USDA rolls out its hemp rule: is Ohio ready?

By:Peggy Kirk Hall, , Associate Professor, Agricultural & Resource Law , Associate Professor, Agricultural & Resource Law Thursday, October 31st, 2019

Legalized hemp production in the U.S. took a major step forward today with the publication of the USDA’s rule establishing the “U.S. Domestic Hemp Production Program.”    States and potential hemp growers have been awaiting this rule since the Farm Bill legalized hemp back in December 2018 but required that regulatory programs be established for overseeing hemp production.  Today’s hemp rule sets up the regulatory framework for state departments of agriculture, Indian tribal governments and the USDA to license producers who want to grow hemp as a commodity crop. 

What’s in the hemp rule?

The hemp rule lays out the requirements for establishing Hemp Production Plans within States or Tribal governments and creates a USDA administered licensing program for producers in areas that choose not to regulate hemp production.  Other parts of the rule include definitions, appeal provisions, and reporting requirements.  The rule also addresses the interstate transportation of hemp.  Here’s a quick summary of provisions that affect Ohioans.

Requirements for State and Tribal Hemp Production Plans.    A State or Tribe must include the following in a Hemp Production Plan that the USDA must approve before the State or Tribe can allow hemp production within its borders:

  • Plans to maintain relevant producer and land information.  A state must collect, maintain and provide USDA with contact and location information for each licensed hemp producer, including personal information about the individual or business and location information about the land where hemp is produced.
  • Plans for accurate and effective sampling and testing.  A plan must include procedures for collecting hemp flower samples; conducting sampling and testing of plants 15 days prior to any harvest; ensuring that sampling methods are reliable and represent a homogeneous composition of the sampling area; preventing commingling of plants from different sampling areas; requiring that producers are present during sampling; and allowing samplers to have unrestricted access to hemp plants and all land and facilities used for cultivating or handling hemp.
  • Procedures to accurately test THC levels in samples.  The rule lays out suggested reliable testing methods but does not establish a single, national testing procedure for determining whether a hemp plant falls beneath the 0.3 threshold for THC, the psychoactive ingredient that distinguishes hemp from marijuana.  However, a State or Tribe must use a testing lab that is registered with the Drug Enforcement Agency and must require the lab to follow testing performance standards.  The standards must include evaluation of “measurement of uncertainty,” a concept similar to determining the margin of error, and must account for the uncertainty in THC test results. 
  • Procedures for disposal of non-compliant plants.  A State or Tribal plan must prohibit any handling, processing, or entering the stream of commerce of any hemp grown in an area that exceeds the acceptable THC level and must have procedures for disposing of the plants, verifying disposal, and notifying USDA of non-compliant plants, including provision of test results to USDA.
  • Inspection procedures.  A plan must include procedures for annual inspections of random samples of licensed producers. 
  • Reporting procedures.  A plan must explain how a State or Tribe will submit all of the information and reports required by the rule, which includes monthly producer reports, monthly hemp disposal reports, and annual reports of total planted, harvested, and disposed acreage.  The plan must also require producers to report crop acreage to the Farm Service Agency.
  • Corrective action plans.  A required corrected action plan will address procedures for allowing producers to correct negligent regulatory violations such as failing to provide a legal description, failing to obtain a license, and exceeding the THC level.  The procedures must include a reasonable compliance date, reporting by the producer for two years after a violation, five years of ineligibility for producers with three negligence violations with a five-year period, and inspections to ensure implementation of corrective action plans.
  • Enforcement for culpable violations.  A plan must have procedures for reporting any intentional, knowing, willful or reckless violations made by producers to the U.S. Attorney General and chief law enforcement officers of the State or Tribe.
  • Procedures for addressing felonies and false information.  The plan must not allow a producer with a felony conviction relating to controlled substances to be eligible for a hemp license for a period of ten years from the felony conviction, and must prohibit a producer who materially falsifies information on an application to be ineligible for a license.

Plan review by USDA.  The rule states that after a State or Tribe submits a hemp plan, USDA has 60 days to approve or deny the plan.  The rule also allows USDA to audit approved state plans at least every three years. 

Interstate commerce of hemp.  The rule reiterates an important provision first mentioned in the 2018 Farm Bill: that no state can prohibit transportation of hemp or hemp products lawfully produced under an approved state plan or a USDA license.

USDA issued licenses.  A producer in a state that chooses not to regulate hemp production may apply to the USDA for a license to cultivate hemp.  The USDA’s sets forth its licensing program requirements in the rule, which are similar to provisions for State and Tribal Hemp Production Plans.

Effective date:  today

It’s important to note that the USDA published the rule as an “interim final rule” that becomes effective upon its publication in the Federal Register, which is today, October 31, 2019.  Federal law allows an agency to forego the typical “notice and comment” period of rulemaking and publish a final rule if there is good cause for doing so.  USDA explains that good cause exists due to Congress’s interest in expeditious development of domestic hemp production, critically needed guidance to stakeholders who’ve awaited publication of the hemp rule, previous outreach efforts, and the public’s interest in engaging in a new and promising economic endeavor.  The immediacy of USDA’s rule allows the agency to begin reviewing State and Tribal Hemp Production Plans now, in hopes that producers will be able to plant hemp for the 2020 growing season.   USDA is seeking public input on the interim final rule for the next sixty days, however, and plans to consider such comments when it replaces the interim final rule with a “final rule” in two years time.

Is Ohio ready?

While Ohio’s Department of Agriculture (ODA) won’t be the first in line to have its hemp production program reviewed under the new USDA program, Ohio won’t be too far behind the twenty states and tribes that are already awaiting review.  ODA proposed Ohio’s hemp regulations earlier this month after the General Assembly decriminalized hemp and authorized the agency to develop a hemp program in July of this year via Senate Bill 57.  The USDA rule comes just one day after ODA closed the comment period on the proposed rules, which we summarize here.  Once ODA publishes the final hemp regulations, it can proceed to submit Ohio’s Hemp Production Plan to the USDA for approval.  Ohio’s timing may prove beneficial, as ODA now has the opportunity to review the USDA rule and ensure that Ohio’s plan will meet the federal requirements.  

Our comparison of Ohio’s hemp laws and regulations to the USDA’s hemp rule indicates that Ohio is well prepared to meet the hemp rule requirements.  Only a few provisions in the federal rule may require additional attention by Ohio before ODA submits its plan for USDA approval.  Key among those are procedures for THC testing methods (technical details not included in Ohio’s proposed regulations) and procedures for corrective action plans (which are not clearly laid out in the proposed regulations but are addressed in Senate Bill 57).  One potential conflict between the federal and Ohio rules regards destruction of hemp plants that exceed the allowable 0.3 THC level.  The federal rule prohibits any further handling, processing or entering into the stream of commerce of any hemp plants from the sampling area and requires disposal of non-compliant plants, while Ohio’s regulations allow bare hemp stalks for fiber that is free of leaf, seed and floral material to be harvested, processed and used while all other material from plants that exceed 0.3 THC must be destroyed.    We’ll soon see how ODA handles these and other issues when it submits Ohio’s Hemp Production Plan for USDA approval.

Read the interim final rule on “Establishment of a Domestic Hemp Production Program” here, which is also the site for submitting comments on the rule.  USDA will accept public comments until December 30, 2019.

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