The 2018 Farm Bill: Decoded

Strap in, folks. Things are going to get intense

In 1933, the first-ever Farm Bill was introduced by President Roosevelt under the Agricultural Adjustment Act. America, during these early years, was still very much in the agricultural domain of sorts; a large majority of people within the country had either grown up on a farm, tended someone else’s farm, or had a farm of their own (my family’s ancestry included). During the years preceding this Act, a series of errors was committed by not applying “dryland farming methods”, reflecting on the nature of the serious drought at the time, and the relatively (and arguably) inconsiderate view of the land; farmers did not quite have time to take care of the land while having to make sure the family was fed. The soil with which the majority of agricultural crops were grown in began to deteriorate. The topsoil began to loosen, paving the way for the winds to pick up these loose particles and eventually create ecological and agricultural nightmares which we know of now termed “dust bowls”. The Act that was passed was a recognition from President Roosevelt that the circumstances behind a reliant economy was upon the production of agriculture and by staving off a catastrophic failure of the industry (by alleviating farmers of the risk of lost livelihoods due to unforeseen events) it permitted other sectors to continue to thrive as well.

Since the first Farm Bill in 1933 was introduced, there have been a total of 17 others including the most recent Farm Bill titled the “Agriculture Improvement Act of 2018”. While the congressional bill reauthorizes various conditions previous Farm Bills have done, it also modifies “department of Agriculture programs” that addresses “commodity support, conservation, nutrition assistance, research and extension activities, energy, horticulture, and crop insurance” (H.R.2 — Agriculture Improvement Act). In contrast to other bills, this one seemed to focus on a particular area that had been gaining traction since the early 2000’s (which you can read about here): hemp-sourced viability. It was the first major federal piece of legislation that not only decriminalized hemp-derived CBD from the Cannabis plant, not only moved Cannabis into a regulatory agency (the FDA), but it also recognized the utility behind hemp production and its value in various fields (which is why hemp is mentioned in the Farm Bill a total of seventy-two times).

In light of the passing of the Farm Bill, the Food and Drug Administration has explicitly stated on their website that “this new law changes certain federal authorities relating to the production and marketing of hemp, defined as “the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers…with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis” Furthermore, it preserved the “FDA’s authority to regulate products containing cannabis or cannabis-derived compounds under the FD&C Act and section 351 of the Public Health Service Act (PHS Act)”. Why is this so important? First, with a regulatory agency behind the use of hemp-derived products, it produces added layers of security for consumers; as the FDA’s own website states, they monitor for “safety, efficacy, and security of human and veterinary drugs, biological products, and medical devices”. Second, it legitimizes the industry as a whole for the merits behind its application — meaning that a governmental agency recognizes that there is intrinsic value behind hemp-derived products (including CBD). Third, it establishes hemp-derived products as being similar to the same cornerstone of the agricultural industry — an industry that, throughout time, has often claimed the title of the pinnacle of any great civilization’s success. Fourth, and most importantly, it demonstrates the safe considerations behind the work that so many hemp-growers (and CBD extractors) have been saying for years upon years — even the government recognizes that there is real world applications with how hemp and CBD results in the betterment of society.

So what, pray tell, is specifically outlined in the Farm Bill? The Bill itself establishes items that are new and makes modifications to the 1977 National Agricultural Research, Extension, and Teaching Policy Act (which, specifically, set up exemptions and allowances toward particular items; notably missing from this Act were references to hemp which has thus been modified to include).

The following is a comprehensively examined explanation of everything that is included in the 2018 Farm Bill:

According to the Farm Bill, it classifies the term “hemp” to mean the plant Cannabis sativa and any part of that plant; whether that be any seeds, extracts, cannabinoids, isomers, acids, salts (including salts of isomers), and any derivatives therein with a THC concentration of no more than 0.3 percent on a “dry weight basis”. It does not differentiate between whether the items are actively growing or not.

