We are full steam ahead in 2019, and so far we have held to our new year’s resolutions. However, we want to take a quick look in the rearview mirror. Ohio legislators passed a number of bills in 2018 that affect Ohio agriculture. They range from multi-parcel auction laws to broadband grants, and oil & gas tax exemptions to hunting licenses. Here are some highlights of bills that the Ohio General Assembly passed and former Governor Kasich signed in 2018.
- House Bill 500, titled “Change township law.” As mentioned in a previous blog post, the Ohio General Assembly made a number of generally minor changes to Ohio’s township laws with House Bill 500. The changes included, among other things, requiring a board of township trustees to select a chairperson annually, modifying how vacating township roads and name changes are carried out, allowing fees for appealing a zoning board decision, clarifying how a board can suspend a member of a zoning commission or board of appeals, and removing the requirement for limited home rule townships to submit a zoning amendment or resolution to a planning commission. To learn about more of the changes that were made, visit the Ohio General Assembly’s H.B. 500 webpage here.
- House Bill 480, titled “Establish requirements for multi-parcel auctions.” The Ohio Department of Agriculture regulates auctions, and H.B. 480 gave ODA authority to regulate a new classification of auctions: the multi-parcel auction. Revised Code § 4707.01(Q) will define these as “any auction of real or personal property in which multiple parcels or lots are offered for sale in various amalgamations, including as individual parcels or lots, combinations of parcels or lots, and all parcels or lots as a whole.” For more information, visit the Ohio General Assembly’s H.B. 480 webpage here.
- House Bill 522, titled “Allow outdoor refreshment area to include F permit holders.” A municipality or township may create a “designated outdoor refreshment area” where people may walk around the area with their opened beer or liquor. Previously, only holders of certain D-class permits (bars, restaurants, and clubs) and A-class permits (alcohol manufacturers) could allow their patrons to partake in a designated open area. H.B. 522 will allow holders of an F-class liquor permit to also allow their patrons to roam in the designated area with an open container. F-class liquor permits are for festival-type events of a short duration. However, holders of either permits D-6 (allowing Sunday sales) or D-8 (allowing sales of growlers of beer or of tasting samples) will no longer be eligible for the open container exception. For more information, visit the Ohio General Assembly’s H.B. 522 webpage, here.
- Senate Bill 51, titled “Facilitate Lake Erie shoreline improvement.” As mentioned in a previous blog post, the primary purpose of Senate Bill 51 was to add projects for Lake Erie shoreline improvement to the list of public improvements that may be financed by a special improvement district. S.B. 51 also instructed the Ohio Department of Agriculture (“ODA”) to establish programs to assist in phosphorous reduction in the Western Lake Erie Basin. This adds to the previous instructions given to ODA in S.B. 299 regarding the Soil and Water Phosphorous Program. S.B. 51 further provided funding for a number of projects, ranging from flood mitigation to MLS stadium construction. For more information, visit the Ohio General Assembly’s S.B. 51 webpage here.
- Senate Bill 299, titled “Finance projects for protection of Lake Erie and its basin.” Largely an appropriations bill to fund projects, S.B. 299 primarily targeted water quality projects and research. ODA received an additional $3.5 million to support county soil and water conservation districts in the Western Lake Erie Basin, plus $20 million to establish water quality programs under a Soil and Water Phosphorous Program. Further, the Ohio Department of Natural Resources (“ODNR”) received an additional $10 million to support projects that divert dredging materials from Lake Erie. Stone Laboratory, a sea grant research program, received an additional $2.65 million. The bill also created a mentorship program called OhioCorps, and set aside money for grants to promote broadband internet access. For more information, visit the Ohio General Assembly’s S.B. 299 webpage here.
- Senate Bill 257, titled “Changes to hunting and fishing laws.” ODNR may now offer multi-year and lifetime hunting and fishing licenses to Ohio residents under S.B. 257. Further, the bill creates a resident apprentice senior hunting license and an apprentice senior fur taker permit, and removes the statutory limits on the number of these permits a person may purchase. The bill also creates a permit for a Lake Erie Sport Fishing District, which may be issued to nonresidents to fish in the portions of Lake Erie and connected waters under Ohio’s control. For more information, visit the Ohio General Assembly’s S.B. 257 webpage here.
