USDA Issues Final Rules on Hemp Production

After the USDA and DEA issued their final interim rules on an American hemp production system in October 2019 and August 2020, the USDA issued its final rule on January 19, 2021. Industry participants and service providers have been eagerly awaiting the release of the final regulations to gauge the directional winds for the burgeoning industry. While many industry observers and stakeholders have noted that the final rules are not perfect, these updates include some improvements to help growers and producers.

Improvements:

• The interim final rule stated that producers with material exceeding the negligent threshold of THC must destroy the hemp product. However, the final rule doubled the negligent threshold from 0.5% THC content to 1.0%, which will provide greater flexibility to growers and processors.
• The interim final rule indicated that hemp must be tested for THC content on a dry-weight basis at DEA-registered labs. In acknowledging the shortage of such facilities at the current time, the final rule relaxed the requirement slightly by allowing non-DEA-registered labs to perform testing until January 1, 2022, while committing to issuing more registrations for hemp testing.
• In another acknowledgment of the testing process's logistics, the final rule extended the testing window for sampling hemp for testing from 15 days to 30 days. Due to the testing lab shortages described above, the USDA provided additional time in the sampling window to prevent lab testing backlogs that would hinder production.
• Under the final rule, "hot hemp" (hemp testing above 0.3% THC content) can be destroyed on site, a continuation of the final interim rule.
• The final rule allows testing to be "performance-based" rather than based on strict federal requirements.

Challenges:

• Testing must determine the samples' total THC content rather than the "Delta-9" content. Stakeholders favor the Delta-9 measurement basis, as total THC is always higher. Stakeholders have noted that the Delta-9 THC measurement provides visibility into the portion associated with psychoactive effects.
• While stakeholders pressed for an increase in the THC content limit to be raised from 0.3% to 1.0%, the USDA did not have jurisdiction to change the final rule limit. Changing the limit would require action from the United States Congress since the 2018 Farm Bill set the limit.
• While the agency still requires pre-harvest testing samples to be taken from the flower, the final rule allows the samples to be taken from five to eight inches from the stem of the plant.

It's crucial to have a knowledgeable team of advisors working alongside your organization to assist with your cannabis and agribusiness needs. If you have any questions regarding these new rules, please reach out to a CRI advisor as we work to keep you informed of changes that could affect your cannabis business.