On January 15, 2021, the USDA released the Final Rule for the Domestic Production of Hemp (“Final Rule”). [Read Final Rule here.]  Importantly, this rule does not go into effect until March 22, 2021.  The Biden administration has announced that it will review a number of rules that have been published in the Federal Register, but have not yet gone into effect, including in the Final Rule.   Therefore, this blog post summarizes the Final Rule as it was published in the Federal Register by the Trump Administration.

TAMU AgriLife photo by Kay Ledbetter

You may recall in 2020, the USDA published the Interim Final Hemp Rule (“IFHR”), allowing for the legal production of hemp in the United States.  [Read blog post here.]  After that IFHR was published, the UDSA received nearly 6,000 comments from individuals, industry, agricultural groups, members of Congress, agencies, the scientific community, States and Tribes.  After considering these comments, the USDA published the Final Rule.  There were a number of important modifications made in the Final Rule, many of which could benefit hemp growers around the country.  The Final Rule contains the following key provisions:

Changes to Sampling

• Increased sampling window:  The sampling window was increased from 15 days in the IFHR to 30 days in the Final Rule.  This will allow producers more time and flexibility between taking the sample and harvesting the hemp crop.
• Modification of sampling area on plant:  The IRHF required that samples be taken from the top 1/3 of the plant.  The Final Rule will allow sampling from the flowering tops of the plant by cutting 5″-8″ from the main stem (includes the leaves and flowers), terminal bud (occurs at the end of a stem), or central cola (cut stem that could develop into a bud).  The practical impact of this change is to allow more stems and leaves to be included in the sample, which could result in lower THC levels than the prior top 1/3 requirement.
• Performance-based sampling methods allowed:  The IFHR set forth a specific, detailed sampling protocol that was required to be used in sampling hemp crops.  The Final Rule will allow for States and Tribes to implement a “performance-based” method to sampling.  Essentially, this gives States and Tribes more freedom to consider certain facts when determining the best sampling method to use.  The Rule says that States and Tribes may consider the seed certification process, whether the producer is conducting research for an institute of higher education or that is government funded,  whether a producer has consistently produced compliant hemp plants over a period of time, whether a producer is growing “immature” hemp like seedlings, clones, microgreens, or other non-flowering cannabis, and other similar factors.  The USDA will have to approve of any performance-based method before it may be utilized by the State or Tribe.  For more information, see the USDA Sampling Guide.

Testing

• DEA-registered laboratory requirement waiver extended: The Final Rule extends the waiver of the DEA-registered laboratory requirement through December 2022.   While the IFHR required that all testing be done by a DEA-registered laboratory, the USDA suspended that requirement for the 2020 growing season, citing a concert that there may not be enough qualified laboratories.  The Texas Department of Agriculture also suspended this requirement.  The Final Rule makes this suspension official through the 2021 growing year, stating that the DEA-registered laboratory requirement will not go into effect until January 2023.

Enforcement

• Increased safe harbor standard for negligence:  The IFHR provided that if a crop tested above the acceptable hemp THC level, a producer would not be guilty of a negligent violation so long as the crop tested below .5% and the producer used reasonable production practices.  This was essentially a safe harbor provision, protecting growers against being guilty of a negligent violation if the requirements were met.  The Final Rule increases the THC level for the safe harbor provision from .5% to 1%.  This means that if a crop tests hot–above the .3% allowable THC level–a producer will not face a negligent violation if his or her crop tested under 1% THC and the producer used reasonable farming practices.  Keep in mind, this rule only prevents the producer from facing the ramifications of a negligent violation, it does not allow the crop to be harvested.  Any crop testing above the acceptable hemp THC level will be required to be disposed of.
• Limit to one negligent violation per year:  The Final Rule provides that a producer may only receive one negligent violation per growing season.

Disposal

• Multiple disposal options:  The Final Rule allows for multiple disposal options for unauthorized crops.  Remember, the IFR contained strict requirements that disposal could only be conducted by a DEA reverse distributor.  The UDSA suspended the requirement for the 2020 growing season, the Texas Department of Agriculture followed suit.  Now, the Final Rule officially allows for the following disposal methods: plowing under, mulching/composting, disking, shredding with a bush mower or chopper, burying, burning, and remediation.  For more information, see the USDA Remediation and Disposal Guidelines.
• Remediation option added:  You may note the remediation is now a listed disposal option under the Final Rule.  This is a significant change was it was not an option under the IFR.  Remediation allows a grower whose crop tests above the acceptable hemp THC level to take action and re-test.  In particular, the producer may: (1) remove and destroy flowering material and re-test stalk, stems, leaves, seeds to see if the new sample is below the acceptable hemp THC level; or (2) shred the entire plant to create a biomass-like material and re-test for acceptable hemp THC level.  These options are important and may allow a producer to salvage some value from a hot crop.

Rules Not Modified

Despite many comments, there were several key rules that were not modified by the Final Rule:

• THC limit remains .3%: The acceptable THC limit remains .3% in the final rule, despite a push by many to increase the limit to a higher amount, such as 1%.  It seems likely such a change could not be made by the USDA in a regulation, but would require a modification of the statutory language defining hemp.
• Total THC measurement required:  The required measurement for testing remains the total THC measurement, which takes into account both THC and THCA, an acid that has the potential to convert into THC.  Many commenters sought for this standard to be changed to only require measurement of the THC level, rather than also including THCA, but this change was not included in the Final Rule.
• Whole-plant sampling not allowed:  Many commenters sought whole-plant sampling, which would allow samplers to collect the entire plant for testing.  While the Final Rule did allow for a modification in sampling procedures to include more of the plant, whole-plant sampling was rejected.

Conclusion

Again, keep in mind that these rules are under review by the Biden administration, so there could be additional modifications.  Even if there are no changes made, these rules are not effective until March 22, 2021.  Then, it will be important for growers to see which of these new rules are adopted by the regulatory agency in their own state.  In Texas, growers will need to determine whether the Texas Department of Agriculture makes similar modifications to the TDA hemp regulations.

Finally, if you are interested in the legal and economic issues surrounding hemp production, we’ve got an online program for you!  We are working now on recording a series of videos addressing key issues related to the law and economics of hemp production in Texas that should be out in the next month or so.  Be sure to stay tuned so you don’t miss this information!