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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.

© 2020 Beveridge & Diamond PC National Law Review, Volume VIII, Number 360
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Alan J. Sachs Regulatory Attorney Beveridge & Diamond Washington, DC
Principal

Alan’s practice focuses on the wide range of regulatory issues faced by the global agriculture, food, biotechnology, and bioenergy industries.

Practicing environmental law provides him with daily opportunities to use his legal skills and training to help clients overcome often extremely technical business and regulatory challenges in order to ensure compliance with applicable environmental requirements.

He advises numerous Forbes Global 2000 companies on the legal and regulatory requirements associated with both domestic and foreign production, and the import, export, and...

202-789-6049
Mackenzie S. Schoonmaker Environmental Litigation Attorney Beveridge & Diamond New York, NY
Principal

Mackenzie’s practice includes both litigation and regulatory matters arising under FIFRA, the Clean Water Act, and related environmental laws.

She is passionate about conserving air, water, wildlife, and land for future generations, and enjoys helping clients navigate and enforce the detailed framework of environmental law because she believes compliance is key to preventing adverse impacts to the environment.

Mackenzie is a co-chair of Beveridge & Diamond’s Industrial Hemp & Cannabis industry team. She advises clients, and regularly writes and presents, on federal and state environmental regulations impacting this thriving industry. 

Under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), Mackenzie represents pesticide companies in data compensation arbitrations, focusing on defending the rights of data owners against follow-on registrants of pesticides. She has also worked extensively with task forces comprised of national and multinational companies of all sizes that operate as joint ventures or limited liability companies to generate data and other information to meet government requirements under FIFRA.

Among the wide range of issues under the Clean Water Act that Mackenzie has handled are assisting companies with responses to Clean Water Act Section 308 information requests and Clean Water Act Section 404 compensatory mitigation requirements.

Mackenzie also defends public utilities against toxic tort claims. She was part of the team that obtained a defense judgment after a three-week trial regarding claims alleging that the client supplied corrosive water to apartment buildings. The case, Cormier v. D.C. WASA, 2011 D.C. Super. Lexis 7, 84 A.3d 492 (2013), was successfully upheld on appeal.

212-702-5415
Christopher D. Strunk Environmental Litigation Attorney Beveridge & Diamond San Francisco, CA
Of Counsel

Christopher D. Strunk has more than 20 years of experience litigating complex environmental and toxic tort disputes.  

He focuses on the defense of large, multi-party environmental matters, including mass tort and products liability litigation involving alleged toxic injury arising from asbestos, lead, mold, solvents, and other contaminants. He has represented microchip and technology companies, chemical and petrochemical companies, heavy equipment manufacturers, and the pesticide and fertilizer industry. Over the past five years, he has also developed a significant industrial hemp...

415-262-4016
Kathryn E. Szmuszkovicz Litigation Attorney Beveridge & Diamond Washington, DC
Managing Principal

Kathryn E. Szmuszkovicz litigates and provides strategic regulatory counsel.

Kathy litigates on behalf of individual companies, groups of companies and trade associations in federal and state courts across the country. She also provides alternative dispute resolution (ADR), compliance, strategic planning, and commercial services focused on the regulatory aspects of her clients’ businesses. Kathy’s practice focuses on clients who manufacture, sell, and use products regulated by EPA, USDA, FDA, DOI, DOC, and analogous state agencies under the environmental, health, and safety laws...

202-789-6037
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