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.

Regulating CBD Like Cannabis: Utah and New Mexico Pass Legislation Upping CBD Requirements

The Utah and New Mexico Legislatures passed commercial hemp legislation this week that include provisions that regulate CBD products like cannabis. If signed by the states’ governors, the legislation will become law. The recent legislation might foreshadow a national trend as states’ amend hemp legislation to conform with the 2018 Farm Bill. Requiring CBD products that are intended for human consumption to meet standards that are similar to cannabis products will help the industry achieve a certain level of credibility that it desperately needs. We believe that CBD manufacturers and product companies should consider using cannabis best practices when manufacturing and testing products as well as developing labels. These practices can help a company differentiate a CBD product from others, and obtain a competitive advantage as states move to more robust standards.

Utah’s Hemp and Cannabinoid Act Amendments. directs the state’s Department of Agriculture to adopt rules to create a licensing program for the commercial hemp industry including growers, cultivators, processors and those marketing hemp or hemp products. The bill also requires the Department to adopt regulations governing the registration of cannabinoid products that are intended for human consumption with the Department, and to set standards for the testing and accurate labeling of CBD products. The bill defines cannabinoid products as a hemp product that is processed into a medicinal dosage that contains less than 0.3% THC.

The New Mexico Hemp Manufacturing Act specifically requires the licensing of manufacturers that are performing hemp extraction, processing or engaging in other manufacturing activities. Engaging in these activities without obtaining the appropriate license could result in a Schedule 1 criminal charge. New Mexico’s legislation provides a robust regulatory framework to ensure the safety, sanitation and security of the finished product.

CBD businesses that are transporting CBD products to these states or over the internet should seek guidance on how the new registration regimes impact these activities. Not following the rules could lead to the seizure or destruction of CBD products as well as possible criminal charges.

New Mexico Passes Legislation that Limits CBD Sales to In-State Licensed Hemp Growers and Manufacturers

The New Mexico Legislature voted to create a commercial hemp industry by passing the Hemp Manufacturing Act. The bill will be presented by Governor Grisham, and it will become law upon her signature. The bill directs New Mexico’s Department of Agriculture to establish a licensing and oversight program for a commercial hemp industry. The legislation would result in Schedule 1 criminal charges for the growing of hemp or manufacturing of CBD products without a license.

Under the bill, the Department of Agriculture would establish a hemp harvest certification program requiring the state verify that each licensed grower’s harvest is below the maximum .3% THC threshold. The harvest certification program prevents non-licensed growers or manufacturers from selling or transporting hemp to or in New Mexico. Growing hemp or manufacturing hemp products without a license would be a Schedule 1 offense, and transporting hemp without a harvest certificate is a petty misdemeanor that is subject to a $500 fine. New Mexico law enforcement may also seize the hemp for up to five days if the transporter does not have a harvest certificate. These ramifications are serious as a Schedule 1 violation would limit a business from obtaining a hemp growing license under the 2018 Farm bill or obtaining cannabis or hemp licenses at the state level.

The Department is also directed to adopt rules that govern the manufacturing of hemp products. Persons who are interested in extracting, processing or engaging in other manufacturing activities for hemp products must obtain a permit or face Schedule 1 criminal charges. The Department will oversee the industry’s manufacturing practices to ensure the safety, sanitation and security of the finished product. New Mexico’s focus on manufacturing has brought CBD products into the regulated realm, and thereby limiting the products sold in the state to licensed manufacturers.

Utah Passes Legislation to Create Commercial Hemp Industry and Regulate CBD Products

The Utah Legislature voted to create a commercial hemp industry by unanimously passing the Hemp and Cannabinoid Act Amendments. The bill will be presented by Governor Herbert, and it will become law upon his signature. The bill directs the Department of Agriculture and Food to establish a licensing and oversight program for a commercial hemp industry. Like the 2018 Farm Bill, the legislation prohibits a person who has been convicted of a drug related felony from obtaining a license.

The Department is also directed to adopt rules that govern the registration and sale of CBD products in Utah including testing and labeling requirements. Although the Department will be responsible for overseeing this market, the amendment removes the Department’s authority to seize and destroy non-registered CBD products.

Risky Business: Interstate Hemp Transport Could Cost You Your License

The Oregon Department of Agriculture (DOA) sent the Secretary of the USDA a letter asking the federal regulator to provide guidance to the hemp industry that would allow the transport of hemp across state lines. Oregon emphasized that interstate commerce is critical for the hemp industry. Oregon’s hemp industry has grown tremendously from 105 acres of hemp grown in 2015 to over 20,000 acres in March of 2019.

There have been reports in recent weeks of state authorities bringing criminal charges against persons who are transporting hemp and cbd oil across state lines. Under the 2018 Farm Bill, a person who is convicted of a felony related to a controlled substance under Federal or State law could lose the ability to obtain a hemp license for 10 years. Persons in the cannabis industry would also be required to report the incident to current and future regulators, which could impact the ability to obtain or retain other licenses. This is a significant risk as some states have yet to remove hemp from the Schedule 1 classification.

Unless the USDA acts, relief from this predicament may not arrive until the 2020 growing season. Oregon notes that the 2018 Farm Bill allows interstate commerce once the USDA has received and approved a state’s hemp growing plan. The USDA announced that it will approve the state’s growing plans in time for the 2020 growing season. Until that time, states must rely on the prior 2014 U.S. Farm Bill, which does not permit interstate hemp transport. USDA guidance is needed to provide the market with the certainty that it needs to grow, and compete with international players.

Get Ready for the New Sheriff in Hemp Town - the USDA

The nation celebrated when President Trump legalized hemp by signing the Farm Bill of 2018. The production of cbd infused products skyrocketed, and the country seemed to think everything was legal. This is not the case. Now that the USDA is in charge, we expect the states to step up enforcement efforts. The hemp and CBD market will soon understand exactly what is and is not legal.

The Farm Bill also directed the USDA to develop a program under which the states would submit a hemp growing plan to the USDA for approval. The USDA has updated its website to include a Marketing Program for the Commercial Production of Hemp. The site outlines the agency’s plans for adopting a rule governing each state’s hemp programs, and it will be effective for the 2020 growing season. Until then, the states will rely on the Farm Bill of 2014.

The USDA indicated that the proposed rule will outline minimum requirements that the states must follow for recordkeeping, testing, disposal of failed hemp, inspections and a state’s enforcement program. The USDA is also focused on the production of hemp in violation of the Farm Bill, which is a broad standard. The USDA expects the proposed rules to be released in September. Once adopted, the USDA will monitor the states’ compliance with growing plans including testing, inspection and enforcement procedures.

The hemp, cbd and thc industries must take an active role in providing comment on the USDA’s proposed hemp rules. The final product will drive testing, destruction, remediation and enforcement standards. This states will not be able to lower the standards, and will be forced to enforce the industry’s compliance. The industry’s voice will be muted, and access to federal regulators is limited. The USDA will be holding a listening session for the industry on March 13th. Unlike most state regulatory meetings, federal government agencies do not hold a public comment open mike. Your words will be that voice, and the tone must be one that the federal government understands. Hemp is now legal, but it comes with a new sheriff.