Native tribes that wish to have primary regulatory authority over the production of hemp within the State of their tribal land must submit a production and/or regulatory plan between the Secretary, Governor, and chief law enforcement officer, or tribal government. This plan should include an explanation on how to maintain information gathering of the land, a description of the land, a procedure for testing the THC levels, and a procedure for inspections of random sampling for verification. It is also clear that this Bill is not attempting to impose upon tribal law wherein tribal law has additional considerations; as long as the requirements that the Bill sets up is met, how the regulatory agency of the tribal state is carried out is largely left up to them.

This is much of the nuts and bolts of individuals wanting to get into the hemp-business. Much of the legal discussion here is reflecting on the intricate relationships between the various agencies that will be reviewing your plan and material; essentially, it is saying that if you want to be the primary authority over your own production, it needs to meet the criteria from multiple sources. Be. Very. Considerate. Here. It is very key to note that these agencies will not be writing this for you, they are going to be the judges of it instead. This means doing your due diligence, researching of codes, regulations, municipalities for operation, anything you can possible consider. There is a certain benefit to being an individual that has primary regulatory authority because you have a bit more independence in some of your future choices and growth in as long as you have done your homework to know how to maneuver among these challenges. If your initial plans don’t meet the standard, you may not have as much independence in your decisions as you would hope; your plan also could limit you, too. Take caution in your planning, do not rush it.

General Violation: A hemp producer that is found to be negligent (by the State department of agriculture or tribal law) in violating the plan, through failing to provide a legal description of the land, failing to obtain a license or other authorization, or producing hemp with an increased THC level beyond the allowable amount, must comply to a corrective action plan. This plan must provide a reasonable date to correct the violation, report out to the State department of agriculture or tribal government as applicable (demonstrating compliance) over a period of not less than two (2) calendar years.

A few things about this. It cannot be stressed enough that you would want to avoid a violation at all costs. This can be done through creating your own method of a “mitigation plan”, or some form of plan that can prevent this from occurring (think of it like how some food industries have the official health department checking in, but to be prepared they also higher businesses such as “eco-lab” to come and due low-impact checks to see where they need to work on). If you obtain a violation, the State or local tribe has absolute authority to establish requirements and timelines. The language used in this section states “not less than” meaning that it could be longer.

Negligent Violation: Any hemp producer that violates the State or tribal government law (and, by extension, violates the corrective plan) shall not, as a result of that violation be subject to any criminal enforcement action by the Federal Government or any State government, Tribal government, or local government.

This is good news; it further illustrates how the industry as a whole is being treated. If this policy had referenced more of a “one and done” kind of infraction, it would not bode well for the continued direction the industry would be heading into as legitimate. This is more for the well-intentioned business of hemp-derived sources, like an allowance for growth with an even-measured understanding.

Repeat Violations: A hemp producer that violates the State or tribal government law (and, by extension, violates the corrective plan) three (3) times in a five (5) year period, shall be ineligible to produce hemp for a period of five (5) years beginning on the date of the third violation.

This is huge with a silver lining. Obviously, you would want to avoid any violations at all, but in the event that you do get a violation, it is like speeding tickets — they will, eventually, fall off your “record”, so to speak, but after a certain period of time. Notice, again, that there is no criminal prosecution for the repeat violations (a good thing) but it can, effectively shut down the continuation of the hemp-production and, thus, effectively shut down the business of deriving products or goods from the source. It does not, however, make mention on whether hemp producers cannot continue to sell what products they have already made or on whether hemp producers can remove their own production source and import through another hemp producer and continue to maintain some form of operations. Again, this is on the “hemp producer”.

Other Violations (General): If the State department of agriculture or Tribal government in a State or the territory of an Indian tribe for which a State or Tribal plan is approved under the corrective action plan, as applicable, determines that a hemp producer in the State or territory has violated the State or Tribal plan with a culpable mental state greater than negligence shall report this violation to the Attorney General, chief law enforcement, and (from what I understand) any other method of enforcement stipulated above will be forfeit (meaning that the allowance to correct or get a slap on the wrist will not qualify).

