United States: USDA Issues Guidance On Hemp Legalization Following The 2018 Farm Bill

Last Updated: June 4 2019
Article by Evelina J. Norwinski, Daphne O'Connor and Ryan D. White

Earlier this week, the General Counsel for the US Department of Agriculture (USDA) released a legal opinion to clarify certain provisions of the Agriculture Improvement Act of 2018, commonly referred to as the 2018 Farm Bill. The 2018 Farm Bill was enacted in December 2018 and legalized hemp, a non-psychoactive varietal of the cannabis plant. In the months that followed, it was evident that the 2018 Farm Bill raised more questions than it answered. Arnold & Porter previously examined the changes made by the 2018 Farm Bill and how state and local governments were reacting to the new federal laws.

Now, six months after the 2018 Farm Bill's enactment, USDA seeks to clarify four provisions of the law. Those hemp-related provisions include: Section 7605, which phases out the 2014 Farm Bill; Section 10113, allowing states and Indian tribes to regulate hemp or follow a federal plan for doing so; Section 10114, which prohibits states and tribes from interfering with the transportation or shipment of hemp in interstate commerce; and Section 12619, removing hemp from the Controlled Substances Act (CSA).

USDA's opinion identified four conclusions based on these provisions, each of which is explained below.

Conclusion 1:

As of the Enactment of the 2018 Farm Bill on December 20, 2018, Hemp Has Been Removed from Schedule I of the Controlled Substances Act and Is No Longer a Controlled Substance.

The 2018 Farm Bill amended the CSA in two ways, both of which took effect immediately upon enactment. First, Section 12619(a) amended the definition of "marijuana" in the CSA to exclude hemp.1 Second, Section 12619(b) amended Schedule I of the CSA to exclude the THC found in hemp from the definition of "tetrahydrocannabinols."2 THC, the psychoactive ingredient in marijuana, can exist in hemp, but only in a concentration of less than 0.3% by dry weight.

USDA takes the position that the changes made to the CSA by the 2018 Farm Bill are self-executing. The opinion identifies two challenges to that position but dispenses with both. The first is that regulations need to be published for the changes to take effect. While rulemaking may be the typical way to amend the CSA, Congress can also directly amend the schedules through statute, which it has done here.

A second and similar challenge is that the changes are not effective because they are not reflected in the Code of Federal Regulations. USDA explains that it is "axiomatic that statutes trump regulations." The Drug Enforcement Administration (DEA) does have rulemaking obligations related to updating and republishing the schedules, but those updates are not required for changes made by Congress to take effect. USDA referenced a similar situation in 2012 where DEA itself recognized that rulemaking is unnecessary for legislative changes to the CSA schedules to become effective.

Conclusion 2:

After the Department of Agriculture Publishes Regulations Implementing the Hemp Production Provisions of the 2018 Farm Bill Contained in Subtitle G of the Agricultural Marketing Act of 1946, States and Indian Tribes May Not Prohibit the Interstate Transportation or Shipment of Hemp Lawfully Produced Under a State or Tribal Plan or Under a License Issued Under the Departmental Plan.

Section 10114(b) of the 2018 Farm Bill provides that states and Indian tribes cannot interfere with the interstate shipment of hemp or hemp products that were "produced in accordance with subtitle G of the Agricultural Marketing Act of 1946 (as added by section 10113)." Subtitle G governs the growing of hemp and requires USDA approval of state or tribal plans as well as development of a federal plan for regulating the production of hemp where there is no approved state or tribal plan.

Citing the Supremacy Clause3 and preemption doctrines,4 USDA explains that Section 10114(b) effectively preempts any state law that would interfere with the interstate commerce of hemp. USDA reasoned that the 2018 Farm Bill meets the standards for "conflict preemption" because federal law prevails when compliance with both federal and state law is impossible, or in situations where state laws are an obstacle to the accomplishment and execution of Congressional objectives.5 Any prohibition on interstate shipment would be interfering with the objectives of the 2018 Farm Bill.

New regulations under subtitle G for growing hemp have yet to be implemented and only hemp "grown in accordance with subtitle G" enjoys the express interstate protections of section 10114(b). As noted below in Conclusion 3, however, USDA provides another way to meet the requirement of "grown in accordance with subtitle G" prior to the promulgation of new regulations. The opinion notes that the Secretary of Agriculture is responsible for issuing regulations and guidelines related to approving state and tribal regulatory plans and federal licenses under subtitle G. USDA believes that the regulations will likely be issued later in 2019.

Conclusion 3:

States and Indian Tribes May Not Prohibit the Interstate Transportation or Shipment of Hemp Lawfully Produced Under the Agricultural Act of 2014.

