USDA Issues Legal Opinion Letter on Hemp

The USDA issued an important legal opinion letter (Opinion Letter) today regarding hemp. Submitted by General Counsel Stephen Alexander Vaden, the Opinion Letter contains an executive summary and the letter itself. The USDA also posted a notice and short summary on its webpage. You can read the Opinion Letter by clicking here and the USDA summary by clicking here.

The Opinion Letter makes the following legal conclusions:

(1) Hemp is no longer a controlled substance: “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.” This is fairly uncontested; however, there is a lingering issue regarding whether a state may criminalize hemp. At a bare minimum, and based on the conclusions contained in the letter, a state may not prohibit the transport of hemp through its borders. Additionally, and as discussed below, a state may regulate hemp more stringently than federal law; however, in order to do so it must first submit and have a plan approved by the USDA. Currently, no plan has been approved. (No plans can be approved until the USDA promulgates the federal hemp regulations, which we anticipate occurring in late 2019.) Unfortunately, and despite the clear language in the 2018 Farm Bill, individuals are still being prosecuted under state law for possession and sale of hemp and hemp products, including for transporting hemp through their borders.

(2) States and Indian Tribes may not prohibit interstate transportation of 2018 Farm Bill hemp. “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.” This provision could not be clearer; however, there has not yet been any hemp grown under the 2018 Farm Bill. (It’s all been grown under the 2014 Farm Bill.) So, while this is a helpful conclusion, it has no present impact on the industry. I predict that this single provision will have a major impact on state hemp laws in the near future.

(3) States and Indian Tribes may not prohibit interstate transportation of 2014 Farm Bill hemp. “States and Indian tribes also may not prohibit the interstate transportation or shipment of hemp lawfully produced under the 2014 Farm Bill.” This is arguably the most important conclusion in the Opinion Letter. There have been several high profile instances of midwestern states seizing hemp traveling through their borders. In one instance, discussed and analyzed in the Opinion Letter, the driver was charged with felonies. This clarity should be helpful in resolving these unlawful seizures.

(4) A felony involving a controlled substance disqualifies someone from growing hemp for 10 years. “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.” This provision is disappointing for a number of reasons, including the fact that many people who have been convicted of felonies involving controlled substances are the very people who have been the most active in pressing for cannabis reform. It’s also totally irrational. Under this rule, a person convicted of rape, robbery, criminal fraud, etcetera, could grow hemp (assuming he met the other requirements); however, someone convicted of growing cannabis cannot. That being said, the statute is clear on this point and the only way around it is to lobby for statutory change.

While none of the legal conclusions listed above should come as a surprise to anyone who has been following hemp law, the USDA’s confirmation and clarity regarding these issues is a welcome development.

In addition to the above, the Opinion Letter concludes by addressing, almost in passing, two additional issues: (1) while states and Indian Tribes my choose to regulate hemp more stringently than federal law, they may not prohibit its transport through their borders; and (2) the 2018 Farm Bill did not modify the FDA’s authority to promulgate regulations under the Food, Drug & Cosmetic Act. Again, this is nothing new. However, and with respect to the first conclusion (states and Indian Tribes may regulate hemp more stringently than federal law), I posit that this must be read in conjunction with the requirement under section 297B of the 2018 Farm Bill that a state or Indian Tribe must first submit and have approved by the USDA a plan to regulate hemp production before it can regulate hemp. As to the second conclusion (regarding the FDA), there are important and unresolved issues that are running parallel to the issues address by the USDA.

Truly, it is an exciting time to be involved in hemp.

May 28, 2019

Rod Kight is an attorney who represents lawful cannabis businesses. He speaks at cannabis conferences across the country, drafts and presents cannabis legislation to foreign governments, is regularly quoted on cannabis matters in the media, and maintains the Kight on Cannabis legal blog, where he discusses legal issues affecting the cannabis industry. You can contact him here.