Hemp and CBD

There are some concerns and conflicting information about hemp and CBD legality in the wake of widespread marijuana regulation and legalization. While hemp is regulated separately from marijuana, the close relationship between the two makes careful distinction and understanding of the corresponding laws important.

The Controlled Substances Act (CSA)

The first question is whether hemp and CBD are federally legal. The CSA is the primary federal code regulating and criminalizing drugs in the United States. Under the CSA, both marijuana and synthetic THC are classified as a Schedule 1 drugs. Schedule 1 drugs are those that have been determined to have a high potential for abuse with no medically accepted uses.

Though there have been many efforts to change the classification of marijuana, in July 2016 the DEA confirmed their position that marijuana is a Schedule 1 drug despite widespread state legalization. The nationwide trend seems to be towards decriminalization of marijuana. But, marijuana is likely to remain illegal federally for the short term.

Fortunately for hemp manufacturers and processors, industrial hemp has been formally excluded from the CSA’s prohibition on marijuana and THC and is therefore federally legal.

Federal Hemp Legislation: The 2014 Farm Bill

The Agricultural Act of 2014 (the Farm Bill), is a large bill concerning many elements of U.S. agriculture. Of importance here is Sec. 7606, titled “Legitimacy of Industrial Hemp Research.” Sec. 7606 clarifies that institutions of higher education and State departments of agriculture can cultivate industrial hemp.

More importantly, Sec. 7606 defines “industrial hemp” as “the plant Cannabis sativa L. and any part of such plant, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.” With this change in definition, the 2014 Farm Bill excludes industrial hemp from the definition of marijuana under the CSA.

The 2018 Farm Bill and Further Federal Legalization of Hemp

In 2018, a subsequent Farm Bill was passed which includes restrictions for states that wish to regulate the production of hemp. States must submit to the Secretary of Agriculture a plan to “monitor and regulate” production, including information about the land on which hemp is produced, a procedure for testing the THC levels of hemp, and a procedure for effective disposal of unlawful plants, and a procedure for conducting annual inspections of hemp.

Furthermore, if any state has a law that regulates the production of hemp or is more “stringent” than the 2018 Farm Bill’s provisions, the 2018 Farm Bill does not preempt that state’s law. For example, Idaho, Nebraska and South Dakota currently have restrictive hemp laws which are more stringent than the 2018 Farm Bill. Under Idaho S.B. 1167, “no marijuana or hemp cultivation, no hemp extract production, sale or distribution can occur in Idaho.” Hemp production and research is not legal in South Dakota, and a 2016 bill seeking to legalize production of industrial hemp in accordance with the 2014 Farm Bill failed to pass. In Nebraska, a 2017 law similar to South Dakota’s also failed to pass. While it remains to be seen if these states will change their laws in accordance with the 2018 Farm Bill, hemp production is not allowed in these states and hemp sales in these states should therefore be avoided.

CBD in the Wake of the 2018 Farm Bill

Since the 2018 Farm Bill makes the entire plant legal when properly sourced, the extracts (CBD) from the plant are also legal. Industrial hemp manufacturers must be careful that the THC limit of 0.3% is met in order for the Farm Bill’s protections to apply.

To give “teeth” to the 2018 Farm Bill, Congress de-funded the Department of Justice with regards to hemp enforcement. Congress accomplished this using the Consolidated Appropriations Act, passed most recently in January 2018 . Sec. 729 of the Act states that “[n]one of the funds made available by this Act or any other Act may be used in contravention of section 7606 of the Agricultural Act of 2014; or to prohibit the transportation, processing, sale, or use of industrial hemp that is grown or cultivated in accordance with subsection 7606 of the Agricultural Act of 2014.”

In May 2018, the DEA issued a new clarification to the extract rule, which reads, in part:

“Products and materials that are made from the cannabis plant and which fall outside the CSA definition of marijuana (such as sterilized seeds, oil or cake made from the seeds, and mature stalks) are not controlled under the CSA. Such products may accordingly be sold and otherwise distributed throughout the United States without restriction under the CSA or its implementing regulations. The mere presence of cannabinoids is not itself dispositive as to whether a substance is within the scope of the CSA; the dispositive question is whether the substance falls within the CSA definition of marijuana.”[4]

This clarification leads to the understanding that CBD production and the DEA rule can coexist where hemp is grown and processed pursuant to the Farm Bill.

Colorado Hemp Laws and Regulations

Hemp cultivation is legal in Colorado under C.R.S. 35-61-102:

“Notwithstanding any other provision of law to the contrary, a person who holds a registration issued pursuant to section 35-61-104 may: Engage in industrial hemp cultivation for commercial purposes; or Grow industrial hemp for research and development purposes. Notwithstanding any other provision of law, a person registered pursuant to section 35-61-104 is not subject to any civil or criminal actions for engaging in the activities described in subsection (1) of this section if the person is acting in compliance with this article.”

That section makes it clear that Colorado does not prohibit the cultivation of industrial hemp under the Farm Bill, but that a separated registration process is required with the state.

Colorado Hemp Production and Processing

Hemp processing is similarly legal in Colorado under C.R.S. 35-61-108(2):

“A person engaged in processing, selling, transporting, possessing, or otherwise distributing industrial hemp cultivated by a person registered under this article, or selling industrial hemp products produced therefrom, is not subject to any civil or criminal actions under Colorado law.”

