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Hemp Field 2019

USDA: Farm Bill-compliant hemp protected in interstate commerce

USDA's legal opinion is at odds with a federal court decision currently on appeal related to hemp confiscated in Idaho from a commercial truck driver.

USDA General Counsel Stephen A. Vaden concluded in a May 28 legal opinion that “states and Indian tribes may not prohibit the interstate transportation or shipment of hemp lawfully produced under the 2014 Farm Bill.”

The legal opinion is at odds with a federal court decision currently on appeal related to hemp confiscated in Idaho from a commercial truck driver. Idaho authorities seized hemp grown in Oregon under a program reportedly developed under the 2014 Farm Bill and destined for Colorado.

“This [opinion] should alleviate some of the concerns and risk around moving hemp through states that have taken a restrictive approach to hemp, like Idaho and Ohio,” said Rend Al-Mondhiry, senior counsel with Amin Talati Wasserman LLP, in an email.

National Hemp Association Chairman Geoff Whaling said USDA’s opinion should clear up legal matters involving three out-of-state drivers arrested in Ada County, Idaho. One of those drivers was hauling nearly 7,000 pounds of hemp bound for Colorado.

“I’ve been back and forth with their offices,” Whaling said in a phone interview.

Vaden wrote a 14-page legal opinion on certain provisions of the Agricultural Improvement Act of 2018, otherwise known as the 2018 Farm Bill, which removed hemp from the Controlled Substances Act (CSA) and designated the crop as an agricultural commodity subject to USDA’s authority.

The law directed USDA to issue regulations to implement a program for the commercial production of hemp. The agency in February announced plans to promulgate regulations in fall 2019.

Under the 2018 Farm Bill, states and Indian tribes have the right to impose restrictions on hemp within their jurisdictions. However, they cannot prohibit the interstate shipment or transportation of the crop produced under the law.

But in a joint statement released May 22 before USDA published its legal opinion, Idaho authorities suggested they are free to seize hemp in the state because no regulations have been issued yet under the 2018 Farm Bill.

Idaho state law doesn’t distinguish between marijuana and hemp with any amount of THC, the psychoactive compound responsible for the "high" from using marijuana. 

“The 2018 Farm Bill's intent of allowing the interstate transportation of hemp will only be realized once there is a regulatory system in place,” the Idaho State Police and Ada County Prosecuting Attorney’s Office stated. “As of this date, that system has not been developed in any state— including Idaho—and is therefore not currently in effect. As a consequence, hemp is not legal in Idaho.”

The 2014 Farm Bill legalized the growth or cultivation of industrial hemp under certain conditions, but opinions have differed whether the law authorized full-scale commercial activities. In a brief filed with the U.S. Court of Appeals for the Ninth Circuit, Idaho authorities argued the 2014 Farm Bill only applies to hemp produced for purposes of research and not for purposes of commercial activity.

USDA's legal opinion offers support to Big Sky Scientific LLC in its appeals court fight with Idaho authorities over their seizure of hemp bound for Colorado. A Delaware corporation based in Aurora, Colorado, Big Sky sells cannabidiol (CBD) powder to manufacturers for use in consumer products.

The Idaho State Police and Ada County Prosecuting Attorney’s Office didn’t comment on USDA’s legal opinion in response to emailed requests for this article.

Jonathan Miller is general counsel to the U.S. Hemp Roundtable, a coalition of hemp companies.

"While states have the right to prohibit the cultivation of hemp within their borders, according to the USDA’s recent legal opinion, state and local law enforcement officials may not interfere with the interstate transportation of hemp,” Miller said in an email.

That principle applies whether the “hemp was grown in a 2014 Farm Bill-authorized pilot program, or in a future 2018 Farm Bill-authorized state hemp program,” he added.

USDA’s legal opinion, sources said, also is significant and helpful to the hemp industry in other ways.

Most importantly, Al-Mondhiry noted, Vaden recognized “the ‘self-executing’ nature of the provision in the 2018 Farm Bill that removes hemp (and the THC therein) from the CSA” without the need for a rulemaking or action by the Drug Enforcement Administration (DEA).

Asked whether USDA’s legal opinion would give further comfort to financial institutions to conduct business with the hemp industry, Whalen responded, “Absolutely.”

“I mean if it doesn’t, Stephen Vaden has offered to me that if we learn of any banks or institutions who are still denying services, that we need to gather the facts behind that denial and present them to him, and he will speak to the chief counsel at Treasury [Department] to try and rectify those situations,” Whalen said.

In April, Sens. Mitch McConnell (R-Kentucky) and Ron Wyden (D-Oregon) requested that four regulatory bodies provide guidance to institutions under their jurisdictions to alleviate any concerns over providing financial services to the hemp industry.

“Legal hemp businesses should be treated just like any other businesses and not discriminated against,” McConnell and Wyden wrote in a letter to Jelena McWilliams, the chairwoman of the Federal Deposit Insurance Corp. (FDIC). “We believe clarification from the FDIC on this front would help ensure this legal industry can compete on a level playing field.”

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