UPDATE: DEA Argues it Maintains Legal Authority Over Hemp in Response to Public Comments on USDA Rule
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UPDATE: DEA Argues it Maintains Legal Authority Over Hemp in Response to Public Comments on USDA Rule

The industry’s views are coming into focus as public comment periods for USDA and DEA hemp regulations end with a call for greater certainty, flexibility, and a reduced role for the DEA.

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October 21, 2020

Editor's note: The Drug Enforcement Agency is rejecting the argument that it has no authority over hemp regulation. The DEA's full response is included in the updated story below. This story was originally published Oct. 20.

There is a rising consensus from federal small business advocates, state regulators, and industry groups that, for the industry to thrive, the U.S. Department of Agriculture (USDA) must do three things:

  • Reduce uncertainty in its regulatory standards, including handling of crops that exceed THC thresholds
  • Provide greater flexibility with issues such as testing certification, and
  • Reduce the Drug Enforcement Agency’s (DEA) influence on hemp regulatory policy

Stakeholders’ views are coming into focus as public comments have been submitted for the USDA’s Domestic Hemp Production Program Interim Final Rule and submitted regarding the DEA’s amendments to the Controlled Substances Act regulating hemp and cannabidiol. The DEA’s public comment period ends today, and the USDA’s public comment deadline was on October 8.

SBA Weighs In

One of these commenters, the U.S. Small Business Administration’s Office of Advocacy (Advocacy), plays an essential role in federal rulemaking. This independent office within the agency may not necessarily reflect the SBA or the Trump Administration's views, but other agencies must pay heed to its views. The Small Business Jobs Act of 2010 dictates that agencies must give every possible consideration to Advocacy’s comments regarding regulations’ impacts on small businesses.

Advocacy argues in its October 8 comments that the uncertainty in current USDA standards “stifles small business’ participation in the industry.” That is especially true, the office says, given the “significant startup costs” these businesses face, including land, seeds, equipment, and labor.

“Many farmers have chosen not to grow hemp this year until they are certain about what the requirements are, and whether they can produce compliant crops without the risk of a total loss of their investment due to mandatory destruction of hot crops,” Advocacy says. “In some instances, the rules are so stringent that they feel as though they are being set up to fail.”

According to Advocacy, these stringent rules include the requirement to destroy all their crops that exceed the 0.3% THC threshold, also known as “hot” hemp. The current rule requires the destruction of these crops. However, the 2018 Farm Bill only mentioned “disposal” of non-compliant crops and called for plans to include a date by which a farmer could correct a violation. This discrepancy is harming the industry, Advocacy says.

What Advocacy and other stakeholders want is the flexibility to remediate the crop and retest to see if it is below the THC threshold. If the yield is still “hot” or above the 0.3% threshold, then Advocacy says growers should have the option to dispose of the crops. This option would allow some use for the non-compliant hemp, such as fertilizer or bedding.

Not allowing this flexibility can be economically devastating to growers, effectively bankrupting many of them. And, according to its figures below, “for a small farmer, the risk of having to destroy their crop if it is non-compliant may be too high to justify growing hemp at all.”

Type of Crop Cost of production per acre
Industrial hemp fiber $553.84
Industrial hemp grain $621.49
Industrial hemp CBD $13,768.80

 

State Agriculture Departments and Hemp Growers Association Comment

The National Association of State Departments of Agriculture (NASDA) agrees with the need for certainty while also emphasizing in its October 8 comments support for regulations that provide “flexibility to state authorities to implement regulatory plans that work best for them.”

NASDA also calls for flexibility regarding where farmers can test their crops’ THC levels. The USDA rule requires that testing at a DEA-registered laboratory. However, NASDA and other commenters argue that this is not feasible as there are too few DEA labs throughout the nation. This lack of flexibility undermines growers’ ability to run their businesses, NASDA says.

The U.S. Hemp Growers Association agrees with NASDA, with its Executive Director and Chief Operating Officer Caren Wilcox noting that there are only 66 such labs in 27 states. There are not enough approved labs to meet growers’ needs, she adds. As a result, getting crops tested is more expensive and time consuming for growers than it needs to be. The Hemp Growers Association submitted their interim final rule comments on September 7.

Commenters Target DEA, Agency Responds

Many commenters point to the DEA’s influence in this rulemaking as a source of many problems, arguing that it still considers hemp as an illegal substance. However, the 2018 Farm Bill “removed hemp from the Controlled Substances Act,” making DEA’s involvement unnecessary, NASDA says.

Concerns with the DEA’s continued role in regulating hemp is a theme throughout public comments. While the USDA “wants to do the right thing by farmers,” the DEA interferes in that effort, Jonathan Miller, General Counsel for the U.S. Hemp Roundtable, says.

The Roundtable, which represents a group of hemp companies and organizations, is actively telling its members “to tell the USDA to get the DEA out of [regulating hemp], that Congress intended to get them out of this, and to focus on what’s good for farmers.” The group submitted its interim final rule comments to USDA on September 15.

There are signs that the USDA is moving away from the DEA. For example, this year, the agency said that growers could get their crops tested at non-DEA certified labs. And Wilcox believes that the USDA will be able to negotiate those same terms again. That outcome should be a big step towards more independence from DEA, she adds. 

Miller is hopeful that the USDA will use criticisms of the DEA’s role with hemp regulation to justify removing DEA from the process. Public comments should give the USDA the ability to tell DEA officials, “Listen, this is what the public wants, we need to do it,” he says.

While the USDA declined to reply to the public comments, the DEA did respond, rejecting the notion that it has no legal role in hemp regulation.

"The Farm Bill requires USDA to consult with the Attorney General on the promulgation of regulations and guidelines. The Attorney General has delegated his functions under the CSA [Controlled Substances Act] to the administrator of the Drug Enforcement Administration (28 CFR 0.100).  Therefore DEA and USDA are following the law," DEA spokesman Michael D. Miller tells Hemp Grower

"The DEA works closely with its interagency partners on any regulations affecting the Controlled Substance Act and remains committed to working with our partners at USDA in areas that impact the CSA.  The Farm Bill exempted any product derived from a Cannabis sativa L. plant with a delta-9 THC content of less than 0.3% by dry weight basis. Therefore, products that do not meet that definition as stated in the Farm Bill remain controlled by the CSA. The Farm Bill did not relieve the DEA of its obligation to enforce the CSA and products still controlled. Our engagement with the USDA is necessary as it relates to those circumstances," Miller adds.  

The USDA is expected to publish its final rule in early 2021.