June 18, 2019

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2018 Farm Bill Legalizes Industrial Hemp

Passage of the Agricultural Improvement Act of 2018 (commonly known as the “Farm Bill") into law on Thursday, December 20, 2018 is anticipated to encourage rapid growth in the burgeoning U.S. hemp industry. The $867 billion Farm Bill legalizes industrial hemp, a boon for cannabidiol, or CBD oil. Under the Farm Bill, the U.S. Department of Agriculture (USDA) will regulate hemp, which will no longer be considered a controlled substance under the jurisdiction of the U.S. Department of Justice (DOJ). The Bill will go into effect January 1, 2019.

Industrial hemp is considered any part of the cannabis plant with no more than 0.3 percent of tetrahydrocannabibol (THC) on a dry weight basis. Farm Bill Sec. 10113 (amending 7 U.S.C. 1621 et seq.). Section 12619 of the Farm Bill formally removes hemp-derived products from Schedule I status under the Controlled Substances Act, although it does not legalize CBD more broadly. The Farm Bill authorizes CBD only to the extent that it is contained in hemp produced in a manner consistent with the Farm Bill and other federal and state regulations.

Under prior federal law, industrial hemp could only be legally produced if grown or cultivated for purposes of research and allowed under state law. The Farm Bill is expected to lead to major growth in the cannabis industry at a national level. The Farm Bill allows states to become the primary regulators of hemp cultivation while enabling researchers to apply for federal grants and making the crop eligible for federal crop insurance. Id. § 7605(a); 10113.

The Farm Bill creates guidelines by which tribes and states can take primary regulatory authority over the production of hemp, requiring a plan to be submitted to USDA. Id. § 10113. It also amends both the National Agricultural Research, Extension, and Teaching Policy Act of 1977 and the Critical Agricultural Materials Act to make hemp eligible for research and development funding. The Farm Bill further requires a study of pilot programs “to determine the economic viability of the domestic production and the sale of industrial hemp.” Id. at § 7605(a) (amending 7 U.S.C. 5940).

Of special note, hemp’s new legal status may also portend significant changes to federal pesticide policy under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA). To date, the U.S. Environmental Protection Agency (EPA) has not registered any pesticides for use on cannabis, citing the illegal status of cannabis under federal law. Even as cannabis became legalized under state laws in many U.S. jurisdictions, EPA turned down efforts by those individual states to approve “Special Local Needs” registrations that would have allowed cannabis uses for pesticides under FIFRA Section 24(c). With legalization of industrial hemp under the Farm Bill, however, EPA will now have an opportunity to consider approving nationwide, registered pesticide uses on hemp grown in full accordance with federal law and FIFRA 24(c) Special Local Needs registrations as appropriate.

In addition, while hemp-derived CBD may be off the Schedule I list, it will still be subject to regulation by the U.S. Food and Drug Administration (FDA). FDA currently considers CBD a drug, and an illegal food ingredient. Hemp seed oil has been deemed “Generally Recognized As Safe” (GRAS), but FDA needs more scientific evidence for CBD.

The one exception is for a pharmaceutical grade CBD product FDA approved in June 2018 for treatment of epilepsy, Epidiolex. It is classified as a Schedule V substance, and is currently available by prescription in all 50 states.

© 2019 Beveridge & Diamond PC

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Alan J. Sachs, Beveridge Diamond, Food biotechnology lawyer, bioenergy industries attorney
Principal

Alan’s practice focuses on the wide range of regulatory issues faced by the global agriculture, food, biotechnology, and bioenergy industries. His practice includes all aspects of the U.S. Environmental Protection Agency’s (EPA) regulation of pesticides, including the manufacture, import, distribution, labeling, registration, and use of all types of consumer and agricultural pesticide products under the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA). As part of his FIFRA legal practice, Alan frequently supports the data rights objectives of Beveridge &...

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Mackenzie Schoonmaker, Environmental Lawyer, Beveridge & Diamond Law Firm
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Mackenzie Schoonmaker focuses her practice on litigation and environmental regulatory matters.  Ms. Schoonmaker’s litigation practice includes representing clients in state and federal courts, as well as in data compensation arbitrations under the federal pesticide statute, FIFRA.  Most recently, Ms. Schoonmaker was part of the Firm’s trial team that secured a defense judgment in the District of Columbia Superior Court after a three week trial on tort claims alleging the client supplied corrosive water to apartment buildings.

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Chris Strunk, Beveridge Diamond, Environmental lawyer
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Chris counsels clients on toxic tort, commercial litigation, and business transactions, with a focus on complex litigation involving the defense of toxic injury product liability and premises liability claims involving asbestos, mold, and airborne and water-borne contaminants and chemicals.

He represents multinational manufacturers of heavy industrial equipment, such as valves, pumps, and automobile engine gaskets and brakes; flooring material manufacturers; pesticide and fertilizer manufacturers and suppliers; and chemical and petrochemical...

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Kathryn E. Szmuszkovicz, Biotechnology Attorney, Beveridge Diamond Law Firm
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Ms. Szmuszkovicz chairs the Pesticides and Biotechnology Section of Beveridge & Diamond, P.C.'s Litigation Practice Group. She litigates and provides alternative dispute resolution, compliance, strategic planning, and commercial services for clients who manufacture, sell, and use products regulated by EPA, USDA, FDA, DOI, DOC, and analogous state agencies under the broad range of environmental, health, and safety laws that these agencies implement. She holds an AV Preeminent Peer Review Rating from Martindale-Hubbell, is named in the 2013 edition of both Best Lawyers...

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