Recently, the Department of Agriculture issued its interim rules for the U.S. Domestic Hemp Production Program. This was a necessary step to establish the domestic federal hemp production program. However, not everyone is so happy with the new rules. Sens. Ron Wyden and Jeff Merkley of Oregon, authors of the legislation, cited concerns about the unintended and potentially harmful effects the USDA’s rules would have on hemp production in Oregon and across the country.
Based on feedback from Oregon farmers, researchers and regulators, Sens. Wyden and Merkley requested that the USDA:
- Follow the Oregon hemp model and extend the timeline for testing before harvest to a more realistic timeframe, and provide a reasonable timeframe for post-testing harvest because the proposed requirement of 15 days will be an impossible obstacle for growers to overcome
- Eliminate the requirement that testing labs must be Drug Enforcement Administration (“DEA”)-registered, as hemp is a legal commodity and not subject to DEA, and such requirements would also cause unnecessary delays
- Allow testing for delta-9 THC using methods that do not involve the application of heat or decarboxylation, and to remove all requirements for converting THCA into THC, as the 2018 Farm Bill allows for flexibility in testing methods by
allowing “other similarly reliable methods”
- Follow Oregon’s pre-harvest sampling protocol that a “sample shall be obtained from flowering tops when flowering tops are present, and shall be approximately 8 inches in length,” rather than requiring a sample from the flower or bud located at the top one-third of the plant
- Set a negligence threshold greater than 1% for THC content, as the interim rule’s current threshold at 0.5% is arbitrary and too low. For example, a reasonably prudent hemp producer could take the necessary steps and precautions to produce hemp—such as using certified seed, using seed that has reliable grown complaint plants in other parts of the country, and engaging in other best practices—yet still produce hemp plants that exceed this 0.5% THC concentration
Below is a summary of the USDA’s interim rules for hemp cultivation and production in the US:
I. State and Tribal Plans
A. Land used for production
Plans will need to contain a process by which relevant information regarding the land used for hemp production in their jurisdiction is collected and maintained. The information required to be collected includes a legal description of the land and geospatial location, which the USDA Farm Service Agency (FSA) can help provide, for each field, greenhouse, or other site where hemp is produced. Licensed producers must also report their hemp crop acreage to the FSA.
B. Sampling and testing for delta-9 tetrahydrocannabinol
State and Tribal plans must incorporate procedures for sampling and testing hemp to ensure the cannabis grown and harvested does not exceed the acceptable hemp THC level. Sampling procedures, among other requirements, must ensure that a representative sample of the hemp production is physically collected and delivered to a DEA-registered laboratory for testing.
Within 15 days prior to the anticipated harvest of cannabis plants, a Federal, State, local, or Tribal law enforcement agency or other Federal, State or Tribal designated person shall collect samples from the flower material from such cannabis plants for
delta-9 tetrahydrocannabinol concentration level testing. Testing procedures must ensure the testing is completed by a DEA-registered laboratory using a reliable methodology for testing the THC level. Samples must be tested using post-decarboxylation or other similarly reliable analytical methods where the total THC concentration level reported accounts for the conversion of delta-9-tetrahydrocannabinolic acid (THCA) into THC. Testing methodologies currently meeting these requirements include those using gas or liquid chromatography with detection. The total THC, derived from the sum of the THC and THCA content, shall be determined and reported on a dry weight basis.
If 0.3% or less is within the distribution or range, then the sample will be considered to be hemp for the purpose of compliance with the requirements of State, Tribal, or USDA hemp plans. For example, if a laboratory reports a result as 0.35% with a
measurement of uncertainty of +/- 0.06, the distribution or range is 0.29% to 0.41%. Because 0.3% is within that distribution or range, the sample, and the lot it represents, is considered hemp for the purpose of compliance with the requirements of State, Tribal, or USDA hemp plans. However, if the measurement of uncertainty for that sample was 0.02%, the distribution or range is 0.33% to 0.37%. Because 0.3% or less is not within that distribution or range, the sample is not considered hemp for the purpose of plan compliance, and the lot it represents will be subject to disposal. Thus the “acceptable hemp THC level”
is the application of the measurement of uncertainty to the reported delta-9 tetrahydrocannabinol content concentration level on a dry weight basis producing a distribution or range that includes 0.3% or less. The laboratories conducting hemp testing
must be registered by the DEA to conduct chemical analysis of controlled substances (in accordance with 21 CFR 1301.13). Registration is necessary because laboratories could potentially handle cannabis that tests above the 0.3% concentration of THC on a dry weight basis, which is, by definition, marijuana and a Schedule 1 controlled substance.
