Nine Members Of Congress Tell DEA To Revise Proposed Hemp Rule On THC Content

Nine members of Congress sent a letter to the Drug Enforcement Administration (DEA) on Tuesday, urging the agency to revise its proposed hemp regulations.

DEA released an interim final rule (IFR) for the crop in August, and it said the regulations were simply meant to comply with the 2018 Farm Bill that legalized hemp and its derivatives. But stakeholders and advocates have expressed serious concerns about certain proposals, arguing that they could put processors at risk of violating federal law and hamper the industry’s growth.

Reps. David Joyce (R-OH) and Denver Riggleman (R-VA) led the letter and pointed specifically to a provision of DEA’s IFR that could impact processing hemp extracts. The agency stipulated that “any such material that contains greater than 0.3% of Δ9-THC on a dry weight basis remains controlled in schedule I.”

That’s problematic, the lawmakers said, because in many cases the process of extracting cannabinoids from hemp temporarily causes THC levels to increase beyond that threshold. And so while Congress intended to legalize those extracts, businesses that produce the materials could find themselves inadvertently breaking the law.

I sent a letter to the @DEAHQ asking them to protect hemp producers and clarify hemp regulations. The DEA must specify their requirements and streamline hemp directives by clarifying the legal means of processing hemp products. Read more here, #VA05:https://t.co/wGabQePrts

— Congressman Denver Riggleman (@RepRiggleman) October 21, 2020

“Our offices have received countless calls from constituents involved in the hemp industry who are extremely fearful that simply following the provisions of the Farm Bill will result in criminal liability under the IFR,” the lawmakers’ letter states. “The IFR will likely have the effect of inhibiting these nascent state hemp programs thereby harming those American companies and workers who chose to pursue careers in the hemp industry and made significant investments to effectuate those aspirations.”

Therefore, the lawmakers are “requesting a resolution to this issue as quickly as possible,” adding that “DEA must revise the IFR to eliminate the ambiguities set forth above and provide peace of mind to all Americans who have chosen to pursue a career in the hemp industry.”

Reps. Rodney Davis (R-IL), Morgan Griffith (R-VA), Glenn Grothman (R-WI), Don Young (R-AK), Anthony Gonzalez (R-OH), Earl Blumenauer (D-OR) and Matt Gaetz (R-FL) also signed the letter.

A public comment period on DEA’s proposed rules closed on Tuesday. It saw more than 3,300 submissions, many of which focused on issues with the “work in progress” hemp THC issue.

“This IFR’s criminalizes work in progress hemp extract, a fundamental component of any consumer hemp/CBD product, and will negatively impact the hemp/CBD industry at a time when financial pressure is already high,” one commenter wrote. “Hemp and subsequent extracts are not controlled substances.”

Another issue identified by more than 1,000 commenters concerns delta-8 THC. The most widely known cannabinoid is delta-9 THC, the main component responsible for creating an intoxicating effect, but delta-8 THC from hemp is also psychoactive and is an object of growing interest within the market.

Because DEA’s proposed regulations state that all “synthetically derived tetrahydrocannabinols remain schedule I controlled substances,” some feel that would directly impact the burgeoning cannabinoid, as its converted from CBD through the use of a catalyst—and that could be interpreted as a synthetic production process.

In any case, it’s not clear whether DEA deliberately crafted either of these rules with the intent of criminalizing certain hemp producers—but stakeholders and advocates aren’t taking any chances.

The U.S. Department of Agriculture (USDA) has faced separate criticism over its own proposed hemp rules, though it has been more proactive in addressing them. Following significant pushback from the industry over certain regulations it views as excessively restrictive, the agency reopened a public comment period, which also closed this month.

USDA is also planning to distribute a national survey to gain insights from thousands of hemp businesses that could inform its approach to regulating the market.

