USDA Hemp Regulations: What Was Expected, Unexpected and Unanswered

By Shawn Hauser, Partner; Michelle Bodian, Senior Associate Attorney; Corey Cox, Associate Attorney

Oct 30, 2019

On October 29, 2019, the United States Department of Agriculture (USDA) released its long-awaited hemp cultivation regulations, marking the first federal hemp farming regulations in the United States since the crop was banned in 1937. These regulations implement provisions of the 2018 Farm Bill and are effective October 31, 2019.

Upon official publication, the USDA can begin reviewing and approving hemp plans submitted by states, tribes, and territories that meet these federal standards, giving those jurisdictions primary regulatory over hemp production. Some states have already submitted or are in the process of developing a state plan and now need to update their laws and hemp programs to conform to these new federal requirements. If a state, tribe, or territory chooses not to submit a plan (and does not otherwise prohibit the cultivation of hemp), the USDA will control the production of hemp in that jurisdiction. A few states, like Idaho and Mississippi, may choose to prohibit cultivation or defer to federal regulation.

In the meantime, farmers may continue to cultivate hemp under a state’s 2014 Farm Bill research pilot program; however, on October 31, 2020, the 2014 Farm Bill hemp provisions will officially sunset and state programs must comply with the 2018 Farm Bill regulations.

While it will take time to digest the nuances of this new federal framework, we’ll highlight the following key takeaways, including: five expected provisions, five unexpected provisions, and five unanswered questions.

What provisions did we expect?

1. Interim Rules Effective Length - It was clear that these rules would be an “interim final rule” that would be in effect for some set period of time. However, we were surprised that the rules will be effective for two years, which is a significant period of time for this new industry.
2. Testing - Given the dire need for a uniform testing standard across states and through the supply chain, it was widely anticipated that the USDA would create a federal testing standard, including permitted testing methodologies. Under the rules, testing methodologies must account for THC concentration using post-decarboxylation or other methods that consider the potential conversion of delta-9 tetrahydrocannabinolic acid (THCA) into delta-9 tetrahydrocannabinol (THC), which methods include gas chromatography and high-performance liquid chromatography.  Labs also must report a “measure of uncertainty,” expressed as a +/- percentage.
3. The Total THC Standard - Since states having different methods to measure THC content makes compliance and enforcement very confusing and inefficient, it was highly anticipated that the USDA would address whether the 0.3% THC limit refers to “total available THC” (the sum of THC and THC-A content) or delta-9 THC only. The USDA clarified that “total available THC” is the relevant metric and that any testing methodology must consider the potential conversion of THC-A into THC.
4. Felony Ban - The 2018 Farm Bill was broadly written in scope as to whom the felony ban provision would apply. This provision would prohibit persons with drug felonies in the past 10 years participation in the hemp program. Farmers, drug policy and criminal justice reform organizations, including Vote Hemp and the Drug Policy Alliance, implored the USDA to limit the scope of the ban as narrowly as possible due to the harms and hardships it may impose. The USDA listened and did limit the applicability of the ban, applying the ban to only key participants, defined to include a sole proprietor, a partner in a partnership, or a person with executive managerial control in a corporation.
5. Approval of State, Territories, or Tribal Plans - The USDA confirmed that a state or Indian tribe may submit a plan to have primary regulatory authority over the production of hemp in that territory. It will start approving state, territories or tribal plans within 60 days of the effective date of the rules. Notably, states and tribal authorities are required to re-submit a modified plan within the calendar year of any change in their regulation. If they don’t, USDA will revoke the plan.

What provisions were unexpected?

1. Transportation - Given all of the on-going interstate transportation issues (major issues - including multiple seizures of lawfully grown hemp, arrests of drivers, and criminal charges) and the need for businesses, regulators and enforcement agencies to clearly identify legally grown hemp and transport it without risk, the USDA previously hinted it would create a uniform shipping manifest. Instead, the USDA simply repeated the interstate transportation protection outlined in the 2018 Farm Bill, clarifying that states, tribes, and territories cannot prohibit the transfer of hemp across their borders.
2. “Acceptable hemp THC level” - While many were optimistic that the USDA would allow for a reasonable margin of error in testing, we were surprised by their approach. The USDA incorporated the margin for error inherent in potency testing, (termed the “Measure of Uncertainty”) into the potency calculation for a given sample, specifying that a cannabis plant is legal hemp for USDA purposes if the tested THC level plus or minus the Measure of Uncertainty is 0.3% or below. Notably, this level has no impact on potential CSA liability.
3. DEA-registered testing facilities - In what feels like a throwback to prohibition and reefer madness, the rules require that all laboratories testing hemp must be registered with the DEA. USDA is also considering adding a USDA approval requirement for labs testing hemp. ISO 17025 accreditation is not required at this time but is being considered. Most testing labs currently testing hemp do not have a DEA registration.
4. Zero tolerance for “Hot Hemp” - We anticipated law enforcement agencies wouldn't allow the USDA to give much leeway in the remediation of plants that test hot. Still, we were hopeful that some reasonable re-testing or remediation would be permitted, as many states have allowed, given the numerous factors that can result in a hot crop without malfeasance by a farmer. However, the rules are clear that “Hot hemp” is considered marijuana as defined in the Controlled Substances Act and must be disposed of in accordance with the CSA and DEA regulations by a person authorized to handle marijuana (a DEA-registered reverse distributor, federal, state, or local law enforcement officer)... meaning opportunities for remediation or “alternative means of destruction” are non-existent.
5. Third-party sample collection - All samples of “cannabis” intended for delta-9 THC concentration testing must be collected by designated third-party samplers, such as approved federal, state, or local law enforcement, within 15 days prior to harvest. This will potentially require state departments of agriculture to stop sampling hemp crops unless they are included as authorized third parties.

What was left unanswered?

1. How will law enforcement verify whether cannabis is marijuana or hemp?
2. Will the USDA approve state hemp plans that discuss post-harvest extraction and the manufacture of consumable CBD products?  In the interim final rule, the USDA reiterates FDA control over hemp products under the FFDCA and references the FDA’s prohibition on adding CBD to consumer products.
3. Is there sufficient access to DEA-registered testing facilities, and do those facilities have capacity to meet the demand for testing services?
4. Without federal seed certification, how do farmers ensure the seeds they buy won’t exceed 0.3% THC and will actually germinate?
5. How will the USDA address a license modification in the event a business holding a hemp license is sold? The rules allow for a license modification in the event of the “sale of a business”. However, the rules do not provide additional details on license modification, the related process/information and whether the USDA needs to approve and the timing of such approval.