Monterey County, CA: We Changed Our Mind, Hemp is a Little Like Cannabis....

Monterey’s County Board of Supervisors adopted an Industrial Hemp Pilot Program that will restrict the size, location, and the number of industrial hemp cultivators allowed in unincorporated areas of the county. The county will accept registration requests until August 31, 2020, and grant 30 registrations. To date, the county has received over 50 requests to cultivate hemp.

The California Department of Food and Agriculture established an industrial hemp program for the registration of industrial hemp cultivators. Under the program, applicants must register with a local county agricultural commissioner and abide by any local restrictions.

Monterey’s County Planning Commission held a meeting on July 10th during which the group debated whether hemp is an agricultural commodity or as cannabis. The Planning Commission concluded that hemp is a commodity that should be treated without restrictions.

During a meeting on July 23, the Board of Supervisors reversed that decision and adopted an ordinance that established an industrial hemp pilot program. The Board of Supervisors debated the impact of odors on local communities such as King City; the likelihood that hemp growers could inadvertently contaminate cannabis crops; and the lack of data available that is required to make clear decisions as to the effectiveness of buffer zones.

Monterey County is not alone in its hesitancy to treat hemp as an agricultural commodity. According to our data, seventeen (17) counties currently allow hemp cultivation, twenty-six (26) counties implemented a temporary moratorium that would give them time to figure out what to do, fifteen (15) counties are silent on whether hemp is permitted, and two (2) counties are moving quickly towards implementation.

Calfornia cities are also acting to prohibit hemp cultivation with Blue Lake, Furtuna, Hollister, Lake Forest, Pittsburg, San Jacinto all recently adopted moratoriums. We expect that more cities will move to prohibit hemp until more information is available as to the impact on local communities. It appears that the hemp industry will be constrained in California until more information is available on effective buffering zones that can mitigate the pungency of hemp odors and cross-pollination concerns.

North Carolina's Proposed Hemp Law Classifies Smokable Hemp as Marijuana

The North Carolina Industrial Hemp Commission is holding an emergency call today, July 23, 2019 to discuss the state’s legislation that will implement the 2018 Farm Bill. Under the bill, the state classifies smokable hemp as marijuana, and requires persons manufacturing or selling cannabinoid related compounds to hold a valid state license. The legislation authorizes the Department of Agriculture to develop a licensing regime and best practices for manufacturing, testing and labeling CBD products.

The bill prohibits licensed cultivators or handlers from processing or selling ground raw hemp plant material, including hemp buds and hemp flowers, for products intended for smoking including hemp cigars, and hemp cigarettes. The state classified smokable hemp as marijuana due to the possibility that THC may be ingested during the inhalation process. The legislation allows the classification to be repealed when the US Drug Enforcement Agency approves a test that can immediately detect whether the hemp contains THC.

North Carolina currently does not have a medical cannabis program, and state law’s offer limited protection for the possession of CBD for certain medical conditions. The legislature introduced a medical cannabis bill this year but it has yet to move forward.

The state’s hemp bill will expand access to CBD and other hemp products as hemp extracts will be removed from the state’s definition of marijuana, and the bill exempts THC found in hemp extracts and hemp products from being Schedule VI controlled substances. The exclusion of hemp extracts from the definition of smokable hemp may be due to the fact that hemp extracts can be tested for the presence of THC prior to being sold. The bill will however make it a misdemeanor for any person to sell hemp, hemp products, or hemp extracts to a person under 18 years of age.

California & Industrial Hemp Challenge: Agricultural Commodity or Cannabis

The California Department of Food and Agriculture established an industrial hemp program for the registration of industrial hemp cultivators. Under the program, applicants must contact a local county agricultural commissioner to register for the program and abide by any local restrictions.

