New Final Rule from USDA Relaxes Requirements for Hemp Farmers . . . for Now

Industry insiders are likely aware that the 2018 Farm Bill amended federal statute to effectively authorize the hemp industry at the federal level by removing cannabis testing below 0.3% THC from the definition of “marihuana,” and redefining it as hemp.  However, they might not be aware that the U.S. Department of Agriculture was tasked with creating and implementing rules to govern the newly authorized industry.  Specifically, the USDA was charged with “establish[ing] a national regulatory framework for hemp production in the U.S.” using rules that “flow from and are consistent with the underlying statute.”  So, where the rubber meets the road for those in the hemp industry, it is the USDA rules that govern.

To this point, the hemp industry has been operating under an “interim final rule” which was published by the USDA in October of 2019.  However, on January 15, 2021, the USDA announced that it had completed a “final rule” to govern the industry.  The final rule is the product of several public comment periods during which the USDA received approximately 5,900 comments from interested stakeholders.  The final rule is set to go into effect on March 22, 2021.

The proposed HEMP Act, introduced by Kentucky Senator Rand Paul last month, is aimed at addressing some of the same concerns that the USDA confronted when creating its final rule.  Where the HEMP Act is specifically designed to give relief to hemp industry participants by changing the underlying federal statute itself, the changes under the USDA’s final rule, although often helpful to hemp farmers, are the result of the regular rulemaking authority granted to it by the existing statute.

Notably, the final rule relaxes the threshold for THC content before a negligent violation necessarily occurs.  Previously, a THC level greater than 0.5% meant a presumed negligent violation of the permissible 0.3% THC for hemp.  The final rule raises that threshold to 1.0% THC before a high test is necessarily a negligent violation.   Additionally, the final rule permits the THC sampling of hemp plants to take place within 30 days, an extension from the 15-day requirement under the interim final rule.

Although hemp industry advocates have described the final rule as a definite improvement, points of contention remain.  For example, hemp farmers would prefer that testing be permitted at non-DEA-certified labs.  Although the DEA-certified lab requirement has not been enforced, the final rule is set to begin enforcement after December 31, 2022.  Contention also exists regarding whether sampling should be for all forms of THC (rather than only delta-9 THC), as well as which parts of the plant hemp farmers should be allowed to use for pre-harvest sampling.  For now, the final rule decides those issues in a manner more stringent than farmers prefer.

Finally, the publication of the final rule must be viewed against the backdrop of the changing presidential administration, and with it, a change in leadership at the USDA.  Tom Vilsack, who served as agricultural secretary under President Obama, is expected to fill the role again under President Biden, replacing Secretary Sonny Perdue.  It is certainly possible that changes at the top could result in still further policy changes from the current “final rule.”