Ag Policy Blog

Hemp Industry Seeing Red Over DEA Regulations

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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An irrigated hemp field in Colorado. The hemp industry, which now makes up about 450,000 to 500,000 acres nationally, is concerned about a DEA rule that could make hemp processing and waste products into Schedule I drugs. (Photo courtesy of the Colorado Department of Agriculture)

The Hemp Industries Association is suing the Drug Enforcement Administration and its acting administrator, arguing DEA is trying to regulate products derived from hemp through a skewed view of hemp provisions in the 2018 farm bill.

In a petition filed Monday in the U.S. District Court for the District of Columbia, the hemp industry challenges new DEA interim final rule on how EPA would handle statutory changes to the Controlled Substances Act made in the Agriculture Improvement Act of 2018 (the farm bill). The farm bill deregulated hemp production based on a cannabis crop with .3% levels or lower of delta-9 tetrahydrocanniabinols (THC) on a dry weight basis.

Higher levels of THC are what define hemp's cannabis cousin, marijuana, but the crops look identical.

Since Congress passed the 2018 farm bill, the selling and marketing of cannabidol (CBD) products has soared and more farmers have tried to grow and sell hemp, based on changes in state laws. Farmers still face regulatory and possibly criminal challenges -- based on state and federal law enforcement -- depending on testing for THC content levels.

DEA makes it clear in its rule that cannabis products with THC above levels of .3% remain Schedule I controlled substances. But the DEA rule goes further to state that "the definition of hemp does not automatically exempt any product derived from a hemp plant, regardless of the (THC) content of the derivative." Every component and compound of the plant must fall under that .3% limit. So any product that goes above .3% is a controlled substance, even if the plant itself does not produce higher than .3% levels on a dry weight basis.

In their petition to the court, the Hemp Industries Association, and RE Botanicals Inc., a South Carolina-based company, argue that DEA isn't following the provisions in the 2018 farm bill. Specifically, DEA classifies waste hemp material, and intermediary hemp materials as Schedule I substances while the industry adds both kinds of materials are "necessary and inevitable byproducts of hemp processing." The trade association and company state Congress removed restrictions on commercial hemp activity from DEA's jurisdiction when Congress legalized hemp production, and processing in the farm bill.

The complaint states, "The DEA's interpretation of the 2018 Farm Bill "has serious, immediate, and irreparable consequences. (All) hemp processors and manufacturers who work with and/or store IHM and/or WHM must now choose between ceasing to process, manufacture and/or store hemp; obtaining a Schedule I license from DEA; or risking criminal prosecution under the (Controlled Substances Act). Given the centrality of hemp processing to the hemp industry's supply chain, forcing processors to choose between the foregoing options would effectively destroy the entire hemp industry.”

The industry group and company stated, "DEA's latest jurisdictional overstep threatens every stage of the hemp production supply chain and jeopardizes the entire hemp industry," according to the complaint. "If allowed to stand, DEA's intrusion will undermine a lynchpin of the new hemp economy that has created tens of thousands of new jobs and provided a lucrative new crop for America's struggling farmers."

While the industry has turned to the DC Circuit Court on this, it's also likely there is some lobbying in Congress as well. The hemp provisions in the farm bill were led by Senate Majority Leader Mitch McConnell, R-Ky., and the Kentucky congressional delegation. If DEA begins pushing the industry on this, it's possible more legislation may be needed to clarify regulatory authority.

A survey of 47 states by Hemp Industry Daily reported hemp production was 465,787 acres for 2020, down 9% from 2019, but the number of states allowing hemp production has expanded, and more producers are raising hemp this year. Hemp Industry Daily reported 21,496 licensed growers, up 27% from last year. https://hempindustrydaily.com/…

DEA interim final rule on hemp: https://www.federalregister.gov/…

Petition filed for rule review: https://vicentesederberg.com/…

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN

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