Month: July 2019

The Agriculture Improvement Act of 2018 (“2018 Farm Bill”) legalized hemp by removing the crop and its derivatives from the definition of marijuana under the Controlled Substances Act (“CSA”) and by providing a detailed framework for the cultivation of hemp. The 2018 Farm Bill gives the US Department of Agriculture (“USDA”) regulatory authority over hemp cultivation at the federal level. In turn, states have the option to maintain primary regulatory authority over the crop cultivated within their borders by submitting a plan to the USDA. This federal and state interplay has resulted in many legislative and regulatory changes at the state level. Indeed, most states have introduced (and adopted) bills that would authorize the commercial production of hemp within their borders. A smaller but growing number of states also regulate the sale of products derived from hemp.

In light of these legislative changes, we are presenting a 50-state series analyzing how each jurisdiction treats hemp-derived cannabidiol (“Hemp-CBD”). Each Sunday we will summarize a new state in alphabetical order. So far, we have covered Alabama, Alaska, Arizona, Arkansas, California and Colorado. This week we turn to Connecticut.

Connecticut very recently passed Public Act No. 19-3 (“S.S.B. No. 893”), which directs the state Department of Agriculture (“DOAG”) to implement an agricultural pilot program under the 2014 Farm Bill to enable the cultivation and processing of hemp until the state plan is approved by the U.S. Department of Agriculture (“USDA”). Once the state plan is approved by the USDA, the research program will expire and DOAG will begin regulating the commercial production of hemp and hemp products, pursuant to the 2018 Farm Bill.

Section 1 of S.S.B. No. 893 provides that hemp has the same meaning as that found in the 2018 Farm Bill and defines “hemp products” as “products with a delta-a tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis derived from, or made by, the processing of hemp plants or hemp plant parts.”

Only growers and processors of hemp and hemp products that are not consumable (i.e., hemp products containing no more than 0.3 percent THC not intended for human ingestion, inhalation, absorption or other internal consumption) are required to obtain a license from the DOAG. In addition, DOAG licensed growers and processors must acquire certified seeds and are strictly prohibited from transporting hemp containing more than 0.3% THC to any location not listed on the licensee’s application.

In order to “manufacture, handle, store and market hemp” for human consumption, one is required to obtain a license from the Department of Consumer Protection (“DCP”) and must (1) satisfy specific testing procedures; (2) comply with the Federal Food, Drug and Cosmetic Act; and (3) not make any health claims promoting the therapeutic value of their products.

Note that hemp products that have been deemed Generally Recognized As Safe (“GRAS”) by the Food and Drug Administration (“FDA”) that are (1) marketed for the uses described in the FDA GRAS notices, (2) manufactured in a way that is consistent with the notices, and (3) meet the listed specifications in the notices, may be manufactured in the state without a DCP manufacturers or hemp consumable license.

As of the date of this post, the DCP has yet to release rules on the manufacturing, processing, storing and marketing of hemp for human consumption, but it is clear from its FAQs that the CDP is deferring to the FDA guidelines when dealing with CBD-infused foods and dietary supplements.

So while Connecticut has shown a friendly attitude towards hemp and hemp products (the state was already differentiating hemp from marijuana, even before the enactment of S.S.B. No. 893), the state is also putting restrictions on the manufacture, sale and distribution of CBD-infused foods and dietary supplements. This means that enforcement actions may soon ensue.

The Food and Drug Administration (“FDA”) seems to be listening.

For the past six months, the federal agency has been bombarded with messages, urging the FDA to promptly develop a regulatory pathway for the lawful use of hemp-derived CBD (“Hemp-CBD”) in foods and dietary supplements.

Some of these messages came from Oregon’s hemp champion, Senator Ron Wyden (D), who in two occasions has publicly pressured the FDA to act on this issue.

Back in January, Wyden issued a joint letter with Jeff Merkley (OR-D), in which the Oregon senators demanded that the agency update federal regulations governing the use of certain hemp-derived ingredients in food, beverages and dietary supplements.

At the end of June, Wyden issued a second letter to the agency in which he criticized Former Commissioner Scott Gottlieb’s suggestion that it may take the agency three to five years to issue a final regulation authorizing the lawful use of Hemp-CBD in foods and dietary supplements. Specifically, Wyden explained that the regulatory confusion and uncertainties surrounding CBD could not continue much longer. To that end, Wyden recommended that the FDA adopt certain steps to streamline the regulatory process and directed the agency to issue “enforcement discretion guidance” by August 1 of this year and to follow up by issuing final rules as quickly as possible while the agency develops permanent final regulations.

