Coronavirus and Cannabis: Hemp Industry Updates

Mar 25, 2020

This VS Insight is dedicated to updates regarding the coronavirus and the hemp industry. For updates on other cannabis and coronavirus-related issues, see our main post on the subject, "Coronavirus and Cannabis: Monitoring the Impact."

Hemp regulations are in flux across the U.S. as officials at every level of government work to contain the new coronavirus (COVID-19). Vicente Sederberg is closely monitoring the situation, and we are communicating with regulators to understand how these local, state and federal responses may affect hemp business operators. We are committed to doing everything we can to keep our clients and the public updated as we learn of new developments, but please note this is an extremely fluid situation and there is a lot we do not know. This VS Insights post is for informational purposes only and not for the purpose of providing legal or tax advice. We strongly encourage you to contact an attorney if you are seeking advice regarding any specific legal or tax issue.

JUMP TO:    STATE HEMP UPDATES   |   ADDITIONAL RESOURCES


NATIONAL HEMP UPDATES

March 28, 2020

March 26, 2020

March 24, 2020

March 23, 2020

  • In their efforts to address the novel coronavirus and COVID-19, government and regulatory agencies have identified the healthcare services, pharmaceutical, and food supply industries as “essential businesses” or “critical infrastructure.” These businesses have a “special responsibility” to maintain normal work schedules and are therefore exempt from stay-at-home directives.

    • According to Guidance on the Essential Critical Infrastructure Workforce: Ensuring Community and National Resilience in COVID-19 Response, industries considered essential in the food and agriculture category include (Note: Dietary supplements qualify as “food” under the Federal Food, Drug, and Cosmetic Act):

      • Workers supporting groceries, pharmacies and other retail that sells food and beverage products

      • Food manufacturer employees and their supplier employees

      • Employees and firms supporting food, feed, and beverage distribution, including warehouse workers

      • Workers in food testing labs in private industries and in institutions of higher education

      • Workers who support the manufacture and distribution of forest products, including, but not limited to timber, paper, and other wood products

  • Advisory guidance such as this should be taken into consideration when determining if your company qualifies as essential critical infrastructure under The President’s Coronavirus Guidelines for America, as well as state and local recommendations.

  • FDA issued guidance to the industry regarding "Postmarketing Adverse Event Reporting for Medical Products and Dietary Supplements During a Pandemic" in light of the anticipated lessening of the FDA and industry workforce. 
    • During a pandemic, normal adverse event reporting processes should be maintained to the maximum extent possible.
    • Firms should develop and prepare to implement their continuity of operations plan (COOP) in the event they are not able to fulfill all adverse event reporting requirements because of pandemic-related high employee absenteeism.
    • FDA does not intend to object if, because of pandemic-related high employee absenteeism, certain required adverse event reports are not submitted to the FDA within the timeframes required by statute and regulation, provided that any delayed reports are submitted within six months of the restoration of adverse event reporting processes to their pre-pandemic state.

March 19, 2020

  • FDA held an update call which indicated that all food and agriculture infrastructure is deemed "essential" for national security under several national security laws and by homeland security. FDA also stressed there is no risk of transmission through food and that a confirmed infection at food production facility posed a greater risk to co-workers than to consumers of the food. FDA was not under the impression that food manufacturing facilities of any kind would be closed, and instructed businesses to contact FEMA if local health departments tried to shut down or restrict operations.

  • U.S. Secretary of Agriculture Sonny Perdue announced a partnership between the USDA and the U.S. Department of Labor (DOL) to help facilitate the identification of foreign and domestic workers that may be available and eligible to transfer to other U.S. agricultural sector employers to fulfill critical workforce needs within the U.S. under existing regulatory authority during the COVID-19 pandemic.

    • USDA and DOL have identified nearly 20,000 H-2A and H-2B certified positions that have expiring contracts in the coming weeks. There will be workers leaving these positions who could be available to transfer to a different employer’s labor certification. The data is available here.

