Weekly Inside U.S. Hemp, Issue #1

Blog Feb 12, 2019

Hemp and Hemp-Derived CBD
Weekly Inside U.S. Hemp, Issue #1
From the Greenspoon Marder Washington D.C. Office

Greenspoon Marder has a new Washington D.C. presence and experience in the hemp and hemp-derived products space. We will be reporting weekly on federal regulatory and Hill developments for hemp and hemp-derived CBD.

In Washington D.C., Jessica Wasserman of Greenspoon Marder and Saphira Galoob of The Liaison Group – a wholly-owned subsidiary of the firm – are speaking daily with the officials at the federal agencies (and Members of Congress and Committee staff) seeking clarification of the issues and the timeline for implementing the hemp provisions of the 2018 Farm Bill.

In this regular blog, we will share our insights and analysis as eyes and ears in Washington.

Guidance from the federal agencies on the new hemp provisions has been slowed by the recent government shutdown and the federal regulatory approaches are only now emerging.

Below is some of the information we have gathered this week.

The key implementing agency for hemp as set out in the 2018 Farm Bill statute is the US Department of Agriculture. This week we learned the following:

The Agricultural Marketing Service division of USDA has the lead for the USDA Hemp Implementation Task Force.
USDA is planning to issue FAQs for the industry in the next week or so. USDA will soon be issuing and implementing regulation through notice and comment rulemaking.
USDA has received state plans from two states: Kentucky and Pennsylvania. USDA has informally requested that states hold off on submitting state plans until USDA has had more time to review the new provisions.
USDA is fully aware of the state actions this week to interfere with interstate commerce of hemp (stopping truck transshipments), in seeming violation of the 2018 Farm Bill, and will likely address this issue in its FAQs.
The 2018 Farm Bill does not authorize any funding for implementation of the new hemp programs for FY 2019 and it is likely too late to get funds appropriated for FY 2019, so we are looking at FY 2020 for additional possible funding.
Hemp is now an agricultural commodity but it is not a “program crop” meaning it is not eligible for price support programs, such as the farm loan program, commodity loans, etc. available to program crops such as wheat, corn and soy. It would require a legislative authorization to make hemp a program crop.
Hemp is eligible for crop insurance, the federal program that delivers crop insurance through private insurance companies. Crop insurance is a major USDA program providing around $2 billion annually. Crop insurance will likely not be in place until the 2020 growing season.
Hemp is now, or soon will be, eligible for USDA programs such as marketing and promotion order and programs that support exporting, such as the Market Access Program.

For hemp food products, dietary supplements, cosmetics, and medical devices, Food and Drug Administration regulatory pathways will be critical for the growth of the emerging hemp derived products industry, including the CBD industry. This week we spoke with FDA officials:

FDA will be holding a stakeholder “hearing” in the near future. FDA will issue a federal register notice prior to the meeting giving 30 days advance notice. The hearing is not a formal hearing and does not mean that FDA will issue a regulation on CBD. In fact, FDA has informally said that they will not be issuing a new regulation in the near term. It is common practice for FDA to hold stakeholder meetings without issuing a subsequent regulation or even a guidance.
The industry should not expect any sudden change in the status quo for CBD products enforcement. FDA’s informal advice has been to: 1) avoid curative claims and 2) produce a safe product.
For FDA, the safety of food and supplements is the highest priority and FDA supports the use of cGMPs and self GRAS approaches to CBD manufacture.
The IND preclusion (Epidiolex) applies to food and dietary supplements but not cosmetics. Cosmetics must meet safety standards and claims but is not subject to preclusion. This means the regulatory pathway for cosmetics is easier.
FDA Commissioner Gottlieb will testify next week at the Appropriations hearing for FDA and he might be asked some questions on the regulation of hemp derived products by FDA.
Senators Wyden and Merkeley, who first introduced the Hemp Farming Act (which became the hemp provisions of the 2018 Farm Bill), recently sent a list of questions to FDA Commissioner Gottlieb encouraging clarification of the regulatory environment for CBD. The responses are due February 15^th and we will report the results here.

The enforcement of the rules for import and export of hemp and hemp derived products is administered by the Department of Homeland Security, Customs and Border Protection (CBP)

Imports and exports are under federal jurisdiction and not state jurisdiction. Now that hemp – which is defined in the 2018 Farm Bill as having less than .3% TCH – is no longer a controlled substance under federal law, these same products can be imported into the United States. CBD has not, thus far, issued a communication to the field at ports of entry clarifying this new situation. We understand that CBP will soon clarify the new policy.
FDA works closely with CBP to coordinate US domestic and import rules and enforcement. Under international agreements, the US cannot impose stricter barriers on imports than those enforced on the same domestic products. Products allowed for sale in the US are allowed for import.
CBP should allow exports of hemp derived products, although it is the rules of the importing country that will determine market access in the importing country.

Please do not hesitate to contact Jessica Wasserman at Jessica.Wasserman@gmlaw.com for clarification or if you have a specific question. We would be pleased to provide or find the answer.