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New Congressional Farm Bill Legalizes Some Marijuana

[Updated 12/21 10:45 am: As expected, President Trump signed the Farm Bill into law on Dec. 20. The Commissioner of the FDA also issued a notable statement on the Bill (h/t to Doug Berman). The Commissioner emphasizes the points I make below regarding the ongoing limitations imposed by the FDCA on the use of CBD in food / drug products. The full statement can be found here.]

Congress has just passed the 2018 Farm Bill, which President Trump is expected to sign soon. The Farm Bill includes some important changes to federal law governing marijuana. Marijuana Moment has compiled the relevant provisions into a relatively concise document (the entire bill is roughly 900 pages), which can be found here.

Unfortunately, even the Cliff Notes version of the Farm Bill is difficult to follow. Hence, in this post, I’ll summarize some of the key changes wrought by the Farm Bill and discuss their implications for marijuana law.

1) The bill legalizes some “marijuana” by narrowing the definition of marijuana under federal law.

As discussed in my book (Chapter 2), the Controlled Substances Act (CSA) adopts a broad definition of marijuana. To simplify somewhat, under the CSA, marijuana includes the buds, leaves, and germinating seeds of the cannabis plant, along with substances extracted from those parts of the plant. However, marijuana does not include the stalks and non-germinating seeds of the cannabis plant, or substances extracted from those parts.

Importantly, cannabinoids like THC or CBD play no role in the CSA’s definition of marijuana. The bud of a cannabis plant is still marijuana, even if it contains no THC. Conversely, the stalk of the same cannabis plant is not marijuana, even if it does contain THC. In similar fashion, CBD extracted from the bud of a cannabis plant is marijuana, but CBD extracted from the stalk of the same plant is not. (See my book, pages 21-31, and Is CBD Legal Under Federal Law?, for more in-depth discussion of these points.)

The 2018 Farm Bill changes the definition of marijuana in a critical way—even though, interestingly, it never mentions “marijuana” by name. The Bill (implicitly) declares that the buds, leaves, and germinating seeds of a cannabis plant and the substances extracted therefrom are no longer considered “marijuana”, as long as they contain very little THC. The Farm Bill does this by reclassifying such materials as “hemp.” Here’s the relevant language from the Bill:

“The term ‘hemp’ means the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol [THC] concentration of not more than 0.3 percent on a dry weight basis.”

Farm Bill, Section 10113 (page 429).

The implications of this change are clear: Cannabis plants and any THC or CBD extracted from those plants are no longer considered marijuana – and thus, no longer subject to the CSA – if they do not exceed the .3% THC (once dried) concentration. In other words, the possession of these items is no longer a crime under federal law.

2) Hemp (née, marijuana) will still be subject to regulations.

While the Farm Bill removes hemp (née, marijuana) from the purview of the CSA, it subjects hemp to regulations (Plans) still to be written. Those Plans will be drafted either by the states or by the federal Department of Agriculture.

State Plan. The Farm Bill empowers states to assume primary responsibility for regulating hemp. (The Bill also empowers tribes to do the same, but for ease of exposition, I’ll only discuss states here.) To exercise this option, a state must submit a regulatory plan to the Secretary of Agriculture. The State Plan must satisfy some conditions enumerated in the Farm Bill. In particular, the state must:

a) Track where hemp is being produced in the state
b) Test THC levels in hemp
c) Provide for the disposal of plants and products derived from those plants that are in violation of the Farm Bill (more on this below)
d) Conduct random inspections of grow sites
e) Devote resources to the enforcement of the State Plan
f) Share information on hemp producers with federal law enforcement

Farm Bill, Section 10113 (pp. 429-432)

The Farm Bill also gives states the option of banning hemp outright, if they so choose. This, at least, is how I read the Bill’s preemption provision, which spares state laws that are “more stringent” than federal law. See Farm Bill, Section 10113 (page 430); see also id. (page 432) (seemingly acknowledging that the “production of hemp” could be “prohibited by the State”).

