An Update on the USDA Interim Final Rule Process for Hemp

By Beau Whitney, Vice President and Senior Economist, New Frontier Data

Given widespread interest, investment, and issues in hemp since the 2018 Farm Bill legalized the plant for nationwide U.S. production for the first time in decades, public comment was bound to be vigorous.

By the time that the U.S. Department of Agriculture (USDA) closed the comment period last month, a reported 4,685 comments had been submitted, reflecting a general lack of certainty about the USDA’s issuance of an interim final rule (IFR) effective until Nov. 1, 2021.

To address industry concerns, Bill Richmond, USDA’s Chief of the U.S. Domestic Hemp Production Plan, addressed the Cannabis Collaborative Conference’ Hemp-CBD Connex in Portland, Ore., as it coincided with the closing of the comment period.

The comments chiefly centered around three key topics: the 0.3% threshold for THC, required destruction of an entire crop if it tested above that limit, and the process by which the crop is tested.

The USDA maintains that the 0.3% threshold is out of its jurisdictional hands as written into the law. The lack of remedies for testing noncompliance raised suggestions that farmers be allowed to ship to processors who could remove the THC to keep the crop viable. 

Another issue of concern was the requirement (as described in the Federal Register) that laboratories be certified by the Drug Enforcement Administration (DEA), and crops tested within 15 days prior to harvest.  By the end of January, 44 labs existed to support more than 16,000 licensed farmers. Consequently, the industry expects to remain bureaucratically constrained a season after other fundamental supply-chain bottlenecks limited output and producers’ ability to bring the crops to market.

Given the uncertainty around the IFR, some states are adopting different approaches to address such. Currently, eight states are approved by the USDA to deploy programs in line with the 2018 Farm Bill, while 19 are in the process of applying for approval.

Other states are delaying their participation in the 2018 Farm Bill rule set by remaining in the 2014 pilot programs, a tactic which has been deployed by 11 states for the benefit of greater flexibility for licensees regarding the testing and any criminality associated with hemp testing above the 0.3% threshold. Notably, the tactic will only delay compliance until October 31.

Meantime, states are establishing rules for hemp products that run contrary to federal regulatory rules, so there is conflict between states and the federal government like that which legalized cannabis states have experienced in adopting medical and adult-use programs since 1996.

Operators must be aware that though the 11 pilot-program legacy states offer protections within their own borders, transporting the hemp leaves the state subject to the rules of other jurisdictions.

The takeaway for farmers: Consult a lawyer and ask questions.

While legislation is being considered in various forms on Capitol Hill, as things stand the USDA projects any rule changes to take up to two years, and at minimum not until after this fall’s harvest.