INDUSTRY INSIGHTS

Prohibition is over.
Kind of.

After decades of being treated like an illegal drug, industrial hemp was removed from the Controlled Substances Act (CSA) on December 20, 2018. 

Seven little words at the end of the 2018 Farm Bill “The term ‘marijuana’ does not include hemp”—amount to the most significant change to American drug policy since the CSA was enacted in 1971. For the first time, Congress has acknowledged that not all varieties of the plant cannabis sativa L. are intoxicating. Instead, the law now says, cannabis varieties with trace amounts of THC—no more than 0.3%—should be treated like any other crop.

This change unleashes enormous business opportunities. Hemp can be grown legally anywhere and sold anywhere in the United States. Interstate commerce is guaranteed. Entrepreneurs working with the plant will see banking and regulatory barriers fall away, just as new opportunities for crop insurance and loan acquisition become available. 

But are riches guaranteed for the newly legal hemp industry? Absolutely not. Big questions remain about how federal agencies will regulate hemp’s commercial applications. 

WHAT THE FARM BILL DOES:

• Removes the plant cannabis sativa L. from the Controlled Substances Act if it or a plant contains no more than 0.3% THC on a dry-weight basis. This applies to any and all parts of the plant.
• Tells the U.S Department of Agriculture (USDA) to come up with national hemp regulations “as expeditiously as practicable.”
• Leaves marijuana a Schedule 1 drug.
• Allows states, territories and Indian tribes to submit hemp-growing regulations plans to the USDA, with no deadline for doing so. The plans must include:
  • THC testing procedures, including inspections done at least annually.
  • Bookkeeping procedures to keep track of land approved for hemp cultivation.
  • Plans for “effective disposal” of hemp plants with too much THC.

• Gives the USDA the ability to approve or reject those cultivation regulations within 60 days.
• Gives the USDA one year to study the 42 existing hemp states’ progress with the plant and “determine the economic viability of the domestic production and sale of industrial hemp,” with the findings due to Congress.
• Bans hemp cultivation by people with drug felonies in the past 10 years.
• Guarantees that hemp and hemp products can be moved from state to state to state and imported and exported the same as any other crop

WHAT THE FARM BILL DOESN’T DO:

• Give states any guidelines about regulating hemp manufacturing or processing.
• Guarantee interstate commerce for products containing CBD, not just the molecule itself.
• Limit the U.S. Food and Drug Administration (FDA)’s authority to ban CBD from foods, drugs and cosmetics, which the agency has done.
• Explain whether the clause guaranteeing interstate commerce for “hemp products” affects the FDA’s ability to limit CBD use in foods, drugs and cosmetics.