Source: https://www.everycrsreport.com/changes/20180622_RL32725_f3c135aee90da2fe6e53efc2b0861d55e2f4adfd__20180709_RL32725_4cfae786d89d72bc54dfaa3037af110f60546db5.html
Timestamp: 2019-04-19 08:51:06+00:00

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Industrial hemp is an agricultural commodity that is cultivated for use in the production of a wide range of products, including foods and beverages, cosmetics and personal care products, nutritional supplements, fabrics and textiles, yarns and spun fibers, paper, construction and insulation materials, and other manufactured goods. Hemp can be grown as a fiber, seed, or other dual-purpose crop. However, hemp is also from the same species of plant, Cannabis sativa, as marijuana. As a result, production in the United States is restricted due to hemp's association with marijuana, and the U.S. market is largely dependent on imports, both as finished hemp-containing products and as ingredients for use in further processing (mostly from Canada and China). Current industry estimates report U.S. hemp product sales at nearly $700 million annually.
Despite these efforts, industrial hemp continues to be subject to U.S. drug laws, and growing industrial hemp is restricted. Under current U.S. drug policy, all cannabis varieties—including industrial hemp—are considered Schedule I controlled substances under the Controlled Substances Act (CSA, 21 U.S.C. §§801 et seq.). Although hemp production is generally allowed following requirements under the 2014 farm bill, some aspects of production remain subject to DEA oversight, including the importation of viable seeds, which still requires DEA registration according to the Controlled Substances Import and Export Act (21 U.S.C. §§951-971). Other guidance from DEA, USDA, and the Food and Drug Administration provides additional clarification regarding federal authorities' position on hemp and its future policies regarding its cultivation and marketing. This guidance supports DEA's contention that the commercial sale or interstate transfer of industrial hemp continues to be restricted.
Congress has continued to introduce legislation to further advance industrial hemp and address these types of concerns in the next farm bill. Introduced legislation as part of the Industrial Hemp Farming Act—first introduced in the 109th Congress and greatly expanded over the past few years—seeks to further facilitate hemp production in the United States but would also amend the CSA to specify that the term marihuanamarijuana does not include industrial hemp. An expanded version of this bill was introduced in the 115th Congress in both the House and Senate (H.R. 5485; S. 2667). Many of the provisions in these bills are included in the Senate version of the-passed 2018 farm bill legislation (S. 3042(H.R. 2) that is now being debated in Congress. Similar provisions are not part of the House version of the 2018 farm bill (H.R. 2). Myriad other bills introduced in both the House and the Senate would further amend the CSA and other federal laws to address industrial hemp.
Despite these efforts, industrial hemp continues to be subject to U.S. drug laws, and growing industrial hemp is restricted. Under current U.S. drug policy, all cannabis varieties—including industrial hemp—are considered Schedule I controlled substances under the Controlled Substances Act (CSA),1 and DEA continues to control and regulate cannabis production. Although hemp production is now allowed in accordance with the requirements under the 2014 farm bill provision, other aspects of hemp production are still subject to DEA oversight, including the importation of viable seeds.
Congress has sought to further distinguish between industrial hemp and marijuana. Among the bills addressing industrial hemp, the Industrial Hemp Farming Act would amend the CSA to specify that the term marijuana (or marihuana, as it is spelled in the older statutes) does not include industrial hemp, thus excluding hemp from the CSA as a controlled substance subject to DEA regulation. This bill was reintroduced and expanded from bills introduced in previous Congresses dating back to the 109th Congress. An expanded version of this bill was introduced in the 115th Congress in both the House and Senate (H.R. 5485; ; S. 2667). Other provisions in these bills would further facilitate hemp production in the United States. Many of the provisions in these bills are included in the Senate version of the 2018 farm bill legislation (S. 3042) that is now being debated in CongressH.R. 2) that has passed the Senate. Similar provisions are not part of the House version of the-passed 2018 farm bill (H.R. 2).
Other introduced legislation would amend the CSA "to exclude cannabidiol and cannabidiol-rich plants from the definition of marihuana" intended to promote the possible medical applications of industrial hemp. Myriad other bills introduced in both the House and the Senate would further amend the CSA and other federal laws to address industrial hemp.
Hemp fibers are used in fabrics and textiles, yarns and spun fibers, paper, carpeting, home furnishings, construction and insulation materials, auto parts, and composites. Hurds are used in animal bedding, material inputs, papermaking, and oil absorbents. Hemp seed and oilcake are used in a range of foods and beverages (e.g., salad and cooking oil and hemp dairy alternatives) and can be an alternative food and feed protein source.8 Oil from the crushed hemp seed is used in soap, shampoo, lotions, bath gels, and cosmetics.9 Hemp is also being used in nutritional supplements and in medicinal and therapeutic products, including pharmaceuticals. It is also used in a range of composite products. Hempcrete (a mixture of hemp hurds and lime products) is being used as a building material. Hemp is also used as a lightweight insulating material and in hemp plastics and related composites for use as a fiberglass alternative by the automotive and aviation sectors.10 Hemp is also promoted as a potential biodiesel feedstock11 and cover crop.
