On October 29, 2019, USDA released an interim final rule establishing the U.S. Domestic Hemp Production Program. The highly anticipated regulatory framework specifies the rules and regulations to produce hemp, as required by the 2018 Farm Bill. The interim rule includes, among other things, provisions for testing the levels of THC, maintaining information on the land where hemp is produced, disposing of plants not meeting necessary requirements, seed certification, and the interstate transportation of hemp.

U.S. Secretary of Agriculture Sonny Perdue commented in a video statement:

“We have had teams operating with all hands-on-deck to develop a regulatory framework that meets Congressional intent while seeking to provide a fair, consistent, and science-based process for states, tribes, and individual producers who want to participate in this program.”

Here are some key takeaways from the interim rule:

  • Pursuant to the 2018 Farm Bill, all hemp must have a THC level not exceeding 0.3 percent on a dry weight basis. Any cannabis exceeding the acceptable hemp THC level must be collected for destruction by a person authorized under the Controlled Substances Act (“CSA”) to handle marijuana, such as a DEA-registered reverse distributor, or a duly authorized Federal, State, or local law enforcement officer. The rule allows for leeway up to 0.5%, which would prevent farmers from being subject to prosecution but which would require the farmers to undertake follow-up compliance checks to maintain their licenses. They would still have to destroy their crops, however, a point likely to be of concern to many.
  • Notably absent is the identification of a specific test for THC testing. The rule requires that sampling and testing of hemp must come from the flower material within 15 days prior to an anticipated harvest. Samples must also be tested using post-decarboxylation or other similarly reliable analytical methods where the total THC concentration level reported accounts for the conversion of delta-9-tetrahydrocannabinolic acid (“THCA”) into THC. Accordingly, the total THC, which is derived from the sum of the THC and THCA content, must be determined and reported on a dry weight basis.

The lack of uniform, specific testing standards has been a source of confusion for the hemp industry and for retailers seeking to evaluate CBD products. Testing post-decarboxylation is also likely to be of concern to hemp growers given that it is understood to potentially increase the THC levels. We anticipate commentary from industry on these points as well as the 15-day prior to harvest testing period, which is short and can be difficult to predict.

Other test requirements, such as testing the flower only, are likely to be helpful to growers in some states but add testing for growers in other states, which mandate testing of other plant parts. In short, the state-by-state patchwork that currently characterizes the hemp industry will not be undone with these rules.

  • Testing must be conducted at DEA-compliant labs.       Given that the 2018 Farm Bill descheduled hemp, this is a head-scratcher for many and likely to be a point of discussion in many comments. The rationale, however, is that plants that exceed the 0.3% threshold are considered marijuana under the 2018 Farm Bill and, accordingly, still Schedule I controlled substances subject to destruction.
  • All information on hemp production sites must be collected for each producer covered by a State or Tribal plan, including a legal description of the land and geospatial location for each field, greenhouse, or other site where hemp is produced. Licensed producers must also report their hemp crop acreage to the USDA Farm Service Agency (“FSA”).
  • The interim rule does not include a seed certification program because of the varying reactions that seeds have in different geographical locations and growing conditions.
  • No State or Indian Tribe may prohibit the transportation or shipment of hemp produced in accordance with the interim rule and with section 7606 of the 2014 Farm Bill through the State or the territory of the Indian Tribe, as applicable. As we discussed here, application of the interstate commerce provision of the 2018 Farm Bill has been the subject of litigation already and the expectation is that implementation of USDA’s rules will bring this issue to a close.

The interim rule will become effective when it is published in the Federal Register and will then go through a 60-day public comment period. After reviewing and evaluating the comments, USDA will draft and publish a final rule within two years of the date of publication.

States and Indian Tribes that have already submitted a hemp program plan to USDA will have their plans reviewed after the effective date of the interim rule. USDA will have 60 days to review and approve submitted plans. All hemp produced outside of States and Tribes with approved plans must meet the requirements of the “USDA plan,” as detailed in the interim rule.

Love them or hate them, the draft rules are out. Interested parties should participate in the process by submitting comments before the December 30 deadline.