Read the congressional coalition’s letter to DEA on its hemp rule below: 

DEA IFR Letter by Marijuana Moment

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New Bill Would Give Hemp Businesses A Boost And Require Studies Into Alternative Uses For The Crop

A congressman introduced a bill on Friday that would create a variety of programs and grants to help people enter the hemp industry and build their businesses. It would also require a federal study into potential alternative uses for the crop as well as challenges faced by the market.

Rep. Denver Riggleman (R-VA) filed the Hemp Opportunity Zone Act. As the title implies, the main component of the legislation clarifies that farmers who cultivate the crop can receive tax benefits if they operate in an area designated as an “opportunity zone” by the Treasury Department.

Opportunity zones are census-designated low-income areas that are considered economically distressed. The governor of a state can make the designation, and Treasury then decides whether to certify it. The program is designed to promote investments in communities that might typically be overlooked by allowing investors to defer capital gains taxes if they put money into an opportunity zone business.

“We are reviewing the legislation now, but if it indeed serves to open up investment in hard-hit farming and small business communities, it would be welcome relief for an industry that has been struggling through the COVID pandemic and federal burdens imposed by FDA, USDA and now the DEA,” Jonathan Miller, general counsel for the U.S. Hemp Roundtable, told Marijuana Moment.

Treasury Sec. Steven Mnuchin earlier this year weighed in on eligibility for the opportunity zone program with respect to the marijuana industry and said “it is not the intent of the opportunity zones that if there is this conflict [between state and federal marijuana laws] that has not been cleared that, for now, we should not have those businesses in the opportunity zones.”

In addition to clarifying eligibility for hemp-focused businesses, Riggleman’s new bill would also create a “hemp farmer start-up tax credit” equal to 10 percent of the cash rent paid for land used for production or 15 percent of the “crop share rent so paid by the taxpayer.” To be eligible, farmers would need to have less than $25 million in gross receipts for the last taxable year.

The Hemp Opportunity Zone Act is a huge win for farmers in #VA05. Hemp farming is a new and thriving industry. By providing these tax incentives hemp growers in Virginia and the 5th District are primed to lead based on their historic production of tobacco. https://t.co/LncEw7SQsS

— Congressman Denver Riggleman (@RepRiggleman) August 29, 2020

The legislation would further establish a “small hemp farmer credit” that would enable businesses with less than $250,000 in gross receipts for the previous taxable year to obtain a credit “equal to 30 percent of the basis of hemp farming property placed in service.”

“Hemp farming is a new and thriving industry,” Riggleman, who lost his primary renomination bid this year and only has a few months left in Congress, said. “By providing these tax incentives hemp growers in Virginia and the 5th District are primed to lead based on their historic production of tobacco.”

He said that expanding opportunity zone eligibility to the market “will incentivize investments into long neglected neighborhoods that will spur economic growth and combat poverty.”

Finally, the bill also calls on the Treasury Department to work with the U.S. Department of Agriculture (USDA) on a study of the hemp industry.

The report would look at opportunities to use hemp seeds in animal feed, the potential use of hemp products as protective equipment for medical workers and first responders and the “feasibility” of certain USDA regulations for the market.

Certain questions the study would address concern complaints industry stakeholders have made about USDA’s interim final rule for the crop. Treasury and USDA would have to consider the department’s hemp sampling requirements and its 0.3 THC limit for the crop.

The agencies would also have to explore how the U.S. competes “globally with other countries that have a 1.0 percent THC limitation.” The bill states that the study should additionally consider the potential benefits of including hemp-based food items in “certain public school meal plans” and whether any items used by the federal government or its contractors “can be substituted by a hemp-based product.”

Several of those areas of study were addressed in a bill introduced by Rep. Tulsi Gabbard (D-HI) last year.

Meanwhile, several lawmakers have recently implored USDA to delay the implementation of its proposed hemp rules, citing concerns about certain restrictive policies the agency has put forward in its draft regulations.

Senate Minority Leader Chuck Schumer (D-NY) earlier this month wrote to Agriculture Secretary Sonny Perdue, similarly asking that USDA delay issuing final regulations for the crop until 2022 and allow states to continue operating under the 2014 Farm Bill hemp pilot program in the meantime.