No official estimates are available of the value of U.S. sales of hemp-based products. The Hemp Industries Association (HIA) reports total U.S. retail sales of hemp products of nearly $700 million in 2016,12 which includes food and body products, dietary supplements, clothing, auto parts, building materials, and other consumer products (Figure 2). HIA claims that U.S. hemp retail sales have increased by about 10% to more than 20% annually since 2011. Much of this growth is attributable to sales of hemp-based body products, supplements, and foods. Combined, these categories accounted for more than two-thirds of the value of U.S. retail sales in 2016.
Hemp imports to the United States—consisting of hemp seeds and fibers often used as inputs for use in further manufacturing—totaled $67.3 million in 2017 (Table 1). Although hemp imports have declined from a record high of $78.1 million in 2015, U.S. hemp imports have steadily increased since 2005 when hemp imports totaled $5.7 million. This increase in trade followed the resolution of a legal dispute over U.S. imports of hemp foods in late 2004 (see "Dispute overOver Hemp Imports (1999-2004)") and also prior prohibitions on U.S. domestic production.
In 2017, nearly two-thirds (64%) of the value of all U.S. hemp imports were of hemp seeds, which were used mostly as inputs and ingredients for hemp-based products. Other ingredient imports—hemp oil, seed cake, and solids—accounted for another 28% of the value of total imports. Import hemp yarns and fibers accounted for about 8% of total import value in 2017 (Table 1). Trade data are not available for finished products, such as hemp-based clothing or other products including construction materials, carpets, or paper products.
Canada is the single largest supplier of U.S. hemp imports, accounting for about 90% of the value of annual imports. Other leading country suppliers include China (about 3-5% of annual imports) and Romania (2-4%). Remaining imports are supplied by other European countries, India, the Dominican Republic, and Chile. Canada is the primary source of U.S. imports of food-grade hemp seed and oilcake, with supplies also from China and Europe. China and some European countries are major suppliers of raw and processed hemp fiber and yarn.
Three forms of seed are imported:13 (1) de-hulled seed—often referred to as hemp hearts, hulled seeds, or hemp nut—which is used in a range of food products; (2) non-viable whole seed, which is rendered non-viable through a sterilization process, usually through temperature exposure; and (3) viable whole seed, which is capable of germination under suitable conditions. Most hemp seed cultivars originate in Europe (France, Germany, Hungary, Italy, Poland, and Romania), Russia, Ukraine, and China.
Three forms of seed are imported:13 (1) de-hulled seed, often referred to as hemp hearts, hulled seeds, or hemp nut, used in a range of food products; (2) non-viable whole seed, rendered non-viable through a sterilization process, usually through temperature exposure; and (3) viable whole seed, capable of germination under suitable conditions. Most hemp seed cultivars originate in Europe (France, Germany, Hungary, Italy, Poland, and Romania), Russia, Ukraine, and China.
Other studies differ from the various state reports and provide a less favorable aggregate view of the potential market for hemp growers in the United States, highlighting challenges facing U.S. growers. For example, a 2000 study by USDA projected that U.S. hemp markets "are, and will likely remain, small, thin markets." It also cited "uncertainty about long-run demand for hemp products and the potential for oversupply" among possible downsides of potential future hemp production.16 Similarly, a study by University of Wisconsin-Madison concluded that hemp production "is not likely to generate sizeable profits," and, although hemp may be "slightly more profitable than traditional row crops," it is likely "less profitable than other specialty crops" due to the "current state of harvesting and processing technologies, which are quite labor intensive, and result in relatively high per unit costs."1716 The study also noted that U.S. growers could be affected by competition from other world producers and by production limitations in the United States, including yield variability and lack of harvesting innovations and processing facilities, as well as difficulty transporting bulk hemp. The study further claimed that most estimates of profitability from hemp production are highly speculative and often do not include additional costs of growing hemp in a regulated market, such as the cost associated with "licensing, monitoring, and verification of commercial hemp."
A 2013 study by researchers at the University of Kentucky predicted that despite "showing some positive returns, under current market conditions, it remained unclear whether anticipated hemp returns would be large enough to entice Kentucky grain growers to shift out of grain production" under most circumstances. They also noted that "short run employment opportunities evolving from a new Kentucky hemp industry appear limited (perhaps dozens of new jobs, not 100s)," because of continued uncertainty in the industry.1817 Overall, the study concluded that there were many remaining unknowns and that further analysis and production research was needed.
Given the absence since the 1950s of any commercial and unrestricted hemp production in the United States, it is not possible to predict with any degree of confidence the potential market and employment effects of relaxing current restrictions on U.S. hemp production. While expanded market opportunities might exist in some states or localities if current restrictions on production are lifted, it is not possible to predict the potential for future retail sales or employment gains in the United States, either nationally or within certain states or regions. Information on these types of probable effects is not Little information is available from previous market analyses that have been conducted by researchers at USDA and land grant universities and state agencies.
Approximately 30 countries in Europe, Asia, and North and South America currently permit farmers to grow hemp. Aggregated production data from the United Nations do not include all countries (most notably Canada) and may differ from other sources but comprise the most readily available source of information. Based on these data, excluding Canada, global acreage in hemp cultivation in 2016—both hemp seed and hemp tow waste—is reported at about 192,000 acres (Figure 3), with a reported total production of 355 million pounds (Figure 4). United Nations data do not include Canada, which is a major hemp producing and exporting country. Including other data for Canada, in 2016, aggregate acreage totaled at about 225,000 acres. Canada is also major supplier of U.S. hemp imports, particularly of hemp-based foods and food ingredients and other related imported products.
