Right on schedule, the Agricultural Improvement Act of 2018 (i.e., the Senate’s version of the Farm Bill) was announced on Friday, and brings with it some good news for the U.S. hemp industry. As we predicted last month, hemp supporters in the Senate worked successfully to include the Hemp Farming Act (the “Act”) in this version of the Farm Bill.

The Act, sponsored by Senators McConnell (R-KY), Paul (R-KY), Merkley (D-OR) and Wyden (D-OR), gives states and Indian tribes the opportunity to have “primary regulatory authority” over the production of hemp with that state or on tribal land by submitting a control plan to the Secretary of Agriculture for approval. The plan is required to include, at a minimum:

  • Legal descriptions of land on which hemp is produced in the state or territory;
  • Procedures for testing to ensure compliance with federal restrictions on the THC content of industrial hemp;
  • Procedures for disposal of non-conforming hemp; and
  • Procedures for enforcement of the Act’s requirements.

Department of Agriculture oversight is significant in that the Farm Bill of 2014, on which current state programs are based, did not name a responsible federal agency. This framework will also shape changes to current state applications for licenses to produce industrial hemp and to state rules to the extent that they do not currently address the above requirements.

Another welcome effect of the Act is the specific exclusions of industrial hemp from the Controlled Substances Act (CSA). The CSA’s applicability to industrial hemp is currently murky at best, and while states and various federal agencies have indicated that it is excluded, clarity in this area will be of huge benefit to the industry. In addition, as we wrote about last week regarding the STATES Act, exclusion from the CSA also confers benefits with respect to banking and tax.

The Act further provides for easier funding for industrial hemp research, makes crop insurance available to the industry, and states that the Act, in and of itself, may not be construed to authorize the federal government to interfere with the interstate commerce of industrial hemp.

Nothing is certain in Washington, D.C. these days, but consensus seems to be that the Senate’s Farm Bill has bipartisan support and a much greater chance of success than the House version, which failed to pass in May. If it becomes law, the U.S. hemp industry will be on much stronger footing.

 

Ben Pirie counsels cannabis businesses…. on a wide range of corporate needs. He is passionate about building long-lasting relationships with clients as they reach toward their goals in one of the most dynamic and fraught industries in the world.  Ben brings his experience as in-house counsel to a Fortune 1000 company in Portland to bear on Oregon’s emerging cannabis industry, where he advises clients on business transactions, contracts, entity formation and management, securities compliance, corporate governance, intellectual property, mergers and acquisitions, state and local administrative law, and employment matters.