USDA: With hemp now legal, states must comply with federal guidelines06.05.19
In the same week that the Transportation Security Administration (TSA) updated its “What Can I Bring?” website to allow travelers to carry (with special instructions) medical marijuana and hemp-derived CBD products, the Department of Agriculture’s (USDA) Office of the General Counsel issued a legal opinion concerning the interstate transportation of hemp and who may obtain a license to produce hemp.
The high-level conclusions include:
- With the enactment of the 2018 Farm Bill, hemp has been removed from Schedule I of the Controlled Substances Act of 1970 and is no longer a controlled substance. In other words, by amending Schedule I to exclude hemp, Congress has likewise removed the illegality of delta-9 tetrahydrocannabinol (or THC, the psychoactive ingredient in still-illegal marijuana) derived from hemp. As the 2018 Farm Bill moved regulatory responsibility for hemp from the Justice Department to the USDA, the USDA is able to make such declarations when relating to hemp (but not marijuana). However, the legal opinion does not go so far as to discuss the legalities of hemp-derived Cannabidiol (CBD).
- After the USDA publishes regulations implementing the new hemp production provisions of the 2018 Farm Bill, states and Indian tribes may not prohibit the interstate transportation or shipment of hemp lawfully produced under a state or Tribal plan or under a license issued under the USDA plan. Even before such regulations are published, states or Tribes are barred from prohibiting the interstate transportation or shipment of hemp lawfully produced under the 2014 Farm Bill. A separate memo released by the USDA on the same day also clarifies that Indian tribes can continue to engage with states that authorize hemp pilot programs for research purposes but that they, unlike states, cannot themselves authorize hemp research programs.
- The 2018 Farm Bill does not affect or modify the authority of the Secretary of Health and Human Services or Commissioner of Food and Drugs to regulate hemp under applicable U.S. Food and Drug Administration (FDA) laws. While the USDA noted it will issue further hemp production regulations in 2019, the agency effectively opted out of providing a position relating to the question of regulations for including hemp-derived CBD in food products, animal feed and dietary supplements arising from the FDA’s (present) lack of guidance on such topics.
- A person with a State or Federal felony conviction relating to a controlled substance is subject to a 10-year ineligibility restriction on producing hemp under the Agricultural Marketing Act of 1946. An exception applies to a person who was lawfully growing hemp under the 2014 Farm Bill before December 20, 2018, and whose conviction also occurred before that date.
It will be interesting to see the effect that the USDA’s legal opinion has in relation to the capital markets. To date, no hemp-only company is listed on the NASDAQ or the New York Stock Exchange, likely in large part due to the legal uncertainties arising from the lack of post-2018 Farm Bill regulatory clarity from agencies such as the USDA and FDA. Hopefully, the USDA’s legal opinion will help pave the way for those hemp companies seeking to go public on a national exchange this year.