Businesses interested in starting a hemp company may have trouble finding a county to register in ahead of the 2020 growing season. According to our data, seventeen (17) counties currently allow hemp cultivation, twenty-six (26) counties implemented a temporary moratorium that would give them time to figure out what to do, fifteen (15) counties are silent on whether hemp is permitted, and two (2) counties are moving quickly towards implementation. California counties are struggling with whether to treat hemp as an agricultural commodity or to regulate the industry with restrictions like cannabis.

The California Legislature introduced a bill that has been ordered to its final reading will include hemp and cannabis as agricultural use under the Williams Act. This would remove some disagreement around the treatment of cultivation under local ordinances and provide firm guidance that hemp is an agricultural commodity.

California counties agree that the current high price for hemp that will be used for CBD is great for local farmers. However, counties are struggling to educate local citizens on the differences between cannabis and hemp, address concerns regarding public health and safety, and ward off litigation from surrounding cities and counties. Local police officers are concerned that diversion will occur as they are not trained to identify hemp from cannabis.

Monterey County is currently addressing these issues as it moves forward with implementing a hemp ordinance. Monterey County Planning Commission held a meeting on July 10th during which the group debated whether hemp is an agricultural commodity or as cannabis.

The ordinance that was before the planning commission treated hemp as a similar use as cannabis, and required that the cultivation and processing of industrial hemp occur within a hemp overlay district. The ordinance also required hemp cultivators to comply with cannabis requirements until the adoption of hemp specific regulations. The proposed ordinance provided only 30 registrations for hemp cultivation and limited the cultivation site to 100 acres. The deadline for registering for the 2020 growing season was August 31, 2019.

The Monterey Board of Supervisors will continue this discussion during its meeting on July 26, 2019. The Board of Supervisors will consider an amended ordinance package that includes an alternative approach of treating hemp as an agricultural commodity, which wills allow hemp cultivation in agriculturally zoned areas without additional land-use restrictions. Hemp cultivators will be subject to state law and must register with the county’s agricultural commissioner.

California is at the beginning of its journey in establishing an industrial hemp program. The unknown is preventing over forty-four percent of California’s counties from participating immediately, and the lack of testing facilities and local educational programs are also stumbling blocks to faster growth. Other counties such as Monterey are moving forward with hemp in an effort to bolster the local agricultural industry. Monterey will lead the pack in building out this industry and meeting the challenges head-on.

California Municipalities Rush to Adopt Hemp Regulations

Over the last couple of weeks, counties and cities in California have adopted hemp cultivation bans in order to address perceived public nuisance issues from the activity including odor problems and public safety concerns. Counties and cities are also struggling with how to prevent cross-pollination between hemp and cannabis crops.

Trinity, Humboldt, and San Louis Bopispo counties all voted to ban the cultivation of hemp until they are able to address these public nuisance concerns. Other counties such as King, Imperial and Lassen voted to permit hemp cultivation but under limited circumstances. Monterey County will meet to discuss a limited program to allow hemp cultivation and processing on June 10, 2019.

California cities are also adopting measures to prohibit hemp cultivation as Redding, Pittsburg, and San Jacinto are meeting to adopt ordinances in the upcoming weeks. We expect the number of cities that will be addressing this issue to increase as the state registration process continues.

Local regulation of hemp cultivation is not limited to California. New Mexico, Arizona, and Colorado counties are also implementing regulations to govern the cultivation and processing of hemp. The hemp regulatory structure is complicated and starting to resemble that of cannabis. The rollout of the state hemp cultivation plans should provide a good indicator of how complicated the state hemp regulatory environment will eventually become. This complex development is another hurdle for the hemp and CBD market to overcome.

Oregon State University to Launch Global Hemp Innovation Institute

Oregon State University announced that it plans to open the largest hemp research center in the United States. The Global Hemp Innovation Institute will strive to be the world’s most comprehensive research facility for hemp in the areas of plant research, food innovation, pharmacy, public health, public policy, business and engineering. As of May, over 1,300 hemp growers obtained licenses in Oregon to cultivate over 42,000 acres of land.