In response to Senator Wyden and other stakeholders’ demands, FDA Acting Chief Information Officer, Amy Abernethy, recently announced on Twitter that:

[FDA] is expediting its work to address the many questions about cannabidiol (CBD). This is an important national issue with public health impact, & an important topic for American hemp farmers and many other shareholders.”

Abernethy went on to explain that while the agency is enthusiastic about research into the therapeutic values of CBD-infused products, it is also concerned with the need for safety.

To understand the breadth of issues and gather data on safety we have conducted a public hearing, reviewed the medical literature, and have an open public docket.”

If you recall, the public hearing to which Abernethy refers was held on May 31 and offered stakeholders a platform to share their thoughts and experience with the FDA and to stress the importance of developing a regulatory framework that would legalize the marketing and sale of CBD-infused foods and dietary supplements.

The public had an opportunity to weigh in with the FDA through July 16. Four days before the deadline, over three thousand comments had been published on the public docket. Now that the public comment period is over, the FDA will review the submitted data and anticipates reporting on its progress “around end of summer/early fall.”

Expediting the rulemaking process of CBD products will not only help clarify the legality of these products and render the cultivation and processing of hemp economically viable, it will also settle the position of many federal agencies on this issue. As we previously explained, numerous federal agencies, including the U.S. Patent and Trademark Office and the U.S. Alcohol and Tobacco and Trade Bureau, defer to the FDA in dealing with CBD-related issues.

Whether or not the FDA meets its proposed timeline, we will continue to monitor and report on its progress.

A week or so ago, I wrote a post outlining the current state of California hemp laws, and noted that there are two pending pieces of legislation that could change the state of hemp law in California: AB-228 which deals more with adding hemp-derived cannabidiol to foods and other consumer products, and SB-153, which would re-write a significant portion of California’s Food and Agriculture Code that relates to hemp cultivators. Today, I’m going to talk about SB-153, which could have a massive impact on California’s hemp cultivation industry. Below are some of the highlights of the bill.

A New Definition of “Industrial Hemp”

Currently, the California Health and Safety Code defines “industrial hemp” as follows:

“Industrial hemp” means a crop that is limited to types of the plant Cannabis sativa L. having no more than three-tenths of 1 percent tetrahydrocannabinol (THC) contained in the dried flowering tops, whether growing or not; the seeds of the 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 produced therefrom.

Current provisions of the Food and Ag. code relative to hemp use this definition. But if SB-153 is passed, it’ll add a brand new definition of “industrial hemp” to the Food & Agriculture Code, as follows:

“Industrial hemp” means an agricultural product, whether growing or not, that is limited to types of the plant Cannabis sativa L. and any part of that plant, including the seeds of the plant and all derivatives, extracts, the resin extracted from any part of the plant, cannabinoids, isomers, acids, salts, and salts of isomers, with a delta-9 tetrahydrocannabinol concentration of no more than 0.3 percent on a dry weight basis.

To be clear, this new definition would be in addition to—and not a replacement of—the current state definition. And significantly, the two definitions are different. For example, the general H&S Code definition appears to place caps on the total amount of THC, whereas the Food and Ag code’s definition would place limits on delta-9 THC. This could create confusion or different standards among state agencies. We’ve written about how “total THC” limits have caused a headache in Oregon, and it’s possible that these different definitions could lead to similar issues.

Additionally, the Food and Ag code’s definition only applies to agricultural products, and may not apply to many other derivatives, for example, hemp products imported from other states.

A California Hemp Production Plan

SB-153 would force the state to create and submit to the U.S. Department of Agriculture a hemp production plan. If you haven’t read about the 2018 Farm Bill yet, in short, it allows states to set up their own hemp production programs after approval by the USDA. States aren’t forced to submit plans and have to affirmatively take steps to do it, and SB-153 would put CA on track to do just that.

New Definitions of “Established Agricultural Research Institutions”

Current California law creates a scheme for commercial cultivators to register to cultivate hemp, and then exempts established agricultural research institutions (“EARIs”) from needing to register. EARIs currently can include:

(1) A public or private institution or organization that maintains land or facilities for agricultural research, including colleges, universities, agricultural research centers, and conservation research centers; or

(2) An institution of higher education (as defined in Section 1001 of the Higher Education Act of 1965 (20 U.S.C. 1001)) that grows, cultivates or manufactures industrial hemp for purposes of research conducted under an agricultural pilot program or other agricultural or academic research.

Part (2) of the EARI definition is pretty consistent with the 2014 Farm Bill, which is still in effect, but part (1) is much broader. In the wake of this law, many institutions that may not necessarily qualify for cultivation under federal law would be able to cultivate in CA.

