WARD & SMITH ATTORNEYS
December 20, 2018
On Thursday, December 20, President Donald J. Trump signed into law the Agriculture Improvement Act of 2018 (“Farm Bill”).
“Farm bills” are adopted by Congress from time to time to reauthorize and modify USDA programs that address, among other things, commodity support, conservation, nutrition assistance, farm credit, rural development, research and extension activates, forestry, energy, horticulture, and crop insurance. The 2018 Farm Bill does more than just that: it legalizes hemp.
For years, hemp was considered a Schedule I banned substance under the Controlled Substances Act of 1972 (“CSA”). The reigns on hemp were loosened a bit with the passage of the Agricultural Act of 2014, which authorized research institutions and state agricultural agencies to grow industrial hemp as part of a research pilot program. North Carolina then established its own state-level pilot program and the NC Industrial Hemp Commission in 2015. Although that was a huge step forward for hemp in general, the authorizing statutes, and the rules and regulations developed as a result, were limited in nature and left major issues to speculation – like the legality of some commercial hemp activities and hemp-derived cannabidiol (“CBD”). Those legal ambiguities also largely prevented industry participants from accessing traditional banking services, insurance programs (like crop insurance for growers), and other common-place business activities.
Now, though, hemp and hemp-derived cannabinoids, extracts, and isomers have been legalized on the Federal level. Once the Farm Bill takes effect, some of its immediate effects on hemp will include:
- Expansion of the legal definition of “hemp” to include all parts of the Cannabis sativa L. plant, “including seeds and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3% on a dry weight basis.”
- Amendment of the definition of “marijuana” under the CSA to expressly exclude “hemp” (as defined above) and to expressly carve-out of the Schedule I controlled substances list any tetrahydrocannabinols (THC) that exist in “hemp.”
- States may, individually, determine whether or not they want to retain primary regulatory authority over the production of hemp within their borders. To do so, a state must submit to the US Secretary of Agriculture its plan to monitor and regulate hemp production. Importantly, that plan must include “a procedure for testing, using post-decarboxylation or other similarly reliable methods, delta-9 tetrahydrocannabinol concentration levels of hemp produced in the state.” This is consistent with the THC compliance test requirements already enforced by the North Carolina Department of Agriculture & Consumer Services (which oversees testing for the current pilot program).
- “Hemp” and related products can be transported legally across state lines and states must not interfere with that transport, allowing for interstate commerce.
- “Hemp” growers can participate in crop insurance and government subsidy programs, as they are developed and implemented by the regulating authorities.
Passage of the Farm Bill is a leap forward not only for hemp, but for the cannabis industry as a whole. Hemp will effectively become a commodity crop for farmers and, we hope, it will be a boon for North Carolina’s agricultural economy. Many of the concerns that previously faced hemp growers, processors, manufacturers, retailers, and consumers have been alleviated. But, new challenges will inevitably arise as the industry continues to grow and mature, and our state and Federal governments continue to develop new laws, regulations, rules, and programs applicable to hemp and CBD.
We encourage anyone considering hemp cultivation, processing, or distribution to seek legal counsel before investing significant time and money. Ward and Smith’s Industrial Hemp practice team can advise you as you work through these and other complex legal issues.
FDA Signals Shift in Rhetoric Towards Hemp Products
In tandem with the President’s historic signing of the Agriculture Improvement Act of 2018 (the “Farm Bill”) yesterday, permanently removing hemp as a controlled substance, the U.S. Food and Drug Administration (FDA) signaled its policies towards hemp will similarly be shifting in a more positive way. For years, FDA maintained CBD could not be incorporated into foods, supplements and other products, despite the hemp industry suggesting evidence demonstrating otherwise. The 2018 Farm Bill did not resolve this issue either.
However, in conjunction with the enactment of the Farm Bill yesterday, while not yet officially changing its position, FDA signaled there are “pathways” forward for FDA to consider and review the affirmative allowance of hemp derivatives in the nation’s food supply. FDA even acknowledges the achievement of GRAS status in certain hempseed-derived products, while also maintaining that regulations surrounding foods and supplements (i.e. the prohibition of medical claims) will be maintained. Though these FDA uncertainties may take some time to be resolved, this development should be viewed as an encouraging policy shift, further galvanizing momentum for retailers and other hemp industry stakeholders immediately and going forward.
GREEN LIGHT LAW GROUP (PORTLAND)
Hallelujah, Hemp is Legal.
Christmas came early this year as yesterday the President of the United States signed the long awaited 2018 Farm Bill into law, officially ending the federal prohibition of hemp. Overall, the 2018 Farm Bill is a big win for hemp businesses nationwide and marks a pivotal moment for the entire cannabis industry. Below are five key takeaways from the new legislation:
- The 2018 Farm Bill broadly defines “hemp” as 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 concentration of not more than 0.3 percent on a dry weight basis” (emphasis added). Therefore, hemp AND any extracts or derivatives from hemp (including CBD) are now excluded from the Controlled Substances Act. The law takes effect immediately, which means that federal authorities are now required to treat hemp like any other agricultural commodity. Additionally, the Federal and State governments are prohibited from bringing criminal enforcement against any hemp producer for negligently violating any hemp regulations, which means hemp producers cannot be prosecuted for negligently growing “hot” seeds or plants. However, it is important to note that any hemp producer that negligently commits three violations of the hemp regulations within a five-year period will be banned from producing hemp for five years.
