On December 20, 2018, President Trump signed the Agricultural Improvement Act of 2018 (the “2018 Farm Bill”) into law. This much anticipated legislation will have a major impact on the hemp industry because industrial hemp has been entirely de-scheduled under the Controlled Substances Act (CSA). In other words, hemp is no longer illegal under federal law. Hemp prohibition is over!
We all know that a person cannot get “high” from using hemp due to its low levels of THC (0.3% or less), but not until the 2018 Farm Bill was hemp removed from the federal definition of marijuana, which regulates the plant and products as a Schedule 1 drug. Now, hemp is treated simply as a legal agricultural commodity. The new law provides tremendous economic opportunity to farmers and small businesses throughout the United States.
With the removal of hemp from the auspices of the CSA, hemp farmers will now be able to freely engage in federally regulated institutions including, banking, merchant services, finance, insurance, advertising platforms and to enter into contractual relationships that may have been difficult or impossible in the past. Interstate commerce of hemp and hemp products has also opened up under the Bill.Hemp farmers also may be eligible for government grant programs and tax incentives with the legalization of hemp at both the federal and state level. The removal of hemp from the CSA also has a positive impact with respect to federal income taxes for those engaged in the industry.
The 2018 Farm Bill will also have an impact on the CBD market, as it legalizes hemp products, as well as the plant. Requirements for testing THC levels have not yet been established, however. The DEA may still be involved where THC levels and/or origin of hemp/CBD is not clear.
In the coming weeks and months, states that have already adopted industrial hemp programs will review their existing regulations. Those states’ laws will remain in place, unless the laws were designed to be repealed when hemp became federally legal. The United States Department of Agriculture (USDA) will create a regulatory framework, as well. In addition, consumable products – think CBD supplements, oils, etc. – will be subject to regulation by the Food and Drug Administration (FDA).
As the implications of the 2018 Farm Bill begin to develop, we expect many positive developments. Be sure to subscribe to our blog to get the latest industry news and updates on the legal/regulatory framework