OSU will be the first university in the nation to launch a hemp seed certification program for the state’s Department of Agriculture. The university will also create ten (10) hemp experimental growing sites that will across the state to understand how the plant reacts to different growing conditions including soil and temperatures.

OSU currently has forty (40) faculty members who are actively engaged in research or teaching courses on hemp. The university intends to continue to push its global dominance in hemp research, and regain its prominence for hemp research in the US. From the 1880’s through 1932, OSU led the national hemp research program with the US Department of Agriculture.

Connecticut Enacts Hemp Law Implementing 2018 Farm Bill

The Connecticut Legislature passed a bill that will implement hemp production under the 2018 Farm Bill. The legislation establishes the licensing framework and the oversight program for the production, processing and manufacturing of hemp and hemp products. The Act defines the term “manufacture” as “the conversion of hemp for the purpose of creating a consumable.” Persons selling hemp products, including those intended for human consumption are not required to be licensed.

The Act’s requirements for hemp production and processing are in line with other states that recently enacted similar regulation. The new law governs the seed, testing, disposal and transport of hemp and hemp products.

The portion of the Act setting out the obligations for manufacturers is robust and requires independent testing by a lab that is ISO certified and governs the marketing and labeling of products..

The testing requirements are quite similar those applicable to cannabis. Hemp products must be tested for microbiological contaminants, mycotoxins, heavy metals and pesticide chemical residue, and active ingredient analysis. Hemp or hemp products that fail the tests must be surrendered to the Commissioner of Consumer Protection for disposal. The new law also prohibits the marketing of hemp products as providing a medical effect or promoting a mental or physical benefit.

Florida Legislature Passes Business Friendly Hemp Program on Last Day of Regular Session

The Florida Legislature passed a bill to implement a hemp program in the state in accordance with the 2018 Farm Bill on the last day of the legislative session, May 3, 2019. The new law will require the Department of Agriculture and Consumer Services to establish a licensing and oversight program for the cultivation, distribution and sale of hemp and hemp extract. The department must also provide the USDA with Florida’s hemp plan for approval within 30 days of implementing the hemp regulations. The USDA’s approval for Florida’s hemp plan is needed to implement the 2018 Farm Bill in the state.

The new law makes it illegal to cultivate hemp without a license from the department. The new law does not limit the number of cultivators. Florida may deny an applicant a license for providing the state with false information, or if the applicant was convicted of a felony related to a controlled substance during the last 10 years. The new law delegates the implementation of the hemp program to the department. We believe that the USDA will drive the final oversight and enforcement requirements as part of the hemp plan approval process. However, the new law does manage to limit the department’s enforcement power by requiring the department to issue a notice of correction to persons who violate the regulations prior to issuing a fine.

The department will oversee the distribution and sale of hemp extracts that are intended for ingestion. Although processors and retailers will not need a license, the state will only allow hemp extract to be distributed and sold in the state if it is tested by an independent testing facility and packaged in accordance with the state’s laws and regulations. It is not clear as to what the penalties will be for violating the distribution and sale requirements.

The FDA Issues CBD Guidance: CBD is a Drug that Must Be Approved

Last week, the Food and Drug Administration (FDA) issued guidance on CBD that has widespread ramifications for the industry. In short, the FDA has determined that a CBD product marketed as offering therapeutic effects is a new drug that must be approved prior to sale.

The FDA also indicated that CBD products are not dietary supplements, and may not be sold on the internet as such. The FDA issued warning letters on March 28, 2019 to stop three CBD companies from selling products, including gummies, due to unsubstantiated health claims. The companies marketed the products as therapeutic remedies for arthritis and dementia and other ailments. The FDA stated that it will continue to monitor the marketplace for other product violations, and it will issue warning letters when necessary. The FDA responded to a question related to the availability of CBD products online by stating:

“FDA continues to be concerned at the proliferation of products asserting to contain CBD that are marketed for therapeutic or medical uses although they have not been approved by FDA. Often such products are sold online and are therefore available throughout the country. Selling unapproved products with unsubstantiated therapeutic claims is not only a violation of the law, but also can put patients at risk, as these products have not been proven to be safe or effective. This deceptive marketing of unproven treatments also raises significant public health concerns, because patients and other consumers may be influenced not to use approved therapies to treat serious and even fatal diseases.”

