industrial hemp cbdLast week, the U.S. Department of Agriculture (“USDA”) held a public meeting during which hemp stakeholders shared their opinion on the promulgation of rules to regulate the crop.

Pursuant to the 2018 Farm Bill, which legalized hemp by descheduling the crop under the Controlled Substance Act, the USDA is tasked with overseeing and regulating the production of hemp in the United States. Specifically, the federal agency is to review and approve “plans” submitted by states and Indian tribes that choose to hold primary regulatory authority over hemp. However, before the federal agency may begin reviewing these plans, the agency must formalize rules with which states and Indian tribes plans must comply. As of the date of this memo, only a handful of states and Indian tribes have submitted their plans.

Roughly 50 speakers, including state governments, Indian tribe representatives, and stakeholders in the supply chain of hemp, shared their thoughts during the three-hour long webinar. All expressed concerns regarding testing procedures, interstate transportation of the crop, access to banking, and guidance from the Food and Drug Administration (“FDA”). Here is a summary of what each group had to say:

States 

Several state Departments of Agriculture, including Pennsylvania, Kentucky, and Wisconsin, expressed great concerns regarding testing and access to banking. Ryan Quarles, Commissioner of the Kentucky Department of Agriculture, explained that hemp farmers and companies need access to capital “just like any other farmer or agri-business.” Quarles also called for guidance from the FDA regarding its position on CBD derived from industrial hemp:

If the FDA regulates too hard against CBD, it would really harm small Kentucky family farms … We’ve got to develop rules that allow our farmers an opportunity to continue supporting this crop and benefitting economically from it, especially during a period of depressed farm cash receipts.”

Indian Tribes

Although the USDA expects to release these rules by the 2020 growing season, Indian tribes urged the USDA to do so before the end of the 2019 harvest season. Because Indian tribes are not currently allowed to grow hemp pursuant to the 2014 Farm Bill, which strictly limits hemp cultivation within state borders, pushing the release of the rules until fall would further delay tribes’ access to the market and put them at a financial disadvantage.

Supply Chain Stakeholders

The primary concern shared by stakeholders involved in the supply chain pertained to the likely confusion by state enforcement officials in differentiating hemp from marijuana. Indeed, as reflected in recent events, local enforcement groups have struggled to differentiate the plants as they look and smell alike. This issue partially stems from the technologically inadequate field kits currently available, which only detect whether THC is present, regardless of its concentration. Such confusion, industry players held, will continue to lead to unnecessary delays and mistaken arrests.

This public meeting was the first step toward the USDA issuing a proposed regulation in the implementation of the 2018 Farm Bill.  Next month, the FDA will hold a similar public meeting to hear directly from stakeholders regarding the regulation of CBD-infused food and dietary supplements. We will summarize the meeting after it occurs. Stay tuned!

Our California hemp lawyers regularly get asked about the laws and regulations about growing hemp in California, manufacturing hemp products, and shipping those products around the country. I’ve written about the various hemp laws in California and how confusing they are previously (see here and here). Those posts, however, were more geared towards the manufacture and sale of hemp-derived cannabidiol (“Hemp CBD”) products than the actual cultivation of hemp, which is becoming an increasingly important topic in the hemp industry in the wake of the federal Agricultural Improvement Act of 2018 (or “2018 Farm Bill”).

The reality is that California is far behind many other states when it comes to hemp. There are very few laws or regulations here on hemp and Hemp CBD, and most of them take a very restrictive view towards what kinds of products are allowed to be sold. There is actual law on the books for cultivation, but it mostly sat there for a few years and is only now coming to light.

california hemp

To understand the current state of hemp cultivation in California, we need to look back a few years. In 2013, California passed Senate Bill 566, the California Industrial Hemp Farming Act (or “CIHFA”). The CIHFA amended the Health and Safety Code to redefine “marijuana” to exclude industrial hemp, and to statutorily 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 and commercial cultivators. This latter section was not immediately effective and was subject to federal law authorizing it.

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.

After the 2014 Farm Bill was passed, on June 6, 2014, then-California Attorney General 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.” The 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 other words, 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.

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 state Department of Food and Agriculture (“CDFA”) and county commissioners, effective January 1, 2019. SB-1409 provides relatively sparse testing and other rules (at least in comparison to the highly regulated cannabis industry). After SB-1409 was passed, the CDFA issued proposed regulations in November 2018 for registering commercial cultivators, which appear to be under review with the California Office of Administrative Law (“OAL”) through April 3, 2019.