- The 2018 Farm Bill also allows for interstate commerce of hemp and expressly prohibits any State or Indian Tribe from preventing or disallowing the transportation or shipment of hemp. Now hemp producers in Oregon can freely transact business with buyers in different states without fear that any federal or state authority will seize their product. However, if you are entering into a commercial transaction to buy or sell hemp, it would be prudent to ensure that any transactional documents make clear that the seller/buyer across from you is validly authorized and licensed by their respective State to grow or handle hemp, just to be safe.
- The 2018 Farm Bill will make it much easier for hemp farmers to operate and sustain their businesses. The new legislation allows farmers to obtain access to federally backed farm support programs, including crop insurance, federal water accessand low-interest loansfor new farmers. In addition, hemp businesses should be entitled to patent and trademark protections under federal law, but we will wait to see how that process develops.
- The U.S. Department of Agriculture (USDA) is given the sole authority to regulate hemp on the federal level, and the Secretary of the USDA is directed to come up with rules “as expeditiously as possible.” States and Indian Tribes may submit their own plans for regulating hemp to the Secretary of the USDA, and any such plan must be approved or disapproved within 60 days of receipt of any such plan.
- The U.S. Food and Drug Administration (FDA) retains the power to regulate any hemp product that is used in the production of food, drugs or cosmetics through its authority under the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301et seq.). Using that authority, the FDA approved Epidiolex in June of 2018, the first cannabis derived prescription. With the passage of the 2018 Farm Bill, we expect that the FDA will contribute more time to evaluating the approval certain hemp-derived food products, cosmetics, dietary supplements, and drugs.
This is a big step forward for the cannabis industry. There are always unforeseen consequences when new legislation is passed, and there will likely be complications as marijuana remains a Schedule I controlled substance under the Controlled Substances Act. We will be watching closely to see how the new legislation unfolds and we are available to answer any questions you may have about how the 2018 Farm Bill will affect your business.
WENDEL ROSEN BUSINESS & LEGAL UPDATES
Proceed at Your Own Risk: The Farm Bill Does Not Authorize CBD in Food or Dietary Supplements
By Bill Acevedo, December 21, 2018
General Creative Commons Attribution by Martin Jakobsen is licensed under CC BY 2.0
I have said it before, and I will say it again: no, you cannot use CBD as an ingredient in food or dietary supplements. While some have touted the recent passage of the Agriculture Improvement Act of 2018 (aka, the Farm Bill) and its relaxation of the controls on the production and marketing of hemp as an implicit sign that it is acceptable to use cannabidiol (CBD) in food and/or dietary supplements, those fortune tellers are wrong. Yesterday, the Food & Drug Administration released an updated guidance document regarding its current positions on cannabis and CBD, in particular.
The FDA has expressly stated that THC and CBD products are excluded from the dietary supplement definition under sections 201(ff)(3)(B)(i) and (ii) of the Food, Drug & Cosmetic Act (the Act). If a substance such as THC or CBD is an active ingredient in a product that has been approved as a drug or that has been authorized for investigation as a new drug, then products containing such substances are outside the definition of a dietary supplement. According to the FDA, “[t]here is an exception to sections 201(ff)(3)(B)(i) and (ii) if the substance was ‘marketed as’ a dietary supplement or as a conventional food before the drug was approved or before the new drug investigations were authorized, as applicable. However, based on available evidence, FDA has concluded that this is not the case for THC or CBD.”
With regard to food, the FDA has also provided unequivocal guidance:
Under section 301(ll) of the FD&C Act, it is prohibited to introduce or deliver for introduction into interstate commerce any food (including any animal food or feed) to which has been added a substance which is an active ingredient in a drug product that has been approved under 21 U.S.C. § 355 (section 505 of the Act) or a drug for which substantial clinical investigations have been instituted and for which the existence of such investigations has been made public.
While there are exceptions to this rule when the drug has been previously marketed as a food before the drug was approved or clinical investigations involving the drug was initiated, like dietary supplements, the FDA has concluded that none of these exceptions apply for THC or CBD. Accordingly, the FDA has concluded that “it is a prohibited act 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.”
Given this clear guidance, I stand by my often provided advice to clients (and to those of you reading this blog): CBD cannot be used in food or dietary supplements, and if you do so, you proceed at your own risk. The Farm Bill does not serve as any legal basis for the use of CBD-derived hemp. In fact, the Farm Bill expressly preserved the FDA’s current authority to regulate products containing cannabis or cannabis-derived compounds. Until the FDA approves the use of CBD, I would also caution against any rationalizing of the use of CBD that comes from hemp as opposed to cannabis. As the FDA notes, it has seen no evidence to change its current thinking on CBD, but it will consider any evidence to the contrary by interested parties. Thus, if you want to use CBD, do your homework, develop your evidence, and then work with your legal counsel to present your findings to the FDA so as to obtain approval of including CBD in your product before you release it in commerce.
HEMP INDUSTRY DAILY – WEBCAST
US HEMP ROUNDTABLE