SB-153 would close that gap. The bill would re-define EARIs to only include:

an institution of higher education, as defined in Section 101 of the federal Higher Education Act of 1965 (20 U.S.C. Sec. 1001), that grows, cultivates, or manufactures industrial hemp for purposes of research conducted under an agricultural pilot program or other agricultural or academic research in accordance with Section 7606 of the federal Agricultural Act of 2014 (7 U.S.C. Sec. 5940) or otherwise approved by the secretary.

This new definition of EARIs would be much more in line with the 2014 Farm Bill, and would not allow many different kinds of parties to claim EARI exemptions. But note, this definition change won’t take effect until after the state’s hemp production plan is approved. So it could take a long time.

Expansion of Hemp Registrations

What will all of those companies who used to qualify as EARIs and don’t want to cultivate commercial do if the definition changes? Well, the answer is that SB-153 would expand required registrations from only commercial cultivators to include all cultivators except EARIs. So purely private companies who wanted to do hemp research and could not qualify as EARIs or work with EARIs would probably need to get registered with their county commissioner and follow the Department of Food and Agriculture (and localities’) requirements for registered cultivators.

Penalties for Misbehavior

SB-153 would add some pretty key penalty provisions that are not currently in the Food and Ag code.

First, SB-153 says that “[a]ny person convicted of a felony relating to a controlled substance under state or federal law before, on, or after January 1, 2020, shall be ineligible, during the 10-year period following the date of the conviction, to participate in the industrial hemp program.”

This is exceptionally broad. Anyone who has been convicted, ever, in any state, for any drug, would be barred from participating in the program for 10-years post conviction. We don’t have hemp regs yet or even know what the production plan will look like. But the extent of this could be far-reaching. If “ownership” is anything like in the cannabis rules, this may exclude a wide class of persons from even owning relatively minor stakes in hemp companies.

Second, “A person that materially falsifies any information contained in an application [for commercial or non-commercial registration], or other application to participate in the industrial hemp program, shall be ineligible to participate in the industrial hemp program.”

This is also significant. Companies who are seeking registrations will need to be 100% sure that everything they put into their application is accurate. Even minor slip-ups could lead to ineligibility to participate in the hemp industry.

These are just a few examples of the significant changes that SB-153 might bring about. The bill isn’t guaranteed to pass, and it’s possible that it gets amended again. It’ll be a while before it’s fully implemented, but it’s clear now that the state wants to get up to speed and in compliance with the federal farm bills as fast as possible. We’ll continue to report on SB-153 and its aftermath in the coming months.

The Agriculture Improvement Act of 2018 (“2018 Farm Bill”) legalized hemp by removing the crop and its derivatives from the definition of marijuana under the Controlled Substances Act (“CSA”) and by providing a detailed framework for the cultivation of hemp. The 2018 Farm Bill gives the US Department of Agriculture (“USDA”) regulatory authority over hemp cultivation at the federal level. In turn, states have the option to maintain primary regulatory authority over the crop cultivated within their borders by submitting a plan to the USDA. This federal and state interplay has resulted in many legislative and regulatory changes at the state level. Indeed, most states have introduced (and adopted) bills that would authorize the commercial production of hemp within their borders. A smaller but growing number of states also regulate the sale of products derived from hemp.

In light of these legislative changes, we are presenting a 50-state series analyzing how each jurisdiction treats hemp-derived cannabidiol (“Hemp-CBD”). Each Sunday we will summarize a new state in alphabetical order. So far, we have covered Alabama, Alaska, Arizona, Arkansas, and California. This week we turn to Colorado.

When it comes to hemp, few states have embraced hemp like Colorado. According to a report prepared by Marijuana Business Daily, in 2018, Colorado allocated 12,042 outdoor acres and 2.35 million square feet indoors to the cultivation of hemp. If you buy a product containing hemp, in any state across the country, it likely came from Colorado.

The state’s cultivation program is overseen by the Colorado Department of Agriculture (“CDA”). “Industrial hemp” or “hemp” means “the plant Cannabis sativa L. and any part of the plant, including the seeds of the plant and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of no more than three-tenths of one percent on a dry-weight basis.” CDA oversees the cultivation of hemp does not regulate the processing of hemp into other products, including Hemp-CBD other than requiring that cultivators disclose agreements with Colorado hemp manufacturers.

