The 2014 Farm Bill Extension: What Does it Mean for the Hemp Industry?

By Elliot Y. Choi, Michelle Bodian

Oct 20, 2020

The 2014 Farm Bill and its authorized state hemp research pilot programs were set to expire on October 31, 2020. Upon expiration, the USDA’s interim final rule (IFR) — and its unrealistic and unreasonable requirements — was set to take over. After October 31, the IFR provided states with two options related to hemp production:

  1. Adopt a state plan compliant with the IFR (and essentially codifying the unrealistic and unreasonable requirements) and obtain primary authority; or
  2. Defer authority to USDA and USDA will implement the IFR (and its unrealistic and unreasonable requirements).

Neither of these options provided states with the ability to address concerns with the requirements of the IFR. Concerned states — including New York, North Carolina, Rhode Island, and Colorado — did not find either option appealing and were left hoping that the 2014 Farm Bill would be extended. When that extension failed to materialize, these states had to make hard decisions for the 2021 growing season and some opted against adopting state plans and instead deferred regulatory oversight over hemp production to the USDA.

However, on October 1, the president signed into law HR 8319, the “Continuing Appropriations Act, 2021 and Other Extensions Act,” that, for the most part, provides a temporary budget to avoid a federal government shutdown. Overlooked by most in that bill was the following:

“SEC. 122. Section 7605(b) of the Agriculture Improvement Act of 2018 (7 U.S.C. 5940 note; Public Law 115–334) is amended by striking ‘the date that is 1 year after the date on which the Secretary establishes a plan under section 297C of the Agricultural Marketing Act of 1946’ and inserting ‘September 30, 2021.'”

Translated, the 2014 Farm Bill has been extended until September 30, 2021, and thus delays the implementation of the IFR. While this new law offers a reprieve from the IFR, what does this mean in practice? Where does this leave states for the 2021 growing season? In short, still scrambling, but now with more options.

The 2014 Farm Bill extension effectively groups states into four buckets:

  1. States with USDA approved plan only (no 2014 Farm Bill research program)
  2. States with USDA approved plan and 2014 Farm Bill research programs
  3. States with 2014 Farm Bill research programs only
  4. States without USDA approved plan and no 2014 Farm Bill research program

Vicente Sederberg LLP reached out to various state regulators to determine their plans in light of the 2014 Farm Bill extension, and summarized our findings below. The USDA has not yet published any guidance regarding the 2014 Farm Bill extension, which could alter the views noted below.

States with USDA Approved Plan Only (No 2014 Farm Bill Research Program)

These states have two options: 1) operate under their USDA approved plan; or 2) revoke their approved plan and defer authority over cultivation to USDA.

These states have expressed concerns that the 2014 Farm Bill extension creates an unlevel playing field since research pilot programs were subject to lighter requirements. States operating in this bucket may lobby for state law changes that will them to implement research programs under the 2014 Farm Bill and/or place additional requirements on those research programs.

States with USDA Approved Plans and 2014 Farm Bill Research Programs

These states have the same two options above, plus the option of operating under their 2014 Farm Bill research programs.

The consensus among these states is that they will strive to continue those research programs instead of operating under USDA approved plans. However, some states have expressed concern about shifting back from a research program. As the 2014 Farm Bill extension came as a last-minute reprieve, states had already begun the process of transition from a research program to a 2018 Farm Bill program. Some states, therefore, are hesitant to shift the regulatory requirements for their farmers again.

States with 2014 Farm Bill Research Programs Only

The options for these states are: 1) to continue their 2014 Farm Bill research program; 2) create and obtain approval from USDA of a state plan; or 3) defer regulatory authority to USDA for cultivation.

It is expected that these states will continue their 2014 Farm Bill research program to the extent resources are still available. Certain states that did not submit state plans for USDA approval may have also allocated resources away from their hemp research programs under the assumption that the USDA would take over, and especially in light of budget shortfalls created by the ongoing pandemic.

States without a USDA Approved Plan and No 2014 Farm Bill Research Program

The extension of the 2014 Farm Bill does not directly impact these states.

At such time as it is legal to cultivate hemp in those states, the state will need to either create and submit a plan to USDA for approval, defer authority to USDA to regulate cultivation, or operate a 2014 Farm Bill research program.

The Hemp Industry Has More Work to Do

The 2014 Farm Bill Extension is a positive development for the US hemp industry in that it allows certain states to continue research programs that are less burdensome than the current iteration of the IFR. However, the extension also injects additional complexity and practical considerations into an already complex and oftentimes confusing and inconsistent network of regulations. But most importantly, the extension provides hemp industry participants (including Vicente Sederberg) additional time to engage federal agencies and work through the issues and concerns with the IFR that hopefully results in a regulatory structure that is sensible and practical for the emerging hemp industry.

 

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