Part of the reason for the stalling out of the proposed regulations seems to be the 2018 Farm Bill, which was signed on December 20, 2018. The 2018 Farm Bill completely removed hemp from the Controlled Substances Act and require states to submit “hemp production plans” to the United States Department of Food and Agriculture for its approval. But notably, section 7605(b) of the 2018 Farm Bill extends the 2014 Farm Bill through one year after the USDA’s establishment of certain plans (which will be a while from now).

This is a lot to unpack, but the gist is that hemp cultivated pursuant to state law and provisions of the 2014 Farm Bill (i.e., not purely commercial hemp) will be permitted for now, but purely commercial hemp production may not be permitted until the establishment of USDA-approved plans. It will be interesting to see what happens come April 4 if the OAL approves the regulations that allow for commercial hemp cultivation even in spite of no plan being submitted to the USDA. As of now, it’s pure speculation, and I am not aware of any plan submitted by California to the USDA.

This brings us to today. Currently, California law allows for established research institutions to cultivate hemp if they provide certain information to county agricultural commissioners (subject to any state or local prohibitions, of course). The commercial hemp cultivation regulations haven’t been fully implemented as noted above. There are a few big outstanding questions today.

First, what happens if California allows commercial cultivation before or without submitting a plan to the USDA? We might then be in a world similar to cannabis, where the state has adopted laws and regulations that conflict with federal law. If cannabis is any sign, it may be that the federal government does not prioritize enforcement because California would have its own regulations. But there’s no guarantee as to how the federal government would react and in light of the FDA’s December 20, 2018 statement that hemp-derived CBD isn’t allowed in many commercial products, there may be more aggressive federal enforcement.

Problematically, even if California did allow commercial hemp cultivation, that hemp may get siloed in California or just in the nearby states that don’t block shipments. The 2018 Farm Bill does prevent states from interfering interstate shipment, but its terms seem pretty clear that this only applies to hemp produced pursuant to USDA-approved hemp production plans. Some arguments can be made that 2014 Farm Bill-produced hemp can be transported interstate pursuant to this provision, but the 2014 Farm Bill did not allow commercially grown hemp sales.

Another big question is whether hemp grown by an established agricultural research institute in California could be re-sold commercially. The current hemp law as amended by SB-1409 doesn’t speak to this issue, but these institutions may be concerned about selling hemp and may refuse to do it.

Like I have said many times before, the state of hemp law in California is perplexing. That rule is no different for cultivation than it is for the sale of hemp products. It’s always a good idea to consult with experienced California hemp lawyers when considering hemp cultivation or any other sort of hemp sales. As always, stay tuned to the Canna Law Blog for more California hemp updates.

oregon hemp

Last week, the Oregon Department of Agriculture (“ODA”) submitted a letter of intent to the U.S. Department of Agriculture (“USDA”) in which the state agency conveyed its decision to submit a state hemp plan, pursuant to the Agriculture Improvement Act of 2018 (“2018 Farm Bill”).

In addition to legalizing the production of hemp by removing the crop from the list of controlled substances, the 2018 Farm Bill delegates to states and Indian tribes the broad authority to regulate and limit the production of hemp and hemp products within their territories. Specifically, Subtitle G of the new Farm Bill sets forth a regulatory scheme by which states and Indian tribes may seek primary regulatory authority over hemp production. To obtain primary regulatory authority, states and Indian tribes must submit a plan to the USDA Secretary for review and approval. However, before the Secretary may review and approve state plans it must promulgate rules and regulations pertaining to these plans.

As such, ODA Director Alexis Taylor expressed to the Secretary her department’s eagerness to receive direction from the USDA regarding requirements for state implementation plans. Specifically, Taylor raised the need for requirements in solving the growing confusion surrounding interstate transportation of hemp. The ODA Director explained that delays in rule making are subjecting Oregon’s hemp industry to “unnecessary transportation and commerce restrictions” and further stated that “having additional guidance to allow the flow of hemp in interstate commerce would be critical to farmers in Oregon.” Indeed, as we previously explained, the interstate transportation of hemp is lawful for hemp grown under a plan approved by the USDA, pursuant to the 2018 Farm Bill.