Ok, time for the real heat. Dependent on the state, attempting to examine what a culpable mental state is differs. According to U.S. legal definitions, in general, a culpable mental state refers to “the state of mind of an individual while committing a crime”. It continues to explain that, in order to be found culpable, crimes are done with “a particular state of mind, and that a certain sort of criminal act is more or less serious depending on the perpetrator’s state of mind at the time”. Culpability can be determined by examining the mental state with “negligence, recklessness, knowledge and purpose”. On the immediate response, it is easy to say that “how can someone ever really know where my mind is at any time” but notice in this definition of how culpability can be established through negligence…something that has already been somewhat demonstrated if you need a corrective action plan and/or if that corrective action plan has been violated. Again, this can be argued, but to be safe you would want to avoid getting to this point at all costs.

Other Violations (Felony): Except as provided in clause (ii) (clause two is an exception for anyone that has been previously growing hemp lawfully with a license, registration, or authorization under the pilot program enacted in the Agricultural Act of 2014 before the date of enactment within this Bill), any person convicted of a felony relating to a controlled substance under State or Federal law before, on, or after the date of enactment of this subtitle shall be ineligible, during the 10-year period following the date of the conviction, to produce hemp under any regulations or guidelines.

Bummer. This is somewhat taking the hemp industry back a bit but it also, unfortunately, aligns well with the current state of affairs as it pertains to anything felony-related (and it also, unfortunately, perpetuates the same kinds of stigmas associated with felons in general and helps to increase recidivism. To get somewhat of a sense of the why and how, read up here and here). Simply put, this section prevents people with a felony record from being able to begin this own hemp-production business.

DEPARTMENT OF AGRICULTURE

Department of Agriculture Plan: In the case of a State or Indian tribe for which a State or Tribal plan is not approved under section 297B, the production of hemp in that State or the territory of that Indian tribe shall be subject to a plan established by the Secretary to monitor and regulate that production in accordance with a plan established by the Secretary including a practice to maintain relevant information regarding land on which hemp is produced in the State or territory of the Indian tribe, including a legal description of the land, for a period of not less than 3 calendar years, a procedure for testing, using post-decarboxylation or other similarly reliable methods, delta-9 tetrahydrocannabinol concentration levels of hemp produced in the State or territory of the Indian tribe, a procedure for the effective disposal (and compliance) of the plants (regardless of growth or not) that are produced in violation including any products, and a procedure for conducting annual inspections of, at a minimum, a random sample of hemp producers to verify that hemp is not produced in violation

Okay, so this section really only applies if an initial plan is not approved based on section 297B which is the section already discussed above (review the “primary regulatory authority”). So, if we are to imagine that your initial plan is rejected to be the primary regulatory authority, you essentially will fall under a bit more of a fine-toothed comb plan that is set forth from the regulatory agencies instead. This can hamper your ability for growth and direction that you had envisioned because it will be somewhat up to the regulating agencies to decide. It could also result in higher difficulty in startup operations as regulating agencies are more inclined to uphold the standards that they see or view vs. possible methods that you may be already aware of and could be cost-saving. Just imagine that your original plan called for a practice that kept information on land producing hemp for three years but the rest of your plan wasn’t great and it was ultimately rejected. According to the way the language of this section props it up, the minimum would be three years…but they could ask for practically any real number. This could, in the future, run additional, unforeseen costs solely due to the relationship dynamic of who is to be considered the “primary regulatory authority” or call into question whether you are considered trusted enough to regulate and maintain on your own; all because your initial plan may have been rejected. In my honest opinion, this section offers opportunities for people wanting to get into the hemp production business but questions how much of the government and authorities would be involved with you.

Licensing: The Secretary shall establish a procedure to issue licenses to hemp producers in accordance with a plan established under subsection (a) which refers to the above paragraph.

Simply put, by accepting this plan put forth, you will be issued a license to produce hemp. There is no real telling here, though, in terms of what that might entail in regards to time (for renewals or expansions), quantity or quotas, etc. It is not entirely certain whether these licenses are only for people whose plan is not accepted, but there is a strong opinion that licenses would be universally applied.