Federal Plan. In the alternative, that is, if state does not submit a State Plan or ban hemp altogether, hemp producers would be governed by federal regulations. These regulations will be promulgated by the federal Department of Agriculture. The Federal Plan must meet the same criteria set forth above for State Plans (e.g., it must track where hemp is being produced, etc.); it must also provide for the licensing of hemp producers.

I suspect states would prefer to assume primary responsibility for the regulation of hemp, but it remains to be seen how many will actually get on the ball and submit acceptable State Plans.

3) The Farm Bill’s impact on the market for CBD products will be somewhat limited.

Much of the excitement over the Farm Bill stems from its potential impact on the market for CBD products. Consumer demand for CBD already exceeds demand for other hemp-related products (often called industrial hemp), like hemp-based textiles. But while the Farm Bill shields hemp-derived CBD from the coverage of the CSA – thereby removing one market obstacle, it does not shield hemp-derived CBD from other federal laws that could continue to limit sales of CBD infused products.

For example, the Farm Bill expressly states that “Nothing in this subtitle shall affect or modify . . . the Federal Food, Drug, and Cosmetic Act [(FCDA)].” Farm Bill, Section 10113 (page 434). The Food and Drug Administration (FDA) has previously warned that it is “a prohibited act [under the FDCA] to introduce or deliver for introduction into interstate commerce any food (including any animal food or feed) to which THC or CBD has been added.” See FDA and Marijuana: Questions and Answers. If federal law prohibits the use of CBD in food products, I suspect that some large companies will decline to incorporate CBD into their beverages, snacks, etc., notwithstanding strong consumer demand for CBD—and notwithstanding the fact that the possession, manufacture, and distribution of the substance, by itself, is now legal (at least when derived from hemp).

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Sean O’Connor and Erika Lietzan’s paper, The Surprising Reach of FDA Regulation of Cannabis, Even After Descheduling, does a wonderful job of explaining how the FDCA limits the market for CBD. They also identify some loopholes (my term, not theirs) in the FDCA . For example, it doesn’t appear to ban the sale of raw CBD, and it only applies to food products shipped across state lines or made with ingredients that were shipped across state lines. The existence of such loopholes suggest that sales of hemp-derived CBD could thrive post-Farm Bill, albeit perhaps not to the degree suggested by the most optimistic commentators.

The Farm Bill’s impact on the market for THC products will likely be even more muted. Under the Bill, farmers can grow hemp with high concentrations of CBD, thereby allowing for economical (volume) production of hemp-derived CBD. By definition, however, farmers cannot grow “hemp” with high concentrations of THC. In any event, even if hemp producers could economically extract large quantities of THC, the sale of such extracts would probably remain unlawful. After all, the Farm Bill imposes a tight cap on THC concentrations in hemp “extracts” as well as cannabis plants.

The Farm Bill contains a few other less important but still interesting provisions worth noting here.

4) The Farm Bill limits the sanctions that apply to negligent violations of State and Federal Plans, thereby reducing the legal risks faced by hemp producers.

The Farm Bill limits the punishment that the federal and state governments may impose upon hemp producers who negligently violate a State or Federal Plan. With regard to State Plans, for example, the Bill provides that,

“A hemp producer that negligently violates a State . . . plan . . . shall not as a result of that violation be subject to any criminal enforcement action by the Federal Government or any State government . . .”

Farm Bill, Section 10113 (page 431). Instead, negligent violations are subject only to “Corrective Action,” which basically means that the producer must promptly correct the violation. For example, a farmer who mistakenly grows plants that exceed the Bill’s THC limits would probably just need to destroy those plants.

This is an important protection for hemp producers. The THC content of any given cannabis plant can vary significantly over time, due to growing conditions, cultivation practices, and so on (see book pages 18 and 367). Because of these variations, producers may worry that the hemp they cultivate today could become marijuana tomorrow, exposing them to severe criminal sanctions under the CSA in the process. The Farm Bill reassures producers that if they breach the limits imposed by the law through mere negligence, they cannot be prosecuted under the CSA or comparable state laws.

5) The Farm Bill might force states to exclude marijuana producers from the hemp market.

