Highway to Hemp: Life After Legalization

Golden State Government Relations
07.02.19 11:54 AM Comment(s)

Hemp is getting a green light.  This June, following months of speculation, the United States Department of Agriculture (USDA) issued a memorandum to clarify misgivings surrounding the crop after the 2018 Farm Bill was signed. Most notably, this memorandum specified hemp’s federal legal status, solidified the circumstances around interstate transport, and introduced boundaries for convicted felons looking to engage in the new industry.

In the months leading up to this announcement, various states made moves to either incorporate or sidestep the crop. In California, several jurisdictions issued temporary moratoriums, citing a need for a regulatory framework to provide guidance as they develop ordinances. For its part, the California Department of Agriculture (CDFA) released an Emergency Regulation, opening registration for all cities and unincorporated counties that did not issue a ban. 

Read below for highlights on the recent memorandum, and broader outlook at what has been and will be done to push the industry forward.

The Memorandum 

Below are the highlights from the USDA’s announcement. To read the full document, click here. 

Descheduling Hemp

One of the most important points illuminated by the memorandum was the USDA’s claim that hemp’s descheduling from the Controlled Substances List was “self-executing.” This means that once the Farm Bill was signed, hemp was removed from the list, becoming a federally legalized crop. This directly impacts states and jurisdictions that were not certain if regulations must first be in place for cultivators to put seeds in the ground. 

Interstate Transport For Hemp Produced Under the 2014 Farm Bill

This point caught the eye of farmers, manufacturers, and retailers alike. It claims that none of the fifty states or locations under Native American sovereignty can ban interstate transport of hemp and hemp derived products grown lawfully under the 2014 Farm Bill. This sets a standard for states that have recently taken legal action against recent shipment of hemp and its by-products due to the misconception that products grown under the 2014 Farm Bill needed to be held until regulations associated with the 2018 Farm Bill were implemented. 

Stalled Interstate Transport for Hemp Under the 2018 Farm Bill 

Interstate Transport for hemp and hemp byproducts cultivated under the 2018 Farm Bill will be free from persecution. However, this will only be the case after the federal regulating agencies propose and receive approval from the Office of Administrative Law (OAL) on the governing regulations. Once those regulations take effect, all interstate transport across states and Native American land is acceptable under federal law.

Eligibility of Convicted Felons

For its final point, the memorandum outlines the circumstances under which individuals who have been charged and convicted of a crime including a controlled substance in State or Federal Courts can engage with legal hemp. 

An individual in these circumstances faces a decade long restriction from producing hemp. However, a person that was convicted prior to the 2014 Farm Bill, who then began to legally grow once that Farm Bill was passed, will be exempt from ineligibility. 

What's Next? 

It is important to note that businesses transporting hemp or hemp derived products face potential retaliation if they are not licensed under the 2014 Farm Bill. However, at least in California, the CDFA’s Emergency Regulation means that cultivation, distribution, manufacturing, and sale within state barriers is possible for the 2019 harvest season. Still, there are other factors to consider before getting seeds to soil. 

Mainly, until the final regulations for hemp are implemented state and nationwide, it is difficult to determine what processes could be later considered noncompliant. Companies potentially face exorbitant fines or even lost licenses, simply because we do not yet have a framework in place in which they can operate. 

Once established, these regulations will govern production across the supply chain, monitoring storage, testing, and sale procedures, among other operations. These will serve as the foundation for jurisdictions to create legislative ordinances, which will likely also curb how and where hemp can be grown to reduce pollen drift (a single flower can generate about 350,000 grains which can spread up to 30 miles, contaminating different strains), and account for odor concerns. 

As with the cannabis industry, these federal and state regulations will go through public comment period, allowing businesses to respond with potential concerns before submitting the final proposed regulations for OAL consideration. Hemp is likely to face a learning curve as companies integrate the new regulations into their business models. However, this memorandum and the developing regulations prove we are getting closer by the day. 

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