The ODA’s letter highlights the state’s robust regulation of the crop and the agency’s desire to remain at the forefront of hemp production. The ODA’s strong aspirations for hemp were also reflected domestically this past week. Indeed, a few days before it released its statement to the USDA, the Oregon department filed temporary hemp rules under Oregon Administrative Rules 603-048. The temporary rules, which became effective immediately, bring the ODA testing rules for industrial hemp intended for human consumption and hemp items in compliance with those of the Oregon Health Authority (“OHA”) as required by ORS 571.330. (That statute provides that industrial hemp intended for human consumption and hemp items must be tested similarly to marijuana under OHA’s rules. The OHA recently adopted new testing rules for marijuana, which forced the ODA to amend its rules.)

In addition to revising the ODA testing rules, the proposed rules clarify recordkeeping requirements. The Oregon department announced it would develop a template that registrant growers and handlers will be able to use to ensure their recordkeeping sufficiently meets ODA requirements. The template will be released on the ODA’s website as soon as it will be available. Finally, as we explained recently, the state legislature will likely pass a hemp bill this session.

For more information on Oregon hemp, please contact us.

cbd hemp cigar cigaretteIn the last few weeks, we have received a growing number of inquiries pertaining to the legality of smokable products infused with cannabidiol derived from industrial hemp (“CBD Smokables”), including vape pens and pre-rolled hemp flower joints. This post provides a brief overview of the current legal status of these products.

As we have discussed on several occasions (here and here), the U.S. Food and Drug Administration (“FDA”) has yet to promulgate clear guidelines on CBD-infused products. While we know the FDA deems the sale and use of CBD in food and dietary supplements unlawful, the agency has yet to address its sale and use in tobacco products.

Indeed, the FDA has the authority to regulate the sale, manufacture, and marketing of tobacco products under the 2009 Family Smoking Prevention and Tobacco Control Act (“TCA”). The TCA defines “tobacco product” as a “product made or derived from tobacco that is intended for human consumption, including any component, part, or accessory of a tobacco product.”

In 2016, the FDA expanded its regulatory authority to all products meeting the TCA’s statutory definition of a tobacco product, such as e-cigarettes, cigars, pipes and waterpipes.

However, the various statements published on the FDA’s website (here and here) seem to suggest that the agency currently refuses to interpret “tobacco products” so broadly as to include products free of nicotine or tobacco. Accordingly, it seems unlikely that CBD Smokables devoid of these substances would be considered “tobacco products.”

Although the federal agency is not likely to regulate most CBD Smokables as tobacco products at the moment, it could potentially regulate them as a drug under the Food, Drug and Cosmetic Act (“FDCA”).

Under the FDCA, a drug is defined as “intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease” or “intended to affect the structure or any function of the body . . . .” Accordingly, the agency’s jurisdiction is triggered by the intended use of the product. Generally, intended use is determined on the basis of claims made in labeling, advertising and other promotion of the product. Therefore, any health claim made about CBD-infused products, including CBD Smokables, will be treated by the FDA as a drug.

Drugs are tightly regulated by the FDA and are subject to pre-market approval. Yet, as of the date of this post, the FDA has only approved CBD as a pharmaceutical drug in the treatment of epilepsy (Epidiolex). Accordingly, any health claim made about any CBD Smokable would lead the FDA to treat the product as a drug, and thus, would require the distributor to submit their product to the agency for pre-market approval before they can begin selling it in interstate commerce.

Until the agency makes a final determination and issues guidelines for CBD Smokables, no distributor will technically comply with current FDA rules. However, based on the FDA’s recent statements and past enforcement actions, said distributors can mitigate the risk of FDA enforcement by avoiding medical claims all together.

For additional information on CBD Smokables, please contact our team.

hemp cbd fda agricultureOn February 27, 2019 both the Food and Drug Administration (“FDA”) and the United States Department of Agriculture (“USDA”) provided new insights and guidance related to their proposed regulatory processes for hemp under the 2018 Farm Bill. I will summarize these agency statements below, and give some context for what hemp and CBD businesses can expect in the near term.

USDA

The USDA posted a webpage titled Hemp Production Program (“Program Update”). The 2018 Farm Bill directs the USDA to create regulations and guidance to implement a program for hemp cultivation in the US. The USDA has started to gather information to begin the process of rulemaking. The USDA will use this information to “formulate regulations that will include specific details for both federally regulated hemp production and a process for the submission of State, and Indian tribal plans to USDA.”