However, in 2018 Colorado enacted House Bill 18-1295 (“HB 18-1295”), codified in part in C.R.S. 25-5-426, which establishes that the manufacturing of an “industrial hemp” or “hemp product” must comply with Colorado’s Food and Drug Act. HB 18-1295 defines an “industrial hemp product” as “a finished product containing industrial hemp that”:

• Is a cosmetic, food, food additive, or herb;
• Is for human use or consumption;
• Contains any part of the hemp plant, including naturally occurring cannabinoids, compounds, concentrates, extracts, isolates, resins, derivatives; and
• Contains a delta-9 tetrahydrocannabinol concentration of no more than three-tenths of one percent.

Manufacturers of industrial hemp products must register with the Colorado Department of Public Health and Environment (“CDPHE”).

Colorado imposes certain labeling requirements on hemp products:

• An identity statement, which indicates what the product is (not a brand name).
• A net weight statement.
• A list of all ingredients.
• The company name with an address

The label must also clearly identify that it includes hemp as an ingredient and if there is CBD, the amount of CBD and whether it is an isolate. Labels must also include the statement “FDA has not evaluated this product for safety or efficacy,” and may not contain any health claims.

In this 50-state series, we’re moving through states alphabetically. However, if we were ranking the states, Colorado would almost certainly come in first due to its full-on embrace of hemp. The state was one of the first to legalize recreational marijuana so we’d give them a pass if they were to slow things down when it came to hemp. Obviously, that’s not the route taken by the Centennial State. In addition, in light of the uncertainties surrounding how the FDA would regulate Hemp-CBD, the state has tasked CDPHE with overseeing the manufacture of products containing hemp and Hemp-CBD. Kudos to Colorado for boldly moving forward with hemp.

The Agriculture Improvement Act of 2018 (“2018 Farm Bill”) legalized hemp by removing the crop and its derivatives from the definition of marijuana under the Controlled Substances Act (“CSA”) and by providing a detailed framework for the cultivation of hemp. The 2018 Farm Bill gives the US Department of Agriculture (“USDA”) regulatory authority over hemp cultivation at the federal level. In turn, states have the option to maintain primary regulatory authority over the crop cultivated within their borders by submitting a plan to the USDA. This federal and state interplay has resulted in many legislative and regulatory changes at the state level. Indeed, most states have introduced (and adopted) bills that would authorize the commercial production of hemp within their borders. A smaller but growing number of states also regulate the sale of products derived from hemp.

In light of these legislative changes, we are presenting a 50-state series analyzing how each jurisdiction treats hemp-derived cannabidiol (“Hemp-CBD”). Each Sunday we will summarize a new state in alphabetical order. So far, we have covered Alabama, Alaska, Arizona and Arkansas. This week we turn to California.

I personally think that it’s a bit difficult to talk about Hemp-CBD in a vacuum in California, because the laws we have here are much more focused on the actual hemp plant itself. So today, I’m going to talk not only about Hemp-CBD, but also about laws on cultivation and processing.

Hemp Cultivation

Of all the things you can do with hemp in California, cultivation is probably the safest and most “legalized”. It’s had a relatively long and complex history in this state, beginning most significantly in 2013, when California passed Senate Bill 566, the California Industrial Hemp Farming Act (or “CIHFA”). The CIHFA amended CA law to redefine “marijuana” to exclude industrial hemp, and to define industrial hemp. It also added a section to the Food and Agriculture Code that would regulate the production of hemp by established agricultural research institutions (“EARIs”) and commercial cultivators. Even though there was a law allowing commercial cultivation, it didn’t actually take place until many years later.

The next year, the federal Agricultural Act of 2014 (or “2014 Farm Bill”) was passed. As readers of this blog probably know by now, section 7606 of the 2014 Farm Bill allowed the cultivation of hemp for research purposes conducted under an agricultural pilot program or by a research institution, in states where hemp cultivation was legal. California still hasn’t developed an agricultural pilot program, but according to FAQs issued by the California Department of Food and Agriculture (“CDFA”), the pilot program is in the works.

After the 2014 Farm Bill was passed, on June 6, 2014, then-California Attorney General (and current 2020 U.S. presidential runner) Kamala Harris issued opinion 13-1102, which stated “Federal law authorized, and rendered operative, the relevant portions of the California Industrial Hemp Farming Act on February 7, 2014.” Harris’ opinion, however, noted that provisions of the CIHFA were “inoperative to the extent that they apply or pertain to any form of industrial hemp cultivation not authorized by federal law.” In plain English, commercial cultivation was still not allowed.

In 2016, the Control Regulate and Tax Adult Use Of Marijuana Act (or “Prop. 64”) was passed. Prop. 64 formally amended the above California Food & Agriculture Code sections to make the hemp provisions become effective on January 1, 2017. But even that didn’t really happen.

