UPDATE: On February 27, 2020, the USDA announced that it will temporarily delay enforcement of two provisions of the Interim Final Rule on hemp production. until October 31, 2021 or the publication of the Final Rule, whichever is earlier. First, the DEA will delay enforcing the requirement that THC testing must be conducted at DEA registered laboratories. Instead, testing may be conducted by labs that are not yet DEA registered. Second, USDA will delay enforcement of the requirement that producers use a DEA-registered reverse distrubutor or law enforcement to dispose of non-compliant plants. Instead, the producer may dispose of his or her crop using one of the methods listed by the USDA, which include plowing under, disking, and burning, among other options. The USDA says it is delaying the enforcement of these rules due to comment received in response to the Interim Final Rule and from discussions with states as they develop their plans. “We have learned that these provisions will serve as a significant hindrance to the growth of a domestic hemp market at this nascent stage.” [Read guidance here.]
After months of anticipation, the USDA has released its Interim Final Hemp Production Rule (IFR). [Read full document here.] This blog post is an attempt to summarize some of the key provisions included in the IFR. To me, the three issues that jumped out were the 15-day window for testing prior to harvest, the new concept of “acceptable hemp THC level” with regard to THC testing, and the compliance provisions related to negligent violations.
What is this regulation?
This is an interim final rule with request for comments submitted by the Agricultural Marketing Service, USDA. The rule will go into effect on the day it is published in the Federal Register and will last for the following 2 years. The creation of this rule was mandated by the 2018 Agricultural Improvement Act (“Farm Bill”).
As described by the rule itself, “this rule outlines provisions for the Department of Agriculture (USDA) to approve plans submitted by States and Indian Tribes for the domestic production of hemp” and establishes a federal plan for producers in States or territories of Indian Tribes that do not have their own USDA approved plan.
Importantly, the USDA will be taking comment on the rule for 60 days after it is published in the Federal Register, and the USDA specifically requests comments from interested parties on certain topics included in this IFR. After taking comments into account, the USDA will publish a Final Rule within two years of this IFR being published in the Federal Register.
What is hemp?
Hemp is defined as “the plant species Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.” Any cannabis with a THC level exceeding .3% is considered marijuana, which remains listed as a schedule I controlled substance under the Controlled Substance Act (CSA) regulated by the DEA.
Who will regulate production?
If a State or Indian Tribe wants to have primary regulatory authority over hemp production within its territory, the State or Tribe must submit a plan concerning the monitoring and regulation of hemp production to the Secretary of the USDA for approval. Much of the IFR addresses what must be contained in those plans. In States or Indian Tribes where the production of hemp is legal, but there is not an approved State or Tribal plan in place, the USDA will establish a Departmental plan to govern hemp production in those areas. A large portion of the IFR lays out provisions of this Departmental program.
When the IFR is published in the Federal Register, the USDA will begin review of State and Tribal plans and will begin issuing licenses under the Departmental plan.
Requirements for State & Tribal plans
All State and Tribal plans must be submitted to and approved by USDA prior to their implementation. The IFR makes clear that States and Tribes have the ability to impose more stringent provisions than those included in the 2018 Farm Bill. State and Tribal Plans must address the following requirements:
Land Used for Production
Plans must contain a process for information on hemp production to be gathered and maintained. Specifically, information on hemp production sites must be collected for each producer covered by the Plan. The required information includes a legal description of the land and geospatial location for each field, greenhouse, or other production site. States and Tribes must retain this information for at least 3 years. In addition to providing information to the State or Tribe, producers will be required to report their hemp crop acreage to the USDA Farm Services Agency (FSA). When reporting to the FSA, producers must provide their State or Tribe-issued license number, and this will create a nationwide hemp production identification system.