Source: FAOSTAT, http://www.fao.org/faostat/en/. Does not include all producing countries, including Canada.
Leading global hemp producers include Europe, China, South Korea, and Russia. Some countries never outlawed production; other countries banned production for certain periods in the past and later lifted these restrictions. Hemp production across these countries and regions account for nearly all the reported production and acreage reported in the U.N. database.
According to Food and Agriculture Organization (FAO) of the United Nations data, Europe is the world's single largest hemp producing market. In 2016, European countries produced hemp on a reported more than 80,000 acres—a historical record high2019 and accounting for about 40%one-half of FAO-reported global acreage. The EU has an active hemp market, with production in most member nations. Production is centered in France, the Netherlands, Lithuania, and Romania.2120 Many EU countries lifted their bans on hemp production in the 1990s and, until recently, also subsidized the production of "flax and hemp" under the EU's Common Agricultural Policy.2221 Most EU production is of hurds, seeds, fibers, and pharmaceuticals.2322 Other non-EU European countries with reported hemp production include Russia, Ukraine, and Switzerland.
Source: CRS from Agriculture and Agri-Food Canada data, "Industrial Hemp Statistics," and "Industrial Hemp Production in Canada," and other press reports (D. Brown, "Canada on Course for Record Hempseed Crop in 2017," June 2017).
NoteNotes: The downturn in 2007 is viewed as a correction of overproduction in 2006 following the "success of the court case against DEA in 2004, and continued improvements in breeding, production, and processing," which resulted in part in a "dramatic reduction in hemp acreage planted" in 2007. The 2007 downturn is also attributed to "increasingly positive economics of growing other crops" (Manitoba Agriculture, National Industrial Hemp Strategy, March 2008, prepared for Food and Rural Initiative Agriculture and Agri-Food Canada).
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Source: CRS from information from Vote Hemp, "2017 U.S. Hemp Crop Report," January 2018 (number of acres), and the Colorado Department of Agriculture, "2016 National Hemp Regulatory Meeting Survey," October 2016 ("purposes grown"). "NA" indicates that information is not available.
Between 1914 and 1933, in an effort to stem the use of Cannabis flowers and leaves for their psychotropic effects, 33 states passed laws restricting legal production to medicinal and industrial purposes only.41 The 1937 Marihuana Tax Act defined hemp as a narcotic drug, requiring that farmers growing hemp hold a federal registration and special tax stamp, effectively limiting further production expansion.
Strictly speaking, the CSA does not make growing cannabis illegal; rather, it places strict controls on its production, making it illegal to grow the crop without a DEA permit. Regarding industrial hemp, however, growers that comply with the 2014 farm bill provision (discussed in the next section) do not need DEA approval.
The 113th Congress considered various changes to U.S. policies regarding industrial hemp during the omnibus farm bill debate.46 The 2014 farm bill (Agricultural Act of 2014 [P.L. 113-79], §7606)47 provides that certain "institutions of higher education"48 and state departments of agriculture may grow industrial hemp, as part of an agricultural pilot program, if allowed under state laws where the institution or state department of agriculture is located. The farm bill also established a statutory definition of 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." The provision was included as part of the research title of the law. The provision did not include an effective date that would suggest any kind of program rollout, and there appears to be nothing in the conference report or bill language to suggest that the states might not be able to immediately initiate action on this provision.
Some have speculated whether the industrial hemp provision in the 2014 farm bill could terminate, expire, or require reauthorization in a subsequent farm bill.49 Although some individual authorizations in the farm bill specifically have provisions indicating that they expire in 2018 (such as authorized funding levels), the industrial hemp research provision in the 2014 farm bill does not have such language. Furthermore, the farm bill does not contain a default sunset provision for all its authorizations. Accordingly, the industrial hemp research provision in the 2014 farm bill appears to be intended to have some degree of permanence.
Immediately following the 2014 farm bill, some states quickly responded by expanding their efforts to grow industrial hemp. However, these initiatives were slowed by the absence of viable seeds in the United States to grow industrial hemp and DEA actions blocking the importation of viable seedefforts to block imports of viable seed slowed these efforts. (For more information, see "DEA's Blocking of Imported Viable Hemp Seeds".) To avoid future similar DEA actions that might further stall full implementation of the hemp provision of the farm bill, Congress acted swiftly. Both the House and Senate FY2015 Commerce-Justice-Science (CJS) appropriations bills contained provisions to block federal law enforcement authorities from interfering with state agencies and hemp growers and counter efforts to obstruct agricultural research. The enacted FY2015 appropriation blocked federal law enforcement authorities from interfering with state agencies, hemp growers, and agricultural research.51 The provision stated that "none of the funds made available" to the U.S. Justice Department and DEA "may be used in contravention" of the 2014 farm bill. Similar language has been included in each subsequent enacted CSJ appropriationsappropriation and is now also part annual Agriculture appropriationsappropriation.