Violations: In the case of a State or Indian tribe for which a State or Tribal plan is not approved, it shall be unlawful to produce hemp in that State or the territory of that Indian tribe without a license issued by the Secretary. A violation of a plan established under subsection (a) shall be subject to enforcement in accordance with paragraphs (2) and (3) of section 297B(e), except that the Secretary shall carry out that enforcement instead of a State department of agriculture or Tribal government. In the case of a State or Indian tribe covered by paragraph (1), the Secretary shall report the production of hemp without a license issued by the Secretary under subsection (b) to the Attorney General

Okay, so if your original plan was not approved and/or you do not follow the proposed plan from the State, you essentially will not be able to produce hemp. This section essentially is outlawing the production of hemp without a license that is issued by the Secretary so this is meant to inform you behind the illegality of obtaining or creating licenses to produce hemp without them having been directly issued by the Secretary. A few scenarios for why this is important to know. Imagine that you submitted a plan, it was accepted, you get a license which is fantastic and you begin your production. If, at a later date, it is determined you must renew every year to a hefty amount and you, instead, decide not to renew, then you are in violation because you do not have an active license issued. So, it doesn’t entirely matter if your plan is accepted at a given moment in time, but if you do not have a license that is maintained in perpetuity according to the Secretary issuing them you will still be in violation. This can have ramifications including, and/or up to, legal action or law enforcement being involved. Why is this so critical? Well, read the next section.

Information Sharing for Law Enforcement: The Secretary shall collect information, make accessible to federal, state, and local law enforcement agencies the contact information for each hemp producer that has their plan approved or a plan accepted according to the State regarding the land and the status of the license (or other required authorizations) or any changes to that status.

Well, here it is; the exact issue that was discussed earlier and the gray area on the unknown of how frequently these licenses may need to be renewed (after all, if the Secretary needs to provide updated “statuses” of licenses, it suggests that there is a component of “valid/invalid” playing out which is related to time, circumstance, issuance, etc…much like the DMV in registering cars). Again, this kind of regulation definitely points out the legitimacy behind becoming involved in the CBD industry; if they recognize the importance of providing a given “status” for renewal or maintenance of said status, it would suggest that there is recognized growth within the industry. In other words, it ain’t going anywhere.

REGULATIONS AND GUIDELINES; EFFECT ON OTHER LAW

Authority: the Secretary shall have sole authority to promulgate Federal regulations and guidelines that relate to the production of hemp, including Federal regulations and guidelines that relate to the implementation of sections 297B (accepted plan submitted by you) and 297C (accepted plan provided to you by the Secretary)

This is juicy and it really depends how you read this. Promulgation means to “make widely known/promote” or to put law or decree into effect. This seems to have some accountability measures enacted on the Secretary; what if the Secretary fails to adequately do this? That is unknown. However, it also does mean that if the Secretary says something or provides updates as this law pertains in its coinciding to others, that hemp producers need to pay attention.

INSTERSTATE COMMERCE

Rule of Construction and Transportation: Nothing in this title or an amendment made by this title prohibits the interstate commerce of hemp (as defined in section 297A of the Agricultural Marketing Act of 1946 (as added by section 10113)) or hemp products. No State or Indian Tribe shall prohibit the transportation or shipment of hemp or hemp products produced in accordance with subtitle G of the Agricultural Marketing Act of 1946 (as added by section 10113) through the State or the territory of the Indian Tribe, as applicable.

As long as the hemp that is produced matches the expectations behind the definition and/or the expectation of what the hemp needs to meet in order to be legally produced, there should no prohibition to be able to sell across state lines. From my understanding, this doesn’t quite provide free access unilaterally, it just states that there shall be no prohibition of hemp commerce or products from the State or tribe — States can still impose their own views on regulation, restrictions, etc (because, remember, this is a Federal Bill). It is very good, though, as some laws which provide for an established acceptance of goods and services don’t always translate into permitting the transportation of it (which usually results in killing most of a business) so this upholds some form of standard for the law-abiding hemp producer and gives them some relative protections as well from interference. Again, though, just some slight caution with this area.

CROP INSURANCE

Federal Crop Insurance Act (amended, section 502b): The term ‘hemp’ has the meaning given the term in section 297A of the Agricultural Marketing Act of 1946.

Not much here to report out on though the title would suggest more. It essentially corrects how hemp is defined according to the AMA of 1946. However, it is not known fully whether hemp crops would be covered under the crop insurance act; this would require far deeper examination to determine.

