By: T. Daniel Logan
On January 19, 2021, the United States Department of Agriculture (USDA), Agricultural Marketing Service (AMS) published a final rule to implement the Agriculture Improvement Act of 2018 (also known as the 2018 Farm Bill), Pub. L. No. 115-334, and set forth rules governing hemp production. That rule, “Establishment of a Domestic Hemp Production Program,” at 86 Fed. Reg. 5596 (hereinafter “the 2021 final rule”), will supersede and replace the interim final rule (IFR) previously published by AMS (at 84 Fed. Reg. 58,522) as of March 22, 2021, the effective date of the 2021 final rule. The regulations, codified at 7 C.F.R. Part 990, largely track the language of the IFR and detail the requirements for State and Tribal hemp production plans and the USDA administered hemp production plan.
However, the 2021 final rule differs from the IFR in several key respects, set forth below.
- Performance Based Sampling: Whereas the IFR mandated State and Tribal plans to require collection of sufficient hemp samples to ensure that no more than 1% of plants in each lot would exceed 0.3% delta-9 tetrahydrocannabinol (THC) levels at a 95 percent confidence interval, the 2021 final rule permits submitted plans to include performance based-sampling plans. 86 Fed. Reg. at 5599 (to be codified at 7 C.F.R. § 990.3(a)(2)(iii)(A) and (B)). Such alternative sampling plans may not necessarily require each lot to be sampled. AMS explained that requiring each lot to be sampled may prove burdensome and expensive for local governments and hemp producers and that there are different risk factors for hemp used for fiber and grain versus hemp used for cannabinoids. Id.
- Plant Sampling Method: AMS rejected calls by commenters to change the way in which hemp plants must be sampled to test for THC concentration and instead offered greater specificity regarding how hemp plants must be sampled in advance of THC testing. Under the final rule, samples of hemp plants must be taken by cutting the “top five to eight inches” from the main stem, terminal bud, or central cola of the flowering top of the plant (to be codified at 7 C.F.R. § 990.3(a)(2)(ii)). While this procedure is consistent with AMS’ current position, previously, the agency had stated that samples should be taken from the top one-third of the plant. AMS explained that it had rejected calls to permit whole plant sampling because it needed to “strike an appropriate balance between the need to collect a sufficiently large portion of the plant’s flower…and the need to avoid cutting a portion so large that it would be logistically difficult to transport, dry, and prepare for laboratory testing.” 86 Fed. Reg. at 5601.
- Harvest Window: Whereas the IFR required harvest of hemp crops within 15 days of sampling, under the 2021 final rule, entities will have 30 days to harvest hemp from the date of sampling (to be codified at 7 C.F.R. § 990.3(a)(2)(i)). In modifying the harvest window, AMS noted that it agreed with commenters claims that a 15-day timeframe for harvest poses “logistical challenges,” but declined to grant the 60-day window requested by some. Rather, AMS explained that it opted for a 30-day window for harvest in order to “balance the logistical challenges…with the fact that THC concentration in hemp generally increases the longer the plant is in the ground.” 86 Fed. Reg. at 5601. As was the case in the IFR, producers may begin to harvest plants prior to receipt of test results but such harvest must be completed before the end of the 30-day window. 86 Fed. Reg. at 5636.
- Drug Enforcement Administration (DEA) Registration for Hemp Testing Laboratories: The final rule retains the requirement, set forth in the IFR, that hemp-testing laboratories be registered with the Drug Enforcement Administration. Although AMS had previously announced a delay in enforcement of such requirement until October 31, 2020 or publication of a final rule, AMS determined that DEA-registration remains necessary for laboratories conducting hemp testing because “laboratories could potentially handle cannabis that tests above 0.3 percent THC…which is, by definition marijuana and a Schedule 1 controlled substance.” 86 Fed. Reg. at 5602. Although the agency acknowledged the dearth of DEA-registered hemp testing facilities in some States and Tribal territories, it noted that numerous laboratories have applied for registration since publication of the IFR. Crucially, the 2021 final rule announces that AMS will not enforce the DEA-registration requirement until December 31, 2022; after that date, only laboratories registered with the DEA may conduct testing as part of a State, Tribal, or USDA hemp production plan (to be codified at 7 C.F.R. §§ 990.3(a)(3)(iii)(H), 990.25(g)(3)).
- Plant Disposal and Remediation: The 2021 final rule incorporates AMS’ allowance, announced as an enforcement discretion policy in February 2020, for additional means of disposing non-compliant plants. 86 Fed. Reg. at 5604 (to be codified at 7 C.F.R. § 990.27(a)). In order to dispose of hemp plants testing above 0.3% THC on a dry weight basis, the IFR required use of a DEA-registered reverse distributor or other law enforcement. However, subsequent to the publication of the IFR, AMS stated that it would not enforce such disposal requirements if the producer of the plants disposed of the plants in one of several specified ways, including plowing under, mulching/composting, disking, deep burial, burning, or bush mowing to turn plants into “green manure.” The final rule retains these options for disposal; AMS noted that these are common on-farm disposal practices that render the plant unusable and could reduce resource impacts on State, Tribal, and local law enforcement. 86 Fed. Reg. at 5604. The final rule further diverges from the IFR by permitting hemp growers to “remediate” non-compliant hemp crop by removing and disposing of flower materials and salvaging the remainder of the plant (stalk, stems, leaves, and seeds) or by shredding the entire plant (including the flowers) into a “biomass like material” and re-testing such biomass for THC content. 86 Fed. Reg. at 5605. AMS argues that allowing remediation will help hemp producers reduce the financial risk associated with the loss of a hemp crop. Id.
- Negligence Threshold: Under the terms of the IFR, hemp producers could be charged with a negligent violation if cannabis plants produced were shown to have a total THC concentration of more than 0.5% on a dry weight basis. AMS faced pushback from commenters, who generally found the negligence standard to be too strict, particularly given the nascent nature of the hemp growing industry. 86 Fed. Reg. at 5605. Accordingly, the 2021 final rule modifies this threshold such that producers do not commit a negligent violation if: (1) they use reasonable efforts to grow hemp; and (2) the plant does not have a THC concentration of more than 1.0% on a dry weight basis. Id. (to be codified at 7 C.F.R. § 990.29(a)(3)). In making these changes, AMS explained that the increased negligence threshold would “increase flexibility [for] farmers as they learn more about how to grow compliant hemp and as the availability of stable hemp genetics improves” and “incentivize…innovation by research institutions and producers.” 86 Fed. Reg. at 5605. Producers who commit 3 or more negligent violations in a 5-year period will have their license revoked and may not produce hemp for 5 years. In making these changes, AMS explained that the increased negligence threshold would “increase flexibility [for] farmers as they learn more about how to grow compliant hemp and as the availability of stable hemp genetics improves” and “incentivize…innovation by research institutions and producers.” 86 Fed. Reg. at 5605. Additionally, commenters expressed concern that producers could receive three negligent violations in one season (for instance, if a producer grows in three different locations) and be subject to automatic license revocation for 5 years. AMS agreed that that such concerns were valid and thus drafted the 2021 final rule to provide that producers may not be subject to more than one negligent violation per year. 86 Fed. Reg. at 5606 (to be codified at 7 C.F.R. § 990.29(a)).