Friday, November 15, 2019

USDA Issues Interim Final Rule Establishing Domestic Hemp Production Program: Next Steps in South Carolina



On October 28, 2019, the Agricultural Marketing Service of the United States Department of  Agriculture (USDA) issued an Interim Final Rule for the Establishment of a Domestic Hemp Production Program as required by the Agricultural Improvement Act of 2018 (2018 Farm Bill).

The Interim Rule went into effect October 31, 2019 and is effective through November 1, 2021. The USDA is accepting comments on the Interim Final Rule until December 30, 2019. The South Carolina Department of Agriculture indicates that it plans to submit comments to the USDA no later than December 16, 2019. Following the comment period, the SCDA may submit a plan to the USDA for approval. The Interim Final Rule requires the USDA to approve or disapprove a plan submitted by the SCDA no later than 60 days after its submission.

For more on the 2018 Farm Bill’s provisions related to commercial hemp and the South Carolina Hemp Farming Act enacted following the 2018 Farm Bill, click here.

The Interim Final Rule and South Carolina

State plans submitted to the USDA for approval must contain certain provisions set out in the Interim Final Rule, including licensing requirements, maintaining information on land used for production, testing procedures to determine THC concentration levels, procedures for disposing of non-compliant plants, and compliance and violation procedures. For those States and Indian Tribes without approved plans, the USDA will establish a hemp regulation plan.

Licensing. The South Carolina Hemp Farming Act contains various licensing requirements, which will undoubtedly be incorporated into the plan submitted by the SCDA to the USDA.

Information on Land Used to Produce Hemp. The SCDA will have to collect and maintain (for at least three years) information on hemp production sites, including a legal description of land and its geospatial location (given that many rural areas lack specific addresses). Licensed hemp producers must report hemp crop acreage to the USDA Farm Service Agency (FSA).

Sampling and Testing of THC. Cannabis with a concentration of no more than 0.3% THC is considered hemp, and not marijuana (a Schedule 1 drug and controlled substance). The Interim Rule requires hemp samples to be collected within 15 days before the anticipated harvest for THC concentration testing. Testing must be conducted by a “DEA-registered laboratory using a reliable methodology for testing the THC level.”

Because there is some uncertainty inherent in all testing, the “acceptable hemp THC level” extends to cover the distribution or range of uncertainty. (If a test has a range of uncertainty of +/- 0.05, then a measured THC level of 0.34% for a sample would be considered hemp).

Disposal of Non-Compliant Plants. Material exceeding the “acceptable hemp THC level” is considered marijuana, and must be disposed of consistent with the Controlled Substances Act and DEA regulations.

Compliance Procedures: “Reasonable Efforts,” “Negligent Violations,” and “Intentionally, Knowingly, or with Recklessness”. The Interim Rule requires the South Carolina plan to address procedures to identify and correct negligent acts, which include failing to provide a legal description of hemp production land, failure to obtain a required license or authorization, and producing plants exceeding the acceptable THC level. More particularly:
  • if a producer uses reasonable efforts to grow hemp, but produces plants exceeding the 0.3% THC threshold but having no more than 0.5% THC, then that producer does not commit a negligent violation;
  • a negligent violation requires a corrective action plan;
  • negligent violations are not subject to criminal enforcement action by local, Tribal, State, or Federal governmental authorities; and
  • intentional, knowing, or reckless acts must be reported immediately to the Attorney General and the chief law enforcement officer of the State or Tribe.
Because the production of cannabis exceeding the “acceptable hemp THC level” is considered a “negligent violation” under 7 CFR Section 990.6(b), and because 7 CFR Section 990.6(c)(3) specifies that a producer committing a “negligent violation” is not subject to any criminal enforcement action, the South Carolina Attorney General may be revisiting a June 10, 2019 Opinion on SC Hemp Farming Act.


Conclusion 

The SC plan to implement the 2018 Farm Bill and the Interim Final Rule presumably will provide a more clear framework for licensed hemp operations in South Carolina.