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Industrial Policy 101

Renée Johnson, Specialist in Agricultural Policy Presentation to the Greater Peoria Economic Development Council and the Tri‐County Regional Planning Commission

January 2019

Hemp versus “” (or “Marihuana”)

• Botanically, the same plant species ( sativa) • However, many differences: • Genetically distinct cannabis varieties and cultivars • Distinguished by their use and chemical makeup • Differing cultivation practices in their production o Marijuana: cultivated for use as a psychotropic drug (whether used for medicinal or recreational purposes) o Hemp: cultivated for use in the production of a wide range of products, including foods and beverages, personal care products, nutritional supplements, fabrics and textiles, paper, construction materials, and other manufactured goods • Different definitions in U.S. law

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Industrial Hemp versus “Marijuana” (continued) • Separate statutory definitions in U.S. law • Marijuana: “The term ‘marihuana’ means all parts of the plant L., whether growing or not; the seeds thereof; the resin extracted from any part of such plant; and every compound, manufacture, salt, derivative, mixture, or preparation of such plant, its seeds or resin. Such term does not include the mature stalks of such plant, fiber produced from such stalks, oil or cake made from the seeds of such plant, any other compound, manufacture, salt, derivative, mixture, or preparation of such mature stalks (except the resin extracted therefrom), fiber, oil, or cake, or the sterilized seed of such plant which is incapable of germination” (21 U.S.C. § 802(16)) • Hemp: “The term ‘industrial hemp’ means the plant "Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, , isomers, acids, salts, and salts of isomers, whether growing or not, with a delta‐9 concentration of not more than 0.3 percent on a dry weight basis” (7 U.S.C. § 5940(b)(2)), as amended by the 2018 farm bill (P.L. 115‐334)

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Modern Uses for Industrial Hemp >25,000 products: agriculture, food and beverages, textiles, recycling, automotive, furniture, paper, construction materials, personal care

Source: Industrial Hemp Association of Tasmania, http://www.ihat.org.au/.

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U.S. Retail Hemp Market (Hemp Industries Association) 2017 U.S. retail sales: $818 million Estimate covers food, hemp CBD (), dietary supplements, body products, clothing, auto parts, building materials, and industrial products

$688 million (2016)

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Agricultural Act of 2014 (P.L. 113‐79, § 7606)

• Hemp cultivation/growing is allowed in certain situations: • “for purposes of research conducted under an agricultural pilot program or other agricultural or academic research” (where an “agricultural pilot program” is defined to mean a “pilot program to study the growth, cultivation, or marketing” of hemp), and • if allowed under state laws where the institution or state department of agriculture is located • Industrial hemp cultivation and growing is limited to: • “institutions of higher education” • “state departments of agriculture” • Established a statutory definition of “industrial hemp” • Included as part of the research title of the farm bill

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State Laws Related to Industrial Hemp

Source: National Conference of State Legislatures (accessed January 2019), http://www.ncsl.org/research/agriculture‐and‐rural‐development/state‐industrial‐hemp‐statutes.aspx.

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Industrial Hemp Crop Report, United States Hemp comprises a negligible but growing share of U.S. crop acres Number Production Acres State 2016 2017 2018 Colorado 5,921 9,700 21,578 Hawaii 1 1 2 Indiana 2 5 5 Kentucky 2,525 3,271 6,700 Maine 1 30 550 Massachusetts NA NA 21 Minnesota 51 1,205 710 Montana ‐ 542 22,000 Nebraska 1 1 1 Nevada 216 417 1,881 New York 30 2,000 2,240 North Carolina ‐ 965 3,184 North Dakota 70 3,020 2,778 Oklahoma NA NA 445 Oregon 500 3,469 7,808 Pennsylvania ‐ 36 580 Tennessee 225 200 3,338 Vermont 180 575 1,820 Virginia 37 87 135 Washington ‐ 175 142 West Virginia 10 14 155 Wisconsin NA NA 1,850 Total 9,770 25,713 78,176 * Source: Vote Hemp, “U.S. Crop Report,” January 2019. * Total includes greenhouse or indoor production.

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Post‐2014 Farm Bill: DEA/Federal and Legislative Actions • Blocking of Imported Viable Hemp Seeds • In 2014, U.S. Customs officials blocked a shipment of U.S. imports of viable hemp seed from Italy at Louisville International Airport • 2016 “Statement of Principles” on Industrial Hemp • Clarification for industry regarding: o Who can grow/cultivate hemp o Availability of USDA research support for hemp • Industry continued questions regarding: o Definition of industrial hemp o Restrictions on commerce, uses, and distribution • Dispute Over Hemp Food Shipments • In 2017, DEA designated certain hemp‐derived non‐psychotropic products, such as CBD, as a “marihuana extract” subject to the CSA • Proposed Legislation Leading Up to 2018 Farm Bill • Industrial Hemp Farming Act(s) (H.R.5485, S.2667, H.R.3530) • Therapeutic Hemp Medical Access Act of 2017 (S. 1008) • Charlotte's Web Medical Access Act of 2017 (HR 2273) • Industrial Hemp Banking Act (H.R. 4711) • Industrial Hemp Water Rights Act (H.R. 4164, S.1576)

