Industrial Hemp – An Overview
The cultivation of hemp and the production of hemp-based products has a tumultuous legal history in the United States. Hemp—a variety of the Cannabis sativa plant species—is typically grown for its myriad industrial uses. Although industrial hemp is derived from the same Cannabis sativa species as the marijuana plant, industrial hemp has lower concentrations of the psychoactive component tetrahydrocannabinol (THC) and higher concentrations of cannabidiol (CBD), which translates to much lower psychoactive effects as compared to medical or recreational cannabis. Hemp is used to produce a variety of products, including fiber, paper, plastics, biofuel, food products, and animal feed.
Hemp was freely grown for its industrial uses in the American colonies and well into the 19th century. By the mid-1930s, all cannabis was regulated as a drug in every state. The first national regulation of cannabis was the Marihuana Tax Act of 1937, which effectively made the possession and transportation of cannabis illegal throughout the United States. This law remained in effect until 1969, when the Supreme Court found the Act unconstitutional in Leary v. United States. In response to the Supreme Court’s decision, Congress passed the Controlled Substances Act of 1970 (CSA), which once again prohibited the cultivation and use of cannabis for all purposes.
The CSA has been the reigning federal law on cannabis since it was enacted, despite many states’ drastic loosening of their own cannabis policies. This remained true until the passage of the Agricultural Act of 2014. Also known as the 2014 Farm Bill, the Agricultural Act of 2014 established a framework for industrial hemp cultivation without requiring a permit from the Drug Enforcement Administration (DEA). Under the 2014 Farm Bill, states were permitted to implement hemp research pilot programs that allowed farmers to cultivate cannabis that contained no more than 0.3% delta-9 THC, provided that they met additional requirements imposed by the United States Department of Agriculture (USDA), the states and sometimes Native American tribes depending on where the hemp was cultivated.
The Agricultural Improvement Act of 2018, also known as the 2018 Farm Bill, took the hemp provisions of the 2014 Farm Bill several steps further. While hemp cultivation permitted by the 2014 Farm Bill was relatively narrow, the 2018 Farm Bill granted much broader allowances. The 2018 Farm Bill allowed states to expand their allowed hemp cultivation beyond small pilot programs. Additionally, the 2018 Farm Bill explicitly allowed the transfer of hemp and hemp-derived products across state lines for commercial and other purposes. There are no restrictions on the sale of hemp-derived products, provided that those products are produced consistently with all applicable laws.
The legalization of hemp cultivation in the 2018 Farm Bill led to a huge surge in production, specifically for CBD. Overproduction flooded the market with hemp biomass, far exceeding demand due to the lack of a market caused by a regulatory pathway. The U.S. Food and Drug Association’s (FDA) position states that it is unlawful to market hemp-derived CBD and THC in food or as dietary supplements. Without a clear regulatory pathway, larger food, beverage and dietary supplement companies have not made investments to develop new products which led to the lack of market demand.
In a webinar conducted by the USDA on March 13, 2019, legislators and members of the hemp industry had an opportunity to identify issues that surround hemp cultivation. Public comments were solicited and many individuals shared their perspectives with USDA officials. On October 31, 2019, the USDA published an interim final rule (IFR) entitled “Establishment of a Domestic Hemp Production Program.” This IFR was effective immediately upon publication, with an expiration of November 1, 2021. The IFR set forth explicit procedures for State and Tribal governments to obtain USDA approval for hemp production plans. The required procedures included: tracking the land where the hemp is grown; testing for THC levels; disposing of non-compliant plants; and collecting and sharing information with the USDA. The comment period for the IFR was open from October 31, 2019, through January 29, 2020, and again from September 8, 2020, through October 8, 2020. During all comment periods, a total of 5,900 comments were received from various stakeholders, including Indian Tribes, industry and agricultural organizations, private citizens, and executive agencies. On January 19, 2021, the USDA published the final rule that established the Domestic Hemp Production Program, superseding the 2019 IFR. The final rule became effective on March 22, 2021, establishing a regulatory program for the oversight of hemp.
