Will USDA’s Rule Get Hemp Over the Hump? (Maybe Not Without a Little Help from FDA)

USDA published its much-anticipated interim final rule establishing a domestic hemp production program, as directed by the Agriculture Improvement Act of 2018 (a/k/a the Farm Bill).  The rule sets out the requirements for hemp production plans developed by States and Indian Tribes that choose to have primary authority over production of hemp within their jurisdiction.  The rule also sets out the USDA hemp production program requirements, which will apply in States and Tribal Nations that don’t have their own plans but choose to allow production of hemp within their jurisdiction.

Generally, all hemp producers will be subject to similar requirements, regardless of whether they are licensed by a State, Tribe, or USDA.  These include obtaining a license, submitting information on land areas under cultivation, securing appropriate sampling and testing for TCH content, disposing of plants containing excess levels of THC, participating in compliance audits, and maintaining appropriate records.  USDA has posted a webinar that provides a high-level overview of what producers can expect.  USDA is also maintaining web pages with resources for state departments of agriculture and tribal governments, hemp producers, and hemp testing labs.

Hemp producers and other stakeholders are encouraged to read the regulation and at least the first 12 pages of the preamble, in which USDA has embedded requests for comments on specific issues.  These include appropriateness of a 15-day sampling window prior to harvest, whether USDA should establish a fee-for-service laboratory approval process, whether labs should be required to have ISO 17025 accreditation, and what efforts should be considered as reasonable in determining whether a producer has committed a negligent violation.  Comments are due by December 30.

Readers with the time and inclination may also find it worthwhile to dive into the Regulatory Impact Analysis in the preamble, which starts with this statement: “The future of the hemp industry in the United States (U.S.) is anything but certain.”  The preamble acknowledges that U.S.-based hemp production recently has seen a “massive resurgence.”  Indeed, hemp acreage reportedly increased 8-fold from 2016 to 2018, and is projected to double in 2019.  However, the preamble states that “it remains unclear whether consumer demand will meet the supply.”  Producer interest is said to be “largely driven by the potential for high returns from sales of hemp flowers to be processed into CBD oil,” but products that contain CBD oil and are intended for human or animal use must still comply with whatever federal and state laws apply to those products – including the Federal Food, Drug, and Cosmetic Act and its implementing regulations.

In discussing projected growth in gross revenues and the potential benefits of its hemp program regulation, USDA pointedly states that, “if FDA does not provide clarity about their plans for future regulation of CBD, there will continue to be uncertainty and downward pressure on the CBD portion of the hemp market….  As a result, full realization of the benefits estimated here could be delayed pending regulatory certainty.”