Even though the Farm Bill offers states the opportunity to assume primary responsibility for regulating hemp, it might force them to exclude marijuana producers from the hemp market to take advantage of this opportunity. The relevant provision of the Farm Bill indicates that a State Plan must include (among other items noted above),

“a procedure for the effective disposal of— (I) plants, whether growing or not, that are produced in violation of this subtitle; and (II) products derived from those plants.

Farm Bill, Section 10113 (at 430).

Read literally, this provision appears apply to all marijuana within a state. After all, high-THC cannabis grown for the medical or adult use markets would be “produced in violation” of the Farm Bill. For example, the provision would seem to require California to adopt a “procedure for the effective disposal of” the high-THC marijuana now being produced for the state’s adult-use market, that is, if the state wants to assume primary responsibility for regulating hemp. At the very least, it might require California (and other legalization states) to exclude licensed marijuana producers (i.e., those that handle high THC products) from the hemp market, in order to comply with the Farm bill’s requirements for State Plans. After all, it would be difficult for a state like California to comply with this provision, if licensed hemp producers are also cultivating high-THC, at least in the same facility.

Note that this provision does not impermissibly commandeer the states. The Farm Bill imposes obligations on the states only if they choose to submit a State Plan; but because States may decline to submit a plan in the first instance (point 2) above), there is no command.

6) The Farm Bill reduces some barriers to interstate commerce in hemp.

Another, little noticed provision in the Farm Bill declares that,

(a) Nothing in this title . . . prohibits the interstate commerce of hemp . . . or hemp products.
(b) No State . . . shall prohibit the transportation or shipment of hemp or hemp products produced in accordance [a State or Federal Plan] through the State . . .

Farm Bill, Section 10114. This provision is likely designed to prevent states from interfering with shipments of hemp bound for other states. For example, it prevents Indiana from seizing a shipment of Kentucky hemp on its way to Michigan, even if possession (etc.) of hemp remain illegal under Indiana law.

Section 10114 only addresses transportation – i.e., it doesn’t explicitly block a state from banning the sale of out-of-state hemp within the state. Nonetheless, the provision could indirectly limit state power to discriminate against out-of-state hemp producers. Normally, such discrimination violates the dormant Commerce Clause. The assumption behind the dormant Commerce Clause is that Congress usually wants to eliminate barriers to interstate trade. With marijuana, that assumption arguably doesn’t hold water, because Congress is trying to quash interstate commerce in the drug, not promote such commerce. This is why many believe that state discrimination in the marijuana market, e.g., in the form of residency requirements for licensing (see book pages 451-452), does not (yet) violate the dormant Commerce Clause (see book pages 283-288). However, because the Farm Bill legalizes hemp, it might make resuscitate dormant Commerce Clause challenges to state discrimination in the hemp market. In other words, the Farm Bill might make it more difficult for states to sustain discrimination against out-of-state hemp producers.

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That’s it for now. I’m sure there will be more to write about the Farm Bill in the near future.

The Farm Bill, hemp legalization and the status of CBD: An explainer

This week, Congress agreed to the final version of the 2018 Farm Bill, and President Trump is expected to sign the legislation within days. But this is not your typical farm bill. While it provides important agricultural and nutritional policy extensions for five years, the most interesting changes involve the cannabis plant. Typically, cannabis is not part of the conversation around farm subsidies, nutritional assistance, and crop insurance. Yet, this year, Senate Majority Leader Mitch McConnell’s strong support of and leadership on the issue of hemp has thrust the cannabis plant into the limelight.

For a little bit of background, hemp is defined in the legislation as the cannabis plant (yes, the same one that produces marijuana) with one key difference: hemp cannot contain more than 0.3 percent of THC (the compound in the plant most commonly associated with getting a person high). In short, hemp can’t get you high. For decades, federal law did not differentiate hemp from other cannabis plants, all of which were effectively made illegal in 1937 under the Marihuana Tax Act and formally made illegal in 1970 under the Controlled Substances Act—the latter banned cannabis of any kind.

It’s true that hemp policy in the United States has been drastically transformed by this new legislation. However, there remain some misconceptions about what, exactly, this policy change does.