The Program Update states that the USDA’s goal is to have regulations in place by fall of 2019 to accommodate the 2020 planting season. The Program Update also indicates that cultivators should operate under the 2014 Farm Bill for the 2019 planting season. The 2018 Farm Bill extension of the 2014 authority expires 12 months after USDA has established the plan and regulations required under the 2018 Farm Bill. The USDA will hold a listening session on hemp production in the form of a webinar on March 13, 2019, at a to-be-determined time.

FDA

FDA Commissioner Dr. Scott Gottleib provided testimony to the House Committee on Appropriations on the FDA’s status of operations. Kyle Yaeger of Marijuana Moment, reported on the testimony moments after Gottleib stood down. According to Gottleib, the FDA understands that “Congress wants there to be a pathway for CBD to be available.” Gottleib qualified this by saying that CBD access is not a straightforward issue because CBD has already been investigated and approved as a drug, Epiodiolex, which generally means CBD cannot be added to food. This is where things get interesting.

Gottleib stated that CBD products could be available “in a high concentration, pure formulation as a pharmaceutical product” and “at a different concentration as a food product or dietary supplement.” This only adds to the rumors that the FDA may distinguish hemp extracts by those that include the full array of cannabinoids found in the plant (“full spectrum extracts”) and those that have isolated CBD alone (“CBD isolate”). At this point, that distinction is just conjecture, but Gottleib’s recent statement is an indicator that FDA is at the very least considering this distinction. For more information on this and the Red Yeast Rice case that has lead to the widespread industry speculation, please see the following:

Gottleib went on to say that “We believe it does have therapeutic value and has been demonstrated [. . .] but I will tell you this is not a straightforward process. There’s not a good proxy for us doing this through regulation.” Gottleib is right. CBD doesn’t fit in nicely to the FDA’s general framework. That is one of the reasons why we write so frequently on CBD and the FDA.

Gottleib also noted that the FDA will hold a public hearing on hemp and CBD in April. That hearing is sure to draw a TON of interest, so stay tuned for that.


These recent updates from the FDA and USDA are not groundbreaking, but they do provide some new information, including when and how the public can provide input into the critical rulemaking process. We will continue to monitor FDA, USDA and other federal agencies as they figure out how to regulate legal hemp.

cbd alcoholThe recent wave of crackdowns on cannabidiol (“CBD”)-infused alcohol beverages has further exacerbated public confusion regarding the legal status of the cannabis plant’s non-psychoactive compound.

This post provides an overview of the regulatory framework of alcoholic beverages, including pre-manufactured industrial hemp-infused drinks and “homemade” alcoholic drinks infused with CBD oil or extracts.

Pre-Manufactured Alcohol Beverages Infused with Hemp

As we previously explained, alcoholic beverages are regulated by federal and state laws. Cannabis is heavily regulated at the state level but unlike alcohol, it is—for the most part—strictly prohibited under federal law. However, one variety of cannabis, hemp, was recently legalized under the Agriculture Improvement Act of 2018 (“2018 Farm Bill”), which removed that particular crop from the definition of “Marihuana” under the Controlled Substance Act (“CSA”). Consequently, hemp is allowed in the formulation of alcohol beverages so long as the product meets specific criteria imposed by federal and state alcohol regulatory bodies.

The formulation of hemp-infused alcoholic drinks is regulated by the U.S. Alcohol and Tobacco and Trade Bureau (“TTB”) as well as by state liquor control agencies in states where the production and sale of hemp-infused drinks is allowed. Indeed, in its latest FAQ’s (which pre-dates the enactment of the 2018 Farm Bill), the TTB declared it understood the 2014 Farm Bill to only authorize the use of hemp in the production of alcoholic beverage products for sale within limited state-sanctioned pilot programs.

However, in the same FAQ’s, the TTB explained that before it approves a formulation, it consults with the Food and Drug Administration (“FDA”) to determine whether a hemp ingredient is safe for consumption and whether its use is lawful under the Food, Drug & Cosmetic Act (“FD&CA”). As we previously explained, the FDA currently deems the use of hemp-CBD-infused foods and drinks as unlawful because CBD has been approved in the treatment of epilepsy (Epidiolex); and therefore, can only be used as a drug. As such, the FDA has refused to recognize hemp-CBD as a safe food additive, which means it would treat hemp-CBD infused alcoholic beverages as unlawful under the FD&CA.