March 18, 2020

  • The FDA hosted a webinar, Briefing for Foods Stakeholders on Coronavirus Disease 2019 (COVID-19), which explained changes in agency operations relating to COVID-19:

    • FDA is effectively stopping all non-critical inspections. The agency already stopped foreign inspections as of a couple of weeks ago. It is very important that all companies, at all stages of the supply chain, recognize that the FDA is not in the facilities, so they need to validate what they receive. If companies were previously relying on the fact that FDA is minding the store, they shouldn’t.

    • FDA suspended supplier verification onsite audits.

    • FDA appears to acknowledge the “essential” nature of food and healthcare products, so would expect these companies to continue to operate despite local and state "shelter-in-place" orders.

    • FDA provided a number of resources to help companies navigate this critical situation:

      • FDA posted FAQs for food safety and COVID-19. The FAQs and this webpage will be updated regularly. It is also posting information for all industries to the Resources for You page.

      • Companies experiencing logistical/supply chain issues should contact FEMA’s National Business Emergency Operations Center at nbeoc@fema.dhs.gov.

      • Food safety technical questions should be directed to the Food & Cosmetic Info Center.

March 17, 2020

  • United States Department of Agriculture (USDA) issued a press release and video stating that it remains committed to working closely with industry to fulfill its mission of ensuring the safety of the U.S. food supply and protecting agricultural health. 
    • The Animal Plant Health Inspection Service (APHIS) and Agricultural Marketing Service (AMS) continue to provide critical inspections and grading services, and issued a letter to stakeholders reassuring them that FSIS and AMS are rising to meet the challenges associated with COVID-19

March 11, 2020

  • President Trump instructed the Small Business Administration (SBA) to allot $50 billion in aid to small businesses via low-interest loans during the historic coronavirus (COVID-19) global pandemic, which would help small businesses stay afloat with current expenses, including payroll. The SBA issued an update, Coronavirus (COVID-19): Small Business Guidance & Loan Resources. While SBA loans are not available to marijuana businesses, certain hemp businesses are eligible. Eligibility may be determined on a case by case basis.

    • SBA did clarify their rules in February 2019 and incorporated policy changes issued in SBA Policy Notice 5000- 17057 “...consistent with the Agriculture Improvement Act of 2018, revised guidance regarding the eligibility of hemp-related businesses to state that a business that grows, produces, processes, distributes or sells products made from hemp (as defined in section 297A of the Agricultural Marketing Act of 1946) is eligible.”


STATE HEMP UPDATES

Theses state updates are specific to hemp. For state updates on medical and adult-use cannabis, click here.

COLORADO

  • On March 25, 2020, Governor Polis signed Executive Order D 2020-017 “Ordering Coloradans to Stay in Place Due to the Presence of COVID -19 in the State.” This order effective beginning 6:00 am on Thursday, March 26, 2020. The EO mandates that Coloradans stay at home except to perform tasks critical to their (or their family’s) health and safety and to go to or return from critical work at “critical businesses.” 

    • Hemp cultivation and manufacturing operations are “critical businesses” under the EO and can remain operational during the duration of the EO. However, businesses that remain open during the EO must take all steps possible to comply with social distancing requirements. 

  • On March 22, 2020, Governor Polis signed Executive Order D 2020 013 directing all of Colorado’s non-critical employers to reduce their in-person workforce by 50 percent, effective March 24 through April 10. The Order classifies hemp cultivation, manufacturing, and other critical hemp product supply chain operations as “critical infrastructure” that is exempt from the in-person workforce reduction. Certain hemp retail establishments, however, may be subject to the Order and must implement the in-person workforce reduction.

    • The state specifically designates the following as “critical infrastructure: “agriculture/farms…..food and plant cultivation including farming crops, livestock, food processing and manufacturing, animal feed and food products, rendering, commodity sales, and any other work critical to the operation of any component of the food supply chain….and any business that produces products critical or incidental to the processing, functioning, development, manufacture, or delivery of the above products.” 

  • The Colorado Dept. of Agriculture released an update on COVID-19 Temporarily Modified Operations, with specific details on the Plant Industry Division. According to the Department:

    • The division will continue providing phytosanitary inspection and certification service to customers. At this time, they encourage all customers to apply online for their registrations for hemp, pesticides private applicators, pesticide products, and others to help the division process them faster.

