Industrial Hemp – An Overview

The cultivation of hemp along with the production of hemp-based products has had a long, tumultuous legal history in the United States. Hemp—a variety of the Cannabis sativa plant species—is typically grown for its 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 decreases the psychoactive effects. Hemp is used to produce a variety of things, including fiber, paper, biodegradable plastics, biofuel, food products, and animal feed.

In the early days of the United States, hemp was freely grown for its industrial uses. 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 to 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 use of cannabis for all purposes.

Despite various states drastically changing their own cannabis policies, the CSA has been the reigning federal law on cannabis since it was enacted. This remained true until the passage of the Agricultural Act of 2014. The Agricultural Act of 2014, also referred to as the 2014 Farm Bill, created a framework for the legal cultivation of industrial hemp without the need for a permit from the Drug Enforcement Administration (DEA). Under the 2014 Farm Bill, states were permitted to implement hemp research pilot programs which would allow farmers to cultivate cannabis containing no more than 0.3% of THC provided they meet the requirements imposed by each state.

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 the hemp cultivation allowed in the 2014 Farm Bill was relatively narrow, the hemp cultivation allowed in the 2018 Farm Bill is much broader. The 2018 Farm Bill allows states to expand hemp cultivation beyond small pilot programs. Additionally, the 2018 Farm Bill explicitly allows the transfer of hemp and hemp-derived products across state lines for commercial and other purposes. It also puts no restriction on the sale of hemp-derived products provided that those products are produced consistent with all applicable laws.

However, many problems still remain, and in many ways the legal aspect of hemp cultivation is as murky as ever. In a  conducted by the United States Department of Agriculture (USDA) on March 13, 2019, legislators and members of the hemp industry had an opportunity to identify issues continuing to surround hemp cultivation.

On October 31, 2019, the USDA publish an interim final rule (IFR) entitled “Establishment of a Domestic Hemp Production Program.” This IFR became effective immediately upon publication and expires on November 1, 2021. The IFR set forth explicit procedures for State and/or Tribal governments to obtain USDA-approval for a hemp production plan. Procedures required include: tracking the land where the hemp is grown; testing for THC levels; disposing of non-compliant plants; and sharing information.

Despite the provisions of the 2018 Farm Bill and the 2019 IFR, transportation of hemp and hemp-derived products remains a big issue. Several states continue to refuse to allow hemp to cross their borders, while other states are content to allow hemp to cross, but not strains of cannabis with a THC level higher than 0.3%. The challenge for those states is that there is currently no roadside test to determine the THC levels of transported cannabis, which makes the job of law enforcement officials trying to allow hemp to cross state lines while continuing to prohibit other types of cannabis very tricky. As of May 2020, there are two states where the production of industrial hemp is still illegal: Idaho and Mississippi. Additional problems still facing the hemp industry involve developing reliable and effective tests for THC levels, the importation of hemp seeds, and determining the role of banks in an industry with uncertain legality.