• Jeffrey Friedland

The Devil’s in the Details: The US Department of Agriculture’s Interim Hemp Regulations

Authors Note: The USDA’s Interim hemp regulations have tremendous implications for all stakeholders in America’s hemp industry. Since I have been closely following the implications of federal and state regulations on the hemp industry since the 2014 Farm Bill, this is the first of a new series of articles on the impact of the USDA’s regulations relevant to all industry participants.

November 2, 2019 - The long-awaited US Department of Agriculture (USDA) “Interim Final Rules” on hemp have finally been released. These interim rules are a significant step in enabling American-grown hemp to become a major agricultural crop.

The impact of USDA policies and regulations on all stakeholders in the hemp, extraction and processing, and retail sale of all derivatives of the hemp plant, including CBD is significant.

Since the 2018 Farm Bill was signed into law, all hemp industry stakeholders have been awaiting specific regulatory guidance from the USDA. While the interim rules provide an initial regulatory framework, there is a 60 day comment period. It’s also envisioned that the USDA will issue final regulations within two years. These interim rules should provide general guidance to hemp growers and processors prior to the 2020 planting season.

Highlights of the interim rules include:

The establishment of producer licensing requirements, either through the USDA or state regulations. These will address issues including negligent compared to intentional violations, information sharing between federal and state regulators including law enforcement, and the impact of criminal backgrounds on industry participants.

The establishment of separate sampling and testing rules.

Providing clarification for law enforcement regarding the shipping of hemp across state lines, and the determination of whether the cargo is hemp or marijuana. (This is of particular importance for trucking companies, haulers, and drivers.)

A requirement that testing procedures utilize total THC, measuring both THC and THCA, which must be measured from the part of the plant with the highest THC, the flower or bud. (I believe that this has devastating consequences for many growers.)

Three of my concerns are:

A potential benefit of the interim rules is that they will hopefully provide guidance to banks regarding opening accounts and accepting deposits from hemp businesses.

I view it as very troubling that the interim rules establish a role for the Drug Enforcement Administration (DEA) in overseeing testing labs. This will likely require that DEA certified labs be ISO-17025 certified, which may be prohibitively costly for many existing labs.

The interim rules do not address exports. The export market could be very significant for the hemp industry. The USDA indicated that they would look at the export market in conjunction with other government agencies if there was sufficient interest by industry stakeholders.

In commenting on the interim regulations, Sonny Perdue, the agency’s Secretary, stated, “At USDA, we are always excited when there are new economic opportunities for our farmers, and we hope the ability to grow hemp will pave the way for new products and markets.” He also commented, “We have had teams operating with all hands on deck to develop a regulatory framework that meets congressional intent while seeking to provide a fair consistent and science-based process for states, tribes and individual producers who want to participate in this program.

About Phyto Intel

Phyto Intel provides strategic assistance to enable businesses and entrepreneurs to enter and succeed in the fast-growing and fast-evolving legal cannabis, hemp and CBD markets in the United States and globally.

Phyto Intel’s services are focused on four general areas:

Formulation of food, beverage, and cosmetic products that include CBD

Providing proprietary information on federal, state, and local regulations regarding CBD and products that include CBD

Development of branding, marketing, and sales strategy for products that include CBD

Post-product launch services including analytics and market feedback

Phyto Intel also provides market intelligence, formulation and “go to market” strategies for Consumer Packaged Goods (CPG) companies and CBD producers interested in developing, formulating, manufacturing and marketing food, beverage, nutritional supplement, and cosmetic products containing hemp seed oil and/or CBD.

Phyto Intel’s affiliate, Growth Advisory Group provides various programs and services for cannabis, hemp and CBD producers and marketers.

Phyto Intel LLC

Michael King-Sadick, CEO

Email Michael@phytointel.com

Tel. 303-815-6261

©2019 by Phyto Intel Inc.