Congress Passes Farm Bill, Pushing Toward Full “Legalization” of Hemp and Hemp-Derived CBD

On December 20, 2018, President Trump signed H.R. 2, the Agriculture Improvement Act of 2018 (“2018 Farm Bill”). Among other things, the 2018 Farm Bill legalized the commercial cultivation of hemp and the production of hemp products in the United States, and effectively removed hemp-derived cannabidiol (“hemp-derived CBD”) from the definition of “marihuana” under the Controlled Substances Act (“CSA”). The 2018 Farm Bill adds to the 2014 Farm Bill new provisions that provide for commercial hemp production outside the confines of a state sanctioned research program. These changes significantly increase the commercial business opportunities to grow, process, manufacture, and distribute hemp and hemp products. Although the 2018 Farm Bill does “legalize” domestically produced hemp and hemp products in the sense that they no longer fall under the CSA, the 2018 Farm Bill did not exempt the addition of such products to foods, beverages, or dietary supplements from regulation at the federal or state level.

Below are a few key takeaways from the 2018 Farm Bill:

What the 2018 Farm Bill Does:

• Amends the CSA to exempt “hemp” and “tetrahydrocannabinols in hemp” (i.e., hemp-derived CBD) from the list of Schedule I controlled substances. The 2018 Farm Bill defines “hemp” to include “all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta- 9 tetrahydrocannabinol (“THC”) concentration of not more than 0.3 percent on a dry weight basis.” CBD is a different cannabinoid from THC. Accordingly, CBD extracted from hemp is not a Schedule I controlled substance, so long as the extract does not contain greater than 0.3 percent THC. In effect, this modification amends the CSA to exempt “hemp” and “tetrahydrocannabinols in hemp” (i.e., hemp-derived CBD) from the list of Schedule I controlled substances.
• Confers on the U.S. Department of Agriculture (“USDA”) authority over hemp production, including the ability to approve/disapprove regulatory plans for hemp production submitted by individual states that want to have primary regulatory authority over hemp production.
• Reminds the industry that foods, beverages, and dietary supplements containing hemp-derived CBD are subject to the Federal Food, Drug and Cosmetic Act (“FDCA”), just as any other food, beverage, or dietary supplement would be. The 2018 Farm Bill states that the Commissioner of the Food and Drug Administration (“FDA”) and the Secretary of Health and Human Services (in which the FDA is housed) continue to have the authority to promulgate regulations and guidelines relating to the production of hemp and hemp products used in food, beverage, and dietary supplement products. There are a number of provisions in the FDCA that need to be addressed before hemp and hemp products, specifically hemp-derived CBD, may lawfully be used as an ingredient in foods, beverages, or dietary supplements. Currently, any substance added to a food or beverage must be an approved food additive or be generally recognized as safe and any “new dietary ingredient” used in dietary supplements is subject to FDA’s premarket notification process, otherwise the product containing that substance would be considered an “adulterated” product. 
• Explicitly pre-empts state laws that would prohibit the transportation of hemp, hemp products, or hemp-derived CBD produced in compliance with the 2018 Farm Bill’s provisions through that state.

What the 2018 Farm Bill Does Not Do:

• The 2018 Farm Bill does not completely legalize use of hemp-derived CBD. The 2018 Farm Bill removes CBD derived from “hemp” from the CSA so long as the resulting extract does not contain greater than 0.3 percent THC. CBD derived from marijuana plants that do not meet the definition of “hemp” is still unlawful under the CSA, as is any CBD product that contains greater than 0.3 percent THC, whatever its source.
• Does not change any provisions under the FDCA, which, as discussed above, is the federal statutory framework that governs food, beverage, and dietary supplement production in the United States.
• Does not address open questions about the impact of the FDA’s approval of Epidolex (FDA-approved CBD drug) on the use of hemp-derived CBD in food, beverages, and dietary supplements.

Removal of “hemp” from the CSA is a huge step forward and addresses some of the more significant risks associated with the production of hemp and hemp products, including hemp-derived CBD. However, other existing federal laws and regulations, including the FDCA and rules promulgated thereunder, must be considered when bringing hemp-derived CBD products to market. The application of those existing federal laws and regulations to this growing industry certainly raise new questions about how to lawfully produce and distribute hemp-derived CBD products.

As USDA and FDA move forward with issuing or clarifying regulations and guidance on this topic, some of those outstanding questions and potential obstacles will likely be addressed. In the meantime, the production and distribution of foods, beverages, and dietary supplements containing hemp-derived CBD present some risks, as is the case with any other innovative ingredient.

Please reach out if you have specific questions about use of hemp-derived CBD in foods, beverages, or dietary supplements, or if you have any other questions about the impact of the 2018 Farm Bill on your business.

This advisory is a publication of Davis Wright Tremaine LLP. Our purpose in publishing this advisory is to inform our clients and friends of recent legal developments. It is not intended, nor should it be used, as a substitute for specific legal advice as legal counsel may only be given in response to inquiries regarding particular situations. Manufacturing, cultivation, distribution and possession of cannabis remains illegal under federal law and under certain state laws, and is strictly regulated in those states which have legalized medical or recreational cannabis.