History
The 2018 Farm Bill, or Agriculture Improvement Act of 2018, was a huge turning point for the hemp industry in the United States. The bill established a hemp regulatory system under the US Department of Agriculture. For hemp farmers and the industry as a whole, this opened up opportunities for individuals to start growing industrial hemp to sell commercially. The regulations set in place are meant to oversee the cultivation, processing, and marketing of hemp products in the wake of CBD’s increasing popularity, along with other increasingly popular hemp items.
Under the Farm Bill, hemp is now eligible for federal crop assistance in times of need, and also allows hemp and hemp-derived products to cross state lines as long as the hemp was farmed legally under the USDA restrictions.
The 2018 Farm Bill also removed hemp and hemp seeds from the schedule of controlled substances, legalizing it federally. The Drug Enforcement Agency (DEA) had previously listed hemp along with marijuana as a schedule 1 narcotic. An important rule of the new hemp regulatory restrictions requires hemp to be analyzed and certified as having less than 0.3% total THC on a dry weight basis in the product. THC is the cannabinoid that holds all the psychoactive properties of cannabis, so by limiting this compound the intoxicating effects will also be stifled.
Current Testing Regulations
Because the Farm Bill legally restricts hemp THC values to less than 0.3%, hemp farmers must have their products analyzed by accredited laboratories to ensure those numbers are factual and that no products that could potentially cause intoxication are sent out to consumers. Since the Farm Bill was passed, farmers have been using local laboratories to run these analyses and produce Certificates of Analysis (COA) to prove their products follow the necessary guidelines.
Hemp farmers are also required to dispose of any product that tests higher than 0.3% THC. While the farmers specifically cultivate their crop to stay below this limit, there is a chance that weather conditions or other factors could affect the THC level in hemp, thereby creating hemp products that have an illegal level of THC. When that happens, the farm must properly dispose of the product to make sure it is not ingested. Currently farmers may use the following methods of disposal, which are considered legal and compliant by the United States Department of Agriculture (USDA):
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- Plowing Under – this method rotates the soil and buries the crop underneath.
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- Mulching or Composting – this involves cutting the crop and then blending it with manure or another biomass material and leaving it to decompose naturally.
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- Disking – named after the attachment used on the tractor, this method levels the field and destroys the crop, leaving it there to feed the soil below.
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- Bush Mower or Chopper – this process uses a commercial lawn mower to shred and mix the crop.
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- Deep Burial – fields would be trenched and the crop and surface soil are buried at least 12” underneath.
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- Burning – this process involves using a controlled fire to burn the field or a pile of crops.
Proposed Regulations
In October 2019 the USDA published an interim final rule (IFR) that upset the hemp industry; the new rule requires hemp producers to only use laboratory testing facilities that are registered with the U. S. Drug Enforcement Agency. The rule also requires hemp production facilities to dispose of non-compliant plants by using a DEA-registered reverse distributor or law enforcement rather than the methods they’d previously been using for disposal.
The hemp industry immediately cried out with widespread criticism of the new rule. The main concerns being the likelihood of bottlenecks causing dramatic delays as hemp producers from all over the country were forced to send their product samples to only a small number of approved laboratories. These DEA approved laboratories are often located in a different state than the hemp farm, sometimes as far as two states away. With specific deadlines for sample testing and a high risk of backlog at each laboratory, hemp farmers predicted a catastrophic result.
The potential risks included not only the delays and supply interruptions for current farms, but also made entering the industry more difficult in general. If entry is seen as too risky, fewer entrepreneurs and agricultural professionals will choose to enter the market, one that is potentially very lucrative for individual business owners and the country as a whole.
Currently there are only 47 laboratories in the United States registered with the DEA, with many states not having a registered testing facility at all. This would mean law enforcement agents would be responsible for moving these products over state lines within 15 days to get them to the DEA registered labs for testing.
Another concern caused by the new rule is in regards to the disposal limitations. Again, just like with the DEA-registered laboratories, using only the limited number of DEA reverse distributors or law enforcement will not only delay the disposal process, it also adds a substantial cost to the farmer and government entities.
With the entire industry crying out that the timing wasn’t right, the USDA decided to delay its new rule. Stating that they fully understood the potential problems that could come with running a high volume of samples out of a small number of laboratories, they decided to postpone this decision in order to allow more labs in more states to get registered with the DEA in anticipation of the booming industry and future regulation restrictions. In the coming year the DEA will encourage states to work with their laboratories to ensure they are able to get the proper DEA certification for the 2021 crop year.
The USDA also decided to delay the disposal restrictions, allowing farmers to continue using the previously approved on-farm methods that don’t require specially registered facilities or law enforcement. Farmers are still required to document and report their disposed plants by filling out a disposal form and submitting it to the USDA.
Going Forward
While the delay helps hemp farmers this year, there is no guarantee about what will happen next year or the year after that. The USDA has officially put a deadline on the delay of October 31, 2021 or until the final rule is published, whichever comes first. Without knowing what the final rule could entail or even when it will go into effect, hemp industry professionals are doing their best to plan their businesses around whatever regulations might be proposed.
This current iteration of hemp production is very new, after being considered illegal for decades. This means it’s going to take everyone involved an undetermined amount of time to work out how to regulate or restrict this product. This can be nerve-racking for those already inside the new hemp market, or those looking to enter. As with any new industry, if limitations present themselves it can be hard for a business to be successful.
The USDA has stated these steps are temporary while they work to draft a final rule and figure out a way for regular enforcement. And as such, they are planning to reach out again in the fall of 2020 and get more comments from those in the industry about plans for the upcoming year and input about the most recent production season.
While there are sure to be many changes to the industry going forward and the USDA is able to change the testing and sampling requirements as part of their agency power over the regulation of hemp, they are unable to change the other aspects of the rule, such as the 0.3% THC testing limit that came with the 2018 Farm Bill. The only way that number can be changed is by the U.S. Congress.
One thing is for sure, the federal government understands that Americans are interested in hemp products and want to keep consuming them, especially CBD. In a new industry that is already proving extremely popular, the regulators are struggling to keep up pace with the demand while trying to work out the best possible way to manage the industry safely and fairly. This will be a process that takes time and patience from those within the industry and those in the government who are trying to find a way to responsibly regulate it.