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How To Have Your Say on the USDA’s New Hemp Rules

Nov 05, 2019

How To Have Your Say on the USDA’s New Hemp Rules

Last week, the US Department of Agriculture (USDA) released its draft of interim regulations for the American hemp industry.

The directives offer formal, federal guidelines for how hemp crops can be grown, harvested, tested, processed, and sold legally in the US, as well as guidance for business owners, lawmakers, and financial institutions on how to deal with the country’s newly legal hemp market.

“The industry has been waiting with bated breath for these,” said attorney Anita Sabine, who represents hemp, cannabis and CBD firms at the Manatt, Phelps & Phillips law firm in Los Angeles, to CNN Business. “They could not come soon enough.”

The proposed regulations were published Thursday in the Federal Register, and are available for public comment via Regulations.gov until December 30. As of midnight November 4, the USDA has received over 300 comments on the docket which includes the new interim rules for domestic hemp production.

 

How did hemp get here?

While hemp was federally legalized by the 2018 Farm Bill last year, the federal government provided no official guidance for the industry at that time.

Without proper guidance, the relationship between licensed hemp businesses and insurance providers became strained, as the latter continued to deny insurance coverage or close the bank accounts of companies involved in the industry. This happened despite the 2018 Farm Bill increasing protections for hemp farmers by writing the crop into the 1980 Federal Crop Insurance Act.

One such case in Maine ended with state’s governor penning a letter to USDA secretary Sonny Perdue, urging the department to approve and publish the interim regulations swiftly so that the lending and insurance industries could benefit from “long-needed clarification.”

 

What do the new regulations cover?

The new regulations will provide a useful reference point for states and Native American tribes to use in developing their own hemp production plans, which must be submitted to and approved by the USDA. For states and tribes that don’t wish to submit an individual plan, they may defer to the new USDA federal guidelines as the regulations for their respective industries.

The guidelines also rule that states cannot prohibit interstate transport of hemp material, ruling that states cannot it. The rules don’t explicitly address the exportation of hemp and hemp products, although the USDA has indicated that it may consider exports in the future.

In a lenient move, the USDA also says that it will not crack down on growers who produce plants with up to 0.5 percent THC (the legal limit is 0.3 percent), so long as they were trying in good faith to produce hemp. The offending crop will still have to be destroyed.

“USDA recognizes that hemp producers may take the necessary steps and precautions to produce hemp, such as using certified seed, using other seed that has reliably grown compliant plants in other parts of the country, or engaging in other best practices, yet still produce plants that exceed the acceptable hemp THC level,” the regulations state.

The rules also require hemp testing laboratories to use “post-decarboxylation or other similarly reliable analytical methods” where the total THC level reported will factor in the conversion of the acidic precursor tetrahydrocannabinolic acid (THCA) into THC. Such methods “include those using gas or liquid chromatography with detection.” Laboratories are also encouraged to include a “measurement of uncertainty,” or a margin of error, in reporting THC results.

As written, the rules also address issues to do with land use, disposal of non-compliant plants, inspection compliance, information sharing, and the intersection of USDA oversight and state regulations.

 

No CBD?

Notably absent from the USDA regulations is any guidance on the production and marketing of cannabidiol (CBD) products, which are commonly derived from hemp plants. CBD remains under the purview of the US Food and Drug Administration, which is currently still considering potential changes to its rules surround CBD use and marketing.

“We have this hemp CBD industry that's exploded,” attorney Anita Sabine also told CNN Business. “[Products can be] cultivated in State A, extracted in State B, added to a product in State C, finished in State D, and moved across state lines – all of this with no assurance to the consumers that the products have been tested to meet minimum standards."

The USDA's rules should help establish some of that baseline while additional FDA guidelines are awaited, Sabine added.

 

How to Have Your Say 

The guidelines will be in place for one year and are effective as of October 31 through November 1, 2021. The USDA has confirmed that comments received before December 30, 2019, will be taken into consideration for the final rule.

Comments are being welcomed from hemp growers and producers, as well as those involved in the wider hemp industry.

The full text of the draft rules can be viewed here, and comments can be submitted via the appropriate agency docket, which can be found here.

Further information on how to submit comments by post or by fax, as well as contact details for officials who can assist small businesses seeking guidance on complying with these new regulations, can all be found via the appropriate page on Regulations.gov

 

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