HEMP LAWS
The U.S. Congress enacts a new Farm Bill every 5 years establishing the direction of U.S. farm and food policy.
The 2018 Farm Bill (the Agricultural Improvement Act of 2018) enacted by the U.S. Congress addressed a variety of policies and programs but the biggest news was the treatment of hemp. The 2018 Farm Bill opened the hemp industry for business.
Congress extended the 5 year deadline in 2023 and 2024 so the U.S. continues to operate under the 2018 Farm Bill.
Hemp Background
Both marijuana and hemp are from the same species of plant, Cannabis sativa, but from different varieties or cultivars. Hemp is a low THC variety of cannabis, legally defined as less than 0.3 percent THC (2018 Farm Bill section 10113). Hemp is used in a number of products such as paper, fabrics, food and beverages, nutrition products, construction materials, and other industrial goods. Hemp is also used for extraction of CBD (Cannabidiol).
Prior to the late 1950s, hemp in the United States was considered an agricultural commodity, and the U.S. Department of Agriculture (USDA) supported its production. Control and regulation of hemp has been administered by the U.S. Drug Enforcement Administration (DEA) since the late 1950s. The definitions of marijuana under the 1937 Marihuana Tax Act and the 1970 Controlled Substances Act (CSA) do not distinguish between low THC cannabis plants (hemp) and high THC cannabis plants – both were considered Schedule I controlled substances. Some argued that the definition under the Controlled Substances Act exempts industrial hemp under its exclusions for stalks, fiber, oil, cake, and seeds, but the DEA has consistently disagreed with this position.
Federal policy regarding hemp was significantly altered with the 2014 Farm Bill (Agricultural Act of 2014). The 2014 Farm Bill allowed state departments of agriculture to grow hemp under an agricultural pilot program, and certain research institutions, in states with laws allowing for hemp production. Further, the U.S. Congress used appropriations bills to block the U.S. Department of Agriculture from prohibiting the transportation, processing, sale, or use of industrial hemp that is grown or cultivated in accordance with the 2014 Farm Bill, and also blocked the DEA and other federal law enforcement authorities from interfering with state agencies, hemp growers, and agricultural research.
Nevertheless, there was significant disagreement concerning certain aspects of the 2014 Farm Bill including the definition of industrial hemp, who could cultivate hemp, the scope of the commercial activity allowed, the transportation and sale of hemp across state lines, and the importation of viable hemp seeds. (See 2016 Congressional correspondence regarding hemp to USDA, DEA & FDA and the CRS Memo with 2016 Joint DEA, USDA & FDA Statement of Principles on Industrial Hemp.)
2018 Farm Bill
The 2018 Farm Bill established a new federal hemp regulatory system under the U.S. Department of Agriculture which aims to facilitate the commercial cultivation, processing, and marketing of hemp, and essentially treat hemp like any another agricultural commodity. It removed hemp and hemp seeds from the statutory definition of marijuana and the DEA schedule of Controlled Substances (that removal was effective upon the enactment of the 2018 Farm Bill in December 2018). It even made hemp an eligible crop under the federal crop insurance program. The 2018 Farm Bill also allowed the transfer of hemp and hemp-derived products across state lines provided the hemp was lawfully produced under a State or Indian Tribal plan or under a license issued under the USDA plan.
This does not mean, however, that anyone can grow hemp. Hemp cultivation and production remain subject to significant regulation at the federal, state and local levels. Under the 2018 Farm Bill, each state (or Indian tribe, territory or possession) department of agriculture must submit to the USDA a plan for state licensing and regulation of hemp.
The 2018 Farm Bill also outlined actions that are considered violations of federal hemp law including activities such as cultivating without a license or producing cannabis with more than 0.3 percent THC. It sets forth possible punishments for violations and identifies which activities qualify as felonies.
Finally, the 2018 Farm Bill does not affect or modify the authority of the Secretary of Health and Human Services or the Commissioner of Food and Drugs to regulate hemp under applicable U.S. Food and Drug Administration laws. (See the 2019 Hemp Legal Opinion by USDA General Counsel.)
Hemp products remain subject to regulation under the Federal Food Drug & Cosmetic Act when applicable such as with drugs, foods, dietary supplements, cosmetics, veterinary products, etc. The U.S. Food and Drug Administration takes a dim view of many of these products.
