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INSIDER Law

U.S. hemp production rule—on verge of taking effect—draws praise

Hemp Field 2019
By and large, many stakeholders are pleased with a final rule that takes effect soon governing the domestic production of hemp.

Final regulations governing the U.S. production of domestic hemp become effective March 22. Farmers and others affected by the development must now adhere to requirements widely considered a vast improvement over an interim final rule (IFR) published in October 2019.

The U.S. Department of Agriculture announced the massive final rule in January under then-President Donald Trump, but as part of a customary review of pending regulatory actions during a new administration, USDA took time to review the 301-page document following the inauguration of President Joe Biden.

“We’re really pleased that the final rule was such an incredible improvement over the interim final rule, and it really demonstrates both that the career staff at the USDA as well as the new Biden administration took into account all of the industry’s concerns,” said Jonathan Miller, general counsel to the U.S. Hemp Roundtable, in an interview.

But from the perspective of farmers, the final rule is far from perfect, suggested Kim Stuck, founder and CEO of Allay Consulting, which serves the cannabis and hemp industries.

“Always with regulation, there are things that are never perfect, and I’m hoping that in the future, things will be able to be revised and changed as needed,” she said in an interview.

Commenting on USDA's final rules, Stuck concluded, "We won some and lost some."

The comprehensive document includes regulations used by USDA to approve plans submitted by states and Indian tribes for domestic hemp production, as well as regulations for producers in states or territories of Indian tribes that don't have their own USDA-approved plans.

The domestic hemp production "program provides requirements for maintaining records about the land where hemp is produced, testing the levels of total delta-9 tetrahydrocannabinol, disposing of non-compliant plants, licensing hemp producers and ensuring compliance under the new program," USDA explained in the final rule.

Asked whether entities impacted by USDA’s final rule are prepared to comply with it, Miller observed states running hemp agricultural programs must determine “how to approach this planting season in a way that’s fair to farmers.”

Among those groups touting the rule: the National Association of State Departments of Agriculture (NASDA), which represents elected and appointed commissioners, secretaries and directors of the departments of agriculture in all fifty states and four U.S. territories.

NASDA “praises USDA’s work to finalize the Domestic Hemp Production Program final rule and chart a pathway for nationwide market development and interstate commerce to support this new industry,” NASDA CEO Barb Glenn, Ph.D., said in an emailed statement to Natural Products Insider. “The rule provides certainty for growers making planting decisions this spring that they will have a market to sell to, locally or elsewhere, come harvest time.”

Rick Trojan, president of the Hemp Industries Association (HIA), described the final rule as “a step in the right direction.”

Thanks to completion of the rule, “we now have some degree of certainty for a short period of time,” Trojan added in an interview, “and that allows businesses to plan [and] investors to invest. It opens up a lot of opportunities.”

Among the provisions in the final rule viewed as an improvement over the IFR: USDA increasing the threshold for a negligent violation from 0.5% to 1% THC. Hemp producers whose crop does not exceed 1% THC will not be found to have committed a negligent violation.

“Many times, you can’t control what a plant does,” Stuck said, noting environmental factors like sunlight and an especially hot summer can affect THC.

Industry isn’t thrilled with all the provisions in the final rule. For instance, a USDA-approved sampling agent or local, tribal, state or federal law enforcement agent must collect samples to test hemp for THC. Farmers don’t have the option of doing so themselves, although some commentators had proposed allowing hemp producers to gather their own samples.

“If there aren’t enough people to go out to these farms and take samples, then you might have to schedule that out months in advance,” said Stuck, who was a marijuana specialist for the city and county of Denver for a little over three years. “That date of sampling and testing is very important because of the THC level. If you’re a few days later than you wanted to be, that THC level could rise.”

Among industry’s other concerns: A requirement that labs testing hemp are registered with the DEA. Many stakeholders are opposed to the requirement since the federal bill (2018 Farm Bill) that legalized hemp removed it from the Controlled Substances Act (CSA) and jurisdiction of DEA. But THC exceeding 0.3% on a dry weight falls outside the definition of hemp and is technically considered marijuana.

“There are a few issues, such as the DEA registration of labs … that we still want to work out, but we got most of what we wanted,” Miller said. The final rule, he concluded, “will provide a whole lot more flexibility and certainty for farmers.”

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