On October 29, 2019, the United States Department of Agriculture (the "USDA") released interim rules for the Establishment of a Hemp Production Program that went into effect on October 31, 2019.

As a reminder, the Rules are a result of the enactment of the 2018 Farm Bill, which, among other things, deregulated hemp as a Schedule 1 controlled substance under the Controlled Substances Act (the "CSA") and directed the USDA to promulgate rules for the production of hemp. The Rules are interim rules, which means that they are not final, but are effective as of the date published to the Federal Register, October 31, 2019. The following highlights some of the key takeaways.

(A) STATE AND TRIBAL PLANS: States and Tribes desiring to have primary authority over the production of hemp may submit plans for approval to the USDA. Plans must be approved before their implementation and must, at a minimum, meet the standards and requirements under the Rules. Plans submitted for approval, among other requirements, must contain the following:

  1. Information Collection. Plans must provide a process for collecting, maintaining, and reporting certain information regarding the land used for production and the producers licensed. Information required for collection must be collected for each producer and such information must be retained for three years. Licensed producers are also required to report acreage and provide their issued license or authorization number to the USDA.
  2. Sampling and Testing. Plans must provide for sampling and testing procedures to ensure hemp does not exceed allowable THC levels. Among other requirements, representative samples must be physically collected and delivered to a DEA-registered laboratory using reliable THC level testing methodology. Within 15 days prior to anticipated harvest, authorized persons must collect samples from the flower for THC concentration testing. Harvest cannot occur before such samples are collected. Any hemp testing above 0.3% THC is non-compliant and must be reported to the USDA. The Rules also establish THC testing requirements and standards appearing to require a total THC standard, rather than delta-9 only:
  3. "A State or Tribal plan must include a procedure for testing that is able to accurately identify whether the sample contains a delta-9 tetrahydrocannabinol content concentration level that exceeds the acceptable hemp THC level. The procedure must include a validated testing methodology that uses postdecarboxylation or other similarly reliable methods. The testing methodology must consider the potential conversion of delta-9 tetrahydrocannabinolic acid (THC-A) in hemp into THC and the test result measures total available THC derived from the sum of the THC and THC-A content. Testing methodologies meeting the requirements of this paragraph (a)(3) include, but are not limited to, gas or liquid chromatography with detection. The total THC concentration level shall be determined and reported on a dry weight basis."
  4. Disposal. Plans must provide for effective disposal procedures for hemp exceeding THC limits. Disposal procedure must be in accordance with the CSA and DEA regulations because such hemp material exceeding THC limits is considered marijuana under federal law. As a result, disposal procedures must require that hemp exceeding THC limits must be collected and destroyed by personnel authorized under the CSA to handle marijuana.
  5. Compliance Procedures. First, plans must consist of procedures to ensure that hemp is produced in compliance with USDA and State or Tribe regulations. At a minimum, plans must include annual inspections, random sampling, and procedures for handling violations. Second, while States and Tribes have some flexibility in enforcing their approved plans, all plans must include procedures for identifying and responding to negligent acts, failing to provide legal land description, and producing hemp with higher THC concentration. Third, all plans must provide provisions regarding the mental state of the violators (i.e. acting with intent, knowledge, or recklessness). Fourth, plans must provide that States and Tribes perform criminal background checks on all applicants, and that persons convicted of a felony related to a controlled substance are prohibited from participating for 10 years following such conviction.
  6. Certification of Resources. States and Tribes must also certify that they have the resources and personnel to carry out and enforce such requirements and procedures.

States will submit their plans to the USDA for approval. The USDA will review plans within 60 days. Plans that do not meet USDA minimum requirements will be notified in writing of their rejections. If plans are rejected, States or Tribes may re-submit an amended plan for review or request reconsideration through the appeal process.

(B) USDA LICENSES: Producers in States or Tribes without plans, or in States or Tribes where plans are not approved, may apply for a USDA license to produce hemp, so long as such State or Tribe "does not prohibit the production of hemp." The USDA will not begin accepting USDA license applications until 30 days after the Rules are published. This is to allow states to first submit their plans. USDA licenses are valid for three years and, among others, have similar compliance and reporting requirements as required by State and Tribal plans.

The 161-page publication of the Rules is comprehensive and includes several other requirements in addition to those discussed above. Notably, the Rules identify areas that are not covered by the Rules such as seed certification, and expressly states that the Rules prohibit States or Tribes from interfering with transportation of lawfully produced hemp and hemp products. Further, the Rules also state that "the 2018 Farm Bill explicitly preserved the authority of the U.S. Food and Drug Administration ("FDA") to regulate hemp products under the Federal Food, Drug, and Cosmetic Act [...]."

The public will have 60 days to comment on these Rules. Following this 60-day comment period, the USDA will work on final rules, which may take as long as two years to produce. The deadline to submit comments is December 30, 2019. Comments can be submitted electronically to the Federal eRulemaking portal, faxed to Fax: (202) 720-8938, or filed with the docket clerk at: Marketing Order and Agreement Division, Specialty Crops Program, AMS, USDA, 1400 Independence Avenue SW, STOP 0237, Washington, DC 20250-0237.

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.