The USDA published its Final Hemp Rule rule on January 15, 2021, providing a definitive regulatory framework for hemp production throughout the United States. The regulations took effect March 22, 2021.
The USDA also developed guidelines for hemp testing (USDA Hemp Testing Guidelines) and sampling (USDA Hemp Sampling Guidelines).
State Hemp Laws and Regulations
The 2018 Farm Bill applies to all states and Indian tribes (as well as the District of Columbia, Puerto Rico, and any other territory or possession of the United States). A state, territory, or Indian tribal government hemp regulatory plan must be approved by the USDA before that hemp plan can take effect. For any state, territory, or Indian tribal government that does not submit a hemp regulatory program, the USDA will create a regulatory program for hemp cultivators in that jurisdiction to apply for licenses.
States and Indian tribes retain authority to prohibit or restrict cultivation of hemp if they choose, but cannot prohibit the interstate transportation of hemp lawfully produced. (There are conflicting cases on whether States or Indian tribes could prohibit interstate transportation of hemp lawfully produced under the prior 2014 Farm Bill. The USDA General Counsel issued an opinion that they may not prohibit interstate transportation.)
The 2018 Farm Bill also opened the door for hemp products that contain THC, CBD and other cannabinoids. Hemp products, even those containing THC, have became ubiquitous. Even national liquor retailer Total Wine & More is selling hemp derived THC products in many states.
States have taken various approaches to address the issue of what is being termed intoxicating hemp ranging from bans of hemp products that contain any amount of THC to regulations regarding the types of hemp products that may be sold in the state.
California Hemp Laws and Regulations
In California, cannabis and hemp are currently regulated in separate supply chains. Unlike cannabis, hemp products can be sold to consumers within the standard commercial market, for example, within grocery stores, beauty retailers, and general merchandise retailers. Cannabis licensees are not authorized to engage in hemp activities on their licensed cannabis premises.
Hemp products are not “cannabis products” under California law. The definition of “cannabis,” for purposes of the California Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA) excludes “industrial hemp,” as defined in the California Uniform Controlled Substances Act (UCS Act). See California Business & Professions Code § 26001(f) and California Health and Safety Code § 11018.5.
In October of 2021, the Governor signed Assembly Bill 45 which took effect immediately as an urgency statute. AB 45 established a regulatory framework for industrial hemp under the Sherman Food, Drug, & Cosmetic Law. The California Department of Public Health has regulatory authority over industrial hemp products outlined in AB 45.
Manufacturers of products containing industrial hemp or hemp products must obtain an Industrial Hemp Enrollment and Oversight (IHEO) Authorization issued by the California Department of Public Health to manufacture, distribute, pack, or hold industrial hemp products in California.
Manufacturers must also comply with all other California and federal laws including applicable registrations for the specific commodity (such as Processed Food Registration, Pet Food Registration, Cosmetic Manufacturing Registration, cannery license, etc.). Examples of other laws and regulations that may apply include the California Sherman Food, Drug and Cosmetic Law, the California Safe Cosmetics Act of 2005, the California Food Sanitation Law, the California Pure Pet Food Act, the Federal Fair Packaging and Labeling Act, the Federal Food, Drug, and Cosmetic Act, etc. Food manufacturers that include industrial hemp in products must also follow all food safety laws and regulations.
In 2024, after state legislators failed to pass Assembly Bill 2223 regulating intoxicating hemp products, the California Department of Public Health issued emergency regulations banning any quantity of THC from consumable hemp products. On September 23, 2024, the emergency regulations were approved by the Office of Administrative Law and went into effect. For hemp-derived food, beverage, and dietary products, the regulations (i) ban any detectable amount of THC or other intoxicating cannabinoids per serving; (ii) ban sales to people under 21; and (iii) limit servings to five per package.
Cultivation of hemp is lawful in California. The state is one of the larger producers of hemp in the U.S according to the United States Department of Agriculture National Agricultural Statistics Service Hemp Report.
Industrial hemp cultivation is regulated by the California Department of Food and Agriculture. California laws for the cultivation of industrial hemp by registered growers, hemp breeders, and established agricultural research institutions are contained in Division 24 of the California Food and Agricultural Code. Regulations for California industrial hemp cultivation are contained in Title 3, Division 4, Chapter 8 of the California Code of Regulations.
Contact us by phone or email to learn more about California cannabis law including state, county or city cannabis licensing and cannabis regulations, cannabis regulatory compliance, cannabis litigation, and hemp laws.