This article by Robert Hoban was originally published on Forbes and is shown here with permission.

As all Americans know, Joseph Biden was sworn in as the 46th President of the United States on January 20, 2021. His inauguration came with a number of candidates, various positions at cabinet level, and agency heads across the federal government. While new leadership and new appointments would bring new directions, the outgoing Trump administration made one last attempt to fingerprint hemp policy.

On January 15, six days before the new president took office, the USDA released a final ruling on domestic hemp production that closed the loop of a two-year process that began with the 2018 Farm Bill. That piece of legislation directed the USDA to create a national legal framework for hemp production, which was first introduced in the form of the provisional final ruling published on October 31, 2019. The final rule, published in January 2021, builds on and incorporates various modifications and provisions, as well as concerns raised during the public comment session based on the lessons learned in the 2020 production year. American farmers, which officially went into effect on March 22nd, now have final regulations for the production of industrial hemp in the United States.

While the USDA rules serve as a unified standard for government programs, various states are currently negotiating with the USDA to approve their own programs for industrial hemp cultivation.

States are allowed to adopt their own programs based on the 2018 Farm Bill provisions for industrial hemp, but must be approved by the USDA. There have been a number of states that have been approved by the USDA under the provisional rules, and the new rule doesn’t change that. However, a number of other states have conducted intensive negotiations with the USDA and have not yet approved their programs. Colorado is one of those states, and the clock is ticking.

The last rule expands a number of concepts, one of which involves negligent breaches of acceptable THC levels that define legal industrial hemp made from illegal marijuana. Industrial hemp is defined as 0.3 percent THC or less. Under the tentative final ruling, a culture tested above 0.3 percent THC had a significant impact on the Drug Enforcement Administration.

The final rule, published in January, increases the negligence threshold from 0.5 percent THC to 1 percent THC. In addition, the maximum number of negligent violations that growers can suffer in a given growing season is limited to just one. This is a major change that takes a far less draconian approach to treating U.S. hemp growers. Under the provisional rule, a farmer tested at 0.6 percent would face criminal repercussions.

The 1 percent negligence threshold provides farmers with broader protection while creating a more profitable industrial hemp industry. The final rule also continues to require DEA registered laboratories to test all hemp produced in 2020 and possibly 2021. This puts an additional burden on those seeking DEA registration compliance as a more expensive form of testing the hemp must be sought.

The last rule empowers Indian tribes to pursue their own cannabis programs. This had been an unaddressed or ambiguous area as tribal lands were not specifically designated as states under the law. This provides excellent opportunities for Native Americans to maintain jurisdiction over their industrial hemp production. This in turn should bring enormous benefits to the tribes from an agricultural and economic point of view.

Despite the final ruling going into effect, the day it took office, the Biden government issued a memo asking the agencies to freeze any rules not yet published in the federal register. While the rule required close scrutiny by Biden administration officials, it was decided to keep the rules despite being released by the Trump administration in the 11th hour.

This is especially important given that Biden’s candidate for the office of Secretary of Agriculture is Tom Vilsack. Vilasack served in this capacity under the Obama administration and was criticized for his ties to Monsanto and perception that he did not follow certain scientific concepts.

Vilsack’s past has set some red flags on how the USDA will proceed in general and with regards to industrial hemp in particular amid all of these regulatory moves and changes. Remember, all of this will happen when farmers finalize their hemp growing plans in 2021. This year could mark a significant shift towards hemp grain and fiber production, as opposed to the almost unique focus we have seen on cannabinoids over the past five years.

The final rule will have a significant impact on the growth and viability of the industrial hemp sector this year and beyond. With these regulations finally finalized, Senator Rand Paul is pushing ahead with his Hemp Economic Mobilization Plan (HEMP) bill. If passed, the HEMP law would have far-reaching regulatory implications and would likely instruct the USDA to reassess the final rule. As we know, this can take years.

Ultimately, 2021 will be a fascinating year for the growing US industrial hemp industry – from states negotiating licensing under the new rules, to the new leadership of the US Department of Agriculture, to the continued involvement of the DEA in the prosecution of hemp. Only time will tell the effectiveness of this official system of regulation on the production of industrial hemp by American farmers. While these rules may feel set in stone, the changes in these regulatory contexts are constant. Stay tuned.

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