In 2018, commercial cultivation began to become a reality with Senate Bill 1409. SB-1409 (which we have written about here, here, and here) allowed for the commercial cultivation of hemp upon registration with the CDFA and county commissioners, effective January 1, 2019. It was only on April 30, 2019, years after the CIHFA was passed, that the CDFA published information concerning registration with county agricultural commissioners to cultivate hemp.

To date, CDFA has created (1) regulations that deal with cultivation for commercial purposes; (2) regulations that list of approved seed cultivars; (3) emergency testing and sampling regulations; (4) guidelines for county agricultural commissioners to collect certain information from EARI cultivators; and (5) guidelines requiring certain hemp cultivators to obtain nursery stock licenses. More are likely to come, and soon.

What this all means is:

• Pilot Program: We don’t have one here officially yet, but might soon.
• EARIs: CIHFA basically allows EARIs to cultivate hemp with very few restrictions. There are still a lot of unanswered questions, like whether this hemp can be sold for commercial purposes.
• Commercial Cultivation: Commercial hemp cultivators can pay a modest fee to cultivate hemp (provided their local jurisdiction allows it), and are subject to some testing and sampling, as well as other requirements. All in all, commercial cultivators are subject to DRASTICALLY fewer restrictions and regulations than commercial cannabis cultivators in CA (for the record, CA defines “Cannabis” here to exclude hemp, sorry for any confusion). However, because the 2018 Farm Bill hasn’t been fully implemented and the federal government is still relying on the 2014 Farm Bill, commercial cultivation is still in a gray area.

Being California, this is of course about to possibly change. The state is considering passing new legislation (SB-153) that would amend the hemp provisions of the Food and Agriculture Code to be more consistent with the 2014 and 2018 Farm Bills. I plan on writing more on SB-153 in the coming weeks, but for now, here are some highlights:

• SB-153 would contain a new definition of “industrial hemp” that’s sort of different from CA’s current definition in the Health and Safety Code, meaning there will be two definitions of the term;
• The definition of EARI would be restricted much, much further to apply to a much smaller subset of research institutions;
• Permits would be required for all hemp cultivation—including non-commercial cultivation—meaning that some research institutions that currently qualify as EARIs will need to register and comply with CDFA regulations;
• The CDFA will be forced to create and submit a hemp production program to submit to the U.S. Department of Agriculture per section 297B of the 2018 Farm Bill; and
• People who provide false information on their commercial hemp registrations will be barred from participating in CA’s future hemp program.

This is just a brief overview and, again, I plan on writing in detail on SB-153 in the coming weeks. Needless to say, however, SB-153 would clarify a lot for hemp cultivators here given that the 2018 Farm Bill has yet to be implemented and, to date, there hasn’t been much action to get a California hemp production plan going.

Hemp Processing/Manufacture/Testing

The CDFA FAQs say all that needs to be said: “California law does not currently provide any requirements for the manufacturing, processing, or selling of non-food industrial hemp or hemp products.” That said, the California Department of Public Health’s (“CDPH”) Hemp CBD FAQs take the position that Hemp CBD is illegal in basically all foods, beverages, and some other products. Based on this position, the CDPH has apparently been going after manufacturers of Hemp CBD products on the grounds that Hemp CBD “adulterates” foods, under the California Sherman Food, Drug, & Cosmetic Law.

I recently wrote about a new law (AB-228) that if passed, would find conclusively that Hemp-CBD added to foods and other products does not in and of itself adulterate them. The law looks poised to pass, and if it does would do the following:

• Licensed cannabis companies wouldn’t be precluded from being in the hemp business;
• Hemp products that are foods, beverages, or cosmetics would have some minimal labeling requirements;
• Food manufacturers that make hemp products would be required to obtain certain registrations and would need to demonstrate that their hemp comes from a jurisdiction that has an “established and approved industrial hemp program” that meets all federal requirements for the sale and cultivation of hemp;
• The CDPH wouldn’t be able to conclude that foods, beverages, or cosmetics are adulterated just because they contain CBD; and
• Raw hemp products would need to undergo certain lab testing and get certificates of analysis prior to sale.

Hemp-CBD Product Sales

The CDPH’s Hemp CBD FAQs prohibit the sale of Hemp CBD in foods and many other products as noted above. It’s less clear about certain products like flower, oil, and vape cartridges. But we do know what if AB-228 passes, Hemp CBD may be allowed in many kinds of products that the state has, for some reason, tried to ban.

In the near future, we may be dealing with a “legal” and regulated Hemp CBD market in California.