Reflections on the 2018 Farm Bill

By Michelle Bodian, Senior Associate Attorney and Caitlin Wightman, Law Clerk

Jul 17, 2019

Hemp-derived CBD products are everywhere and everyone is still confused about what’s legal...

Since the passage of the 2018 Farm Bill on December 20, 2018, much has changed in the world of hemp. No longer one of those "four-letter words," the non-intoxicating cousin of cannabis often used in textiles, beauty, cosmetics, and industrial products, was removed from the Controlled Substances Act (CSA) and is now regulated as an agricultural commodity by the United States Department of Agriculture (USDA).

Under U.S. federal law, and most state laws, hemp is defined as any part of the cannabis plant including seeds, derivatives, extracts, and cannabinoids with a tetrahydrocannabinol (THC) concentration of not more than 0.3% on a dry weight basis. That includes cannabidiol (CBD), which is one of the 104 cannabinoids derived from hemp.

Below is a recap of major hemp-related developments in the past seven months and an overview of some of the most important issues to keep an eye on as the legal hemp industry in the U.S. continues to evolve.

December 20, 2018: The 2018 Farm Bill is Signed into Law and Hemp is No Longer a Controlled Substance!

Nearly seven months ago, the Agriculture Improvement Act of 2018, commonly referred to as the 2018 Farm Bill, was signed into law. While it ended the prohibition on a plant that most other countries have regulated as an agricultural crop for decades- which is a HUGE step in the right direction - many complex legal issues and uncertainties remain. One thing is for certain, however: people are buying and selling hemp-derived products like never before.

The 2018 Farm Bill also:

  • Creates a legal path at the federal level for the commercial production and sale of hemp and hemp-derived products throughout the U.S.

  • Gives states and tribal authorities shared regulatory authority while still protecting interstate commerce by allowing states to limit or prohibit the sale of hemp or hemp-derived products in their own jurisdictions, but not prohibit the shipment or transportation of hemp or its products within their boundaries.

  • Excludes hemp from the definition of marijuana in the CSA.

  • Ensures that farmers who cultivate hemp are eligible for crop insurance and research grants. 

The Roles of the Federal Regulators

Regulating the complicated and ever-evolving hemp industry is a shared responsibility for a number of different entities.  Although much of the regulation will occur under state departments of agriculture, state departments of health, local boards of health, and other state and local agencies, the primary federal regulatory authorities are: 

  • United States Department of Agriculture : The USDA is the primary federal regulatory agency overseeing hemp production, though states, U.S. territories, and Indian tribes desiring to obtain (or retain) primary regulatory authority over hemp activities within their borders are allowed to do so after submitting a plan for regulation to the USDA and receiving its approval.

  • United States Food and Drug Administration (FDA): The FDA is responsible for ensuring public health and safety through regulation of food, dietary supplements, cosmetics, drugs, and other products- including any hemp product introduced into interstate commerce that meets the definition of an FDA-regulated article (e.g., food, dietary supplement, cosmetic, drug).  

The 2014 Farm Bill Still Controls… For Now

The 2014 Farm Bill’s limited hemp research authorizations will remain the primary federal law governing domestic hemp production until one year after the USDA establishes regulations governing hemp production in states without their own USDA-approved plans.

Unlike its 2018 successor, the 2014 Farm Bill limits hemp cultivation to participating higher education institutions or departments of agriculture in states who have adopted hemp pilot programs for research purposes, which includes market research about the commercial potential of hemp. Territories and Indian tribes are not eligible. The 2014 Farm Bill also does not provide a federal regulatory framework for hemp cultivation and research, which has resulted in the state laws governing pilot programs varying greatly. Not all states have a 2014 Farm Bill hemp agricultural pilot programs, and many state programs are very limited.

So Far, the USDA Has Refused to Approve State Plans but Indicated It Will Issue an Interim Final Rule in August 2019

The 2018 Farm Bill tasked the USDA with overseeing hemp production, and they are currently in the process of developing rules and regulations to govern this aspect of the industry. Notably, states, U.S. territories, and Indian tribes can also elect to have regulatory power over their individual hemp programs by submitting a regulatory plan for approval to the USDA. This individual plan can actually be more restrictive than the USDA’s regulations, as long as it complies with minimum federal standards.