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Agriculture Improvement Act of 2018 (P.L. 115‐334) • Conforming Changes to Controlled Substances Act (§ 12619) • Amends Section 102 of the CSA (21 U.S.C. § 802(16)) to exclude hemp from the statutory definition of marijuana • Removes hemp—as defined in statute and subject to USDA oversight—from CSA and from being regulated as a Schedule I drug o Legalizes the cultivation, processing, marketing, and sale of hemp and any (such as CBD) if it is derived from hemp that is produced in a manner consistent with the farm bill, associated federal regulations, associated state regulations, and by a licensed grower o All other cannabis and cannabinoids, produced in any other setting, remain a Schedule I substance under federal law and are thus illegal (except for pharmaceutical‐grade CBD products approved by FDA, such as Epidiolex) • Excludes hemp from the statutory definition of marijuana based on its delta‐9 tetrahydrocannabinol (delta‐9 THC, the primary psychoactive chemical in cannabis) concentration (may not contain more than 0.3% on a dry weight basis (AMA § 297A) • Interstate Commerce (§ 10114) • Creates new requirements under the Agricultural Marketing Act of 1946 (AMA, 7 U.S.C. § 1621 et seq.) • Provides that states or tribal government may not prohibit the “transportation or shipment of hemp or hemp products” • Removes prohibitions on the interstate commerce of hemp (as defined in AMA § 297A) and transport prohibitions of hemp or hemp products produced in accordance with the new requirements

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Subtitle G, Hemp Production (P.L. 115‐334, §10113) • Industrial Hemp Farming Act of 2018 (S. 2667, 115th Congress) • Creates new subtitle under the Agricultural Marketing Act of 1946 (AMA, 7 U.S.C. § 1621 et seq.) • Expands existing statutory definition of hemp • Expands eligibility to tribes and territories • Establishes a regulatory framework to monitor compliance and regulate production • AMA § 297A • Expands statutory definition of hemp • Makes ineligible “any person convicted of a felony relating to a controlled substance under state or federal law before, on, or after the date of enactment… during the 10‐year period following the date of the conviction” (except for those growing hemp in accordance with the 2014 farm bill) • Specifies requirements regarding the approval process of state and tribal plans and any necessary corrective action for plan violations • Provides that USDA may give technical assistance to develop plans

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Subtitle G, Hemp Production (P.L. 115‐334, § 10113), cont. • AMA § 297B • Authorizes states and tribal governments wanting primary regulatory authority over hemp production to submit a plan to USDA for approval o Covering grower location, licensing, procedures for testing, inspections, background checks, disposal, enforcement of violations, and other requirements • If a state or tribal plan is denied or revoked, hemp production in that state or tribal domain would fall under USDA’s jurisdiction as authorized in AMA §297C • AMA § 297C • Requires USDA to develop an agency plan(s) to be implemented in states and tribal territories that forego developing and submitting a state or tribal hemp production plan o USDA’s plan(s) would meet the same content requirements as in AMA §297B but may contain additional practices and procedures • Requires USDA to report any hemp production without a license to the U.S. Attorney General and requires certain other information sharing to law enforcement o Encourages USDA to develop a Memorandum of Understanding with federal law enforcement agencies to define and to potentially share the costs of such information sharing system

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Subtitle G, Hemp Production (P.L. 115‐334, § 10113), cont. • AMA § 297D • Requires USDA to promulgate regulations and guidelines to implement Subtitle G “as expeditiously as practicable” • Clarifies USDA has the sole authority to issue guidelines and regulations regarding the production of hemp • Clarifies that nothing in Subtitle G affects or modifies the authority granted to FDA and HHS under o Federal Food, Drug, and Cosmetic Act (FFDCA, 21 U.S.C. § 301 et seq.) o Section 351 of the Public Health Service Act (42 U.S.C. § 262), including for hemp‐derived products • AMA § 297E • Authorizes appropriations of “such sums as are necessary” for USDA to carry out Subtitle G

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Agriculture Improvement Act of 2018 (P.L. 115‐334), cont. • Critical Agricultural Materials Act Grant Program (§ 7501) • Reauthorizes appropriations for program (FY2019‐FY2023) • Expands scope of the program to study the economic feasibility of developing native agricultural crops to include hemp • Legitimacy of Industrial Hemp Research (§ 7605) • Requires USDA to conduct a study of agricultural pilot programs, assessing the economic viability of the domestic production and sale of hemp, and review the hemp pilot program and any other agricultural or academic research relating to industrial hemp • Requires USDA to submit a report describing the study not later than 12 months after the date of enactment • Repeals 2014 hemp pilot program one year after USDA establishes a plan under AMA § 297C • Crop Insurance Definitions (§ 11101, § 11119) • Defines hemp for the purposes of federal crop insurance eligibility according to AMA §297A • Adds hemp to the statutory definition of agricultural commodity

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Agriculture Improvement Act of 2018 (P.L. 115‐334), cont.

• Insurance Period (§ 11106) • Adds hemp to the crops for which post‐harvest losses may be covered by federal crop insurance, which for most crops is generally prohibited • Post‐harvest losses are also covered for tobacco, potatoes, and sweet potatoes • Submission of Policies/Materials to FCIC Board (§ 11113, § 11121) • Authorizes FCIC to waive certain viability and marketability requirements in the case of a policy or pilot program relating to the production of hemp • Authorizes the Federal Crop Insurance Corporation (FCIC) Board to waive the viability and marketability requirements for reimbursement of research and development relating to a policy to insure the production of hemp

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CONTACT INFORMATION

Renée Johnson Specialist in Agricultural Policy [email protected]

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