- House Bill 225, titled “Regards plugging idle or orphaned wells.” H.B. 225 creates a reporting system where a landowner may notify ODNR’s Division of Oil and Gas Resources about idle and orphaned oil or gas wells. Upon notification, the Division must inspect the well within 30 days. After the inspection, the Division must determine the priority for plugging the well, and may contract with a third party to plug the well. To fund this, the bill increases appropriations to the Oil and Gas Well Fund, and increases the portion of the fund that must go to plugging oil and gas wells. For more information, visit the Ohio General Assembly’s H.B. 225 webpage here.
- House Bill 430, titled “Expand sales tax exemption for oil and gas production property.” Certain goods and services directly used for oil and gas production have been exempted from sales and use taxes, and H.B. 430 clarifies what does and does not qualify for the exemption. Additionally, property used to control water pollution may qualify for the property, sales, and use tax exemptions if approved by ODNR as a qualifying property. H.B. 430 also extends the moratorium on licenses and transfers of licenses for fireworks manufacturers and wholesalers. For more information, visit the Ohio General Assembly’s H.B. 430 webpage here.
- Senate Bill 229, titled “Modify Board of Pharmacy and controlled substances laws.” The Farm Bill’s opening the door for industrial hemp at the federal level has led to a lot of conversations about controlled substances, which we addressed in a previous blog post. Once its changes take effect, Ohio’s S.B. 229 will remove the controlled substances schedules from the Ohio Revised Code, which involve the well-known numbering system of schedules I, II, III, IV, and V. Instead, the Ohio Board of Pharmacy will have rulemaking authority to create schedules and classify drugs and compounds. Prior to the removal of the schedules from the Revised Code, the Board of Pharmacy must create the new schedules by rule. S.B. 229 also mentions cannabidiols, and lists them as schedule V under the current system if the specific cannabidiol drug has approval from the Food and Drug Administration. For more information, visit the Ohio General Assembly’s S.B. 229 webpage here.
The end of 2018 effectively marked the end of the 132nd Ohio General Assembly, and 2019 marks the start of the 133rd Ohio General Assembly. Any pending bills from the 132nd General Assembly that were not passed will have to be reintroduced if legislators wish to proceed with those bills. Stay tuned to the Ag Law Blog for legal updates affecting agriculture from the Ohio General Assembly.
Hemp is one of the most talked-about provisions of the new Farm Bill passed earlier this month by Congress and signed by the President on December 20. There’s a lot of excitement about the removal of federal restrictions on hemp production and the economic opportunities for growing hemp. But what exactly does the Farm Bill say about hemp? Can Ohioans now grow, use and sell hemp and hemp products? We dove into the 807 pages of the Farm Bill Conference Report (available here for your reading pleasure) to find answers to your questions about the new legal status of hemp and hemp cultivation.
What is hemp?
Before we go much further in this discussion, it’s important to understand that both hemp and marijuana are species of cannabis, but they have different properties. Of particular note is the fact that marijuana contains much more tetrahydrocannabinol (THC) than hemp. THC is the part of a cannabis plant that can cause a psychoactive effect in certain concentrations, but hemp plants generally do not contain enough THC to produce a “high.” Hemp has many uses— it can be used for construction materials, fabrics and clothing, and animal bedding. It has even been discussed as a potential cover crop. Cannabidiol, or CBD, is a very popular extract of the hemp plant that is alleged to help those with anxiety, pain, inflammation, and other ailments, but not much research has been done to verify its effectiveness for medical use. Note that CBD is also an extract of the higher THC marijuana plant.
Hemp is removed from the federal list of controlled substances—but only if it meets certain requirements
First and foremost, the Farm Bill removes hemp from the federal list of controlled substances. Section 12619 of the bill removes hemp from the definition of marijuana, which is still an illegal drug under federal law. In the same section, the bill federally decriminalizes tetrahydrocannabinols (THC) in hemp. Not all hemp, however, is subject to this exemption. Only hemp and THC as defined in the Farm Bill and as grown under the conditions set forth in the Farm Bill are accorded the exemption.
