USDA Hemp Regulations: What Was Expected, Unexpected and Unanswered

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.... Read more
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. 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. Read less
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November 16, 2019
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Shawn Hauser for Vicente Sederberg LLP

October 31, 2019

  • How will law enforcement verify whether cannabis is marijuana or hemp?
  • 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... Read more
October 31, 2019

  • How will law enforcement verify whether cannabis is marijuana or hemp?
  • 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.
  • Is there sufficient access to DEA-registered testing facilities, and do those facilities have capacity to meet the demand for testing services?
  • Without federal seed certification, how do farmers ensure the seeds they buy won’t exceed 0.3% THC and will actually germinate?
  • 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. 

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Shawn Hauser for Vicente Sederberg LLP

October 31, 2019

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. 

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Bill Richmond

Domestic Hemp Production Program Chief
October 28, 2019

“[l]icenses may not be sold, assigned, transferred, pledged, or otherwise disposed of, alienated or encumbered.” (§ 990.22(b)(3))

“[a] license modification is required if there is any change to the information submitted in the application including, but not limited to, sale of a business, the production, handling, or storage... Read more

October 28, 2019

“[l]icenses may not be sold, assigned, transferred, pledged, or otherwise disposed of, alienated or encumbered.” (§ 990.22(b)(3))

“[a] license modification is required if there is any change to the information submitted in the application including, but not limited to, sale of a business, the production, handling, or storage of hemp in a new location, or a change in the key participants producing under a license.” (emphasis added, § 990.21(c))

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USDA Hemp Regulations: What Was Expected, Unexpected and Unanswered

2019/10/31 - Vicente Sederberg LLP