Under the 2018 Farm Bill, the USDA has 60 days to complete its review of plans submitted by states, U.S. territories, or Indian tribes. To date, however, the USDA indicated that it will not approve any such plans until it has developed its own rules. This has not stopped a number of states and Indian tribes from submitting plans to the USDA. Interestingly, one Indian tribe that submitted such a plan, the Flandreau Santee Sioux Tribe in South Dakota, sued the USDA over the USDA’s refusal to review its plan.

The USDA recently revealed that prior to going through the notice-and-comment period, it will issue an Interim Final Rule (IFR) in August 2019. At this point, it is unclear whether the USDA will rely on the IFR to begin the process of approving state, U.S. territory, and Indian tribe plans.

FDA Says Current Law Prohibits the Sale of Consumable CBD Products

Over the past few years and particularly the last six months, CBD, which can be derived from hemp, has emerged as a popular ingredient additive for a wide variety of consumer products, including food. This popularity led the FDA to issue a statement on April 2, 2019, reiterating the agency’s long-standing position that pursuant to the Federal Food, Drug & Cosmetic Act (FFDCA) that “it is unlawful to introduce food containing added CBD. . . into interstate commerce, or to market CBD. . . products as dietary supplements.” This led to increased enforcement action at the federal, state and local levels. Notably, in that statement, the FDA also expressed its commitment to finding a regulatory pathway for such products and solicited input through a public hearing held on May 31, 2019, written public comment, and the formation of an internal working group.

Now that the written public comment period has closed, the FDA expressed that they are “expediting work to address the many questions about cannabidiol.” According to a statement by FDA Deputy Director Amy Abernethy, they plan to report on their progress around the end of Summer/early Fall 2019.

State Legislatures All Over the Country Are Passing Hemp Legislation

In 2019, legislation establishing new hemp programs was passed in states including Connecticut, Iowa, Louisiana, and Texas. Several other states, including Nevada, New Mexico, North Dakota, South Carolina, and West Virginia, passed legislation expanding existing hemp programs. As of the date of this post, all but four states allow for the cultivation of hemp for commercial, research or pilot programs, and only seven states still have state laws criminalizing the possession of hemp or hemp-derived products.

The USDA Gives Interstate Commerce the Greenlight under the 2018 Farm Bill

On May 29, 2019, the USDA released a legal opinion confirming that once it passes regulations implementing the 2018 Farm Bill, states and Indian tribes will not be allowed to 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. This opinion seems to resolve what was a major issue under the 2014 Farm Bill, where hemp product being shipped through certain states (including Oklahoma and Idaho) and land controlled by Indian tribes was regularly at risk of being seized by law enforcement in that jurisdiction.

The TSA Takes CBD Off the No-Fly List… Sort Of

In the spring of 2019, the Transportation Security Administration (TSA) updated its “What Can I Bring?” FAQs on its website to address the issue of flying with hemp-derived products by making the following distinctions:

  • Cannot be brought in carry-on or checked bags: Marijuana and cannabis-infused products, including some CBD oil, that are illegal under federal law

  • Can be brought in carry-on or checked bags with special instructions: Products that contain no more than 0.3 percent THC on a dry weight basis or that are approved by the FDA

That latter distinction creates an issue for travelers, as most hemp-derived consumable CBD products are not compliant or approved by the FDA.

What Else Are We Waiting For?

While much progress has been made over the past six months, several major items still need to be addressed in the months and years to come, including:

  • Federal guidance around the testing, sampling, and interstate commerce of hemp and hemp-derived products

  • FDA guidance on the sale of food, supplements, drugs, and cosmetics containing CBD

  • USDA’s issuance of its IFR in August 2019, and ultimately its final regulations sometime thereafter

  • Clarification about what the USDA’s approval process will look like for states, U.S. territories and Indian tribes submitting plans

  • How states, Indian tribes, and territories can submit hemp plans and obtain USDA approval to have primary regulatory authority

  • Types of research grants and other benefits that will be made available to farmers

  • Whether the states without a hemp plan will get involved in the industry (Idaho, Mississippi, Ohio, South Dakota)