So, how does the Farm Bill change the definition of hemp? The main hemp provision of the bill, Section 10113, separates hemp from the definition of marijuana and redefines hemp as “the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.”
Coming soon: state and federal hemp production plans
The new law doesn’t allow a producer to start growing hemp today. Instead, Section 10113 of the Farm Bill describes the two situations under which a producer will be able to engage in legal hemp production in the future. In the first situation, the States or Indian tribes may take charge of the regulation of hemp production within their boundaries. To do this, a State must first submit a plan to the USDA through their state department of agriculture. A State plan must include:
- A way to keep track of land where hemp is produced within the state;
- Methods the state will use to test how much THC is in hemp plants;
- A way to dispose of plants or products that have a higher THC concentration than is legally allowed;
- A procedure for inspecting hemp producers;
- A plan for enforcing the law;
- A system for dissemination of a hemp producer’s information to the USDA; and
- Assurances that the state has the resources to carry out the plan.
A producer who wants to cultivate hemp in a State that has an approved hemp production plan must first comply with the State’s plan before beginning to grow hemp. Predictions are that it may take a State about a year to create its hemp production plan and obtain the required USDA approval for the plan.
The second situation for growing hemp comes into play if a State or Tribe does not submit a hemp plan to USDA. In this case, as long as the State has not limited the regulation or production of hemp under state law, the Secretary of Agriculture for the USDA may establish a plan “to monitor and regulate” hemp production within that State. A plan established by the USDA must meet the same criteria as a plan written by a State, and the law also requires the USDA to establish a licensing procedure for producers. Thus, a producer in a State that doesn’t have a hemp plan could legally grow hemp by obtaining a USDA hemp license through the hemp regulations that the USDA will develop, unless the State has prohibited hemp cultivation. Section 10113 specifically states that it does not preempt or limit any state law that “regulates the production of hemp” as well as any state law that is “more stringent” than federal law in regulating hemp production. Thus, a State can outlaw hemp production within its boundaries or include additional restrictions and requirements in its State plan as long as the plan complies with the federal law requirements.
Handling producer violations
What if a hemp producer doesn’t comply with the new law or with the State or USDA hemp production plan? Section 10113 also describes how violations of the law will be handled. If a hemp producer negligently violates a State or USDA hemp production plan, the producer could be subject to enforcement. One negligent violation of the plan would not trigger criminal punishment, but the violator would have to comply with a corrective action plan prescribed by the State or USDA. However, if a producer negligently violates a plan three times in five years, the producer will be banned from producing hemp for five years. Examples of negligent violations in the law include: not providing a legal description of the land where hemp is produced, growing hemp without obtaining a license “or other required authorization” from the State, Tribe, or USDA, or producing hemp with a THC concentration higher than 0.3 percent. If a producer violates a State or USDA plan “with a culpable mental state greater than negligence” (that is, purposely, knowingly, or recklessly), then the State or USDA must report the violation to law enforcement authorities. Furthermore, persons convicted of a felony relating to a controlled substance under state or federal law are generally barred from hemp production for ten years following the date of their conviction, with the exception of persons convicted of a controlled substances felony but lawfully participating in a pilot program under the 2014 Farm Bill. Finally, if a person falsifies an application to participate in hemp production, that person will be totally barred from producing hemp.
Legal hemp not to be prohibited in interstate commerce
The new law also allows for the interstate commerce of legally produced hemp and hemp products. Section 10114 says that a State or Indian Tribe cannot prevent the transportation or shipment of legally produced hemp through its state or territory. While a State may ban the sale of hemp or hemp products solely within its borders, it must allow hemp products to move freely through the State. For example, imagine that Pennsylvania allows hemp production but Ohio does not. Producers of legal hemp in Pennsylvania could not sell the hemp within Ohio, but Ohio could not prohibit a truck, train, or other type of transport from carrying the hemp through Ohio to a destination outside of Ohio.