The enacted FY2018 Agriculture appropriation states that none of the funds made available by the Agriculture or any other appropriation may be used in contravention of the 2014 farm bill provision or "to prohibit the transportation, processing, sale, or use of industrial hemp that is grown or cultivated" in accordance with the farm bill provision "to prohibit the transportation, processing, sale, or use of industrial hemp, or seeds of such plant, that is grown or cultivated" in accordance with the 2014 farm bill "within or outside the State in which the industrial hemp is grown or cultivated."52 The FY2017 and FY2016 Agriculture appropriation contained similar language.53 Language referring to selling industrial hemp within a state addresses intrastate commerce, whereas language referring to selling hemp outside the state may be considered to address interstate commerce.
Other proposed appropriations bills had also addressed industrial hemp. For example, the Senate FY2018 Energy and Water Development and Related Agencies appropriationappropriations proposed to prohibit regulators from denying hemp growers access to water if hemp is grown or cultivated in accordance with the laws of the state in which such use occurs.55 The provision was not enacted as part of the omnibus appropriation.
Since the mid-1990s, there has been a resurgence of interest in the United States in producing industrial hemp. Farmers in regions of the country that are highly dependent upon a single crop, such as tobacco or wheat, have shown interest in hemp's potential as a high-value alternative crop, although the economic studies conducted so far paint a mixed profitability picture. Beginning around 1995, an increasing number of state legislatures began to consider a variety of initiatives related to industrial hemp. Most of these have been resolutions calling for scientific, economic, or environmental studies, and some are laws authorizing planting experimental plots under state statutes.
Some states have well-developed guidelines for growers, covering issues such as registration and reporting requirements, inspection, THC testing and threshold determination, seed availability and certification, pesticide use, production standards, and other information. Other general requirements may apply under some circumstances. For example, in 2016, USDA published guidance on organic certification of industrial hemp products.64 Some are calling for the need to develop more far-reaching consensus standards for a range of cannabis varieties given concerns about the general lack of standards and test methods.65 Production of industrial hemp has been reported in several states (Table 2).
Source: National Conference of State Legislatures, State Industrial Hemp Statutes (http://www.ncsl.org/research/agriculture-and-rural-development/state-industrial-hemp-statutes.aspx). Accessed May 29, 2018.
Notes: Darker shade indicates "allows cultivation of hemp for commercial, research or pilot programs." NonLighter-shaded states indicate "does not allow cultivation of hemp."
Prior to the 2014 farm bill, although many states had established programs under which a farmer may be able to grow industrial hemp under certain circumstances, a grower would still need to obtain a DEA permit and abide by DEA's strict production controls. This situation resulted in some high-profile cases in which growers have applied for a permitpermits but DEA did not approve (or denied) a permithas not approved (or has denied) permits to grow hemp, even in states that authorize cultivation under state laws.
Even if DEA were to approve a permit, production might be discouraged because of the perceived difficulties of working through DEA licensing requirements and installing the types of structures necessary to obtain a permit. Obtaining a DEA permit required that the applicant demonstrate that an effective security protocol will be in place at the production site, such as security fencing around the planting area, a 24-hour monitoring system, controlled access, and possibly armed guards to prevent public access.68 DEA application requirements also include a nonrefundable fee, FBI background checks, and extensive documentation. It could also be argued that the necessary time-consuming steps involved in obtaining and operating under a DEA permit, the additional management and production costs from installing structures, and other business and regulatory requirements could ultimately limit the operation's profitability.
As some states began to allow U.S. producers to grow hemp under state law, some growers were foregoing the requirement to obtain a federal permit. For example, in 2009, Montana's Agriculture Department issued its first state license for an industrial hemp-growing operation in the state, and media reports indicated that the grower did not intend to request a federal permit.7475 Such cases posed a challenge to DEA of whether it wasis willing to override the state's authority to allow for hemp production in the state.
DEA's position that "anything that contains 'any quantity' of marijuana or THC" should be regarded as a controlled substance is further supported by reports published by the National Institute on Drug Abuse, which is part of the National Institutes of Health. Although it does not have a formal position about industrial hemp, its research tends to conflate all cannabis varieties, including marijuana and hemp. For example, it reports: "All forms of marijuana are mind-altering (psychoactive)," and "they all contain THC (delta-9-tetrahydrocannabinol), the main active chemical in marijuana." DEA further maintainedmaintains that the CSA does not differentiate between different varieties of cannabis based on THC content.
Regarding states that have enacted laws legalizing cannabis grown for industrial purposes, DEA had stated "these laws conflict with the CSA, which does not differentiate, for control purposes, between marijuana of relatively low THC content and marijuana of greater THC content."
DEA followed up, in October 2001, with publication of an interpretive rule in the Federal Register explaining the basis of its zero-tolerance standard.7879 It held that when Congress wrote the statutory definition of marijuana in 1937, it "exempted certain portions of the Cannabis plant from the definition of marijuana based on the assumption (now refuted) that such portions of the plant contain none of the psychoactive component now known as THC."
In March 2003, DEA issued two final rules addressing the legal status of hemp products derived from the cannabis plant. It found that hemp products "often contain the hallucinogenic substance tetrahydrocannabinols (THC) ... the primary psychoactive chemical found in the cannabis (marijuana) plant."7980 Although DEA acknowledged that "in some cases, a Schedule I controlled substance may have a legitimate industrial use," such use would be allowed only under highly controlled circumstances. These rules set forth what products may contain "hemp" and also prohibit "cannabis products containing THC that are intended or used for human consumption (foods and beverages)."