Consequently, alcoholic beverages derived from parts of the hemp plant that do not contain CBD, such as hulled hemp seeds, hemp seed protein and hemp seed oil, grown pursuant to a state pilot program that allows the commercial sale of these products, seem to be the only hemp-infused beverages eligible for TTB approval at the moment.

Drinks Infused with CBD Oil or Extracts

The alcoholic beverages recently banned from state bars and restaurants consisted of pre-manufactured alcohol beverages to which CBD oil or extract was later added. Unlike manufactured alcohol beverages, alcoholic drinks sold in bars and restaurants are directly regulated by state liquor control boards and state departments of health, which are free to defer to and adopt FDA regulations.

Although the FDA has limited its enforcement actions against CBD-infused products by sending warning letters, state agencies have begun confiscating those products, pursuant to FDA guidelines that categorize CBD as unsafe food additives. As I previously explained, food additives must receive FDA pre-market approval to be deemed safe for human consumption. However, given the FDA’s current position on CBD-infused products, such approval has yet to be granted.

Because these “homemade” CBD-infused alcoholic drinks are devoid of TTB and FDA market approval, it is understandable that they be banned from local restaurants and bars as they pose a potential threat to health and safety.

So as of now, only TTB-approved hemp-infused alcohol beverages seem to be legal and officially “safe” for human consumption. And to be honest, we don’t know of any that have been approved. That said, this is an incredibly fast-evolving area of law and policy, and we have seen a dramatic escalation of interest in this space ever the past year.

For more information on this issue, feel free to contact our team of hemp and CBD experts.

idaho hemp cannabis seize

Earlier this week, I wrote about how hemp businesses should not yet rely on the 2018 Farm Bill to protect them from their products being seized. This is because although Section 10114 of the 2018 Farm Bill prohibits states from interfering with the interstate transport of hemp and hemp products, that protection is limited to hemp that was cultivated in accordance with Section 10113 of the 2018 Farm Bill. At this time, full compliance with Section 10113 is not possible because the US Department of Agriculture (“USDA”) has yet to approve of any state or tribal plans covering the cultivation of hemp or issue its own plan allowing for the cultivation of hemp in states that do not have an approved plan.

As such, the cultivation of hemp is still governed by the 2014 Farm Bill, which allows state departments of agriculture to license the cultivation of industrial hemp. States have taken a widely different approach to regulating industrial hemp and not all states recognize any difference between industrial hemp and marijuana, regardless of the amount of THC present.

Back in September 2018, I wrote about how varying state laws made it challenging to ship hemp products, including hemp-derived CBD (“Hemp-CBD”) across the country. I used the following example to illustrate the risks:

[B]usinesses must carefully consider how their products reach consumers. For example, imagine that Hemp Co. is planning to distribute Hemp-CBD. Hemp Co. sources its industrial hemp from a farm in Medford, a small town in Southern Oregon. Hemp Co. has a large order to fill for a natural food store in Billings, Montana. Hemp Co. decides that the fastest and cheapest method of delivery is ground shipping through Idaho. However, according to a 2015 informal opinion from the Idaho Attorney General,  the state makes no distinction between industrial hemp and marijuana. Therefore, Hemp-CBD, even without the presence of THC, is not permitted in Idaho. Even though Hemp Co.’s products come from a farmer who cultivates in-line with Oregon’s industrial hemp program (and relevant federal law), that does not insulate Hemp Co. from liability if the shipment is inspected by Idaho State Police.

Unfortunately, this hypothetical now appears to be playing out in real life as the Idaho State Police recently seized a shipment of industrial hemp traveling from Oregon to Aurora, Colorado.

Big Sky is a Colorado company that processes hemp into CBD powder which it then sells to manufacturers who add CBD to a number of different consumer products. Big Sky purchased 13,000 pounds of hemp from a permitted hemp cultivator in Oregon. Big Sky contracted with a third party logistics company to have the hemp shipped from Oregon to Aurora, Colorado.

On January 24, 2019, a truck carrying the hemp was stopped in Ada County, Idaho. The driver did not conceal the fact that he was shipping hemp and a bill of lading that accompanied the shipment indicated that the cargo was hemp. The Driver was arrested and charged with marijuana trafficking in Idaho state court. The Idaho State Police seized the contents of the truck: 7,000 pounds of industrial hemp.