Although all fifty states have legalized industrial hemp as of April 2021, the hemp industry continues to face legal barriers. Barriers include challenges to development of reliable and effective tests for THC levels, importation of hemp genetics into the United States, and regulatory confusion about using certain cannabinoids in food, beverages or dietary supplements.
Since the 2018 Farm Bill, many hemp-derived cannabinoids have entered the marketplace, including delta-8 THC, delta-10, and THC-O acetate. While these products remain within the legal delta-9 THC threshold, many consider them to be “intoxicating.”
Several states have adopted strict stances on cannabinoid products, maintaining restrictive laws or banning these products altogether. State restrictions have generally been found to not be preempted by the 2018 Farm Bill hemp provisions so long as they do not affect interstate transport.
Industry-changing hemp-related legislative changes were made to 7 U.S.C. § 1639o in the Agriculture, Rural Development, Food and Drug Administration, and Related Agency Appropriations Act, 2026. Enacted November 12, 2025, but not coming into effect until November 12, 2026, these changes closed the “hemp loophole” for intoxicating products. These provisions target synthetic and hemp-derived cannabinoid products and apply a concentration limit (0.4 milligrams per “container”) to total THC, which would include all isomers, like delta-8, delta-10, and THCA. The Act created new definitions for “industrial hemp,” “hemp-derived cannabinoid product,” “intermediate hemp-derived cannabinoid product,” and “container.” Under these provisions the FDA must produce within 90 days lists of known cannabinoids produced by Cannabis sativa, all known naturally occurring THC cannabinoids, other cannabinoids with similar effects to THC, and additional guidance on the definition of “container.”
Proposed legislation at the federal level to change this approach to intoxicating cannabinoids (such as the Hemp Safety Enforcement Act (S. 4315) have been introduced, but no legislation has been successfully passed.
Federal Regulatory Authority
Administrative agencies such as the USDA/FDA/EPA have been given authority by Congress to create regulations implementing the requirements of federal law on industrial hemp. In 2024, the Supreme Court of the United States issued two rulings that are expected to have a major impact on how courts rule on cases challenging those regulations and the agency’s authority.
Loper Bright Enters. v. Raimondo, 144 S. Ct. 2244 (2024) overruled the long-standing doctrine of deference established in Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984). Chevron deference was a two-step process that clarified how and when federal courts should defer to an agency regulation interpreting a statute. Chevron only applied in situations where a court had determined that statutory language the agency was interpreting was ambiguous. If it was ambiguous, the court would consider whether the agency’s interpretation of the statutory language was “reasonable”. If it was reasonable, the court was required to defer to the agency’s interpretation. If it was not, the court would overrule the interpretation.
Loper Bright formally overturned Chevron. In a 6-3 decision, the Supreme Court held that “courts may not defer to an agency interpretation of the law simply because a statute is ambiguous[.]” Following the ruling, courts are instead required to exercise independent judgment in determining whether an administrative agency has acted within its statutory authority. Courts may still seek guidance from the agencies involved, but courts will no longer be required to defer to an agency’s interpretation of a statute.
In Corner Post, Inc. v. Bd. of Governors of the Fed. Rsrv. Sys., 144 S. Ct. 2440 (2024), the Supreme Court extended the period of time during which a party may file a lawsuit challenging federal agency actions. According to 28 U.S.C.S. § 2401(a), the six-year statute of limitations began to run when an administrative agency’s action was “final.” In Corner Post, the Supreme Court ruled that an action becomes “final” when a plaintiff suffers an injury, rather than when a “final regulation” is released. This ruling expands the potential for plaintiffs to challenge federal agency rules and regulations that have been final for over six years.
While the full effect of these two rulings remains to be seen, the agricultural industry will likely be impacted by the Supreme Court’s decisions. Importantly, these rulings fundamentally change how courts resolve lawsuits challenging agency regulations for misinterpreting the agency’s statutory authority. Impacts are most likely to be felt in areas of the law, such as industrial hemp, dominated by statutes with relatively ambiguous language, where Congress has relied on agency regulations to fill in specifics.