Hemp industry trade groups, retailers, and a major Canadian exporter filed suit against DEA, arguing that congressional intent was to exempt plant parts containing naturally occurring THC at non-psychoactive levels, the same way it exempts poppy seeds containing trace amounts of naturally occurring opiates.8081 Industry groups maintain that (1) naturally occurring THC in the leaves and flowers of cannabis varieties grown for fiber and food is already at below-psychoactive levels (compared with drug varieties); (2) the parts used for food purposes (seeds and oil) contain even less; and (3) after processing, the THC content is at or close to zero. U.S. and Canadian hemp seed and food manufacturers have in place a voluntary program for certifying low, industry-determined standards in hemp-containing foods. Background information on the TestPledge Program is available at http://www.TestPledge.com. The intent of the program is to assure that consumption of hemp foods will not interfere with workplace drug testing programs or produce undesirable mental or physical health effects.
In May 2018, DEA issued an internal directive to further clarify the ruling in the 2004 court case.8687 The directive acknowledges that products and materials made from the cannabis plant that fall outside the CSA's definition of marihuanamarijuana—such as sterilized seeds incapable of germination, oil or cake made from the seeds, mature stalks, and fiber from mature stalks—are exempt from CSA and may be "sold and otherwise distributed throughout the United States without restriction under the CSA or its implementing regulations."8788 Exempt cannabis plant material also includes "any other compound, manufacture, salt, derivative, mixture, or preparation" of the above items, despite the presence of cannabinoids. The directive further acknowledges that such exempt products and materials may be imported into the United States without restriction (under the Controlled Substances Import and Export Act, 21 U.S.C. §§951-971) or exported from the United States ("provided further that it is lawful to import such products under the laws of the country of destination"). The directive does not address marijuana extracts and resins.
Some in the hemp industry are interpreting the 2018 directive as providing an indication of DEA's position regarding extracts such as CBD from exempt plant materials, including industrial hemp. They claim that this could provide an indication that CBD extracted from hemp could be considered exempt from CSA regulation and DEA's jurisdiction.8889 They also acknowledge that some research indicates that meaningful levels of CBD might not be readily extracted from exempt plant materials such as industrial hemp.
Changes to Colorado's state laws in November 2012 now allow for industrial hemp cultivation. Industrial hemp was reported as being grown in Colorado in 2013.9193 However, growers and state authorities continue to face a number of challenges implementing Colorado's law, including sampling, registration and inspection, seed availability and sourcing, disposition of non-complying plants, and law enforcement concerns, as well as production issues such as hemp agronomics, costly equipment, and limited manufacturing capacity, among other grower and processor concerns.9294 There is also general uncertainty about how federal authorities will respond to production in states where state laws allow cultivation.
In November 2012, state authorities in Colorado requested clarification from DOJ about how federal enforcement authorities might respond to its newly enacted laws and forthcoming regulations.9395 Since federal law regards all varieties of the cannabis plant as "marijuana," many continue to regard DOJ's August 2013 guidance as also likely applicable to the regulation of industrial hemp.9496 In November 2013, Colorado officials requested further clarification regarding the cultivation of industrial hemp specifically.9597 It is not known whether either federal agency has responded to the state's requests.
Kentucky announced plans for several pilot projects through the Kentucky Department of Agriculture. However, in May 2014, U.S. Customs officials blocked the department's shipment of 250 pounds of imported viable hemp seed from Italy at Louisville International Airport. DEA officials contend that the action was warranted since the "importation of cannabis seeds continues to be subject to the Controlled Substances Import and Export Act (CSIEA)"102104 and to the implementing regulations, which restrict persons from importing viable cannabis seed unless they are registered with DEA and have obtained the necessary Schedule I research permit, among other requirements.
To facilitate release of the hemp seeds, the Kentucky Department of Agriculture filed a lawsuit in U.S. District Court against DEA, DOJ, U.S. Customs and Border Protection, and the U.S. Attorney General.104106 In the lawsuit, the department contends that its efforts to grow industrial hemp are authorized under both state and federal law and that DEA should not seek to impose "additional requirements, restrictions, and prohibitions" on hemp production beyond requirements in the 2014 farm bill or otherwise interfere with its delivery of hemp seeds.
Although hemp production is now allowed in accordance with the requirements under the 2014 farm bill provision, the importation of viable seeds still requires DEA registration according to CSIEA (21 U.S.C. §§951-971). This requirement was reinforced in a 2016 joint "Statement of Principles" on industrial hemp from DEA, USDA, and FDA.106108 Purchasing viable seed for germination continues to be a complicated process. It can be difficult to locate a seed source, since there are no U.S. cultivars, and any seed must be sourced internationally. Also, the grower must submit a DEA 357 import form, and any seed source must be pre-screened by DEA and also meet USDA phytosanitary rules. Once the permit is obtained, a copy of the permit is then sent to the seed supplier and may be shipped by air freight.107109 Other requirements include approval for entryentry approval and ground transport to field sites and field site security.
In August 2016, DEA issued three major decisions on marijuana and industrial hemp.108110 Regarding marijuana, DEA announced it was rejecting a petition to reschedule marijuana (affirming its continued status as an illegal Schedule I controlled substance).109111 It also announced certain policy changes regarding authorized marijuana cultivators for research.110112 Regarding industrial hemp, DEA issued a joint statement with USDA and FDA on the principles on industrial hemp.