Big Sky’s attorneys filed suit in US District Court in Idaho. Big Sky is seeking a declaratory judgment stating that Idaho Police improperly seized Big Sky’s properly and are improperly holding the property in light of the 2018 Farm Bill’s prohibition on the interstate shipment of hemp and general principles under the Commerce Clause which prohibit states from interfering with the interstate shipment of lawful goods. Big Sky also filed a motion for a temporary restraining order (TRO) and preliminary injunction to force the Idaho State Police to immediately return the seized hemp.

In order to get emergency relief in the form of an injunction or TRO, a party must show that they are likely to succeed on the merits of the underlying case. The Court determined that Big Sky had not met this burden because it is unclear whether Section 10144 of the 2018 Farm Bill covers the seized hemp at issue. The Order denying Big Sky’s claims states the following;

The takeaway from an examination of the respective arguments of Big Sky and the [Idaho State Police] is that a reasonable argument can be made that even though Big Sky may, at some point in time, be able to purchase industrial hemp that has been “produced in accordance with Subtitle G,” the hemp that was seized in Idaho could not possibly meet that standard because no “plans” to regulate the production of industrial hemp under the 2018 Farm Act have either been approved (by the federal government as to Oregon, as pertinent here) or created and promulgated by the United States Department of Agriculture for the federal government (to apply in the absence of an approved state or tribal plan).
To clarify, the Court is not ruling on the question of whether Big Sky was afforded protection under Section 10114 of the 2018 Farm Bill. Instead, it is saying that Big Sky has not yet shown a high likelihood that it prevail on the merits and therefore it is not entitled to have the seized hemp returned now. The Court has, however, identified that it is not clear that the 2018 Farm Bill prevents states from interfering with the interstate transport of hemp grown under the 2014 Farm Bill.
Big Sky will no doubt argue that the 2018 Farm Bill does prevent Idaho from interfering with this shipment. Though it is true that the Section 10114 does not explicitly cover hemp grown under the 2014 Farm Bill, it seems fair to say that the intent of Congress is to have hemp treated like an agricultural commodity, not a controlled substance. Additionally, Big Sky’s attorneys can expand their arguments that Idaho is interfering with interstate commerce, an area that is traditionally only to be regulated by Congress under the Commerce Clause of the US Constitution.
We’ll continue to monitor Big Sky’s case against the Idaho State Police. In the meantime, be very careful about how you ship hemp products.

Congress passed the Agricultural Improvement Act of 2018 (better known as the “Farm Bill”) in December 2018 which removed hemp from the federal Controlled Substances Act. This further resulted in hemp-based cannabidiol or “hemp-CBD” legalization. Despite their federally legal status, hemp-CBD products are now more in question than ever, different state and federal agencies have proposed drastically different regulations throughout every facet of the hemp-CBD industry.

If you are a hemp-CBD business, have interest in the industry or are interested in the state and future of hemp-CBD legality, please join us tomorrow, February 21, 2019 at noon (PST) for the latest installment in our lunchtime webinar series. This session is entitled “West Coast Hemp-CBD After the Farm Bill.”

In this hour-long session, Harris Bricken lawyers Daniel Shortt (Seattle, Washington), Nathalie Bougenies (Portland, Oregon), and Griffen Thorne (Los Angeles, California) will provide an in-depth look at changes in federal law and policy post Farm bill, as well as its impact on each of the three west coast states (Washington, Oregon, and California). Throughout the presentation our team will also discuss the status of laws and regulations in each state. Some of the topics we will cover include:

  • the future of hemp permitting;
  • Farm Bill implications for Internal Revenue Code section 280E;
  • banking for hemp-CBD businesses;
  • intellectual property for hemp-CBD businesses;
  • CBD in food, beverages, vape cartridges, oils, topicals, and other products; and
  • the Food and Drug Administration’s role in hemp-CBD.

With an industry that is projected to be worth $20 billion by 2022, interest in hemp is at in an all-time high. Make sure you don’t miss out on this valuable information! The webinar will be moderated by Hilary Bricken, with our panel of attorneys addressing audience questions throughtout the presentations. Please register for the event here! Should you have any further questions, please feel free to reach us at firm@harrisbricken.com.

hemp cbd transport arrestBack in September 2018, I wrote about how important it was for hemp businesses to carefully plan the routes they would use to ship hemp and hemp products, including hemp-derived CBD. This is because some states are hostile towards hemp and do not recognize a difference between hemp and marijuana.

