United States: The Farm Bill's Impact On Hemp And CBD – And How Some States Are Reacting

While the legal landscape continues to evolve in the cannabis industry, making entry into the space a potentially risky proposition, the passage of the Agriculture Improvement Act of 2018 (the "Farm Bill") can be a real game changer in attracting mainstream companies to the industry.

According to the Farm Bill, hemp is now exempt from the Federal Controlled Substance Act ("CSA"), theoretically making all hemp-derived CBD products, and all commercially available products derived from hemp, legal in all 50 states.

But don't open your CBD cookie shop just yet. As profound as this piece of legislation may sound, there are other regulators looming in the foreground that can severely limit these new rights. Shortly after the Farm Bill's passage, both the New York State Department of Agriculture and the New York City Department of Health banned all CBD in food and beverages. Without its own laws regulating CBD in food or consumables, New York took direction from the Food and Drug Administration ("FDA") which found it "unlawful under the FD&C Act to introduce food containing added CBD or THC into interstate commerce, or to market CBD or THC products as, or in, dietary supplements, regardless of whether the substances are hemp-derived" (emphasis added)

Also in Maine, much to the dismay of local business owners, the Department of Health and Human Services insisted that edibles and other CBD infused products be immediately banned, having not been federally approved as harmless food additives. The Farm Bill sparked many questions within the state about its impact on Maine's rapidly growing hemp and CBD industry, and upon review, some state lawyers concluded that CBD could not be used in mass-marketed foods until Maine's experimental hemp program achieved federal approval. Days after the Farm Bill went into effect, environmental health inspectors began informing businesses that they had to remove all foods, tinctures and capsules from their shelves that contained the non-psychoactive chemical compound found in the cannabis plant.

The California Department of Public Health ("CDPH"), which proactively issued FAQs, took the position that:[A]lthough California currently allows the manufacturing and sales of cannabis products (including edibles), the use of industrial hemp as the source of CBD to be added to food products is prohibited. Until the FDA rules that industrial hemp-derived CBD oil and CBD products can be used as a food or California makes a determination that they are safe to use for human and animal consumption, CBD products are not an approved food, food ingredient, food additive, or dietary supplement," according to the California Department of Public Health. Under California law, "food" is defined as "[a]ny article used or intended for use for food, drink, confection, condiment, or chewing gum by man or other animal" and"[a]ny article used or intended for use as a component of any article designated" in the foregoing definition. What this means is that the CDPH views anything that could be deemed a food or beverage that is intended for human or animal consumption as unlawful.

So, while the Farm Bill will undoubtedly spark interest and generate activity in CBD related ventures, it is a gross misconception to suggest that all hemp-derived CBD products are now100% legal.

What, then, can we take away from the Farm Bill and what can we expect to see in the near future? Here are some important things to note:

  • CBD (or, cannabidiol) is the non-psychoactive component in cannabis. CBD can come from the marijuana plant or from the hemp plant. Unfortunately there is only one fool-proof way to distinguish between the two, according to United Stated Department of Agriculture ("USDA") and that involves a chemical analysis of the THC. Generally speaking, the plants are otherwise very similar in appearance.
  • As a direct result of the Farm Bill, hemp-derived CBD has been officially removed from the list of Schedule I controlled substances, which legally opens up interstate commerce for hemp and hemp-derived CBD. Without any risk of federal prosecution (unless, I suppose, the FDA steps in) individuals and entities in the business of selling CBD-infused products or dried hemp flower are now permitted to ship across state lines. Hemp production is now not only permissible in all U.S. territories, it is also permissible on Indian Tribal land (which was not included under the 2014 Farm Bill).
  • With the substantial national interest in the hemp industry, and with the rapid growth of hemp-based products, an infrastructure will likely be needed to manage the greater demand for hemp-derived products. Hemp grown in this country will very possibly be used as a source for emerging industries. Legalization should also promote innovative and novel cultivation and growing techniques and methods.
  • Licensed producers that unintentionally (or even intentionally) violate the THC legal limitation of 0.3% will not be deemed guilty of a drug crime anymore, and they will be granted a grace period to cure the violation or "correct' the "hot" hemp by submitting a plan and following through on that plan.
  • The Farm Bill has also removed barriers to obtain IP protection (trademarks and patents) under federal law.
  • The USDA is responsible for overseeing all hemp production, and has been instructed to codify rules as "expeditiously as practicable."

Stay tuned for updates as we see them...…

And for further detail on the Farm Bill, click here for the full text.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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