Summary of Changes Introduced by the 2018 Farm Bill with Respect to Hemp in the United States
I. INTRODUCTION
The 2018 United States Farm Bill became law on December 20, 2018—and, while it generally preserves the existing farm and nutrition policies that were already in place, it also incorporates legislation that specifically addresses the production of hemp and derivative products. More precisely, as a result of this legislation, hemp is no longer a controlled substance. It is now an ordinary agricultural commodity regulated by the United States Department of Agriculture.[1]
II. FEDERAL REGULATION OF HEMP AND HEMP-DERIVED PRODUCTS
THE AGRICULTURAL MARKETING ACT OF 1946
Section 10113 of the 2018 U.S. Farm Bill amends the Agricultural Marketing Act of 1946 (AMA) by introducing a new part “Subtitle G―Hemp Production.”[2] This is where the federal government officially defines hemp:
(1) HEMP.―The term ‘hemp’ means the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.[3]
If a State or Tribal government desires to regulate the production of hemp, the department of agriculture or equivalent Tribal authority must submit four main items of information to the federal government. These requirements are relevant because some of this information will in turn be requested from each hemp producer. They are:
(1) Information about the land on which hemp is produced, including a legal description of the land, for a period of at least 3 years;
(2) A procedure for testing delta-9 tetrahydrocannabinol concentration levels using postdecarboxylation or similarly reliable methods;
(3) A procedure for the effective disposal of products that are produced in violation the rules; and
(4) A procedure to comply with violations.[4]
The penalties for violating federal hemp production rules are far less than what they used to be under the CSA. The AMA first lists the violations deemed to have occurred out of negligence, which include:
“(i) failing to provide a legal description of land on which the producer produces hemp;
“(ii) failing to obtain a license or other required authorization from the State department of agriculture or Tribal government, as applicable; or
“(iii) producing Cannabis sativa L. with a delta-9 tetrahydrocannabinol concentration of more than 0.3 percent on a dry weight basis.[5]
The AMA clearly states that a hemp producer who fell out of compliance out of negligence “shall not be subject to any criminal or civil enforcement action by the Federal Government or any State government, Tribal government, or local government other than the enforcement action authorized under the [corrective action plan described in the previous subsection].”[6] Therefore, negligent violations are, at least initially, only subject to corrective action, which requires: (1) a reasonable date by which the hemp producer will correct the negligent violation; and (2) periodic reporting on the hemp producer’s compliance for at least two years.
The penalty increases if a hemp producer repeatedly violates the AMA’s provisions three times in a five-year period. In that case, the infringer will be prohibited from producing hemp for 5 years beginning on the date of the third violation.
And, in the event the infringing hemp producer is deemed to have broken the law out of more than negligence, the State or Tribal government is required to report the offense to the U.S. Attorney General and the chief of local law enforcement. The AMA makes it clear that the corrective action measures available to negligent offenders do not apply in this situation, which means that the hemp producer may face criminal charges.
Next under violations, the AMA specifies that anyone who has been convicted of a felony related to controlled substances―either before, on, or after its enactment on December 20, 2018―is ineligible to produce hemp for ten years past the conviction date.
The last item on the topic of infractions is making a false statement about a material fact on the application to become a hemp producer. The AMA simply states that anyone who materially falsifies any information on the application cannot become a hemp producer in that state.[7]
Table 1. AMA Section 297B(e) Violations, At-a-Glance
| (1) IN GENERAL. | Violations can only be enforced as directed by this subsection of the AMA. |
| (2) NEGLIGENT VIOLATION. | (A) There are 3 general types of negligent violations: failing to describe the land for hemp production; failing to get a license to grow hemp; or growing plants with THC concentrations greater than 0.3% (in other words, growing marijuana). |
| (B) Corrective action – the hemp producer is required to: pick a date by which the violation will be corrected; and periodically report on compliance for at least 2 years. | |
| (C) Negligent violations are not subject to criminal enforcement. | |
| (D) A producer who violates the AMA hemp rules 3 times in a 5-year period cannot grow hemp for 5 years after the 3rd violation. | |
| (3) OTHER VIOLATIONS. | (A) Violations that are more than negligent must be reported to the federal government and the chief of the State or Tribal law enforcement. |
| (B) Anyone who has been convicted of a felony related to controlled substances cannot produce hemp for 10 years after the conviction date for that felony. | |
| (C) Anyone who lied on the hemp producer application about important facts cannot produce hemp in that State. |
The remaining sections of the AMA are less directly relevant to hemp growers, as they aim to guide the State or Tribal government on how to implement the above-mentioned federal regulations.[8]
INTERSTATE COMMERCE
Section 10114 of the U.S. Farm Bill removes all doubt that hemp and hemp products can now freely travel between the states and no State, Tribal, or local authority is permitted to interfere with its transport.
