Examining The U.S. Department Of Agriculture's Final Rule For Growing Hemp

This article By Robert Hoban was originally published on Forbes and appears here with permission.

As all Americans know, on January 20, 2021, Joseph Biden was sworn in as the 46th president of the United States. His inauguration came with a slew of nominees, various cabinet-level positions, and agency heads across the entire federal government. While new leadership and new appointments would bring new directions, the departing Trump Administration took one final stab at putting its fingerprints on hemp policy.

On January 15th, six days before the new president took office, the USDA published a final rule for Domestic Hemp Production closing the loop on a two-year process that began with the 2018 Farm Bill. This piece of legislation directed USDA to establish a national regulatory framework for hemp production, which first came in the form of the interim final rule published on October 31, 2019. The final rule published in January of 2021 builds upon and incorporates various modifications, provisions, and concerns raised during the public comment session based on lessons learned during the 2020 production year. Officially effective on March 22nd, American farmers now have final regulations for the production of industrial hemp in the United States.

While the USDA rules serve as a baseline unifying standard regarding state programs, various states are presently engaged in negotiations with the USDA for approval of their own industrial hemp farming programs.

States are allowed to enact their own programs based on the 2018 Farm Bill Provisions surrounding industrial hemp, but they must be approved by USDA. There were a number of states that were approved by USDA under the interim rules and the new rule does not change that. However, a number of other states have engaged in deep negotiations with the USDA and do not yet have their programs approved. Colorado is one of those states, and the clock is ticking.

The final rule expands upon a number of concepts, one of which involves negligent violations of the acceptable THC level that defines legal industrial hemp from illegal marijuana. Industrial hemp is defined at 0.3 percent THC or below. Under the interim final rule, a crop that tested above 0.3 percent THC faced significant repercussions from the Drug Enforcement Administration. 

The final rule published in January raises the negligence threshold from 0.5 percent THC to 1 percent THC. Further, it limits the maximum number of negligent violations producers can receive in a particular growing season to just one, a significant change - taking a far less Draconian approach toward the treatment of U.S. hemp growers. Under the interim rule, if a farmer tested at 0.6 percent he’d be subject to criminal repercussions.

The negligence threshold of 1 percent gives farmers wider protection while creating a more viable industrial hemp industry. The final rule also continues to maintain that DEA-registered laboratories are required to test all hemp produced in 2020 and possibly 2021. This puts an extra burden on those seeking compliance with DEA registration because one must seek out a more expensive form of testing the hemp. 

The final rule authorizes Native American tribes to move forward with their own hemp programs. This had been an unaddressed or ambiguous area, as tribal lands were not expressly designated as states under the law. This creates excellent opportunities for Native Americans to maintain jurisdiction over their industrial hemp production. That in turn should benefit the tribes tremendously from an agricultural and economic perspective. 

Despite the enactment of the final rule, the day the Biden administration assumed office it issued a memo asking agencies to freeze any rules not yet published in the Federal Register.  While the rule required close review by Biden Administration officials, the decision was made to keep the rules as they are despite being published by the Trump Administration in the 11th hour.

This is especially important because Biden's nominee to serve as the United States secretary of agriculture is Tom Vilsack. Under the Obama Administration, Vilasack served in this capacity and came under criticism for his ties to Monsanto and the perception that he didn't follow certain scientific concepts.

Vilsack’s past has raised some red flags about how the USDA will proceed generally and in particular as it relates to industrial hemp amidst all this regulatory movement and change. Keep in mind, all of this is happening as farmers finalize their plans for growing hemp in 2021, and this year may very well represent a significant shift toward hemp grain and fiber production, as opposed to the nearly singular focus we’ve seen on cannabinoids over the last five years.

The final rule will have a major impact on the growth and viability of the industrial hemp sector this year and beyond. In the backdrop of these regulations finally reaching a level of completion, Senator Rand Paul is moving forward with his Hemp Economic Mobilization Plan (HEMP) Act. If passed, the HEMP Act would have wide-reaching regulatory implications, and would likely direct USDA to re-evaluate the final rule. As we know, this could take years.  

Ultimately, 2021 is shaping up to be a fascinating year for the growing U.S. industrial hemp industry– from states bargaining for approval under the new rules to new leadership of the US Department of Agriculture to the DEA’s continued involvement in hemp law enforcement. Only time will tell the effectiveness of this official regulatory scheme for the production of industrial hemp by American farmers. While these rules may feel written in stone, change is constant in these regulatory contexts. Stay tuned.

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