01 Jan Feds and California State Take Steps to Clarify Hemp Regs
In the final quarter of 2019, the U.S. Government and the State of California adopted new laws and regulations to support the nationwide legalization of industrial hemp cultivation. In October, California Governor Gavin Newsom signed Senate Bill 153 to mandate that a state plan compliant with federal law be submitted to the USDA by May 1, 2020. Then, also in October, the USDA issued regulations clarifying how industrial hemp would be regulated by the federal government. However, the USDA stopped short of regulating hemp-derived products, including CBD, which will be regulated by the FDA.
California Law – SB 153
On October 13, 2019, California Governor Gavin Newsom signed Senate Bill 153 (SB 153) into law. SB 153 requires the state’s hemp regulations be in full compliance with federal law legalizing industrial hemp. The new state law, which was widely supported by the California hemp industry, ensures that the state will submit a plan for hemp and hemp-derived products to the US Department of Agriculture by May 1, 2020.
The submission of a state plan is expected to ease regulatory uncertainty for California hemp farmers, processors, and distributors as well as those supporting the hemp industry. The Company’s joint venture SoCal Hemp is fully compliant with current laws authorizing the farming of hemp and will also be in full compliance with the SB 153 regulations when they become effective in 2020.
Graham Farrar, the CEO of SoCal Hemp, made the following statement about the signing of SB 153:
“California is a leader in the U.S. cannabis industry and has taken another positive step forward by ensuring its laws support California hemp’s competitive advantage in the booming worldwide market for this important crop. With regulatory progress continuing, we look forward to transitioning into commercial production of sun-grown, organic, California hemp and hemp-derived products in 2020.”
To learn more about SB 153, visit these summaries provided by the bill’s sponsors:
Federal Regulations – USDA
In December 2018, President Trump signed the U.S. Farm Bill, which legalized the farming of industrial hemp and untethered the crop from marijuana. While many farmers immediately began cultivating this sought-after crop, regulatory uncertainty remained and on October 31, 2019, the U.S. Department of Agriculture (“USDA”) published an interim rule for federal hemp production detailing how hemp would be tested and regulated at the federal level to protect it as a legal crop nationwide. The USDA regs are under a public comment period until January 29, 2020.
Industry publication Hemp Industry Daily has been tracking the public comments, and maintains a summary of industry comment on its website: https://hempindustrydaily.com/hemp-industry-reacts-to-usda-production-rules/ .
With both the federal administration and Congress signaling support for the hemp industry, the industry appears positioned to benefit from continued regulatory clarity. Last week, the USDA introduced a pilot hemp crop insurance program : https://hempindustrydaily.com/usda-issues-new-crop-insurance-program-for-2020-hemp-production-season/ and banking regulations have also been clarified: https://hempindustrydaily.com/hemp-banking-gets-a-boost-as-four-federal-agencies-remove-red-tape-for-new-crop/. The industry is now also awaiting the Federal Drug Administration’s issuance of regulations for hemp-derived cannabidiol (CBD), which is currently the most popular hemp-derived product: https://hempindustrydaily.com/fda-says-more-scientific-data-needed-to-move-forward-with-cbd-regulation/. We expect state and federal regulators to continue to clarify hemp related policy in 2020.