McConnell Bill Will Legalize Hemp In Every State

The most notable thing about The Hemp Farming Act of 2018, S. 2667, introduced by Senator McConnell on April 12, 2018 (Hemp Bill), is that it will make hemp lawful throughout the country at both the federal and state levels. This is huge. When advising my clients about industrial hemp we invariably discuss the difficult issue of which states they should avoid. The Hemp Bill fixes that problem. (I should point out that I assume that this Bill, or some version of it, will be enacted. I intend to address other aspects of it; however, since this is arguably the most important one I think it should be addressed first.)

The state-specific problem is based on the wording of the Agricultural Act of 2014 (Farm Act). A state may enact a pilot industrial hemp research program. The word “may” is crucial, since it does not require a state to create a pilot program. It only authorizes states to do so. If a state creates a pilot program then industrial hemp grown pursuant to the program and having delta-9 tetrahydrocannabinol (THC) levels that do not exceed 0.3% is lawful in the state. To be clear, there are two elements involved: (1) that the hemp be grown pursuant to a state’s pilot program, and (2) that the hemp’s Δ9 THC concentrations do not exceed 0.3% (Legal Limit). I’m always taken aback when people are unaware of the first element. A cannabis plant that does not exceed the Legal Limit is not lawful industrial hemp unless it is also grown pursuant to a state’s pilot program.

Additionally, the practical effect of specific provisions in the FY18 Agriculture, Food and Drug Administration, Rural Development, and Related Agencies Appropriations Act (Budget Act) is to make industrial hemp lawful at the federal level throughout the country. And, generally speaking, industrial hemp grown in one state is lawful in another state that has an industrial hemp pilot program. None of this is new or controversial.

The problematic issue is that since the Farm Act does not require a state to enact a pilot program industrial hemp is not legal at the state level in every state. For this simple reason, the Farm Act does not preempt state law. (For the non-lawyers reading this post, “preemption” is the doctrine that federal law overrides or displaces state law when the two conflict.) Industrial hemp is nothing more than unlawful marijuana in states that do not recognize “industrial hemp” as a separate legal category. This causes enormous problems for interstate commerce. Every state’s pilot program is different and some are more restrictive than others. This makes it difficult to determine at times whether industrial hemp from one state is lawful in another. Complicating matters is the fact that some states, such as Georgia, Illinois, and Texas, do not have pilot programs but seem to unofficially tolerate industrial hemp. (Texas policy may soon change.) I keep a running and evolving list of “states to avoid” that I often share with my clients. It’s an imperfect list, but I’ve yet to find a better one. In short, industrial hemp is not lawful under the laws of every state.

The Hemp Bill fixes this problem. Rather than using the term “may”, it removes the requirement that hemp be grown according to a state’s program altogether. Hemp is defined as all parts of the cannabis plant with Δ9 THC concentrations that do not exceed the Legal Limit. The first element of the Farm Act, that it be grown pursuant to a state’s pilot program, is removed. Importantly, unless granted specific approval by the federal government, a state does not regulate hemp. The Hemp Bill states, “A state desiring to have primary regulatory authority over the production of hemp in the state or Indian territory” shall submit a plan. This means that a state does not have primary regulatory authority unless it submits a plan which is approved. The Hemp Bill further states that “nothing in this section prohibits the production of hemp in a state or territory” for which a state plan is not approved. The section that follows this grants the federal government “sole authority” to issue guidelines that relate to the production of hemp.

Taken together, the Hemp Bill triggers federal preemption, notwithstanding section 297B(a)(3)(A), which limits a state’s authority only “to the extent that law is consistent with this subtitle“. (This is sort of like your boss saying that you can work in your own way so long as you don’t violate any company policies. While it’s true that this gives you some some leeway in how you structure your day it’s clear that company policy controls how you do it.) The bottom line is that federal law governs hemp unless a state’s plan to regulate it is approved. Importantly, a state can no longer refuse to enact a hemp program and thereby prohibit its citizens from participating in the hemp industry. If enacted, the Hemp Bill will make hemp legal at both the federal and state level across the country. For an industry that is growing rapidly despite the patchwork of state by state laws, this will be a significant boost.

A version of this article was originally published in the Cannabis Law Report, April 27, 2018. Thanks to Sean Hocking, John Taylor, and the entire CLR group for their excellent journalism about the cannabis industry.

Rod Kight is a lawyer based in Asheville, NC. He is licensed in North Carolina and Oregon and represents legal cannabis businesses. You can contact him by clicking here.