Hemp is legal in the United States—with serious restrictions

The allowed pilot programs to study hemp (often labeled “industrial hemp”) that were approved by both the U.S. Department of Agriculture (USDA) and state departments of agriculture. This allowed small-scale expansion of hemp cultivation for limited purposes. The 2018 Farm Bill is more expansive. It allows hemp cultivation broadly, not simply pilot programs for studying market interest in hemp-derived products. It explicitly allows the transfer of hemp-derived products across state lines for commercial or other purposes. It also puts no restrictions on the sale, transport, or possession of hemp-derived products, so long as those items are produced in a manner consistent with the law.

However, the new Farm Bill does not create a completely free system in which individuals or businesses can grow hemp whenever and wherever they want. There are numerous restrictions.

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First, as noted above, hemp cannot contain more than 0.3 percent THC, per section 10113 of the Farm Bill. Any cannabis plant that contains more than 0.3 percent THC would be considered non-hemp cannabis—or marijuana—under federal law and would thus face no legal protection under this new legislation.

Second, there will be significant, shared state-federal regulatory power over hemp cultivation and production. Under section 10113 of the Farm Bill, state departments of agriculture must consult with the state’s governor and chief law enforcement officer to devise a plan that must be submitted to the Secretary of USDA. A state’s plan to license and regulate hemp can only commence once the Secretary of USDA approves that state’s plan. In states opting not to devise a hemp regulatory program, USDA will construct a regulatory program under which hemp cultivators in those states must apply for licenses and comply with a federally-run program. This system of shared regulatory programming is similar to options states had in other policy areas such as health insurance marketplaces under ACA, or workplace safety plans under OSHA—both of which had federally-run systems for states opting not to set up their own systems.

Third, the law outlines actions that are considered violations of federal hemp law (including such activities as cultivating without a license or producing cannabis with more than 0.3 percent THC). The law details possible punishments for such violations, pathways for violators to become compliant, and even which activities qualify as felonies under the law, such as repeated offenses.

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Ultimately, the Farm Bill legalizes hemp, but it doesn’t create a system in which people can grow it as freely as they can grow tomatoes or basil. This will be a highly regulated crop in the United States for both personal and industrial production.

Hemp research remains important

One of the goals of the 2014 Farm Bill was to generate and protect research into hemp. The 2018 Farm Bill continues this effort. Section 7605 re-extends the protections for hemp research and the conditions under which such research can and should be conducted. Further, section 7501 of the Farm Bill extends hemp research by including hemp under the Critical Agricultural Materials Act. This provision recognizes the importance, diversity, and opportunity of the plant and the products that can be derived from it, but also recognizes an important point: there is a still a lot to learn about hemp and its products from commercial and market perspectives. Yes, farmers—legal and illegal—already know a lot about this plant, but more can and should be done to make sure that hemp as an agricultural commodity remains stable.

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John Hudak

Deputy Director – Center for Effective Public Management

Senior Fellow – Governance Studies

Hemp farmers are treated like other farmers

Under the 2018 Farm Bill hemp is treated like other agricultural commodities in many ways. This is an important point. While there are provisions that heavily regulate hemp, and concerns exist among law enforcement—rightly or wrongly—that cannabis plants used to derive marijuana will be comingled with hemp plants, this legislation makes hemp a mainstream crop. Several provisions of the Farm Bill include changes to existing provisions of agricultural law to include hemp. One of the most important provisions from the perspective of hemp farmers lies in section 11101. This section includes hemp farmers’ protections under the Federal Crop Insurance Act. This will assist farmers who, in the normal course of agricultural production, face crop termination (crop losses). As the climate changes and as farmers get used to growing this “new” product, these protections will be important.