C. Disposal of non-compliant plants.
State and Tribal plans are also required to include procedures for ensuring effective disposal of plants produced in violation of this Part. If a producer has produced cannabis exceeding the acceptable hemp THC level, the material must be disposed of in
accordance with the CSA and DEA regulations because such material constitutes marijuana, a schedule I controlled substance under the CSA. Consequently, the material must be collected for destruction by a person authorized under the CSA
to handle marijuana, such as a DEA-registered reverse distributor, or a duly authorized Federal, State, or local law enforcement officer.
D. Compliance with Enforcement Procedures Including Annual Inspection of Hemp Producers
State and Tribal plans must include compliance procedures to ensure hemp is being produced in accordance with the requirements of this part. This includes requirements to conduct annual inspections of, at a minimum, a random sample of hemp producers to verify hemp is not being produced in violation of this part. These plans also must include a procedure for handling violations. However, there are certain compliance requirements that all State and Tribal plans must contain. This includes procedures to identify and attempt to correct certain negligent acts, such as failing to provide a legal description of the land on which the hemp is produced, not obtaining a license or other required authorizations from the State or tribal government or producing plants exceeding the acceptable hemp THC level. In the context of this part, negligence is defined as a failure to exercise the level of care that a reasonably prudent person would exercise in complying with the regulations set forth under this part.
This rule specifies that hemp producers do not commit a negligent violation if they produce plants that exceed the acceptable hemp THC level and use reasonable efforts to grow hemp and the plant does not have a THC concentration of more than 0.5 percent on a dry weight basis. USDA recognizes that hemp producers may take the necessary steps and precautions to produce hemp, such as using certified seed, using other seed that has reliably grown compliant plants in other parts of the country, or engaging in other best practices, yet still produce plants that exceed the acceptable hemp THC level. In cases where a State or Tribe determines a negligent violation has occurred, a corrective action plan shall be established. The corrective action plan must include a reasonable date by which the producer will correct the negligent violation. Producers operating under a corrective action plan must also periodically report to the State or Tribal government, as applicable, on their compliance with the plan for a period of not less than two calendar years following the violation. A producer who negligently violates a State or Tribal plan three times in a five-year period will be ineligible to produce hemp for a period of five years from the date of the third violation. Negligent violations are not subject to criminal enforcement action by local, Tribal, State, or Federal Government authorities.
State and Tribal plans also must contain provisions relating to producer violations made with a culpable mental state greater than negligence, meaning, acts made intentionally, knowingly, or with recklessness. If it is determined a violation was committed with a culpable mental state greater than negligence, the State department of agriculture or tribal government, as applicable, shall immediately report the producer to the Attorney General, USDA, and the chief law enforcement officer of the State or Tribe. State and Tribal plans also must prohibit any person convicted of a felony related to a controlled substance under State or Federal law before, on, or after the enactment of the 2018 Farm Bill from participating in the State or Tribal plan and from producing hemp for 10-years following the date of conviction. An exception applies to a person who was lawfully growing hemp under the 2014 Farm Bill before December 20, 2018, and whose conviction also occurred before that date. To meet this requirement, the State or Indian Tribe will need to review criminal history reports for each applicant. When an applicant is a business entity, the State or Indian Tribe must review the criminal history report for each key participant in the business
E. Information sharing.
State and Tribal plans also must contain procedures for reporting specific information to USDA. The information required here includes contact information for each hemp producer covered under the plan including name, address, telephone number, and email address (if available). If the producer is a business entity, the information must include the full name of the business, address of the principal business location, full name and title of the key participants, an email address if available, and EIN number of the business entity.
II. Department of Agriculture Plan
This rule also establishes a USDA plan to regulate hemp production by producers in areas where hemp production is legal but is not covered by an approved State or Tribal plan. All hemp produced outside of States and Tribes with approved plans must
meet the requirements of the USDA plan. The requirements of the USDA plan are similar to those under State and Tribal plans.