My article was written prior to the passage of the Agricultural Improvement Act of 2018 (“2018 Farm Bill”), which expanded federal law to cover a wider range of commercial hemp activity and gave the US Department of Agriculture (“USDA”) regulatory authority over the cultivation of hemp. With regards to the interstate transfer of hemp, section 10114 (b) of the 2018 Farm Bill states the following:

TRANSPORTATION OF HEMP AND HEMP PRODUCTS.—No State or Indian Tribe shall prohibit the transportation or shipment of hemp or hemp products produced in accordance with subtitle G of the Agricultural Marketing Act of 1946 (as added by section 10113) through the State or the territory of the Indian Tribe, as applicable.

In plain english, this means that states and Tribes can’t prohibit hemp or hemp products from passing through their state or territory if the hemp or hemp products were produced in compliance with Section 10113 of the 2018 Farm Bill. On it’s face this provision may look like hemp businesses no longer need to fear state-level enforcement against hemp or hemp products entered into interstate commerce. However, that is not necessarily the case and businesses who hang their hat on section 10114 do so at their own risk.

The problem with relying on section 10114 is that it appears to be contingent on Section 10113 of the 2018 Farm Bill. Section 10113 of the 2018 Farm Bill covers hemp production (which you can read about here). In summary, Section 10113 indicates that the USDA will oversee hemp production at the federal level by approving of state and Tribal plans covering the cultivation of hemp. States and Tribes will submit plans to the USDA for approval. Section 297C of the 2018 Farm Bill requires that the USDA establish its own plan and and issue licenses to cover the cultivation of hemp in states or Tribal territories where that state or Tribe’s plan for hemp cultivation has not been approved.

The USDA has not yet approved of any state or Tribes plan. It also has not created its own plan under Section 297C. That means that any hemp legally cultivated in the US was done so under Section 7606 of the 2014 Farm Bill. The 2014 Farm Bill allows states to implement agricultural pilot programs to research the cultivation of industrial hemp. State departments of agriculture can issue licenses for the cultivation of hemp. Some states have interpreted this to cover commercial activity. However, the 2014 Farm Bill provides no explicit protection for the interstate transfer of industrial hemp.

Returning to the 2018 Farm Bill, Section 7605 (b) of the 2018 Farm Bill extends Section 7606 of the 2014 Farm Bill for one year after the USDA establishes a plan under 297C. That provision is not contained within Section 10113. Section 10114’s prohibition on interference with the interstate transfer of hemp does not reference the 2014 Farm Bill. Therefore, Section 10114’s protection against interference with the interstate shipment of hemp or hemp products may not currently apply to hemp or hemp products currently in transit because they cannot yet be cultivated “in accordance with” Section 10113.

On the other hand, the intent of Congress seems to indicate that hemp and hemp products should be commercially distributed throughout the country. The 2018 Farm Bill changes the Controlled Substance Act (“CSA”) by explicitly removing “hemp” from the definition of marijuana. It also defines hemp as an agricultural commodity that is eligible for federal crop insurance. Additionally, it allows the USDA to license the cultivation of hemp in a state or Tribal territory that does not have an approved plan. Additionally, an administrative law judge has held that products containing CBD derived from 2014 Farm Bill industrial hemp are allowed to be distributed in the US mail. Also, a federal judge in West Virginia recently lifted a restraining order that limited a hemp cultivator from transporting processed hemp to a Pennsylvania lab that would process it into CBD isolate, because “the Court has become increasingly doubtful of the Government’s case on the merits.” This is due, at least in part, to the 2018 Farm Bill’s removal of hemp from the CSA. (A copy of the order is provided by Hemp Industry Daily, which also wrote about the decision here.)

We’ll likely get additional insight into the question of whether companies can ship 2014 Farm Bill hemp across state lines as there is currently a lawsuit pending between Big Sky Scientific, LLC (“Big Sky”) and the Idaho State Police. I’ll provide some additional insight on this case later this week.

For now, the bottom line is that hemp businesses must still carefully consider their shipping plans for hemp and hemp products. Blind reliance on Section 10114 to protect against local law enforcement is ill advised. Until the 2018 Farm Bill is fully implemented by the USDA, states may seize hemp shipments. Hemp businesses should avoid transporting their products through states that show hostility towards hemp. If you have questions about other ways to mitigate the risk of state level enforcement, please contact our regulatory attorneys.