Insurance Period (amended): the Federal Crop Insurance Act (7 U.S.C. 1508(a)(2)) is amended by striking ``and sweet potatoes’’ and inserting ``sweet potatoes, and hemp’’.

Truth be told, I think this is just a correction but what is of note is that it recognizes hemp as its own product which would then, in theory, be considered covered under the Insurance Period title of the Federal Crop Insurance Act. The act states:

Except in the cases of tobacco, potatoes, sweet potatoes, and hemp, insurance shall not extend beyond the period during which the insured commodity is in the field. As used in the preceding sentence, in the case of an aquacultural species, the term ‘‘field’’ means the environment in which the commodity is produced.

Which would suggest that hemp is, indeed, covered under Insurance within particular parameters and dependent on the Corporation; what is interesting is that the usually insured commodity is only covered while it is in the field itself. For hemp, there is an exception to this and seems to be covered beyond just the production and harvesting of it. This is a huge plus for hemp production qualities if that is an accurate reading. Of course, there are exclusions to this so it is up to the producer to determine whether they meet this or not.

SUBMISSION OF POLICIES AND MATERIALS TO BOARD

Section 508(h) of the Federal Crop Insurance Act: amended. Waiver for hemp: The Corporation may waive the viability and marketability requirement under clause (i)(I) in the case of a policy or pilot program relating to the production of hemp.’’; and in the case of reviewing policies and other materials relating to the production of hemp, may waive the viability and marketability requirement under subparagraph (A)(ii)(I)

This section is essentially discussing that any person or insurance provider (including additional person(s)) may prepare and submit to the Board premiums as they relate to the insured crops, insurance crop policies and provisions, but the Corporation may submit to the Board any policy or program if they (the Corporation) find at its sole discretion, that the policy or program would result in a viable and marketable policy, provide crop insurance coverage in a significantly improved form, and/or adequately protect the interests of the producers. However, hemp can be waived according to the Corporation’s determination relating to the production of hemp.

REIMBURSEMENT OF RESEARCH, DEVELOPMENT, AND MAINTENANCE COSTS

Section 522(b) of the Federal Crop Insurance Act (7 U.S.C. 1522(b)) is amended: Waiver for hemp. — The Board may waive the viability and marketability requirements under this paragraph in the case of research and development relating to a policy to insure the production of hemp. The Corporation may waive the marketability requirement under subparagraph (A) in the case of research and development relating to a policy to insure the production of hemp.

Essentially, if I am reading this right and have done my own research diligently, is pretty much saying that hemp can be waived by both components when it concerns the researching and development risks associated when producing hemp. From what I gather, this is like a gamble; don’t expect to have your insurance coverage be triggered if, through research and development, it does not produce because in these circumstances, policies made to insure may not warrant support in these cases.

CONFORMING CHANGES TO CONTROLLED SUBSTANCES ACT

Controlled Substances Act (amended): The term `marihuana’ does not include — ``(i) hemp, as defined in section 297A of the Agricultural Marketing Act of 1946. Schedule I is amended by inserting after ``Tetrahydrocannabinols’’ the following: ``, except for tetrahydrocannabinols in hemp.

Quite possibly the one of the biggest moments from the Bill. Marijuana, now, is reserved solely to production resulting in THC above 0.3 and hemp is completely separated from marijuana accordingly. This is a huge change as it provides complete validation toward hemp and hemp-derived products from the illegality previously associated with. Amazing to see! Furthermore, from how I am reading this is that MAY be room for an eventual allowance of THC levels in hemp-production to increase. Schedule I is amended to permit for the existence of it within hemp; previously, the language banned and any all THC which disavowed hemp and marijuana…but with this definitive language, it does not apply as a universal ban per se anymore, just of its existence in marijuana (and not hemp).

Whew, okay, that was a lot to take in but the takeaway from all of this analysis is the business production of hemp does not seem to be going anywhere and the value found in hemp being incorporated through varied amendments to previous laws, bills, policies, and the establishment of action plans for production in an agricultural bill really speaks volumes on its validity. CBD is not something to be afraid of in regards to illegality; if anything, for the first time ever, you have valid recognition behind the worth and merit of hemp and all hemp-derived products.