What does this mean for the CBD industry?

The CBD market raises complex issues with a new twist each week. There are many issues that remain outstanding including the sale of CBD products that do not claim therapeutic benefits. The FDA’s move may push the CBD industry off of the internet and into the state cannabis ecosystem. CBD retailers and manufacturers may need to replicate the THC model by creating vertically integrated markets in states where it can be legally produced and sold, and avoiding risk by selling products in licensed dispensaries. Producers should avoid transporting CBD across state lines until states provide guidance on how this can be done. Producers and retailers should also review marketing and product labels to ensure compliance with the FDA’s recent guidance.

Oregon's Proposed Hemp Rules Requires CBD to be Tested Like Marijuana

The Oregon Department of Agriculture published proposed hemp rules that implements the state’s requirement that hemp intended for human consumption to be tested to the same degree as marijuana. The draft rules apply an extensive regulatory framework to hemp products intended for human consumption. The proposed rule replicates the marijuana product categories, and by reference, the product’s testing requirements. The window for providing feedback on the rules closes on May 7, 2019. Some of the highlights that should be noted include

  • Topicals are considered products that are intended for human consumption.

  • The products must be tested prior to sale or transfer. It is not clear how this requirement is satisfied for hemp that is imported from another state.

  • Hemp may be remediated to remove pesticides and solvents - but not dilution.

  • Hemp items (i.e, CBD, etc.) must be tested to ensure potency is below the .3% THC threshold.

Trick question: What is the difference between hemp seed oil and CBD? (psst one is legal)

Two Michigan regulatory agencies announced in guidance that selling CBD-infused food and drinks, or as a dietary supplement, is illegal, however, using hemp seed oil to infuse food and drinks is legal. Why?

In guidance issued Friday, March 29, 2019 by the Bureau of Marijuana Regulation and the Michigan Dept of Agriculture & Rural Development, they noted that the Food and Drug Administration (FDA) has not approved CBD in food or beverages or as a dietary supplement. Without FDA approval, selling these products in Michigan is illegal.

Other states have issued similar guidance. Washington State noted in December that CBD infused alcohol is illegal as it must be approved by the US Tax and Trade Bureau. In August, Ohio noted in that only licensed medical dispensaries could sell CBD oil so long as it had been tested by an Ohio licensee. Michigan has similarly indicated that CBD used in edible marijuana products must be sourced from growers or processors currently licensed in the state.

This news is alarming given the vast number of CBD-infused food, beverage, and dietary supplement products that are currently in the marketplace.

Certain states, such as Maine, are trying to fix this problem by enacting legislation to clarify that products infused with CBD are not adulterated, and may be sold in that state without FDA approval. This legislation may not be able to protect nationwide distributors that engage in interstate commerce.

Hemp seed oil can be used though, as it is currently on the FDA’s list of products considered generally regarded as safe. However, since it does not contain cannabinoids, consumers may not find it as beneficial to their health.

So what would stop unscrupulous industry participants from relabeling CBD products as hemp oil? Not much. The industry is in a grey zone right now with more stringent regulation right around the corner. CBD is not yet subject to rigorous testing or labeling requirements. A CBD manufacturer can presently obtain a certificate of analysis without testing the product for cannabinoids.

CBD producers considering this route should consider the serious consequences including criminal charges, product seizures and civil fines. A greater consideration is the industry’s credibility. The industry should consider how it can mobilize, and work with the regulators to address this issue before the enforcement process begins.