As it stands, the earlier pilot program is set to expire on October 31. The minority leader isn’t alone in requesting an extension, as state agriculture departments and a major hemp industry group made a similar request to both Congress and USDA this month.

As USDA works to finalize their regulations, which they intend to complete by October 2021, the department has been systematically approving hemp plans proposed by individual states, territories and tribes. The most recent approvals were for Maryland and the Lower Sioux Indian Community.

Six states that submitted hemp regulatory plans to USDA are being asked to make revisions and resubmit before they’re approved.

Read the text of the Hemp Opportunity Zone Act below: 

Hemp Opportunity Zone Act by Marijuana Moment

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Photo courtesy of Brendan Cleak.

Lawmakers Send Multiple Letters To USDA Urging Hemp Rule Changes

Congressional delegations from Virginia and Maine sent letters to the head of the U.S. Department of Agriculture (USDA) this week, urging the agency to make certain changes to its proposed hemp regulations based on feedback from stakeholders.

Sens. Tim Kaine (D-VA) and Mark Warner (D-VA) wrote that the hemp industry has boomed in Virginia since the crop was federally legalized under the 2018 Farm Bill—but they remain concerned that provisions of USDA’s interim final rule will “unduly burden our growers.”

The senators encouraged USDA to make adopt certain changes as it prepares to finalize the regulations, which will come after a public comment period that was extended this week from the end of December to January 29, 2020. For example, they implored the department to provide a longer hemp testing window, allow laboratories that aren’t registered with the Drug Enforcement Administration to test the crop and raise the allowable THC limit.

In a separate letter led by Rep. Denver Riggleman (D-VA), and signed by the rest of Virginia’s U.S. House delegation, USDA received an almost identical list of recommended changes.

“Virginia and #VA05 are uniquely positioned to lead in the arena of hemp production and I am grateful to the entire Virginia delegation for signing this letter regarding U.S. Domestic Hemp Production. Industrial hemp is a game-changer for Southside.” https://t.co/gsLZLiRBMYpic.twitter.com/yabbBvvcuM

— Congressman Denver Riggleman (@RepRiggleman) December 16, 2019

“We appreciate your commitment to the nation’s farmers and agribusinesses, as well as your commitment to ensuring that the hemp industry grows in a safe fashion,” the House members wrote. “At a time when farmers are experiencing low commodity prices, extreme weather, and volatile market fluctuations, providing clear and reasonable regulatory guidance to producers has become particularly important.”

“We fear that implementing the current rule would result in increased costs for growers and would prohibit many farmers from entering the market, especially small operations,” they wrote.

Sens. Susan Collins (R-ME) and Angus King (I-ME) also reached out to USDA Secretary Sonny Perdue this week to express concerns about the draft regulations for hemp, imploring the agency to heed recommendations submitted by their state’s Department of Agriculture, Conservation and Forestry earlier this month.

Joined by Reps. Chellie Pingree (D-ME) and Jared Golden (D-ME), the senators wrote that “[h]emp is grown in every county in Maine, totaling over 2,000 acres of hemp planted in 2019.”

“During these difficult economic times for farmers, hemp provides an opportunity to diversify farmers’ income and boost rural economies,” they said.

A press release about the letter also emphasized the senators’ work to secure clarity for hemp businesses when it comes to access to financial services.

“Despite the 2018 Farm Bill’s legalization of hemp, the lack of clarity in federal banking regulations has created major barriers for hemp businesses,” the notice states, adding that House-passed legislation called the Secure and Fair Enforcement (SAFE) Banking Act would help resolve the issue.

Numerous stakeholders have echoed these points since the interim rule was released. Sens. Ron Wyden (D-OR) and Jeff Merkley (D-OR) made similar recommendations in a letter sent to USDA last month.

USDA Gives Public More Time To Comment On Hemp Regulations