That section protects processing of hemp cultivated in Colorado under the pilot programs, but does not regulate processing of imported hemp. A processing facility that complies with this section is compliant with the law in Colorado as long as there are not issues with local land use and zoning.

To give regulatory effect to the statutes, The Colorado Department of Agriculture implemented an industrial hemp pilot program to allow some cultivation of hemp in Colorado. This program is a requirement for anyone seeking to enter hemp cultivation in Colorado. The Department of Agriculture is specific however when it states:

“The Industrial Hemp Program does not regulate the processing of industrial hemp and cannot answer questions about rules and regulations regarding the processing of industrial hemp. The CDA receives many calls about processing rules and regulations. You will need to research what government agency, if any, regulates the type of processing that you are interested in. Industrial Hemp registrations are for the cultivation (growing) of industrial hemp only, not the processing of industrial hemp.”

Colorado Removal of Hemp Definition from Constitution

In November, 2018, Colorado voters voted 60.65% in favor of removing the definition of hemp from Colorado’s constitution. Proponents of the change cited greater flexibility as a primary driving factor. With this amendment, Colorado changed its definition of industrial hemp to match any changes in federal law. Opponents were concerned that this made hemp’s legal position more tenuous since its legality is controlled by the whim of the legislature. While this seems like a minor change, even small changes to the definition of industrial hemp can greatly impact its legality and regulation.

The amendment has little impact on the industry immediately. The definition of industrial hemp is now found in C.R.S. 35-61-101(7): “’Industrial hemp’ means a plant of the genus cannabis and any part of the plant, whether growing or not, containing a delta-9 tetrahydrocannabinol concentration of no more than three-tenths of one percent on a dry weight basis.” This definition is very similar to that previously in the Colorado constitution, so there have not been any immediate changes and existing hemp businesses will be able to continue operating as they have before. The bigger impact will be seen in the coming years as federal legislation around the issue changes.

Colorado Regulatory Structure

The CDA has authority to regulate:

Cultivation of hemp, including:
o Registration of hemp producers
o Certified seed program

The CDPHE has authority to regulate processing, manufacturing, and storage of consumable hemp products, if the product is intended for human use or consumption.

Additionally, local governments can regulate businesses involved in the sale of industrial or food products containing hemp so long as those regulations do not conflict with state law. C.R.S. 31-15-501.

Required Licenses and Registration

Registration Required for Hemp Production (CDA)

“A person wishing to engage in industrial hemp cultivation for commercial purposes or to grow industrial hemp for research and development purposes shall apply to the department for a registration…prior to planting the industrial hemp.” C.R.S. 35-61-104.

The application must include:

1. Name and address of the applicant
2. Legal description, global positioning system location, and map of the land area on which the applicant plans to engage in industrial hemp cultivation
3. The name of each officer, director, member, partner, or owner of at least ten percent of the entity and any other person who has managing or controlling authority over the entity
4. Registration fee (current registration fee for Commercial / R&D production of Industrial Hemp shall be $500 plus $5.00/acre outdoors and/or $3.00/1000 sq. ft. indoors.)
5. The application must be submitted 30 days prior to planting
6. Each noncontiguous land area must have a separate registration
7. Any Registrant that wishes to alter the growing area(s) on which the Registrant will conduct Industrial Hemp cultivation for either Commercial or Research and Development purposes shall, before altering the area, submit to the Department an updated legal description, global positioning system location, and map specifying the proposed alterations. Amendments to an existing Registration are limited to changes within the original land area registered, including variety changes, location(s) of varieties, and actual acreage or square feet of each variety planted.

Registration Required for Processing / Storing for Human Consumption (CDPHE)

All hemp product manufacturers, extractors, processors and storage facilities who manufacture, store, wholesale and process hemp products intended for human use and consumption must register with CDPHE. Information on registration and the registration forms can be found at: https://www.colorado.gov/cdphe/food-manufacturing-and-storage.

The application must identify the processor’s source of hemp for purposes of confirming that the hemp source is appropriately registered with the CDA.

Hemp Processing for Other, Non-Human Use

There are no registration requirements for processing hemp for other, non-human use.

CBD Manufacturing Requirements from CDA

Key hemp manufacturing requirements:

• All parts of the hemp plant used in food come from a registered hemp program
• Industrial hemp used must contain no more that 0.3% THC. C.R.S. 35-61-101(7). The producer must be able to document this.
• The product must be labeled in conformance with state and federal labeling laws, such as:

1. Clearly identifying hemp as an ingredient
2. Clearly identifying CBD and amount of CBD if added as an isolate
3. Including the statement “FDA has not evaluated this product for safety and efficacy”
4. Not contain any health or benefit claims

Hemp Storage Requirements

The storage facility must comply with federal food manufacturing and storage regulations in 21 C.F.R. 117 (“Current Good Manufacturing Practice, Hazard Analysis, and Risk–Based Preventive Controls for Human Food”). Generally, the regulations require that you take reasonable measures and precautions to ensure cleanliness, disease control, etc. For large businesses (generally, over $1M in annual sales / inventory), these regulations impose significant requirements and should be thoroughly investigated. Smaller businesses may be exempt from the more onerous requirements like creation of a food safety plan and supply-chain program.

If you have any questions regarding hemp extraction or CBD production, or would like to learn more about how to enter the hemp and CBD industry, please do not hesitate to contact our office.

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