Sampling and Testing for delta-9 tetrahydrocannabinol
State and Tribal plans must incorporate procedures for sampling and testing plants to ensure the cannabis grown and harvested does not exceed the acceptable hemp THC level. Sampling procedures must ensure a representative sample of the hemp production is physically collected and delivered to a DEA-registered laboratory for testing. Within 15 days prior to anticipated harvest, a Federal, State, local, or Tribal law enforcement agency or other Federal, State, or Tribal designee shall collect samples from the flower material from hemp plants for testing. [NOTE: The USDA is specifically requesting comment on this 15-day sampling and harvest timeline.] Testing must be conducted by a DEA-registered laboratory. The IFR notes that USDA is considering establishing a fee-for-service hemp laboratory approval process for labs that wish to offer THC testing services. Additionally, USDA is considering requiring all testing laboratories to have ISO 17025 accreditation (which assesses general competence of testing laboratories). [NOTE: USDA is specifically requesting comment on these considerations.] USDA has published a guidance document related to sampling, available here.
Laboratories must use “post-decarboxylation or other similarly reliable analytical methods where the total THC concentration level reported accounts for the conversion of delta-9-tetrahydrocannabinolic acid (THCA) into THC.” The IFR notes that currently, testing methodologies using gas or liquid chromatography with detection meet this requirement. The total THC, which combines the THC and THCA content, will be reported on a dry weight basis. States and Tribes may submit alternative sampling and testing protocols to USDA for approval.
Recognizing the serious potential impact of hemp testing over the .3% limit–the crop being destroyed and producers “likely losing most of the economic value of their investment”–the USDA notes the importance of there being a “high degree of certainty” that the THC concentration is accurately measured. To ensure this, the IFR requires laboratories to calculate and include the measurement of uncertainty (MU) when reporting THC results. The MU is defined as “the parameter, associated with the result of a measurement, that characterizes the dispersion of the values that could reasonably be attributed to the particular quantity subject to measurement.” In other words, USDA notes, it is similar to a margin of error.
Based on the requirement to report the total THC and the MU, the IFR includes a definition of “acceptable hemp THC level” which will take the MU into account. Essentially, the lab will report a range and if .3% or below is within the range, the sample will be considered hemp. If .3% is outside the range, the sample will not qualify as hemp and the production area will be subject to destruction. The IFR offers the following example: “if a laboratory reports a result as 0.35% with a measurement of uncertainty of +/- 0.06, the distribution or range is 0.29% to 0.41%. Because 0.3% is within that distribution or range, the sample, and the lot it represents, is considered hemp for the purpose of compliance with the requirements of State, Tribal, or USDA hemp plans. However, if the measurement of uncertainty for that sample was 0.02%, the distribution or range is 0.33% to 0.37%. Because 0.3% or less is not within that distribution or range, the sample is not considered hemp for the purpose of plan compliance, and the lot it represents will be subject to disposal.”
Importantly, the IFR notes that this definition and use of “acceptable hemp THC level” in this rule does not affect the definition of hemp in the Farm Bill or the definition of marijuana under the CSA. The provisions of the Farm Bill and the CSA “remain in effect for purposes of federal criminal prosecutions as well as federal civil and administrative proceedings arising under the CSA.” The use of “acceptable hemp THC level” is used only for purposes of determining obligations of licensed hemp growers under the IFR in order to account for uncertainty in the test results.
Disposal of non-compliant plants
State and Tribal plans must include procedures for disposal of plants produced in violation of the IFR. If a producer grows cannabis that exceeds the acceptable hemp THC level, the plant must be disposed of in accordance with CSA and DEA regulations because the plant constitutes marijuana. The material must be collected for destruction by someone authorized under the CSA to handle marijuana, such as a DEA-registered reverse distributor or an authorized Federal, State, or local law enforcement officer.
Compliance with enforcement procedures
State and Tribal plans must include compliance procedures to ensure hemp is being produced in accordance with the IFR. The includes, at a minimum, annual inspections of a random sample of hemp producers. Plans must also include procedures for handling violations. States and Tribes have flexibility to determine whether producers have violated the State/Tribal plan, but there are certain requirements that must be included, specifically related to negligent acts and acts involving culpable mental state greater than negligence.
