Agriculture Secretary Sonny Perdue said Tuesday his department was opening "a new economic opportunity for America’s farmers” with the issuance of long-awaited rules governing legal hemp production and a path for state and tribal governments to submit regulatory plans for review.
The USDA is setting the minimum rules, allowing states to impose more restrictive requirements. One official said the department would "test drive" the interim rule in the 2020 growing season and then adopt a final rule.
The department's rules are the latest step in the rehabilitation of a crop that had long been banned. Senate Majority Leader Mitch McConnell of Kentucky included provisions in the 2018 farm bill that removed hemp from the Controlled Substances list, where it had been classified as an illegal substance with its cannabis cousin, marijuana.
McConnell built on language he’d gotten into the 2014 farm bill that allowed limited and controlled hemp production overseen by states to make sure pot growers didn’t use hemp as a cover for growing what is still an illegal substance under federal law.
“This will help farmers around the country continue pioneering this crop into the 21st century, and I’m proud to say Kentucky is prepared to take the lead,” McConnell said Tuesday on the Senate floor. He said he had focused on the plant as an alternative for former tobacco growers in Kentucky and an opportunity for the next generation of farmers.
The department is expected to publish the regulatory package Thursday in the Federal Register. The rule will take effect upon publication, but the department will take comment for 60 days. It is offering a preview of the package on its website, giving state and tribal officials an early look at the federal requirements for growing a legal hemp crop, defined as plants with 0.3 percent or less delta-9 tetrahydrocannabinol (THC).
The rules cover issues such as licensing of growers and testing procedures for hemp THC at labs certified by the Drug Enforcement Administration and what to do with hemp with THC levels above 0.3 percent Plants above that percentage in dry weight will be destroyed, according to procedures required for marijuana under the Controlled Substances Act and by the Drug Enforcement Administration.
Hemp is a versatile plant, but the most commercially lucrative product is cannabidiol, an extract from the hemp flower that is commonly referred to as CBD. The Hemp Business Journal reported that hemp-derived CBD sales in the U.S. totaled $240 million in 2018, up from $59 million in 2014. The publication also projected the U.S. market for hemp-derived CBD products will reach $647 million by 2022.
The 2018 farm bill left the Food and Drug Administration responsible for regulating CBD and clarifying its uses. The agency has begun its review, but the hemp industry and politicians are sounding increasingly impatient.
“There are ongoing conversations with the FDA on CBD products, ongoing work to help growers and retailers to access credit and financial products,” McConnell said.
State and tribal governments may submit their hemp regulatory plans to the USDA for review. The department will evaluate and approve the plans within 60 days of submission. The goal is to give state and tribal officials enough time to put the plans into action for a 2020 hemp season that will start with planting in the spring. The interim final rule will sunset in two years.
“We will use the 2020 growing season to test drive the interim rule to guide any adjustments made in the final rule,“ said Greg Ibach, the undersecretary for marketing and regulatory programs, on a call with reporters.
Ibach and Bill Northey, undersecretary for farm production and conservation, said the coming year will be a learning curve for hemp farmers and regulators.
“Throughout this process, USDA has cautioned producers who wanted to grow hemp to make sure they had a relationship with a reliable processor or end user that would buy their crop at the end of the crop year,” Ibach said.
Barb Glenn, CEO of the National Association of State Departments of Agriculture, said the 46 states that have approved hemp production have indicated they will send plans to USDA for review.
“We appreciate USDA’s objective to evolve hemp regulations as the industry matures. We are all learning as this industry grows,” Glenn said in a statement.
The USDA will offer alternatives for growers who live in states or tribal lands that have approved hemp production within their boundaries but that don’t submit plans for federal review.