U.S. hemp producers are breathing a little easier with loosened restrictions in the U.S. Department of Agriculture’s hemp production final rule, released Jan. 15. Most notably, the updated rule includes changes to provisions in negligence violations for hemp producers regarding THC content.
In the final rule, the negligence threshold has been raised from .5% to 1% THC. The interim rule would have required the destruction of the crop and possible negligence charges for the producer, should a plant tested for THC exceed the .5% threshold.
Staying below that threshold would be a thin line for farmers to walk, according to Henry Baskerville, partner at Fortis Law Partners with a cannabis law practice. Both CBD and THC content increase the longer a plant grows, Baskerville said. If a harvest comes too early, there might not be enough CBD; if it happens too late, then there’s too much THC.
Hemp and cannabis come from the same family of plant, cannabis sativa. Hemp is illegal and unusable as a product if it develops too much THC, referred to as going “hot.” Hemp produces low levels of THC — around 0.3% or less — while cannabis plants typically contain 5-20% THC. Hemp is cultivated for use in products, such as textiles, paper, construction material and personal care products, while marijuana is used as psychotropic drug. In general, a level of about 1% THC is considered the threshold for cannabis to have a psychotropic effect or an intoxicating potential, according to the Congressional Research Service.
Raising the threshold to 1% was a “huge deal,” according to Baskerville. “At least here they have recognized that someone can try to comply with the laws.”
Under the interim rule, if hemp reached over that 0.5% limit on THC, the producer could be found negligent, according to the final rule. Negligence here is defined as a failure to exercise the level of care a reasonably prudent person would use in complying with the regulation.
A number of factors can affect the amount of THC in a plant ranging from weather to sun exposure to genetic issues, soil type, geographic area and more, said Shawn Hauser, partner and chair of the Hemp and Cannabinoids Department at Vicente Sederberg. And many of these factors don’t explicitly point to negligence — a farmer can follow all reasonable steps and best practices and still grow a “hot” crop.
Further, a number of factors can impact how “hot” the crop grows in terms of THC, according to Baskerville. The USDA’s Agricultural Marketing Service, which administers programs creating marketing opportunities for food, fiber and crops, noted that raising the level allows farmers flexibility with their crop as they learn more about how to grow compliant hemp and “the availability of stable hemp genetics improves.”
According to Hemp Benchmarks, an industry data, business and financial data provider, like many other agricultural crops, the development of hemp with “stable and dependable” genetics is important to the industry’s success. The genetics affect everything from germination rate to hardiness and whether the THC levels are below or above that .3%. However, determining which varieties of hemp to use can be difficult for the new industry. In traditional ag, farmers can rely on specifications of seed being accurate. However, in hemp, this isn’t always the case. While Colorado has certified hemp seed varieties, “this aspect of the industry is nascent.”
Hauser said that because it has been so long since hemp was previously allowed to grow in the U.S., that flexibility is important in allowing producers to learn about grow the hemp in the best ways. In addition to raising the threshold, the updated rule lowers the risks of violation. In the interim rule, exceeding the 0.5% threshold would include destruction of the crop, and “it had a lot of implications in practice aside from looking at a total crop loss,” said Shawn Hauser, partner and chair of the Hemp and Cannabinoids Department at Vicente Sederberg. Lost crops translate lost profits and investment opportunities.
Hauser said she thinks the change to 1% is a positive and more realistic based on standard agriculture practices and what farmers face considering the state of the hemp industry and as general understanding of the genetics of the plants used for hemp grows. The final rule takes the finnicky nature of hemp into account and specifies that producers don’t commit a negligent violation if they produce plants exceeding the acceptable hemp THC level if they used reasonable efforts to grow hemp below the 1% threshold on a dry weight basis.
Brian Koontz, manager of the Colorado Department of Agriculture’s Industrial hemp Program, said that the department was “pleasantly surprised” with the final rule. While the department now has work to do getting in step with the USDA’s final rule, he thought that several pieces of the final rule were beneficial to the industry.
Koontz called the higher 1% figure far less burdensome on producers as well as regulatory agencies. He said there are many crops that test higher than 0.5% but less than 1%.
“I think that’s very good for the industry,” Koontz said.
Comments provided on the interim rule “generally opposed” the definition of negligence, and state and tribe regulatory agencies found the negligence requirements “overly harsh and strict,” according to the final rule text. And, the final rule notes, the AMS recognized the violation threshold could incentivize or “disincentivize” innovation by research institutions and producers.
The rule also notes comments suggesting that the 0.5% negligence threshold threatened “the survival of farmers in an emerging industry.” Comments on the interim rule further suggested that the low threshold was a barrier for entry for new farmers or those with no experience in growing hemp, and risking capital to establish hemp ops.
“Increasing this threshold to 1.0 percent benefits producers, including small and new farmers, that intend to grow hemp but whose crop tested ‘hot’ even though they made reasonable efforts to grow hemp,” according to the rule.
— Avery Martinez