Navigating the Regulatory Maze: Hemp Industry Calls for Additional Federal Action

The 2018 Farm Bill

Taking a step back, the 2018 Farm Bill removed hemp from the Schedule 1 list of controlled substances and defined hemp as the plant Cannabis sativa L. containing less than 0.3% Delta-9 THC.^[1] This definition of hemp is narrow and does not specifically mention, nor limit, other naturally occurring cannabinoids such as CBD, Delta-8 and 10 THC, and THCA.

Soon after passage of the 2018 Farm Bill, entrepreneurs saw an opportunity to create and sell an array of hemp-derived consumables so long as they contain less than 0.3% Delta-9 THC. Initially, hemp and CBD businesses saw quick financial success, leading many lawmakers to tout hemp legalization as an economic driver for hemp farmers and small business hemp retailers. However, individual state regulations, enacted over the past five years, have created economic challenges as multi-state operators navigate varying state-specific requirements. For this reason, the hemp industry is asking the federal government for additional regulatory clarity in hopes that the federal regulations reduce state-specific regulations.

Since past Farm Bills included language on hemp, many are looking to the new Farm Bill as the most logical legislative vehicle to address the legality of hemp and CBD products, though the House Committee on Energy and Commerce and the Senate Committee on Health, Education, Labor, and Pensions (HELP) have jurisdiction over the Food and Drug Administration (FDA), not the Committees on Agriculture that develop the Farm Bill. The 2018 Farm Bill expired on September 30, 2023, and Congress extended farm programs for an additional year through September 30, 2024. Despite the year-long runway, the prospect of passing a new $1.4 trillion Farm Bill through both chambers prior to this year’s election is uncertain. While the federal government has yet to provide additional regulatory guidance, state legislators are considering legislation to address sales within state borders.

State-Level Patchwork

Businesses across the country, including gas stations, convenience stores, pharmacies, and high-end hemp retail stores, are selling hemp-derived products marketed to improve health and wellness. The market for industrial hemp in the United States was valued at $238 million in 2022^[2], but the underlying market for downstream hemp-derived CBD products that same year was $1.9 billion.^[3] A recent Forbes survey found that 60% of Americans have tried or use CBD products.^[4] Edibles, vapes, tinctures, and lotions containing CBD and Delta-8, 9, and 10 THC are available, but some “bad actors” are selling low-quality products, often with unknown levels of THC and potentially harmful synthetic cannabinoids.

Determined to crack down on these “bad actors,” some state legislatures began their 2024 sessions with swift consideration of bills aimed to regulate hemp products, CBD, and Delta-8 THC. For example, the Ohio state legislature is moving legislation to ban Delta-8 THC, a policy Governor Mike DeWine strongly supports. Colorado, Washington, Alaska, and other states have banned Delta-8 THC in previous legislative sessions. Minnesota, on the other hand, allows Delta-8 as long as the THC concentrations remain below the federal 0.3% THC threshold.^[5] In Virginia, the legislature is considering whether to rollback last year’s burdensome hemp legislation in favor of a more business-friendly law this year. Legislation in states across the country is addressing the sale of hemp products in varying degrees, from 21+ age requirements to purchasing, labeling and packaging requirements, and prohibitions on animal or cartoon shaped gummies, all of which are intended to protect consumers, especially children. The result is a patchwork of regulations with roughly 25 states enacting some form of restriction or ban on various hemp-derived consumables.

Has the Federal Government Done Anything?

The 2018 Farm Bill maintained the FDA’s authority (under the Federal Food, Drug, and Cosmetic Act) to regulate hemp-derived products like edibles, liquids, topicals, and the like.^[6] In January 2023, the FDA concluded that existing regulatory frameworks are not appropriate for CBD and said the agency will work with Congress on a path forward. Seven months following this decision, at a hearing on July 27, 2023, Members of Congress formally scrutinized the FDA’s direction for Congress to act and examined the FDA’s “failure to regulate hemp-derived and cannabidiol (CBD) products under existing authorities for years.”^[7] During the hearing, many Members of House Committee on Oversight and Reform – which, like the Committees of Agriculture, lacks legislative jurisdiction over the FDA – delivered their opinions clearly: “[t]he FDA must take action to regulate CBD to create certainty for the industry, support the economy, farmers, and businesses, and ensure the safety of products.”^[8]

The Farm Bill, however, is also not the only legislative vehicle that could potentially address hemp-derived products. A pair of bills were introduced in 2023: S.2451 – Hemp Access and Consumer Safety Act and H.R.1629 – Hemp and Hemp-Derived CBD Consumer Protection and Market Stabilization Act of 2023. Each directs the FDA to regulate CBD under the existing food additive or dietary supplement frameworks, respectively. These bills have not advanced, which has led to frustration among the hemp industry and calls for federal action.

The Hemp and CBD Industry Wants Regulatory Certainty

Moving forward, look for state legislation aimed to restrict hemp and CBD sales within their borders. Anticipated state legislation will likely seek to impose further THC and CBD limits, including bans on Delta-8 THC, and additional regulations on labeling, packaging, marketing, age limitations, and product testing.

On the federal level, the hemp industry will continue advocating for the following priorities:

• Directing the FDA to regulate CBD as a food additive or dietary supplement as outlined in HR 1629 and S 2451.
• Raising hemp cultivation and processing THC limits from 0.3% to 1% total THC on a dry-weight basis.
• Addressing the shortage of hemp testing laboratories.
• Allowing continued market access to popular hemp products while streamlining regulations on hemp and naturally occurring cannabinoids.
• Promoting Environmental, Social, and Government initiatives through supporting research at minority serving institutions and promoting climate opportunities.^[9]

Many have attested that the long-term financial viability of the hemp industry remains in the balance as hemp-derived consumables, CBD, and Delta-8 THC continue to occupy a legal gray area between state and federal law. The hemp industry believes that the requested federal action can lead to the economic success akin to the past five years.