain in effect unless specifically revoked by the USDA, or unless substantive revisions are made to the plan.

As it relates to THC concentration testing, the USDA is considering the establishment of a “fee-for-service” hemp laboratory approval process for labs that wish to offer THC testing services. For example, approved laboratories must comply with the Laboratory Approval Program (LAP) policies and procedures to maintain their states. Additionally, before a lab is approved by the USDA, it must be registered with the DEA. Alternatively, the USDA is considering requiring all laboratories testing hemp to have ISO 17025 accreditation. The USDA is particularly interested in public comments related to testing labs to better understand the number of labs that already have this accreditation, the associated burden, and the potential benefits of such a requirement.

Production under the USDA plan requires application and issuance of a license from the USDA. The USDA has stated it will begin accepting applications after the effective date of this interim rule (this 30 day delay is to allow States and Tribal Governments to submit their plans first). This delay is to prevent the USDA from reviewing and issuing USDA licenses to producers when it is likely that there will soon be a State or Tribal plan in place, allowing producers to directly obtain their license from the Tribe or State. Once the USDA formally receives a plan, they will have 60 days to review the submission. No licenses will issued by the USDA to individuals in a State or Tribe whose production plan is pending USDA approval. Once a State or Tribe has their draft hemp production plan approved, the USDA will deny license applications from individuals located in those States or Tribal Nations. Once issued, licenses will be non-transferable. Licenses will not renew automatically and must be renewed every three years. The interim final rule also outlines an appeals process for licenses that are denied.

Following the publication of the interim rule, the USDA will begin implementation including review of State and Tribal plans and issuing production licenses under the USDA hemp plan. There is a 60 day comment period during which comments may be submitted on this interim rule. The USDA has stated that after review of final comments a final rule will be published within 2 years.

In addition to interim rules, the USDA also promulgated data on the regulatory impact of the hemp industry. While they concluded that the “future of the hemp industry in the United States is anything but certain,” it is clear that there is at least a market trend toward an increase in production nationwide. Though consumer demand is not guaranteed to keep pace, hemp production has had a “massive resurgence” in the last five years. The USDA noted that “from 2017 to 2018, acreage planted for hemp tripled, reaching 77,844 acres. Hemp planted acreage in 2018 was eight times the acreage planted just two years prior in 2016. Acreage in 2019 is expected to at least double from 2018.” Market analysts and industry players should keep an eye on how hemp demand, pricing and related trends play out during the 2020 season.

If you have any questions, please contact Tara Tedrow or any member of the Lowndes Cannabis and Controlled Substances Group.

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