San Francisco (CNN Business) - Hemp is now a bona fide American crop.
The US Department of Agriculture this week posted formal federal guidelines for how hemp — the versatile cannabis varietal used for clothing, plastics, fuel and food — can be grown, harvested, tested, processed, transported and sold. The USDA also established the US Domestic Hemp Production Program to regulate the cannabis plant.
"The industry has been waiting with bated breath for these," said attorney Anita Sabine, who represents hemp, cannabis and CBD firms at the Manatt, Phelps & Phillips law firm in Los Angeles. "They could not come soon enough."
The proposed regulations, published Thursday in the Federal Register for public comment, could be a boon for a burgeoning industry that has operated under a hodgepodge of state laws following the passage of past farm bills, notably the Agricultural Improvement Act of 2018 that legalized hemp.
Under the new program, states and Native American tribes will have to submit for approval hemp production plans that meet or exceed the USDA's standards. For those states and tribes that don't submit a plan, these federal guidelines will apply.
The USDA's rules address concerns such as interstate transport — states can't prohibit it — and the acceptable levels of THC in hemp. The USDA didn't address the exportation of hemp and indicated it may consider exports in the future.
The federal guidelines should help lower the costs of operation and compliance for hemp businesses and farmers alike, Sabine said. The uniformity could assuage those who liken hemp to its federally illicit cousin and have either steered away from working with hemp businesses or tried to ban hemp products.
The USDA standards help tie up some of the loose ends left from the 2018 Farm Bill that legalized the cannabis varietal that contains no more than 0.3% of the psychoactive tetrahydrocannabinol (THC).
More farmers have turned to the crop as grain prices fall, trade war concerns heat up, the climate changes and cannabis laws shift. Notably, hemp was viewed as a cheaper means of producing the lucrative cannabidiol (CBD), the cannabis compound promoted for health and wellness benefits.
But the USDA guidelines still don't provide any significant clarity on CBD--nor were they supposed to. The super-popular extract that's now found in everything from sports drinks to Fido's food bowl remains under the purview of the US Food and Drug Administration, which is currently chewing over potential regulations.
"We have this hemp CBD industry that's exploded," Sabine said. "[Products can be] cultivated in State A, extracted in State B, added to a product in State C, finished in State D, and moved across state lines — all of this with no assurance to the consumers that the products have been tested to meet minimum standards."
The USDA's rules should help establish some of that baseline while additional FDA guidelines are awaited, she added.
A surprise to some hemp growers and producers was the little wiggle room the USDA afforded for hemp that grows "hot," or exceeds the 0.3% THC threshold, said Shawn Hauser, chair of the hemp and cannabinoids practice group at cannabis law firm Vicente Sederberg.
The USDA regulations outline a "measurement of uncertainty" of plus or minus 0.06%; but to be considered hemp and not federally illicit cannabis, the 0.3% of THC must fall within that distribution. Labs that test the plants must be facilities registered with the Drug Enforcement Administration, and plants that exceed the allowed threshold must be destroyed by a DEA agent.
"There's a lot of concern whether there are enough registered DEA labs to satisfy the industry's needs," Hauser said.
Hemp can grow hot for a variety of factors, including weather, soil and a farmer's inexperience in growing it. Some state hemp programs have offered remediation or corrective measures versus immediate destruction.
"Any hot hemp is going to be a total loss for the farmer," she said.
The 60-day public comment period could allow growers and producers to weigh in on those and other matters, she said. The USDA's interim final rule for hemp is effective as of Thursday through Nov. 1, 2021. Comments received prior to Dec. 30, 2019, will be taken into consideration for the final rule.