HEMP :  AN AGRICULTURAL COMMODITY?

On Sept. 4, 2020, the USDA announced that it would reopen the comment period for the interim final rule on domestic hemp production for an additional 60 days.  Two particular regulations are at the center of this industry revolt — one that requires labs testing farmers’ hemp to be registered with the Drug Enforcement Administration (DEA) and one that would require disposal of hemp plants with non-compliant levels of THC to happen with law enforcement involved.  Despite the industry backlash, the new proposed regulations represent a significant step forward for the broad commercial normalization of hemp as an agricultural product.

When President Trump signed the Agricultural Improvement Act of 2018 into law two years ago, few people realized how this new law would speed the commercialization of hemp as an agricultural product.  Prior to 2014, state and federal law had never differentiated hemp from cannabis.  While hemp had previously been lawfully cultivated for thousands of years for a variety of uses, it had languished as a crop since the early 1900’s as a controlled substance that could not be lawfully cultivated.  In 2014, the hemp plant became the subject of intense interest when Congress enacted a farm bill defining hemp as the plant Cannabis sativa L. and any part of the plant with concentrations of THC no greater than .3 percent on a dry weight basis.  The new law authorized institutions of higher education and state departments of agriculture to license the cultivation of hemp as part of a pilot program when authorized by State law for research.

The 2018 Farm Bill paved the way for commercial hemp cultivation.  It removed hemp from the list of controlled substances—thereby federally decontrolling hemp production in all States and Native American Tribes–unless prohibited by state or tribal law.  It also prevented states from interfering in the interstate transport of hemp, including those states and tribes where hemp production and sales were prohibited.  As a result of the new law, the U.S. Department of Agriculture (“USDA”) began to offer crop insurance programs to hemp farmers, thereby reducing the risk to producers and providing ready access to capital.  It also provided assurances to the banking industry to convince them to develop guidance regarding deposits and lending to hemp operations.

The 2018 Farm Bill vested authority to cultivate hemp in the departments of agriculture for the various states, tribal governments, and the USDA.  Under the new law, states and tribes were required to submit to the USDA plans for cultivating hemp commercially, which included provisions for maintaining information about the land where hemp is cultivated, for measuring the levels of THC, for disposal of non-conforming plants (i.e., plants containing over .3 percent THC), and procedures to ensure compliance with these new rules.  All plans were required to be approved by the USDA.

While the 2018 Farm Bill removed hemp from the list of controlled substances, it did not broadly legalize the widespread distribution and use of hemp and its derived products.  The new law explicitly preserved the authority of the Food and Drug Administration (“FDA”) to regulate products that contain cannabis and cannabis-derived compounds.  The FDA retained the authority to issue regulations allowing the use of such ingredients in food and dietary supplements, because of their status as pharmaceutical ingredients.   The FDA treats such products as it does any other FDA-regulated products, regardless of whether the cannabis or cannabis-derived compounds are classified as hemp under the 2018 Farm Bill.

Under the Food, Drug, and Cosmetic Act (FD&C Act), any product intended to have a therapeutic or medical use, and any product (other than a food) intended to affect the structure or function of the body of humans or animals, is defined as a drug.  Cannabidiol (CBD), a compound derived from the cannabis plan, has not been approved as a drug by the FDA for the treatment of any disease or condition.   However, the FDA has approved one cannabis-derived and three cannabis-related drug products, which are only available with a prescription from a licensed healthcare provider.  There are no other FDA-approved drug products that contain CBD.

The FDA is aware that some firms are marketing CBD products to treat diseases or for other therapeutic uses, and has issued several warning letters to such firms.  The FDA is also aware that several states have either passed laws that remove state restrictions on the medical use of cannabis and its derivatives or are considering doing so.  To date, the FDA has not approved a marketing application for cannabis for the treatment of any disease or condition and thus has not determined that cannabis is safe and effective for any particular disease or condition.

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