    • In order to protect the division's inspection staff and customers, they will evaluate conducting each inspection based on the potential level of exposure. However, the division will prioritize and implement all of its Mission Essential Functions and Critical Business Needs. Inspections that require entering large stores and/or exposure to multiple people, including nursery dealers, pesticide marketplace, seed sampling, Japanese beetle records, and applicator workshop monitoring, will be managed on a case-by-case basis. Most will continue as planned.

  • On March 19, Governor Jared Polis announced that Colorado small businesses impacted by COVID-19 can seek individual small business loans up to $2M as part of the Small Business Administration’s Economic Injury Disaster Loan program. Loans are available to some hemp businesses, but it is unclear which businesses will be accepted. Eligibility may be determined on a case by case basis.

  • The Colorado Department of Public Health & Environment (CDPHE) issued the following guidance to small business owners:

    • Employers should take steps to make it possible for employees to minimize close contact with large numbers of people when necessary

    • Make sure flex place options are available
    • Urge employees to stay home when they are sick and be flexible with sick leave benefits
    • Model and encourage everyday actions to limit the spread of illness

FLORIDA

  • As of March 19, 2020, at 10:00 AM ET, the Florida Department of Health (DOH) has not issued any specific guidance related to medical marijuana or hemp. The DOH’s website provides interim guidance for businesses and employers.

MASSACHUSETTS

  • On March 23, Governor Baker issued an emergency order ordering nonessential businesses and organizations to close their physical workspaces and facilities to customers, workers and the public.

    • In response to the spread of COVID-19 and the measures being taken to address it, MDAR has compiled a list of resources to keep our agricultural community informed and aware of relevant policies and best practices.

  • On March 13, John Lebeaux, Commissioner of the Massachusetts Dept. of Agricultural Resources (MDAR), issued Bulletin 2020-01, “Addressing COVID-19 (Coronavirus) Impacts and Guidance,” which provides direction to Massachusetts farmers, agricultural businesses, organizations and valued stakeholders.

NEW YORK

  • On March 25, a contact at the New York Department of Agriculture and Markets indicated that hemp is considered essential in New York, and therefore those businesses are currently exempt from any stay at home orders and other restrictions.

  • On March 16, Governor Andrew Cuomo issued an executive order saying he will exempt essential service industries, including shipping, media, warehousing, grocery and food production, pharmacies, healthcare providers, utilities, banks and related financial institutions, and other businesses essential to the supply chain. Updates from the New York Farm Bureau are available here.

  • Registered organizations (i.e., medical cannabis dispensaries) are now permitted to use hemp (grown under NY’s research program) to manufacture medical cannabis products. Registered organizations have been deemed essential, so this is one avenue by which hemp clients can still have ongoing operations if non-essential businesses get shut down.

  • The New York State Department of Agriculture and Markets, which regulates New York’s industrial hemp research pilot program, is providing COVID-19 related information here.

TEXAS

  • On March 24, a contact in Government Affairs with DSHS said they are not currently issuing any delays in implementing the Texas Hemp Program. Things may need to change, however, if the Department is not able to continue meeting internal deadlines and/or if there are issues with convening the May HHS Executive Council meeting.

  • The Texas Department of Agriculture (TDA) has not implemented any changes to the application process in light of COVID-19. A representative from the Texas Department of Agriculture confirmed that the hemp application process is proceeding normally at this time. TDA released a hemp orientation video to accompany the licensing application process. Watch it here

  • The Texas Department of State Health Services (DSHS) has not publicized any information regarding how COVID-19 may impact procedures for rulemaking; however, delays may be expected. We have reached out to our contacts at the agency and will follow-up with additional information as it is received.

  • The Agriculture Committees in both the Texas House and Texas Senate plan to hold interim charges regarding the rollout of the Texas Hemp Program, which charges are now delayed to a later date in light of the coronavirus.

ADDITIONAL HEMP RESOURCES