New USDA Rule Provides Much-Needed Clarity to US Hemp Industry — Particularly on THC Testing — But Questions Remain

These regulations, which became effective upon publication, provide much needed clarity to the US hemp industry — particularly regarding THC testing, which determines whether cannabis is regulated as an agricultural commodity or a Schedule I drug.

The 2018 Farm Bill

Enacted last December, the 2018 Farm Bill eliminated one of the biggest legal obstacles to producing and working with hemp and hemp-derived materials in the US by removing “hemp”—cannabis plants and derivatives thereof “with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis”—from the Federal Controlled Substances Act (CSA).

It also created a system of shared state and federal regulatory oversight of domestic hemp production, requiring that hemp be produced in accordance with: (i) a USDA-approved state or tribal plan governing the licensing and regulation of hemp production, or (ii) a federal plan administered by USDA for hemp produced in a state or territory that does not have a USDA-approved plan and in which hemp production is legal. According to USDA’s State and Tribal Plan Review webpage, 10 states and 10 tribal governments have already submitted proposed hemp production plans to USDA for approval. (All of these plans were submitted to USDA before the issuance of the interim final rule.)

Overview of USDA’s Hemp Regulations

USDA’s interim final rule codifies similar, but distinct, requirements for hemp production under state and tribal plans and under the federal plan. However, all hemp producers will be subject to similar requirements, including:

• Mandatory licensure;
• Maintaining and reporting information about production locations and cultivated acreage;
• Delta-9 tetrahydrocannabinol (THC) testing requirements;
• Procedures for disposing of non-compliant plants; and
• Procedures for handling negligent and willful violations.

The Importance of THC Testing and What USDA’s Rule Requires

As noted above, with the enactment of the 2018 Farm Bill, cannabis plants and derivatives thereof “with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis” fall within the definition of “hemp” and are thus excluded from the CSA. However, cannabis plants and derivatives thereof that exceed the 0.3% THC threshold are considered “marijuana” — a Schedule I drug that is generally illegal to produce, possess, or sell under the CSA.

Because the THC concentration of a cannabis plant determines whether it will be regulated as an agricultural commodity or a Schedule I drug, the methods and parameters for testing are of critical importance. As we noted previously, before USDA issued this interim final rule last week there were no national standards for testing, resulting in inconsistent regulatory requirements, industry confusion, and even criminal prosecution. The new regulations will provide enhanced uniformity regarding testing, but questions still remain. 

1. Sampling Requirements

The USDA interim final rule specifies when sampling must be conducted and by whom, and the sampling methodology that must be used.

Timing

• Sampling must occur prior to, and within 15 days of, harvesting. Harvesting may not precede sampling.
• If the producer fails to complete a harvest within 15 days of sampling, a secondary pre-harvesting sample must be taken and submitted for testing.

Individuals Permitted to Conduct Sampling

• Sampling must be performed, at the producer’s expense, by an approved sampling agent or authorized government enforcement agent, accompanied by the licensee or designated employee.

Sampling Methodology

• The portion of the plant to be sampled is the flowering material (flower or bud) located at the top one-third of the plant.
• The sampling method must ensure the collection of a representative sample, i.e., one that represents a homogeneous composition of an entire lot of hemp crop acreage. (The rule defines a “lot” as a contiguous area in a field, greenhouse, or indoor growing structure containing the same variety or strain of cannabis throughout the area.)
• USDA has issued a supplemental guideline regarding sampling procedures on its website, which addresses the number of plant specimens to be composited (approximately one per acre) in order to provide a representative sample for lab analysis.

2. Requirements for Testing Laboratories

USDA’s rule also imposes a number of requirements on laboratories that conduct THC testing for the purposes of determining compliance with the 2018 Farm Bill.

• Most notably, testing labs will be required to register with the US Drug Enforcement Administration (DEA).
• USDA is also considering: (1) requiring laboratories to obtain ISO 17025 accreditation or (2) establishing a process for accrediting hemp testing laboratories, which would require labs to comply with USDA’s Lab Approval Program requirements. USDA expressly requested public comment on these two accreditation alternatives.

