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USDA Issues Final Rule Regarding Hemp Production Program

January 21, 2021


On January 15, 2021, the U.S. Department of Agriculture (USDA) issued a final rule governing the Establishment of a Domestic Hemp Production Program. The final rule, which will take effect on March 22, 2021, regulates hemp production plans. It explicitly recognizes hemp’s “numerous industrial and horticultural uses” and attempts to address a number of concerns that hemp producers raised during multiple public comment periods.

The new USDA final rule regulates five key stages of hemp production:

1. The maintaining of records about land used to produce hemp

First, the final rule dictates the requirements for recording information about land used to cultivate hemp crops. According to the rule, “[t]he information required to be collected includes a legal description of the land and geospatial location for each field, greenhouse, or other site where hemp is produced.” In addition, licensed producers must report their hemp crop acreage to the Farm Service Agency (FSA).

2. Tetrahydrocannabinol (THC) testing level requirements

Second, the rule empowers States and Indian Tribes to design and implement THC-testing methods. Methods must be based on plant sampling tests. They must also screen for all types of THC. Thus, the new rule requires testing for THC-A, a non-psychoactive cannabinoid that converts to THC when combusted, as well as for delta-9-tetrahydrocannabinol, the primary “active” component.

3. The disposal of noncompliant hemp plants

Third, the final rule dictates how producers may dispose of noncompliant hemp plants. The rule retains the choices for disposing of noncompliant hemp plants that the Agricultural Marketing Service (AMS) announced on February 27, 2020. However, it clarifies the definition of “disposal” and expands on how disposal processes should be conducted. Moreover, the new final rule, which aims to provide flexible, non-wasteful disposal options adds “remediation as an option to remove non-compliant plants.”

4. Hemp producer licensure procedures

Fourth, the final rule addresses hemp licensure procedures. To produce hemp under the USDA plan, producers must apply for and be issued a USDA license. The final rule prescribes that the USDA will accept applications for hemp production licenses on a rolling basis. The license application is available here.

5. Compliance with the Domestic Hemp Production Program

Finally, the new rule responds to concerns about overly harsh standards for assessing whether a hemp producer acted with criminal negligence. The rule defines negligence “as a failure to exercise the level of care that a reasonably prudent person would exercise.” In essence, the USDA measures negligence by examining a hemp plant’s THC concentration. If the THC percentage rises above a certain, pre-determined level, negligence is presumed. Notably, the new rule increases the criminal negligence threshold from 0.5% to 1.0% THC. It also clarifies how local agencies should determine when to suspend or revoke a producer’s license. Under the new rule, “a producer shall not be subject to more than one negligent violation per calendar year.”

Positive Developments for Hemp Producers

In many ways, the new rule alleviates many producers’ most serious complaints about hemp regulation. As discussed, the rule provides hemp-growers with greater flexibility for disposing of non-compliant plants, and the rule doubles the THC-percentage threshold required to establish a producer’s criminal negligence.

In addition, the new final rule lengthens the window that farmers can harvest hemp plants from fifteen to thirty days after sampling. According to the USDA, this change will better allow producers to account for variables such as testing requirements, weather, agricultural practices, and equipment delays. The new rule also empowers jurisdictions to develop testing methods that best account for relevant environmental and regulatory factors. In fact, the rule expressly disavows the “highly prescriptive rules and requirements” that many producers criticized during the open comment period.

Concerns That May Remain for Hemp Producers

However, the new rule does not address all concerns that hemp-growers articulated during the public comment period. Despite farmers’ criticism of the U.S. Drug Enforcement Agency’s (DEA) active role in enforcing hemp regulations, the DEA remains an integral player in the new hemp production plan. Under the new rule, for example, testing laboratories will need to register with the DEA.

Likewise, during the public comment period, many farmers advocated for THC-monitoring protocols that test whole hemp plants, not just hemp plant flowers. According to producers, this is the best way to accurately assess a hemp plant’s characteristics because hemp plant flowers naturally contain concentrated THC levels. However, the USDA rule rejected these suggestions, opting instead to retain flower testing requirements.

Moreover, the new rule leaves open certain questions. For example, the USDA explicitly states that the “final rule does not address the exportation of hemp.” Likewise, the rule is set to take effect on March 22, 2021. Whether the incoming Biden Administration will have any impact on these regulations before that date remains to be seen.

To ensure that your business is complying with the most up-to-date rules and guidance from the USDA, you should consult an experienced cannabis law lawyer. If you have questions or concerns, our Cannabis Law attorneys are here to help.