2018 Farm Bill Signed Into Law, Legalizing Cultivation and Production of Hemp in the U.S.

On December 20, President Donald Trump signed the 2018 Farm Bill, a sweeping agriculture bill governing farm subsidies, nutrition, and crop insurance, among other topics. The 2018 Farm Bill also legalized hemp, the non-psychoactive variety of the plant cannabis sativa that has many commercial uses. Under prior law, parts of the hemp plant were considered marijuana, which is a controlled substance under U.S. federal law, and were therefore illegal to cultivate, produce, distribute, sell or possess. The 2018 Farm Bill removes hemp (as defined below) from the definition of controlled substances under federal law.

What You Need To Know

• Only federally defined hemp is legal. The Farm Bill defines hemp as the plant cannabis sativa L. and its derivatives, extracts and cannabinoids with a THC content of not more than 0.3 percent on a dry weight basis. THC (tetrahydrocannabinol) is the psychoactive compound found in other varieties of cannabis. That definition includes cannabidiol (CBD) derived from cannabis with a THC content of not more than 0.3 percent. Varieties of cannabis with THC content above 0.3 percent are not affected by the Farm Bill and, as marijuana, they remain illegal.
• State and Federal Regulation. The Farm Bill permits states or Indigenous tribes to exercise primary regulatory authority over hemp production within their jurisdiction by enacting regulations meeting certain minimum standards:
  • procedures to track information regarding the locations of hemp production;
  • procedures for testing hemp for THC level;
  • procedure for destroying product with THC content above 0.3% (“hot hemp”); and
  • enforcement procedures to address violations.

The Farm Bill also authorizes the U.S. Secretary of Agriculture to issue regulations in consultation with the U.S. Attorney General.

• State Law Will Vary. We expect many states to revisit their own laws and regulations to conform them to the new requirements of the Farm Bill. Forty states already participate in the Hemp Pilot Program, which permitted limited cultivation of hemp for research purposes.
• Alleviation of U.S. Banking, Exchange Listing, and Tax Concerns. The Farm Bill should remove federal impediments to U.S. banking and stock exchange listing for hemp businesses. Hemp businesses should also be able to utilize typical U.S. tax deductions and credits as long as those businesses are legal under the laws of the states in which they operate.
• FDA Regulations Remain in Place. The Farm Bill does not affect or modify existing regulations and policies of the Food and Drug Administration (FDA), governing the content and labeling of food, drugs, dietary supplements, and health claims.

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This publication is a general discussion of certain legal and related developments and should not be relied upon as legal advice. If you require legal advice, we would be pleased to discuss the issues in this publication with you, in the context of your particular circumstances.

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