USDA addresses the question of whether, prior to the approval of a state hemp production plan under subtitle G, states and tribes can prohibit the interstate shipment of hemp lawfully produced under a 2014 Farm Bill state pilot program. The opinion finds the answer in § 297B(f) of the 2018 Farm Bill, which provides that hemp produced in a state or tribal territory that does not yet have a USDA approved plan is still legal if done in accordance with "other Federal laws." Because hemp is no longer controlled under the CSA and because the 2014 Farm Bill is still in effect,6 USDA concludes that hemp grown under a 2014 Farm Bill plan is deemed to have been grown in accordance with "other Federal laws." Further, because § 297B falls within subtitle G, hemp produced in accordance with other federal laws is also deemed to be grown in accordance with subtitle G, and states and tribes cannot interfere with its interstate transportation.

The position USDA takes is noteworthy because a federal magistrate judge reached the opposite conclusion earlier this year.7 The Idaho State Police seized a shipment of hemp that was sent from Oregon to Colorado. The judge found that, because the 2018 Farm Bill plans have yet to be implemented, the hemp could not have been produced "in accordance with subtitle G." USDA emphasizes that the ruling failed to consider the "other Federal laws" language. The case is currently on appeal to the Ninth Circuit.

USDA instead agrees with a district court in West Virginia that dismissed the government's case against a producer and allowed the interstate shipment of hemp products.8 Like the Idaho magistrate, the judge in West Virginia also failed to consider the "other Federal laws" language, but USDA recognizes that the conclusion reached in West Virginia is consistent with USDA's "interpretation that States cannot block the shipment of hemp, whether the hemp is produced under the 2014 Farm Bill or under a State, Tribal, or Departmental plan under the 2018 Farm Bill."

Conclusion 4:

The 2018 Farm Bill Places Restrictions on the Production of Hemp by Certain Felons.

USDA's final conclusion relates to a new restriction in the 2018 Farm Bill that did not exist in the 2014 version. An individual with a felony conviction related to a controlled substance is prohibited from participating in a program to produce hemp under subtitle G for a period of 10 years following the conviction. USDA explains that a narrow exception exists, however, for individuals with convictions who were already lawfully producing hemp under the 2014 Farm Bill. The opinion emphasizes that it is the responsibility of the state or tribe to determine eligibility.

Limits on USDA Authority

USDA concludes its opinion by recognizing the limits on its own authority. First, the opinion reiterates that states and tribes have the authority to regulate hemp production (but not interstate transportation) more stringently than the federal government. Second, the opinion recognizes that the USDA's authority under the 2018 Farm Bill does not affect the authority of the Secretary of Health and Human Services and the Commissioner of Food and Drugs to regulate hemp under existing laws. Thus, anyone involved in the hemp industry must also be aware of those regulations.

In addition, if a court were to reach a different conclusion on the issues addressed in the opinion, the court's ruling would prevail. As noted above, the issue of interstate transportation of hemp grown under the 2014 Farm Bill is pending before the Ninth Circuit.

Navigating Hemp Production and Sale Moving Forward

USDA's legal opinion helps clarify some of the questions raised by the 2018 Farm Bill, but many issues remain. For example, state legislatures are responding to the 2018 Farm Bill at their own pace and continue to take many different positions on hemp. This has resulted in a patchwork of state laws that are confusing for those who want to grow, process, and/or sell hemp and hemp products on a nationwide basis. Further, many states are in the process of updating their old laws prohibiting hemp, but these laws were not amended in time for the 2019 growing season. This may mean that businesses will import hemp in order to meet the increasing demand for hemp products. Although there are no longer any criminal prohibitions on importing hemp, the 2018 Farm Bill and the USDA opinion left open the issue of interstate transportation of imported hemp. This hemp likely is protected by other provisions of the 2018 Farm Bill, namely section 10114(a), which broadly protects interstate commerce of hemp.

We expect laws governing hemp to become more consistent and settled as the year progresses and states update their laws and the USDA promulgates regulations and approves state plans for growing hemp.

  1. 21 U.S.C. § 802(16)
  2. 21 U.S.C. § 812(c)(17).
  3.  U.S. Const. art. VI, cl. 2.

  4. Arizona v. United States, 567 U.S. 387 (2012).
  5. Id.
  6. Section 7605 of the 2018 Farm Bill delays the repeal of the 2014 Farm Bill's hemp pilot program authority until 12 months after the Secretary of Agriculture has implemented its plan under the 2018 Farm Bill.
  7. Big Sky Scientific LLC v. Idaho State Police, Case No. 19-CV-00040 (D. Idaho 2019).
  8. United States v. Mallory, Case No. 18-CV-1289 (S.D.W. Va. 2019).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions