Month: October 2019

Today, the U.S. Department of Agriculture (“USDA”) released its interim hemp rules. This is a major step in the full implementation of the 2018 Farm Bill. These rules are not final but they will be effective as soon as they are published in the Federal Register. Stakeholders will have 60 days to submit comments on the interim hemp rules.

Expect to see additional analysis of these rules on this blog in the coming days. For now, we’ve highlighted some of the main points that stuck out to us.

State and Tribal Plans. The 2018 Farm Bill requires states and Indian Tribes to submit hemp cultivation plans to the USDA. The interim hemp rules require that these plans include a practice to collect, maintain and report information on hemp cultivators, the land where hemp is produced, and the status and number of licenses issued. Plans must include a procedure for testing hemp within 15 days of the anticipated harvest. Plans must also ensure that samples are representative of an entire hemp lot and the state or tribal agency charged with testing must have unrestricted access to all land, building, and structures used for the cultivation, handling, and storage of hemp. Hemp producers may not harvest before samples are taken. Hemp that tests above 0.3% THC is deemed a “non-compliant cannabis plant” and a state or Tribal plan must cover the destruction of such material. Non-compliant cannabis plants must also be reported to USDA, along with other information on hemp producers and production generally. States and Tribes must also establish lab standards for testing hemp.

The USDA will review state and Tribal plans within 60 days of receipt. States and Tribes can submit amended plans in the event that the USDA does not approve of the initial submission or if the state or Tribe alters a previously approved plan. The USDA will, from time-to-time, audit state and Tribal plans.

USDA Licensing. If a state or Tribal plan is not approved, would-be hemp producers can grow hemp in that state or Tribal area under a USDA hemp license, so long as “the production of hemp is not otherwise prohibited by the State or Indian Tribe.”

The USDA will issue hemp producer licenses. Applicants can apply 30 days after the rules are published in the Federal Register. After that, the USDA will accept applications between August 1 and October 31 each year. Applicants must submit their contact information and a criminal history report. Remember that a felony conviction, at either the state or federal level, results in a 10-year ban from participating in the legal hemp industry, unless a person was lawfully growing hemp under the 2014 Farm Bill before December 20, 2018.

USDA license will be valid until December 31st three years after the year the licensed was issued. Licenses cannot be sold, assigned, transferred, pledged or otherwise disposed of. An application is required for each location where hemp is grown. USDA licensees must submit tests within 15 days of harvest to the USDA or to a state agency, federal agency, or a person approved by the USDA to accept tests. Non-compliant plant material must be destroyed. USDA licensees will be subject to inspections and must maintain records relating to hemp.

Total THC Testing. The interim hemp rules also cover THC testing, which was a point of concern in the lead up to theses rules being released. The interim hemp rules state that:

A State or Tribal plan must include a procedure for testing that is able to accurately identify whether the sample contains a delta-9 tetrahydrocannabinol content concentration level that exceeds the acceptable hemp THC level. The procedure must include a validated testing methodology that uses postdecarboxylation or other similarly reliable methods. The testing methodology must consider the potential conversion of delta-9 tetrahydrocannabinolic acid (THC-A) in hemp into THC and the test result measures total available THC derived from the sum of the THC and THC-A content. Testing methodologies meeting these requirements include, but are not limited to, gas or liquid chromatography with detection. The total THC concentration level shall be determined and reported on a dry weight basis.

This appears to require Total THC testing, which includes THC-A, and as has been implemented in Oregon. Laboratories who test hemp will also report their “measurement of uncertainty” or “MU.” The USDA provides additional context on this concept:

The definition of “acceptable hemp THC level” explains how to interpret test results with the measurement of uncertainty with an example. The application of the measurement of uncertainty to the reported delta-9 tetrahydrocannabinol content concentration level on a dry weight basis produces a distribution, or range. If 0.3% or less is within the distribution or range, then the sample will be considered to be hemp for the purpose of compliance with the requirements of State, Tribal, or USDA hemp plans. For example, if a laboratory reports a result as 0.35% with a measurement of uncertainty of +/- 0.06, the distribution or range is 0.29% to 0.41%. Because 0.3% is within that distribution or range, the sample, and the lot it represents, is considered hemp for the purpose of compliance with the requirements of State, Tribal, or USDA hemp plans. However, if the measurement of uncertainty for that sample was 0.02%, the distribution or range is 0.33% to 0.37%. Because 0.3% or less is not within that distribution or range, the sample is not considered hemp for the purpose of plan compliance, and the lot it represents will be subject to disposal. Thus the “acceptable hemp THC level” is the application of the measurement of uncertainty to the reported delta-9 tetrahydrocannabinol content concentration level on a dry weight basis producing a distribution or range that includes 0.3% or less. As such, the regulatory definition of “acceptable hemp THC level” describes how State, Tribal, and USDA plans must account for uncertainty in test results in their treatment of cannabis.

Labs that test cannabis for THC levels must be registered with the DEA. The USDA is considering a fee-for-service that would allow labs to seek approval with the USDA for THC-testing.

Interstate Transport. The interim rules prohibit states or Tribes from “prohibiting the transportation or shipment of hemp or hemp products produced under a State or Tribal plan,” a license issued by the USDA, or “under 7 U.S.C. 5940[.]” What is 7 U.S.C. 5940? It’s the codification of the 2014 Farm Bill’s industrial hemp provisions. That means that states (looking at you Idaho) can not seize hemp produced under the 2014 Farm Bill, so long as it’s done in compliance with state law or cultivated by an institution of higher education.

Bottom line. We’ve just begun to scratch the surface. These interim hemp rules also outline hemp violations, the appeal process for hemp licensing, and touch on the interplay with the Controlled Substances Act. More than anything else, the USDA’s release of these rules means that we are finally headed towards full implementation of the 2018 Farm Bill. We expect the USDA to be inundated with state and Tribal hemp plans and applications for USDA hemp production licenses over the next few weeks, and then again early next year after many state legislature reconvene. We’ll keep an eye out for developments and suggest you do the same.

The passage of the 2018 Farm Bill and the legalization of hemp and hemp-derived products has sparked strong business interest from foreign stakeholders. For the past few months, our firm has received numerous inquiries from existing and prospective clients about the legality of importing the agricultural crop and its derived products, particularly hemp-derived CBD (“Hemp-CBD”), to the United States.

This blog posts briefly addresses the risks and feasibility of engaging in this business at the moment.

IMPORTING HEMP

Although the 2018 Farm Bill legalized the commercialization of hemp and its derivatives, the production of the crop has yet to be regulated by the U.S. Department of Agriculture (“USDA”), which is tasked with adopting rules that will serve as a road map for states and Indian tribes wishing to regulate hemp within their borders.

The USDA had anticipated issuing its rules by the end of summer; however, the agency only recently submitted (on September 13) its proposed rules to the White House Office of Budget and Management (“OBM”), which reviews all regulations adopted and implemented by a presidential administration. Until this process is complete, we are left with little guidance on the production of hemp, including its transportation — note that the USDA rules were released today and will be addressed in another blog post.

Back in April, the agency issued a statement in which it expressly legalized the importation of hemp seeds and set forth ways in which the seeds should be imported from Canada and other foreign countries. Then on October 16, the agency quietly updated its guidelines to allow the importation of both hemp seeds and plants in the United States. According to the USDA’s webpage, hemp plants for planting that originate from Canada and other foreign countries may be imported so long as certain requirements are satisfied. Hemp plants from Canada must be accompanied by “a phytosanitary certificate from Canada’s NPPO to verify the origin of the plant and to confirm no plant pests are detected.” Hemp plants from countries other than Canada must also be accompanied by a phytosanitary certificate as well as an application for a Permit to Import Plants or Plant Products, better known as a PPQ 587 permit

These new guidelines align with the position taken by some U.S. courts that foreign hemp may be freely shipped to the U.S. because hemp is now excluded from the Controlled Substances Act (“CSA”)’s definition of marijuana. Yet, in practicality, these court decisions did not eliminate the risk that foreign hemp be seized at the border. This is because hemp is hard to differentiate from marijuana. The crop looks and smells like its psychoactive cousin, which means additional guidelines were desperately needed from the USDA.

Although the agency’s guidelines confirm the importation of hemp plants is lawful, the rules do not mention the need to attach a copy of THC testing results, showing that the plant meets the 0.3% THC limit imposed under federal law. Therefore, it will be interesting to see whether hemp will now freely pass U.S. Customs and Border Protection or if additional regulations, such as testing protocols will be needed.

IMPORTING HEMP-CBD PRODUCTS

In addition to removing the hemp plant from the CSA, the 2018 Farm Bill legalized hemp concentrates and extracts, including Hemp-CBD. Nevertheless, the new law preserved the authority of the Food and Drug Administration (“FDA”) to regulate Hemp-CBD products, including but not limited to foods and dietary supplements. From the moment hemp and its derivatives were legalized, the FDA took the position that the use of Hemp-CBD in foods, dietary supplements and unapproved drugs is unlawful in the United States because CBD was already approved as an active ingredient in a drug used in the treatment of epilepsy (i.e., Epidiolex).

Given the popular demand of Hemp-CBD products, the federal agency has been pressured by lawmakers and stakeholders to reconsider its position on CBD and forge a pathway towards legalizing their sale and marketing in the United States.

Consequently, until the agency adopts new rules and regulations, the sale of these products will remain unlawful in the United States, even if manufactured and imported from overseas — although the FDA seems on board with the sale and marketing of Hemp-CBD topicals.

For more information on this issue, contact our team of regulatory attorneys.

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 summarize a new state in alphabetical order. Today, we turn to Maryland.