A. USDA hemp producer license.
1. Application
To produce hemp under the USDA plan, producers must apply for and be issued a license from USDA. The USDA is currently accepting applications for licenses but will delay acceptance of applications for 30 days to allow States and Tribal Governments to submit their plans first. This is to prevent USDA from reviewing and issuing USDA licenses to producers when there is a likelihood that there will soon be a State or Tribal plan in place and producers will obtain their licenses from the State or Tribe. While a State, such as New Jersey, or Tribal government has a draft hemp production plan pending for USDA
approval, USDA will not issue USDA hemp production licenses to individual producers located in those States or Tribal Nations. For the first year after USDA begins to accept applications, applications can be submitted any time. For all subsequent years, license applications and license renewal applications must be submitted between August 1 and October 31. For hemp grown outdoors, harvesting usually occurs in the late summer and early fall. This application period is close to or after the harvest season when producers are preparing for the next growing season. The license application will be available online at the USDA Domestic Hemp Production Program website. Applications may be submitted electronically or by mail. Copies can be also requested by email at farmbill.hemp@usda.gov.
The application will require contact information such as name, address, telephone number, and email address (if available). If the applicant represents a business entity, and that entity will be the producer, the application will require the full name of the
business, address of the principal business location, full name and title of the key participants on behalf of the entity, an email address if available, and EIN number of the business entity. All applications must be accompanied by a completed criminal history report. If the application is for a business entity, a completed criminal history report must be provided for each key participant. Key participants are a person or persons who have a direct or indirect financial interest in the entity producing hemp, such as an owner or partner in a partnership. A key participant also includes persons in a corporate entity at executive levels including chief executive officer, chief operating officer and chief financial officer. This does not include other management positions like farm, field or shift managers. If those persons have a disqualifying felony, they can no longer participate in the program as provided for by section 297B(e)(3)(B)(i) of the 2018 Farm Bill. The criminal history report must indicate the applicant has not been convicted of a State or Federal felony related to a controlled substance for the 10 years prior to the date of when the report was completed. An exception applies to a person who was lawfully growing hemp under the 2014 Farm Bill before December 20, 2018, and whose conviction also occurred before that date.
2. USDA Hemp Producer Licenses
Once a license application has been approved, USDA will issue the producer license. Licenses are not transferrable in any manner. An applicant whose application has been approved will not be considered a licensed producer under the USDA plan until the applicant receives their producer license. Licenses do not renew automatically and must be renewed every three years. Licenses will be valid until December 31 of the year that is at least three years after the license is issued. For example, if a producer applies for a license August 1, 2020 and is granted a license on September 15, 2020, the license would expire December 31, 2023.
Once a producer has been issued a USDA license, the producer must report their hemp crop acreage to FSA. Producers must provide specific information to FSA, as identified in this part, including, but not limited to: the specific location where hemp is produced, and the acreage, greenhouse, building, or site where hemp is produced. The specific location where hemp is produced must be identified, to the extent practicable, by the geospatial location. If at any time, there is a change to the information submitted in the license application, a license modification is required. A license modification is required if, for example, the licensed business is sold to a new owner or when hemp will be produced in a new location not described on the original application. Producers must notify USDA immediately should there be any change in the information provided on the license application.
B. Sampling and testing for THC
All hemp production must be sampled and tested for THC concentration levels. Samples must be collected by a USDA- approved sampling agent, or a Federal, State or local law enforcement agent authorized by USDA to collect samples. It is the
responsibility of the licensed producer to pay any fees associated with sampling. USDA will issue guidance on sampling procedures that will satisfy sampling requirements to coincide with publication of this rule. Any licensee may request that the laboratory retest samples if it is believed the original THC concentration level test results were in error. The licensee requesting the retest of the second sample would pay the cost of the test. The retest results would be issued to the licensee requesting the retest and a copy would be provided to USDA or its agent.
C. Disposal of non-compliant product
If the results of a test conclude that the THC levels exceed the acceptable hemp THC level, the approved laboratory will promptly notify the producer and USDA or its authorized agent. If a licensed producer is notified that they have produced cannabis exceeding the acceptable hemp THC level, the cannabis must be disposed of in accordance with the CSA and DEA regulations as such product is marijuana and not hemp.
