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Hemp Growers Beware: 2018 Farm Bill Provides Long-Term Opportunities, but Short-Term Risk Remains

March 12, 2019

Overview

Oregon-Grown Hemp Seized in Idaho

On January 24, 2019, an Oregon grower, who had legally grown and produced hemp with a license under Oregon law, was shipping a load of product to a purchaser in Colorado for processing. However, the Idaho State Police (ISP) pulled the truck over near Boise, Idaho. Upon further investigation, ISP seized the shipment of over 6,700 pounds of hemp and charged the driver with felony drug trafficking because hemp is still classified as marijuana under Idaho state law.

Following seizure, the Colorado buyer sued in federal court requesting emergency injunctive relief for release of the hemp shipment, arguing that the recently enacted 2018 Farm Bill had legalized hemp, removed it from Schedule I of the Controlled Substances Act, and prohibited states from interfering with hemp in interstate commerce. 

Recently, the United States District Court rejected the claim for emergency injunctive relief. The Court analyzed the 2018 Farm Bill, agreed that hemp is no longer a controlled substance, but found that states are only prohibited from interfering with hemp that has been legally produced in accordance with the 2018 Farm Bill. To be legal under the 2018 Farm Bill, the hemp must either (1) have been produced in a state that follows a federal plan for production and regulation of hemp or (2) have been produced under a state plan that the U.S. Department of Agriculture (USDA) has approved.

Unfortunately, to date, USDA has neither published a federal plan that states could adopt nor approved any state hemp production plans. Therefore, the Court reasoned that the Oregon-grown hemp had not been legally produced under the 2018 Farm Bill and was not entitled to the statutory protections of the 2018 Farm Bill.

The Court noted that this decision arose in the context of emergency injunctive relief, which carries a higher threshold for success, and that the purchaser may eventually succeed on the merits of the case. But for now, the hemp remains in possession of Idaho State Police, potentially losing value day after day, and an appeal has been filed.

Uncertainty Continues but Federal Regulations Are Forthcoming

This latest ruling extends regulatory uncertainty that many proponents and hemp growers had hoped the 2018 Farm Bill would extinguish.

Currently, hemp grown in Oregon is produced in accordance with the 2014 Farm Bill. The 2014 Farm Bill did not remove hemp from Schedule I of the Controlled Substances Act, which until now classified hemp and marijuana as narcotics, but the 2014 Farm Bill did allow states to implement limited “pilot programs.” In 2016, the Oregon Legislature established an industrial hemp program in accordance with the 2014 Farm Bill requirements, and growers must accordingly register and receive a license from Oregon Department of Agriculture to grow hemp. Idaho does not have a hemp program under the 2014 Farm Bill.

As noted above, the 2018 Farm Bill goes a step further and provides additional protections for hemp, but only if produced in accordance with its provisions. President Trump signed the 2018 Farm Bill into law on December 20, 2018, and USDA has not yet promulgated regulations to implement many of its provisions, including those regarding hemp. However, on February 27, 2019, USDA issued an update regarding hemp. USDA stated that it intends “to issue regulations in the Fall of 2019 to accommodate the 2020 planting season” and will hold a public webinar listening session regarding industrial hemp on March 13, 2019. More information can be found here.

Meanwhile, Oregon Department of Agriculture Director Alexis Taylor sent a letter on March 6, 2019 urging USDA to move forward with rulemaking and issue additional guidance regarding transportation of hemp in interstate commerce.

Until federal regulations are implemented, USDA has reminded interested parties that the limited provisions of the 2014 Farm Bill remain in effect for 2019, and hemp is not legal nationwide. Growers and processors should therefore use caution if they intend to transport hemp, including hemp seed, across state lines, as many of the 2018 Farm Bill protections have yet to take effect.

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