The U.S. Department of Agriculture’s Office of General Counsel recently issued a legal opinion addressing the regulation of hemp under the Agriculture Improvement Act of 2018 (2018 Farm Bill). The opinion states that once the Department issues regulations implementing the new law, "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."  As a result of this opinion, it appears that businesses will be able to transport hemp across state lines, even though some states have not legalized it.

2018 Farm Bill

In no uncertain terms, the 2018 Farm Bill fundamentally changed the way hemp is regulated in the United States.  The bill both authorized the production of hemp and removed hemp and hemp seeds from the Drug Enforcement Administration’s (DEA) schedule of Controlled Substances. Hemp is specifically defined in the 2018 Farm Bill to include any cannabis plant, or a derivative thereof, that contains not more than 0.3 percent delta-9 tetrahydrocannabinol (THC) on a dry-weight basis.

While hemp production was previously restricted to pilot programs, the 2018 Farm Bill allows the industrial hemp industry to truly take off.  It authorizes the transfer of hemp-derived products across state lines for commercial or other purposes. It also does not place any limitations on the sale, transport, or possession of hemp-derived products, provided that such products are produced in accordance with the law.

Under section 10113 of the 2018 Farm Bill, state departments of agriculture must consult with the state’s governor and chief law enforcement officer to establish a plan to license and regulate hemp, which must be submitted to the Secretary of U.S. Department of Agriculture. In states that elect not to establish hemp regulations, hemp cultivators will be subject to a federal oversight program.

U.S. Department of Agriculture  Legal Opinion

The Department of Agriculture’s legal opinion addresses issues related to the interstate transportation of hemp and who may obtain a license to produce hemp. Below are the four primary legal conclusions set forth in the USDA memo:

  • As of the enactment of the 2018 Farm Bill on December 20, 2018, hemp has been removed from schedule I of the Controlled Substances Act and is no longer a controlled substance.
  • After the Department 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 Department’s  
  • States and Indian tribes also may not prohibit the interstate transportation or shipment of hemp lawfully produced under the 2014 Farm Bill.
  • 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.

The Department of Agriculture’s legal opinion interpreting the 2018 Farm Bill emphasizes that hemp may be grown only (1) with a valid Department of Agriculture-issued license, (2) under a Department-approved, State or Tribal plan, or (3) under the 2014 Farm Bill industrial hemp pilot authority. It should also be noted that pilot authority will expire one year after the Department establishes a plan for issuing licenses pursuant to the 2018 Farm Bill.

The Department’s opinion also makes clear that the 2018 Farm Bill preserves the authority of States and Indian tribes to enact and enforce laws regulating the production of hemp that are more stringent than Federal law. Accordingly, while a State or an Indian tribe can’t block the shipment of hemp through that State or Tribal territory, it may continue to enforce State or Tribal laws prohibiting the growing of hemp in that State or Tribal territory.

Finally, the  Department’s legal opinion attempted to address confusion surrounding the inclusion of hemp-derived CBD in food products and dietary supplements.  Specifically, the Department’s opinion provides that  “It is also important to emphasize that 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.” The opinion further provides that the “USDA expects to issue regulations implementing new hemp production authorities in 2019.”

The attorneys of  Scarinci Hollenbeck Cannabis Law Practice group will continue to closely monitor legal developments impacting the growing hemp industry. We encourage current and prospective members of the New Jersey cannabis industry to check back regularly for updates.

If you have questions, please contact us

If you have any questions or if you would like to discuss the matter further, please contact me, Gregg Hilzer, or the Scarinci Hollenbeck attorney with whom you work, at 201-806-3364