Negligent Acts: Negligence is defined as “a failure to exercise a level of care that a reasonably prudent person would exercise in complying with the regulations” set forth under the IFR. Examples included in the IFR include failing to provide a legal description of the land where the hemp is grown, not obtaining the required license or other authorizations from the State or Tribe, or producing plants exceeding the acceptable THC level. Importantly, the IFR states that hemp producers do not commit a negligent violation if they produce plants over the acceptable hemp THC level if they: (1) use reasonable efforts to grow hemp; and (2) the plant does not have a THC concentration of more than .5% on a dry weight basis. Examples of reasonable efforts included in the IFR are using certified seed, using other seed that has reliably grown compliant plants in other parts of the country, and engaging in other “best practices.” [NOTE: USDA specifically seeks comments on what other reasonable efforts should be considered.] States and Tribes will be allowed to determine whether or not a licensee under their plan has taken reasonable steps to comply with plan requirements. Keep in mind, this portion of the rule provides that a producer would not be considered negligent, but they would still be required to dispose of plants if the THC concentration exceeded the acceptable hemp THC level.
If a State or Tribe determines a negligent act has occurred, a “corrective action plan” will be established. This will set a date by which the producer will correct the violation, require periodic reporting for at least two years following the violation. If a producer commits a negligent violation three times in a five-year period, he or she will be ineligible to produce hemp for five years following the third violation. Negligent violations are not subject to criminal enforcement action by local, Tribal, State, or Federal Government Authorities.
Culpable mental state greater than negligence: For violations where a producer acted recklessly, knowingly, or intentionally, the State Department of Agriculture or Tribe must immediately report the producer to the Attorney General, USDA, and the chief law enforcement officer of the State or Tribe.
Additionally, a person convicted of a felony related to a controlled substance under State or Federal Law is prohibited from participating in a State or Tribal Plan and from producing hemp for 10-years following the date of conviction. (An exception exists for someone who has lawfully grown hemp under the 2014 Farm Bill before December 2018 and whose conviction occurred before that date). In order to comply with this requirement, States and Tribes must review criminal history for each applicant. When an applicant is a business entity, the tribe must review criminal history for each key participant in the business.
Finally, anyone who materially falsifies any information submitted to the hemp program will be ineligible to participate.
State and Tribal plans must include procedures to report required information to the USDA.
Certification of resources
All plans must include a certification that the State or Tribe has the resources and personnel necessary to carry out the practices and procedures described in the plan.
Plan approval, technical assistance, and USDA oversight
Once State and Tribal plans are submitted, the USDA will have 60 days to review the plan. If plans are rejected, USDA will provide a letter outlining the deficiencies, and the State or Tribe may submit an amended plan or appeal the rejection.
As noted above, for States or Tribal areas where hemp production is legal but without an approved State or Tribal plan, producers will comply with the USDA Departmental Plan. This plan is outlined in the IFR, but will not be addressed here as the Texas Department of Agriculture will be submitting a State plan to USDA.
Transportation of hemp
The Rule allows for the interstate transportation of hemp and provides that States may not prohibit the interstate shipment of hemp produced in accordance with the law. It does not address international exportation of hemp, but the USDA notes that if there is sufficient interest in exporting hemp in the future, it will work with industry and other federal agencies to facilitate the export process.
Regulation of seed
The USDA will not include a seed certification program in this Interim Final Rule because the same seeds grown in different geographic locations may have different reactions. For example, seeds that are within the .3% THC limit in one part of the country may grow with over the limit in another location. Additionally, the USDA noted that the technology necessary to determine seed planting results in different locations is not advanced enough to make a seed-certification scheme feasible. Also, the USDA says it does not currently have accurate data on the origin of most hemp seed planted in the US. The IFR notes that under the hemp pilot program authorized by the 2014 Farm Bill, various States developed a seed certification program to assist producers in their area. Currently, there is no certified hemp seed in Texas.
The rule briefly addresses the importantation of seed from other countries. Hemp seeds can be imported from Canada if accompanied by either a phytosanitary certification from Canada’s national plant protection organization or a Federal Seed Analysis Certificate for hemp seeds grown in Canada. Seed can be imported from other countries if accompanied by a phytosanitary certificate from the exporting country’s national plant protection organization to verify the origin of seed and confirm no plant pests are detected. The rule does not address import issues further as the importation of seed is regulated by USDA APHIS regulations.