Cannabidiol or CBD is made legal—under specific circumstances

One big myth that exists about the Farm Bill is that cannabidiol (CBD)—a non-intoxicating compound found in cannabis—is legalized. It is true that section 12619 of the Farm Bill removes hemp-derived products from its Schedule I status under the Controlled Substances Act, but the legislation does not legalize CBD generally. As I have noted elsewhere on this blog CBD generally remains a Schedule I substance under federal law. The Farm Bill—and an unrelated, recent action by the Department of Justice—creates exceptions to this Schedule I status in certain situations. The Farm Bill ensures that any cannabinoid—a set of chemical compounds found in the cannabis plant—that is derived from hemp will be legal, if and only if that hemp is produced in a manner consistent with the Farm Bill, associated federal regulations, association state regulations, and by a licensed grower. All other cannabinoids, produced in any other setting, remain a Schedule I substance under federal law and are thus illegal. (The one exception is pharmaceutical-grade CBD products that have been approved by FDA, which currently includes one drug: GW Pharmaceutical’s Epidiolex.)

There is one additional gray area of research moving forward. Under current law, any cannabis-based research conducted in the United States must use research-grade cannabis from the nation’s sole provider of the product: the Marijuana Program at the University of Mississippi School of Pharmacy’s National Center for Natural Products Research. That setup exists because of cannabis’s Schedule I status.[1] However, if hemp-derived CBD is no longer listed on the federal schedules, it will raise questions among medical and scientific researchers studying CBD products and their effects, as to whether they are required to get their products from Mississippi. This will likely require additional guidance from FDA (the Food and Drug Administration who oversees drug trials), DEA (the Drug Enforcement Administration who mandates that research-grade cannabis be sourced from Mississippi), and NIDA (National Institute on Drug Abuse who administers the contract to cultivate research-grade cannabis) to help ensure researchers do not inadvertently operate out of compliance.

State-legal cannabis programs are still illegal under federal law

The Farm Bill has no effect on state-legal cannabis programs. Over the past 22 years, 33 states have legalized cannabis for medical purposes, and over the past six years, 10 states have legalized cannabis for adult use. Every one of those programs is illegal under federal law, with no exceptions, and the Farm Bill does nothing to change that. That said, many in the advocacy community hope that the reforms to hemp policy under the Farm Bill serve as a first step toward broader cannabis reform. (Although I would argue that a soon-to-be-sworn-in Democratic House majority alongside a president with a record of pro-cannabis reform rhetoric is the more likely foundation for broader cannabis reform.)

Even CBD products produced by state-legal, medical, or adult-use cannabis programs are illegal products under federal law, both within states and across state lines. This legal reality is an important distinction for consumer protection. There are numerous myths about the legality of CBD products and their availability. Under the 2018 Farm Bill, there will be more broadly available, legal, CBD products; however, this does not mean that all CBD products are legal moving forward. Knowing your producer and whether they are legal and legitimate will be an important part of consumer research in a post-2018 Farm Bill world.

Mitch McConnell, cannabis champion?

Many advocates applaud Leader McConnell for his stewardship of these hemp provisions into the Farm Bill and his leadership on the legislation overall. That assessment is accurate. Without Mr. McConnell’s efforts, the hemp provisions would never had found their way into the legislation initially. And although his position as Senate leader gave him tremendous institutional influence over the legislation, he went a step further by appointing himself to the conference committee that would bring the House and Senate together to agree on a final version.

McConnell understood much about this issue. First, he knows hemp doesn’t get you high and that the drug war debate that swept up hemp was politically motivated, rather than policy-oriented. Second, Kentucky—the leader’s home state—is one of the best places to cultivate hemp in the world, and pre-prohibition the state had a robust hemp sector. Third, the grassroots interest in this issue was growing in Kentucky, and McConnell knows that his role as Senate Majority Leader hangs in the balance in 2020, as does his Senate seat as he faces re-election that same year. McConnell emerges from the Farm Bill as a hemp hero, but advocates should be hesitant to label him a cannabis champion; Leader McConnell remains a staunch opponent of marijuana reform and his role in the Senate could be the roadblock of Democratic-passed legislation in the 116 th Congress.

[1] Under the Controlled Substances Act, all controlled drugs fall under five schedules. Schedule I has the highest level of control, designated a substance as having no safe medical use and has a high risk of abuse or misuse. Schedule I substances are illegal under the law.