|
The Conference Committee released its manager’s report on the Farm Bill late yesterday. As expected, it expands the definition of Industrial Hemp and removes it from the definition of Marihuana (using the Federal Code’s spelling) on Schedule I of the Controlled Substance Act. The bill places sole authority to regulate the production of Industrial Hemp with the Department of Agriculture. However, the Conference Report expressly affirms the Food and Drug Administration and the Department of Health and Human Service’s authority to regulate hemp-derived products. In reiterating the FDA and HHS’s authority, Congress is exacerbating a gap between expectation and reality that will close in a way very likely to disappoint many cannabis bulls. (Hedgeye’s Cannabis Team is all over that thesis so hit ‘em up to learn more.) |
Congress broke a record in reauthorizing the 2018 Farm bill within just three months of the expiration of the preceding legislation. The combined effects of the midterm elections, which sidelined House conservatives who objected to certain SNAP provisions, and the personal lobbying prowess of Senate Majority Leader McConnell, broke an impasse in Conference Committee last week.
Some of the most closely watched provisions of the Farm Bill relate to the effective legalization of Industrial Hemp. The relevant provisions are:
- Removes Industrial Hemp from Schedule I of the Controlled Substance Act drug schedule.
- Redefines Industrial Hemp as “the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.”
- Requires any state wishing to cultivate Industrial Hemp to do so under a state or tribal plan submitted and approved by the Secretary of Agriculture.
- Requires the Secretary of Agriculture to issue licenses for growers doing so under a state or tribal plan
- Gives sole authority to the Secretary of Agriculture to regulate the production of hemp
- Does not impact or modify the Federal Food, Drug, and Cosmetic Act or authorities of the HHS Secretary and FDA Commissioner to regulate Hemp products
- Allows states to limit Industrial Hemp within their borders but does not allow them to limit passage of Industrial Hemp through their state or tribal territories
The bill is silent on whether Industrial Hemp should be rescheduled or decontrolled altogether. Given the deference to the FDA and HHS that is part of the Conference Report, those agencies will decide. Our money is on rescheduling from I to IV or V. Previously approved drugs that contain CBD are listed on Schedule V and the FDA will be able to leverage the work they did there to move CBD to a new spot on the schedule.
That prior work should allow rescheduling to move more quickly than the usual three to five year process. However, the agencies will need to engage in some public process including rulemaking and that can take some time.
The Conferees deference to the FDA and HHS clearly indicates an interest in continued regulation of CBD. The FDA has asserted that CBD is a drug and subject to its regulatory authority. Unless and until they change that position, their oversight will be a significant factor in limiting expansion of the cannabis sector. In other words, unless Pepsi wants doctors to start writing prescriptions for its soda, it will keep CBD out of it beverages for the foreseeable future.
Also of note, the bill prohibits states from impeding interestate commerce by blocking passage of Industrial Hemp through their territory. However, the Conference report acknowledges that states will continue to control the sale and production of Industrial Hemp within their borders. In short, a 50-state regulatory regime for Industrial Hemp will persist for the foreseeable future.
Expect rulemaking from relevant agencies to begin early next year. Also, expect some interference by law enforcement which is a tad nervous about how they will enforce the law based on THC concentration.
Call me or the gang over on the Cannabis desk with questions.
Emily Evans
Managing Director – Health Policy
Twitter
LinkedIn
