Yesterday, December 20, 2018, President Trump signed the 2018 Farm Bill into law. The Farm Bill received bipartisan support and was passed decisively by Congress with a vote of 369 to 47 in the House and 87 to 13 in the Senate. We have been closely watching the passage of the Farm Bill and how it affects federal legalization of hemp and cannabidiol (“CBD”) products.

How does the Farm Bill affect the hemp industry?

Key Provisions of the Farm Bill

Before the Farm Bill was passed, CBD was classified as a Schedule I controlled substance by the U.S. Drug Enforcement Administration (“DEA”). Per the definition section of the Farm Bill, Hemp, with a concentration of no more than 0.3% of Tetrahydrocannabinols (“THC”), on a dry weight basis, has been removed from the controlled substances list. Hemp containing more than 0.3% of THC, however, is not protected under federal law and is now classified as non-hemp cannabis or marijuana. While marijuana remains illegal at the federal level, the Farm Bill removes hemp and its derivatives from the controlled substance list, effectively legalizing CBD derived from hemp at the federal level.

The Farm Bill empowers states to regulate the production and sale of hemp within their respective borders. To partake in hemp production, states must submit plans to the United States Department of Agriculture (“USDA”), detailing processes associated with how they will gather information, test, inspect and dispose of hemp and its byproducts. The USDA secretary must approve or reject these plans within 60 days from receipt. If a state chooses not to submit a plan to the USDA, producers will be able to apply directly to the USDA for approval. Please note that, pursuant to the terms of the Farm Bill, states have the power to enact stricter laws than those enacted at the federal level and may ban hemp production and sale altogether.

Marketing and Selling Hemp

The Farm Bill places the onus on states to regulate the production and sale of hemp within their respective borders and requires that states facilitate the transportation or shipment of hemp across state lines. Notwithstanding passage of the Farm Act, please note that the Food and Drug Administration will continue to monitor the industry in connection with its authority to regulate CBD-derived products that are marketed as medicine or supplements to consumers. In this rapidly-evolving regulatory environment, hemp businesses must remain apprised of both federal and state regulations.