Maryland’s Industrial Hemp Pilot Program opened a little more than a year ago. In line with the 2014 Farm Bill, the purpose of the program was and is to authorize and facilitate research of industrial hemp and any aspect of cultivating, manufacturing, transporting, marketing, or selling industrial hemp for agricultural, industrial, or commercial purposes. The Maryland Department of Agriculture (“MDA”) or an institution of higher education that submits an application to the MDA may cultivate, manufacture, transport, market, or sell industrial hemp if the hemp is cultivated to further agricultural or academic research—notably, an undefined term in Maryland’s law.

Last year, MDA issued hemp regulations to govern its program. Per MDA guidance, farmers can partner with institutions of higher education, but otherwise, general commercial cultivation is prohibited. MDA also notes that it does not have jurisdiction over hemp processing or sale.

Earlier this year, Maryland’s governor approved of HB-1123, which includes specific provisions for hemp production and requires the MDA to create a plan for monitoring and regulating hemp production in the state.

That said, Maryland isn’t as open to Hemp CBD. The Maryland Department of Health sort of follows the FDA’s approach and holds that foods and beverages containing Hemp CBD are adulterated and can’t be sold in Maryland (sorry, no Maryland Hemp CBD crab cakes). The state has not really addressed many other types of products, but it could change its position to include Hemp CBD products such as vapes, cosmetics, or topicals (apparently, the state will try ban flavored vapes in the future).

Stay tuned to the Canna Law Blog for developments on hemp and Hemp CBD in Maryland and other states across the country. For previous coverage in this series, check out the links below:

• Alabama
• Alaska
• Arizona
• Arkansas
• California
• Colorado
• Connecticut
• Delaware
• Florida
• Georgia
• Hawaii
• Idaho
• Illinois
• Indiana
• Iowa
• Kansas
• Kentucky
• Louisiana
• Maine

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 summarize a new state in alphabetical order. Today, we turn to Maine.

Maine began authorizing the commercial sale of industrial hemp and Hemp-CBD products in 2015. Following the enactment of the 2018 Farm Bill, the state passed H.P. 459 and S.P. 585 to align Maine with the 2018 Farm Bill and clarify the legality of Hemp-CBD foods.

Under S.P. 585, which generally went into effect on September 19, “hemp” means:

the plant Cannabis sativa L. and any part of that plant, including the seeds and all derivatives, extracts, cannabinoids, isomers, acids, salts and salts of isomers, whether growing or not, with a delta-9-tetrahydrocannabinol concentration that does not exceed of not more than 0.3% on a dry weight basis and that is grown or possessed by a licensed grower in compliance with this chapter” and “includes agricultural commodities and products derived from hemp and topical or ingestible consumer products, including food, food additives and food products derived from hemp.” (Emphasis added).

Moreover, S.P. 585 provides that:

[n]otwithstanding any other provision of law to the contrary, food, food additives or food products that contain hemp, including cannabidiol derived from hemp, are not considered to be adulterated or misbranded under this subchapter based solely on the inclusion of hemp or cannabidiol derived from hemp.” (Emphasis added).

Accordingly, the manufacture and sale of Hemp-CBD food products seem to be authorized in the state so long as they comply with the THC testing and marketing requirements.

The state has adopted labeling requirements for packaged and unpackaged Hemp-CBD foods. Packaged food labels must:

1. Indicate that the food, food additive or food product contains hemp or Hemp-CBD;
2. Describe the CBD content by weight or volume;
3. Include the source of the hemp from which the CBD was derived;
4. In the case of extracts or tinctures, indicate the batch number; and
5. Include a disclosure statement that the food product has not been tested or evaluated for safety.

Unpackaged Hemp-CBD foods, which are foods sold in public eating places, such as retail stores, hotels and restaurants, must be accompanied by a conspicuous label or sign indicating that the product contains CBD either on the menu or in an open manner where the food order or food product is served. In addition, the public eating place must conspicuously display a directory for use by customers that contains information on the contents of all unpackaged Hemp-CBD products.

However there is one requirement that applies to both packaged and unpackaged Hemp-CBD foods: they cannot be marketed with any claims that the products can “diagnose, treat cure or prevent any disease, condition or injury” without approval from the FDA. If you follow our blog, you know it is wise not to make statements about the therapeutic value of Hemp-CBD products (see here and here). So by imposing this requirement on Hemp-CBD manufacturers and public eating places, the state is helping Hemp-CBD stakeholders mitigate their risk of FDA enforcement.

Turning to other categories of Hemp-CBD products, the sale of Hemp-CBD smokable products is neither restricted nor authorized under the law whereas the sale of cosmetics (i.e., topical) is expressly allowed under the definition of “hemp”.

Overall, it’s fair to say that Maine is a “Hemp-CBD friendly state.” In fact, no enforcement action has been taken against Hemp-CBD products since the enactment of H.P. 459 in March 27, 2019.