The three federal agencies acknowledged that the 2014 farm bill provision regarding industrial hemp "left open many questions regarding the continuing application of Federal drug control statutes to the growth, cultivation, manufacture, and distribution of industrial hemp products, as well as the extent to which growth by private parties and sale of industrial hemp products are permissible."111113 The 2014 farm bill also "did not remove industrial hemp from the controlled substances list." Federal law continues to restrict hemp-related activities that were not specifically legalized under the farm bill provision, which did not amend CSA requirements regarding the manufacture and distribution of "drug products" containing controlled substances. The farm bill provision also did not amend the Federal Food, Drug, and Cosmetic Act112114 regarding the approval process for new drug applications.
The joint statement restates the 2014 farm bill's requirement that hemp be grown and cultivated "in accordance with an agricultural pilot program ... established by a State department of agriculture or State agency ... in a State where the production of industrial hemp is otherwise legal under State law."113115 It further notes that "state registration and certification of sites used for growing or cultivating industrial hemp" were not addressed in the 2014 farm bill and recommends that "such registration should include the name of the authorized manufacturer, the period of licensure or other time period during which such person is authorized by the State to manufacture industrial hemp, and the location, including Global Positioning System coordinates, where such person is authorized to manufacture industrial hemp."
Many in Congress and in the hemp industry had much anticipated clarification regardingindustry anticipated that the joint statement would clarify DEA's position on industrial hemp, given continuedongoing uncertainty and despiteabout that notwithstanding support for hemp cultivation in the 2014 farm bill. The joint statement provides guidance to "individuals, institutions, and states" on a number of issues pertaining to the growing and cultivation of industrial hemp. While some in Congress and in thethe U.S. hemp industry are encouraged by parts of the joint statement, they have also expressed concerns about other aspects of the joint statement.114116 A summary of these issues is as follows.
Confusion regarding the definition of industrial hemp. Some in the hemp industry worry that the joint statement reinterprets the statutory definition of industrial hemp to cover fiber and seed only, excluding flowering tops, which they believe is covered by the farm bill definition.115117 The flowering heads of the plant have the greatest cannabinoid content. They also worry that the joint statement expands upon inherent restrictions to the statutory definition in that it broadly highlights the term THC, which is defined to include "all isomers, acids, salts, and salts of isomers of tetrahydrocannabinols," whereas the statutory definition in the 2014 farm bill specifies delta-9 THC, the dominant psychoactive cannabinoid of cannabis. Some in Congress claim that the executive branch is defining industrial hemp more narrowly than that defined in statute in that it "drops the 'delta-9' when describing tetrahydrocannabinol" and "adds isomers, acids, and salts of isomers of THC to count against the 0.3% THC threshold."116118 These Members of Congress have asked that the definition be removed from the guidance.
Confusion regarding possible restrictions on commerce. Some in Congress note that the 2014 farm bill defined ''agricultural pilot program'' to mean "a pilot program to study the growth, cultivation, or marketing of industrial hemp" (italics added).117119 These Members of Congress have asked for confirmation that "general commercial activity" does not prevent any types of sale from occurring from the framework of an approved pilot program. Likewise, the hemp industry remains concerned about the inclusion of language in the joint statement indicating that "industrial hemp products ... may not be sold in States where such sale is prohibited."118120 Broadly speaking "industrial hemp products" are already widely marketed, sold, and distributed. Some claim that this restriction on sales is contrary to provisions in both the CSA and the 2014 farm bill.
The Critical Agricultural Materials Act of 1984 (P.L. 98-284, 7 U.S.C. §178) supports the supplemental and alternative crops provisions of the 1985 and 1990 omnibus farm acts and other authorities and funds research and development on alternative crops at USDA and state laboratories.122124 In addition, Section 1473D of the National Agricultural Research, Extension, and Teaching Policy Act of 1977 (7 U.S.C. §3319d(c)) authorizes USDA to make competitive grants toward the development of new commercial products derived from natural plant material for industrial, medical, and agricultural applications. To date, these authorities have not been used to develop hemp cultivation and use.
The United States is a signatory of the United Nations Single Convention on Narcotic Drugs, 1961.123125 The principal objectives of the convention are to "limit the possession, use, trade in, distribution, import, export, manufacture and production of drugs exclusively to medical and scientific purposes and to address drug trafficking through international cooperation to deter and discourage drug traffickers."124126 The convention requires that each party control cannabis cultivation within its borders. However, Article 28.2 of the convention states, "This Convention shall not apply to the cultivation of the cannabis plant exclusively for industrial purposes (fibre and seed) or horticultural purposes." Thus the convention need not present an impediment to the development of a regulated hemp farming sector in the United States.
Congress has continued to introduce legislation to further advance industrial hemp and address continued perceived obstacles to hemp production in the United States. Specifically, an expanded version of the Industrial Hemp Farming Act—first introduced in the 109th Congress—was introduced in the 115th Congress in both the House and Senate (H.R. 5485; S. 2667). These bills are further discussed in "Industrial Hemp Farming Act". Many of the provisions in these bills are included in the Senate version of the-passed 2018 farm bill legislation (S. 3042) that is now being debated in Congress(H.R. 2).
A number of hemp-related amendments to the House Agriculture Committeecommittee bill (Agriculture and Nutrition Act of 2018, H.R. 2) were proposed and/or considered but not adopted.