THE FOOD AND DRUG ADMINSTRATION
The Food and Drug Administration (FDA) inspects and regulates the food, dietary supplements and drugs in the United States. According to FDA Commissioner Scott Gottlieb, M.D., Congress explicitly preserved the FDA’s authority to regulate products containing cannabis or cannabis-derived compounds under the Federal Food, Drug, and Cosmetic Act (FD&C Act) and section 351 of the Public Health Service Act. The FDA will continue enforcing the law while also providing potential regulatory pathways for products containing cannabis and cannabis-derived compounds. The FDA will continue to treat products containing cannabis or cannabis-derived compounds as any other FDA-regulated products regardless of the source of the substance, including whether the substance is derived from a plant that is classified as hemp under the farm bill.[9]
As with any product marketed as a drug for human or animal use, a cannabis product (hemp-derived or otherwise) that advertises health-related or therapeutic claims must go through the FDA’s drug approval process for human or animal use before it is introduced into interstate commerce. Cannabis and cannabis-derived products claiming in their marketing and promotional materials that they’re intended for use in the diagnosis, cure, mitigation, treatment, or prevention of diseases (such as cancer, Alzheimer’s disease, psychiatric disorders and diabetes), are considered new drugs by the FDA. The sale of unapproved new drugs is a violation of the law.[10]
The FD&C Act prohibits food with added CBD or THC from entering interstate commerce. The Act also prohibits the marketing CBD and THC products, such as dietary supplements, from being sold without FDA approval. This is because both CBD and THC are active ingredients in FDA-approved drugs and were the subject of substantial clinical investigations before they were marketed as foods or dietary supplements.[11]
There are three exceptions to this rule – three hemp-derived foods that are CBD- and THC-free, that the FDA recognizes as safe and can be freely sold in the United States. These are: hemp seeds, hemp seed protein and hemp seed oil. Therefore, these products can be legally marketed in human foods without food additive approval, provided they comply with all other requirements and do not make disease treatment claims.[12]
INSURANCE
Hemp crops now qualify for federal crop insurance, a voluntary insurance program that guarantees partial payment for crops lost to catastrophic events. The Federal Crop Insurance Act, 7 U.S.C. § 1502 et seq., is amended to include hemp in the covered crops. In addition, the “viability and marketability” requirements for crop insurance, both for production and for research, may be waived at the discretion of the Federal Crop Insurance Corporation.[13]
III. CBD AND STATE REGULATIONS
While states regulate food alongside and in cooperation with the FDA, states are responsible for food safety within state borders while the FDA’s mandate is to regulate interstate food and drug safety. However, regardless of whether a state has taken a specific position on the issue, all states are obligated to refrain from enacting state food and drug laws that directly conflict with FDA regulations.
Colorado: Colorado’s House Bill 19-1295, which was signed into law in May 2018, modifies the Colorado Food and Drug Act to make explicit that food and drugs containing industrial hemp are not adulterated or misbranded under state law, under certain conditions.[14]
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Notes:
[1] The official text of the 2018 Farm Bill is available at https://www.congress.gov/bill/115th-congress/house-bill/2/text. See also https://www.cannabisbusinesstimes.com/article/2018-farm-bill-opportunities-in-hemp/.
[2] Id. §10113 of the 2018 Farm Bill adds “Subtitle G―Hemp Production” to the Agricultural Marketing Act of 1946 (AMA). The AMA authorizes the Secretary of Agriculture to implement programs for the production, transportation and sale of crops.
[3] AMA §297A. DEFINITIONS. For a direct link to the text of the AMA, as enacted on December 20, 2018, see https://www.agriculture.senate.gov/imo/media/doc/Agricultural%20Marketing%20Act%20Of%201946.pdf.
[4] AMA §297B. STATE AND TRIBAL PLANS., (a) Submission.
[5] AMA §297B. STATE AND TRIBAL PLANS., (e) Violations.
[6] Id.
[7] Id.
[8] See generally, AMA §§297C, D and E.
[9] https://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm628988.htm
[10] Id.
[11] Id.
[12] Id.
[13] https://www.cannabisbusinesstimes.com/article/2018-farm-bill-opportunities-in-hemp/
[14] https://www.natlawreview.com/article/will-hemp-derived-cbd-be-fully-legal-passage-2018-farm-bill-not-quite