3. Analytical Procedures for THC Testing

Although the 2018 Farm Bill defines “hemp” with reference to “delta-9 tetrahydrocannabinol concentration,” USDA’s interim final rule indicates that testing must be for “total THC.”

• Cannabis must be tested for “total THC” concentration—the concentration of THC plus that of its precursor delta-9 tetrahydrocannabinolic acid (THCA), calculated or measured as its decarboxylated form on a dry weight basis. This will be a significant consideration because much hemp currently being produced in the US is harvested without regard to THCA, and hemp crops tend to produce more total THC as they mature, especially just prior to harvest.
• The analysis must be performed by a sufficiently-sensitive, validated, and reliable analytical method, using, for example, gas chromatography (GC) or high performance liquid chromatography (HPLC) in combination with a suitable detector.
  • The GC method involves heating the sample, which automatically decarboxylates any THCA present to form THC. When THC is subsequently detected and measured by the detection device, it is actually a combination of the THC originally present in the sample and decarboxylated THCA, i.e., “total THC.”
  • The HPLC method detects and measures THC and THCA separately. Total THC is then calculated by adding 87.7% of the THCA concentration to that of the THC (since only 87.7% by weight of the THCA molecule is THC).
  • USDA will allow state plans to specify different testing methods, provided that they are “similarly reliable” as compared to GC and HPLC.
• USDA has issued a supplemental guideline regarding testing procedures on its website.

4. Requirements for Calculating and Reporting THC Concentration 

• Testing laboratories will be required to calculate the “measurement of uncertainty” of THC test results — similar to a margin of error — represented by a range of values bracketing the reported result.
• If the concentration range represented by the measurement of uncertainty includes or falls below the statutory limit of 0.3% total THC, the cannabis tested will be considered compliant with the 2018 Farm Bill. For example, if the lab result is 0.35% but the measurement of uncertainty is +/- 0.06%, this represents a possible range of 0.29-0.41%; the 0.3% limit falls within that range and the sample would be within the “acceptable hemp THC level” and therefore compliant.
• Laboratories must share results with both the licensed producer and USDA.
• Licensed producers may request retesting, if they believe the original testing results are erroneous.

Other Highlights of USDA’s Hemp Rule

• USDA emphasized that the rule does not preempt state or tribal law and that states and tribal governments may impose more stringent requirements. However, states and tribal governments may not prohibit or restrict interstate transportation of hemp across their borders.
• Cannabis plants that exceed the “acceptable hemp THC level” are considered to be “marijuana” and must therefore be disposed of in accordance with the CSA and applicable DEA regulations. 
• Producers who use reasonable efforts to produce hemp in accordance with the 2018 Farm Bill, but produce cannabis that exceeds the “acceptable hemp THC level” will not have committed a “negligent violation” provided that the THC concentration is 0.5%or less.
• 30 days after the effective date of the interim final rule, producers may begin applying for licenses to produce hemp under the federal plan for the 2020 season. For the first year of the program, applications may be submitted any time during the first year; for subsequent years, applications and renewals must be submitted between August 1 and October 31. Licenses are not transferrable.
• USDA will have 60 days to review state and tribal hemp production plans submitted to USDA for approval.
• The rule reiterated USDA’s policy regarding the importation of hemp seeds from Canada and other countries (articulated earlier this year on USDA’s website) and noted that producers should be cognizant that the same hemp seeds can produce different THC concentrations depending on the location and conditions in which they are grown.

USDA’s interim final rule became effective upon publication on October 31, 2019 and will sunset on November 1, 2021, by which point USDA expects to have issued final regulations. USDA is accepting comments on the interim final rule through December 30, 2019. On November 5, USDA posted a pre-recorded webinar on its website that discusses the differences between the hemp-related provisions of the 2014 Farm Bill and the 2018 Farm Bill and provides additional information about the requirements of the interim final rule.