During House committee markup, Representative Comer considered but did not propose an amendment to H.R. 2 that would clarify that federally recognized Indian tribes are eligible to grow hemp in accordance with the conditions specified in the 2014 farm bill.125 It;127 it would have also required USDA to develop guidance on standardized testing procedures for the THC concentration for industrial hemp.
Chief among these is a provision that would amend the CSA to exclude from the statutory definition of marijuana industrial hemp, as as it is defined in the 2014 farm bill (i.e., as containing no more than a 0.3% THC concentration) from the statutory definition of marihuana.127. The Senate farm bill also creates a new hemp program under the Agricultural Marketing Act of 1946 (7 U.S.C. § 1621 et seq.), expanding the existing statutory definition of hemphemp and expanding eligibility to other producers and groups, including tribes and territories. States or Indian tribes wanting primary regulatory authority over hemp production would be required to implement a "plan" to further monitor and regulate hemp production. Other provisions in the Crop Insurance title would make hemp producers eligible to participate in federal crop insurance programs, while provisions in the Research title of the bill would make hemp production eligible for certain USDA research and development programs.
Source: CRS from H.R. 2.
The Industrial Hemp Farming Act of 2018 (Comer/H.R. 5485; McConnell/S. 2667) is intended to facilitate the possible commercial cultivation of industrial hemp in the United States. The bills would amend Section 102 of the CSA (21 U.S.C. 802(16)) to exclude "industrial hemp" from the statutory definition of marihuanamarijuana. Industrial hemp would be defined based on its THC content and set atnot a threshold of 0.3% THC. Such a change could remove low-THC hemp from being covered by the CSA as a controlled substance subject to DEA regulation, thus allowing for industrial hemp to be grown and processed under some state laws. The bill could grant authority to any state permitting industrial hemp production and processing to determine whether any such cannabis plants met the limit on THC concentration as set forth in the CSA. In any criminal or civil action or administrative proceeding, the state's determination may be conclusive and binding.
H.R. 5485 and S. 2667 further address industrial hemp as part of the federal crop insurance program and include hemp as eligible for research funding under the Supplemental and Alternative Crops Act131132 and the Critical Agricultural Materials Act,132133 which are authorized to receive $1 million in annual appropriations through FY2018. Finally, the bills require that USDA conduct a study of USDA agricultural pilot programs, including the hemp pilot program, which would be repealed one year after enactment. USDA would also be required to conduct a study of USDA agricultural pilot programs, including the hemp pilot program in the 2014 farm bill.
In the 115th Congress, the Therapeutic Hemp Medical Access Act of 2017 (S. 1008) and the Charlotte's Web Medical Access Act of 2017 (H.R. 2273)1412273)142 would amend CSA by excluding cannabidiol and cannabidiol-rich plants, defined as having a delta-9 THC concentration of no more than 0.3% on a dry weight basis. Similar versions of these bills were introduced in the 114th Congress and 113th Congress.142143 The House and Senate bills are related but are not identical. In addition to removing cannabidiol and cannabidiol-rich plants, as defined, from regulation under CSA, the House bill would further exclude these from being applicable to requirements under the Federal Food, Drug, and Cosmetic Act, which broadly regulates the quality and safety of foods and dietary supplements. This provision is not part of the Senate bill.
There is also growing concern that hemp-based CBD products, derived from industrial hemp, are being marketed as being rich in CBD and as having comparable therapeutic uses to CBD extracts. Medicine-grade CBD is not produced or pressed from hemp seeds. Hemp seed oil, marketed as "hemp oil," is made by pressing hemp seeds that contain low levels of CBD (typically less than 25 parts per million). Most of the CBD extracts currently being marketed for certain therapeutic purposes are generally formulated from strains of cannabis with THC levels higher than 0.3% but generally less than 1% THC.143144 Some claim that scientific research shows that meaningful levels of CBD cannot be extracted from hemp.144145 Also, FDA has continued to issue a number of notices and warning letters regarding its concerns about CBD, which is being marketed across a range of therapeutic/medicinal products.145146 For more information, see CRS In Focus IF10391, Potential Use of Industrial Hemp in Cannabidiol Products.
In February 2017, the National Academies of Sciences, Engineering, Medicine (NASEM) published a comprehensive review of existing cannabis research. The study provides a broad set of evidence-based research conclusions on the health effects of cannabis and cannabinoids and provides recommendations to support advancing future research and inform public health decisions.151 It claims that there is conclusive or substantial evidence that oral cannabinoids are effective antiemetics in the treatment of chemotherapy-induced nausea and vomiting and for improving patient-reported multiple sclerosis spasticity symptoms.152 Others have also documented possible medical uses of cannabis.153 The study, however, does not distinguish between cannabinoids from low and high THC strains or between hemp-derived cannabinoids and cannabinoids from other cannabis strains.
The caucus leaders claimed that many leading medical organizations have called for further research into the potential medical use of CBD. The hearing addressed the complexities involved with conducting CBD research, as well as its potential medical benefits and risks in treating serious illnesses. The hearing provided a follow-up to letters sent by the caucus leaders to DOJ and to the Department of Health and Human Services (HHS) to ask these agencies to evaluate CBD using the appropriate scientific and medical factors to make a scheduling determination for it that is separate from the whole marijuana plant. The caucus anticipates that "[i]f it turns out that CBD may be classified on a lower schedule than the entire marijuana plant, and then research on it may proceed somewhat more easily." The caucus reported that DOJ and HHS have agreed to undertake this evaluation, representing that "for the first time, the federal government will conduct a comprehensive analysis to determine whether cannabidiol has scientific and medical value."