Hemp becomes eligible for crop insurance
Importantly, the Farm Bill also addresses hemp production risk by amending the Federal Crop Insurance Act to include hemp. Section 11119 adds hemp to the definition of “agricultural commodities” that can be insured and section 11106 adds legally produced hemp to the list of crops that can be insured even after harvested. Other provisions in Title XI waive marketability requirements for researching hemp.
Making way for hemp research funding
Several provisions in the Farm Bill ensure that it is legally permissible to fund hemp research. Section 7129 amends the National Agricultural Research, Extension, and Teaching Policy Act to allow the Secretary of Agriculture to award grants for researching hemp and the development of hemp products. In section 7501, the bill amends the Critical Agricultural Materials Act to allow research on hemp, meaning that Congress believes hemp has the “potential of producing critical materials for strategic and industrial purposes.”
Finally, section 7605 amends the hemp pilot program language from the 2014 Farm Bill (for information on the pilot program, see our previous blog post). The Secretary of Agriculture is tasked with conducting a study on the pilot program and submitting a report on the study to Congress within a year. Section 7605 also repeals the hemp pilot programs, but only one year after final regulation on hemp production under section 10113 is published.
How does current Ohio law treat hemp production?
Ohio law defines marijuana as “all parts of a plant of the genus cannabis…” in Ohio Revised Code section 3719.01. Hemp is in the genus cannabis, as discussed earlier in this post. Therefore, under current Ohio law, hemp is the same as marijuana. Marijuana is a controlled substance under Ohio law, and the law states that “[n]o person shall knowingly obtain, possess, or use a controlled substance.”
What about hemp-derived CBD oil? Ohio enacted a medical marijuana law in 2016, although dispensaries in the state have yet to open (so far, only one dispensary in the state has been licensed). In order to obtain medical marijuana in Ohio, it would have to be prescribed by a physician with which the patient has a “bona fide physician-client relationship,” and the patient would have to have a qualifying medical condition. Medical marijuana can be prescribed and used in oil form under the law. Since Ohio law lumps hemp in with marijuana, this means that in order to obtain CBD oil derived from hemp, a person would also have to follow the steps to obtain medical marijuana. Hemp-derived CBD oil also does not fall under any exceptions in Ohio’s definition of marijuana. Ohio’s State Board of Pharmacy specifically stated in a guidance document that CBD oil can only be legally dispensed from a licensed dispensary. In releasing this guidance, the Board of Pharmacy is purporting to act under the rulemaking authority granted under ORC 3796.04.
Note, however, that there are exceptions to Ohio’s definition of marijuana. According to Ohio law, marijuana “does not include the mature stalks of the plant, fiber produced from the stalks, oils or cake made from the seeds of the plant, or any other compound, manufacture, salt, derivative, mixture, or preparation of the mature stalks, except the resin extracted from the mature stalks, fiber, oil or cake, or the sterilized seed of the plant that is incapable of germination.” Since hemp falls under the definition of marijuana, it is possible that some of these exceptions could also apply to certain hemp products made from stalks or seeds. Thus, it is plausible that some hemp products could be sold and used in Ohio. The law also states, however, that no person (other than those licensed under the medical marijuana law) “shall knowingly cultivate” marijuana. Again, since hemp is part of the state’s definition of marijuana, under the law, that means that nobody can “knowingly cultivate” hemp, either.
In sum, it appears as though some excepted hemp products could be sold in Ohio, but not CBD oil, as it does not fall under the exception. Even if some hemp products can be sold in Ohio, hemp itself cannot currently be cultivated in Ohio. The new hemp language in the Farm Bill allows states to be more restrictive with hemp than the federal government, so Ohio can continue its ban on certain hemp products even with the new federal law. The State cannot, however, stop the transportation of hemp across the State, as explained above. Conversely, Ohio’s General Assembly could remove hemp from Ohio’s definition of marijuana and redefine hemp according to the Farm Bill’s new definition, which could allow for legal hemp cultivation under the Farm Bill. For the time being, growing hemp in Ohio is not legal, but that is subject to change.
Stay tuned to the Ag Law Blog for continuing updates on hemp laws!