D. Compliance
USDA has established certain compliance requirements for USDA licensees as part of this rulemaking. This includes the ability for USDA to conduct audits of USDA licensees and to issue corrective action plans for negligent violations. Negligent violations by a producer may lead to suspension or revocation of a producer’s license. USDA may conduct random audits of licensees to verify hemp is being produced in accordance with the provisions of this part. The format of the audit will vary and may include a “desk-audit” where USDA requests records from a licensee or the audit may be a physical visit to a licensee’s facility. When USDA visits a licensee’s facility, the licensee must provide access to any fields, greenhouses, storage facilities or other locations where the licensee produces hemp. USDA may also request records from the licensee to include production and planting data, testing results, and other information as determined by USDA. USDA will conduct an audit of all USDA
licensees no more than every three years based on available resources.
E. Suspension of a USDA license
A USDA license may be suspended if USDA or its representative receives credible information that a licensee has either: (1) engaged in conduct violating a provision of this part; or (2) failed to comply with a written order from the AMS Administrator related to a negligent violation of this part. Examples of credible information are information from local authorities of harvested plants without testing or planting of hemp seed in non-approved locations. A suspended license may be restored after a waiting period of one year. A producer whose license has been suspended may be required to comply with a corrective action plan to fully restore their license.
A USDA license shall be immediately revoked if the licensee: (1) pleads guilty to, or is convicted of, any felony related to a controlled substance; or (2) made any materially false statement with regard to this part to USDA or its representatives with a
culpable mental state greater than negligence; or (3) was found to be growing cannabis exceeding the acceptable hemp THC level with a culpable mental state greater than negligence or negligently violated the provision of this part three times in five years. If the licensed producer wants to appeal any suspension or revocation decision made by USDA under this section, they can do so using the appeal process outlined by these rules.
F. Reporting and recordkeeping.
Consequently, licensed producers will be required to report their hemp crop acreage with FSA, and to provide FSA with specific information regarding field acreage, greenhouse, or indoor square footage of hemp planted. This information must include street address, geospatial location or other comparable identification method specifying where the hemp will be produced, and the legal description of the land. Geospatial location or other methods of identifying the production locations are necessary as not all rural locations have specific addresses. This information is required for each field, greenhouse, building, or site where hemp will be grown. USDA will use this information to assemble and maintain the data USDA must make available in real time to Federal, State, and local law enforcement as required by the 2018 Farm Bill. Specific procedures for reporting hemp acreage to FSA will be posted on the USDA Domestic Hemp Production Program website. This information will be
maintained by USDA for at least three calendar years.
Licensed producers will be required to maintain copies of all records and reports necessary to demonstrate compliance with the program. These records include those that support, document, or verify the information provided in the forms submitted to
USDA. Records and reports must be kept for a minimum of three years. Under the USDA plan, there will be additional reporting requirements for licensed producers. These include specific reporting requirements to collect the information needed by the licensing application, and the record and reporting requirements needed to document disposal of cannabis produced in violation of the provisions of this rule.
III. Appeals
An applicant for a USDA hemp production program license may appeal a license denial to the AMS Administrator. Licensees may appeal denials of license renewals, license suspensions, or license revocations to the AMS Administrator. All appeals must be submitted in writing and received within 30 days of the denial. This submission deadline should provide adequate time to prepare the necessary information required to formulate the appeal.
IV. Interstate commerce
Nothing in these rules prohibits the interstate commerce of hemp. No State or Indian Tribe may prohibit the transportation or shipment of hemp produced in accordance with this part and with section 7606 of the 2014 Farm Bill through the State or the
territory of the Indian Tribe, as applicable.
Should you have any questions about the expansion of New Jersey’s Hemp program in New Jersey, please contact Eric D. Reiser.
Disclaimer: Please note that using, processing, distributing and/or selling marijuana is illegal under federal law, regardless of any state law. Further, the cultivation, manufacture and sale of hemp and its related products are subject to complex regulations and Federal and state requirements that must be strictly complied with. While federal enforcement policy may defer to states’ laws and chose not to enforce federal laws, businesses and individuals should be aware that compliance with state law does not assurance compliance with federal law. Federal laws may be enforced in the future. No legal advice we give is intended to provide any guidance or assistance in violating federal law.