USDA Issues Opinion Letter Regarding Production and Transportation of Hemp
On May 28, 2019, the U.S. Department of Agriculture (“USDA”) became the latest federal agency to clarify its position regarding the cultivation and production of hemp when its office of General Counsel issued an opinion letter. In the letter, the USDA General Counsel made four primary legal conclusions:
(1) As of the enactment of the 2018 Farm Bill on December 20, 2018, hemp has been removed from schedule I of the Controlled Substances Act and is no longer a controlled substance.
(2) After USDA publishes regulations implementing the new hemp production provisions of the 2018 Farm Bill, States and Indian tribes may not prohibit the interstate transportation or shipment of hemp lawfully produced under a State or Tribal plan or under a license issued under the USDA plan.
(3) States and Indian tribes also may not prohibit the interstate transportation or shipment of hemp lawfully produced under the 2014 Farm Bill.
(4) A person with a State or Federal felony conviction relating to a controlled substance is subject to a 10-year ineligibility restriction on producing hemp under the Agricultural Marketing Act of 1946. 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.
Although the fact that hemp (cannabis sativa with a THC content less than 0.3%) is longer included on the list of schedule I controlled substances has already been made clear from the press releases and findings of other federal agencies, the findings of the USDA general counsel are still significant.
One of the major remaining uncertainties regarding the production and sale of hemp-derived products was the legality of transporting hemp across state lines: particularly in states in which the production and cultivation of hemp remained illegal.
Currently, 35 states have programs allowing the production of hemp. Of the remaining states, producers and distributors were left to wonder if getting their product from point A to point B (where the production and sale of their product was legal) meant illegally transporting their product through a state where hemp was illegal. The variation among state laws regulating the possession of hemp created a dizzying mess.
The findings of the USDA general counsel effectively tell states to back off by expressing an intent on the part of the USDA to preempt any state regulation of hemp transportation. The memo also put forth a timeline for establishing USDA regulations under which a grower or producer could apply for a permit to grow or process hemp. Under these regulations, a grower or producer would have several options to legally grow or process hemp.
The options will be to 1) with a valid USDA-issued license, 2) under a USDA-approved state or tribal plan, or 3) under the 2014 Farm Bill industrial hemp pilot authority (although this will be phased out once the permanent regulations are promulgated by the USDA). The memo states that the USDA expects to have regulations completed by 2019.