California Hemp: Don’t Start Your Engines Quite Yet

Our cannabis business lawyers have been dealing with a recent influx of inquiries regarding hemp from tribes, marijuana ancillary companies, and companies not even related to marijuana. In light of the 2014 Farm Bill, it is not difficult to understand the interest in hemp. Though the Farm Bill allows for cultivating hemp without a permit from the Drug Enforcement Administration, it has serious qualifying conditions before anyone can start growing it, including that you have to be a state department of agriculture, or a college or a university, and you have to be in a state that regulates hemp cultivation. Though Kentucky, Washington, and Oregon have moved forward with hemp programs or policies, California just seems to be playing at it.

The California Health and Safety Code defines “marijuana” as “all parts of the plant Cannabis sativa L., whether growing or not; the seeds of that plant; the resin extracted from any part of the plant; and every compound, manufacture, salt, derivative, mixture, or preparation of the plant, its seeds or resin. It does not include industrial hemp, as defined in Section 11018.5, except where the plant is cultivated or processed for purposes not expressly allowed for by Division 24 (commencing with Section 81000) of the Food and Agricultural Code.” In California, “industrial hemp” means “a fiber or oilseed crop, or both, that is limited to non-psychoactive types of the plant Cannabis sativa L., and the seed produced therefrom, having no more than three-tenths of 1 percent tetrahydrocannabinol (THC) contained in the dried flowering tops, and that is cultivated and processed exclusively for the purpose of producing the mature stalks of the plant, fiber produced from the stalks, oil or cake made from the seeds of the plant, or any other compound, manufacture, salt, derivative, mixture, or preparation of the mature stalks, except the resin or flowering tops extracted therefrom, fiber, oil, or cake, or the sterilized seed, or any component of the seed, of the plant that is incapable of germination.”

In 2013, California passed by legislative action the California Industrial Hemp Farming Act, and the regulation of industrial hemp is governed by the California Food and Agricultural Code at Sections 81000-81010. Though these rules regulate hemp cultivators in California, they fail to establish a mechanism for the issuance of hemp cultivation permits and they also mandate at Section 81010, that “[t]his division shall not become operative unless authorized under federal law.” In other words, California has set up an insurmountable legal contradiction where it has hemp regulations in place, but no legal means by which anyone can actually cultivate hemp.

All seemed lost for California hemp until the federal Farm Bill came along, presumably activating the California Industrial Hemp Farming Act. The Farm Bill states that,

An institution of higher education (as defined in section 101 of the Higher Education Act of 1965 (20 U.S.C. 1001)) or a State department of agriculture may grow or cultivate industrial hemp if [,] (1) the industrial hemp is grown or cultivated for purposes of research conducted under an agricultural pilot program or other agricultural or academic research; and (2) the growing or cultivating of industrial hemp is allowed under the laws of the State in which such institution of higher education or State department of agriculture is located and such research occurs.

‘‘State department of agriculture” means the agency, commission, or department of a state government responsible for agriculture within the state. And ‘‘agricultural pilot program” means “a pilot program to study the growth, cultivation, or marketing of industrial hemp (A) in States that permit the growth or cultivation of industrial hemp under the laws of the State; and (B) in a manner that (i) ensures that only institutions of higher education and State departments of agriculture are used to grow or cultivate industrial hemp; (ii) requires that sites used for growing or cultivating industrial hemp in a State be certified by, and registered with, the State department of agriculture; and (iii) authorizes State departments of agriculture to promulgate regulations to carry out the pilot program in the States …”

On June 6, 2015, California Attorney General Kamala Harris issued a legal opinion on what the federal Farm Bill means for the California Industrial Hemp Act, saying that, “[w]e conclude that federal law authorizes, and the Hemp Act permits, institutions of higher education and the California Department of Food and Agriculture to grow and cultivate industrial hemp for purposes of agricultural or academic research.”

This is great news for California hemp except that the federal Farm Bill likely requires the California Department of Agriculture to draft new rules specifically geared towards hemp research pilot programs at colleges and universities to comply with the federal Farm Bill since that Bill does not allow private actors to cultivate hemp on their own. This new rule making will likely take anywhere from 6-18 months.

So, although California hemp has been a wash and will likely continue to be a wash for quite some time, the situation is bound to improve.

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