Turning Over a New Leaf: USDA Releases Interim Hemp Rule

On October 29, 2019 the U.S. Department of Agriculture (“USDA”) released its hotly anticipated interim rule establishing the Domestic Hemp Production Program (“DHPP”). The interim rule follows on the heels of the 2018 Farm Bill (“Farm Bill”) which permitted production of hemp and hemp-derived cannabidiol (“CBD”) products under certain circumstances.

The Farm Bill legalized hemp production as long as it was cultivated by approved licensees, pursuant to a state proposal approved by the USDA, and in accordance with state regulations. However, the Farm Bill lacked a clear regulatory framework forcing hemp cultivators to operate in a legal grey area and without clear guidance as to how to remain compliant. With establishment of the DHPP, cultivators now have a path towards ensuring their products satisfy federal and state requirements.

The DHPP requires any state-backed hemp plan to include methods for testing hemp to ensure it is below the legal limit for THC, the psychoactive compound of cannabis. Hemp is currently statutorily defined as cannabis with .3% or less THC, though the DHPP makes regulatory allowances for uncertainty in testing methods. The DHPP also permits hemp-derived CBD products to be manufactured, processed, and sold as long as they similarly contain .3% or less THC.

Cultivation plans must include a method for destroying non-compliant hemp and specify recordkeeping requirements for land on which hemp is produced. The rule additionally establishes a “fallback” federal plan for hemp producers in states that do not yet have their own approved hemp production plan. States are also no longer allowed to prohibit the interstate transport of hemp lawfully grown under the DHPP.

The USDA’s interim rule is expected to become effective later this week. States are now able to submit their proposals for hemp cultivation plans, which the USDA will have 60 days to review and approve. Businesses and individuals wishing to provide public comment may do so after the DHPP becomes an interim final rule and is published in the Federal Register.

The DHPP represents a major step forward for the burgeoning hemp industry. Multistate hemp and CBD businesses that have previously been required to comply with a vast array of complicated and sometimes conflicting state laws will finally receive clear federal guidance on how to ensure compliance. As hemp and CBD businesses continue to develop, the DHPP may ultimately become the bedrock of a more expansive federal regime and provide a pathway for continued legalization and advancement of the industry.