A number of other bills regarding industrial hemp have been introduced in the 115th Congress. The Industrial Hemp Banking Act (H.R. 4711) would identify hemp production as a legitimate business. It would similarly exempt hemp production from CSA's definition of marihuanamarijuana and would also prohibit regulators from denying banking services to hemp producers.154 In addition, the Industrial Hemp Water Rights Act (H.R. 4164, S. 1576, S.1576) would prohibit regulators from denying hemp growers access to water—regardless of whether the water is part of a federal water project—if the hemp cultivation is authorized under the laws of the state where it is grown.
In November 2015, several Members of Congress sent a letter to USDA requesting clarification of the agency's research funds for industrial hemp.155156 This action was in response to questions by a number of state and private research institutions on the extent to which industrial hemp initiatives were eligible for U.S. federal grant awards (both USDA and non-USDA program funds). These questions arose, in part, given mixed messages received by some land grant universities about whether they would qualify for USDA competitive grants to do industrial hemp research and initial indications that they would be denied such support. Some groups feared they could jeopardize eligibility for other grants if they pursued research into industrial hemp.
In late 2015, CRS staff attempted to get further clarification on USDA's policy regarding industrial hemp and federal grants and loans to support research of industrial hemp with limited success. Information provided from USDA was not always consistent and often conflicting.156157 According to USDA's National Institute of Food and Agriculture (NIFA), the agency had not awarded any competitive research grants for industrial hemp (as of September 2015).157158 However, subsequent searches of USDA's Current Research Information System (CRIS) database158159 indicate that NIFA formula-funded grants were used at Colorado State University for 2015 under available Hatch Act funding to study hemp cultivation as part of bigger grants about profitability of alternative agriculture in southern Colorado.159160 Other available information, including correspondence between USDA and various congressional staff, suggests that USDA has no record of any application for industrial hemp research being denied. No additional information is available on whether any such applications had been proposed or would or could be approved.
A USDA memo dating back to December 2014 states that "NIFA supports" grants for industrial hemp research so long as that research meets existing state requirements consistent with the requirements in the 2014 farm bill (P.L. 113-79, §7606; 7 U.S.C. 5940).160161 However, USDA staff indicated that the December 2014 memo pertains only to what the statutory provision authorizes and does not say anything explicitly about federal funding of industrial hemp research.161162 Although this response did not address the underlying issue regarding federal funding, it likely indicates that researchers working on industrial hemp may carry on with this work at least on their own (according to requirements specified in the 2014 farm bill) without threatening their status and working relationship with USDA.
Other communication with USDA's Rural Development Agency indicated that the agency's Rural Business-Cooperative Service has initiated conversation with USDA's Office of the General Counsel to review whether its programs could potentially support the industrial hemp industry.162163 There does not appear to be any legal reason why USDA would not be able to provide grant funding for research activities on industrial hemp within the language of the 2014 farm bill provision, and the question remains about whether USDA will fund such applications in the future. Specifically, clarification is needed regarding whether industrial hemp research projects are eligible for USDA competitive grants (e.g., under USDA's Agriculture and Food Research Initiative program) and/or for Hatch Act formula funds, as well as clarification about whether hemp producers are eligible for other types of agricultural support from other USDA agencies (such as loans and grants administered by USDA's Rural Development Agency).
In 2010, NASDA stated it "supports revisions to the federal rules and regulations authorizing commercial production of industrial hemp" and has urged USDA, DEA, and the Office of National Drug Control Policy to "collaboratively develop and adopt an official definition of industrial hemp that comports with definitions currently used by countries producing hemp." NASDA also "urges Congress to statutorily distinguish between industrial hemp and marijuana and to direct DEA to revise its policies to allow USDA to establish a regulatory program that allows the development of domestic industrial hemp production by American farmers and manufacturers."170171 NASDA first adopted a policy on industrial hemp in 2002.
Hemp production in the United States also faces competition from other global suppliers. The world market for hemp products remains relatively small, and China, as the world's largest hemp fiber and seed producer, has had and likely will continue to have major influence on market prices and thus on the year-to-year profits of producers and processors in other countries. Canada's headlead start in the North American market for hemp seed and oil would also likely affect the profitability of a start-up industry in the United States.
J. H. Cherney and E. Small, "Industrial Hemp in North America: Production, Politics, and Potential," Agronomy, vol. 6, no. 56 (2016).
L. Lane et al., Industrial Hemp: Legal, Political/Social and Economic Issues Raised Over Time, University of Arkansas, 2016.
T. R. Fortenbery and M. Bennett, "Opportunities for Commercial Hemp Production," Applied Economics Perspectives and Policy, vol. 26, no. 1 (2004).
7 U.S.C. §5940(b)(2). In contrast, marijuana ("marihuana")marijuana is defined at 21 U.S.C. §802.
See USDA, Industrial Hemp in the United States: Status and Market Potential, AGES001E, January 2000.
Some have suggested similarities between hempseed oil and hash oil. However, there is evidence suggesting differences regarding initial feedstock or input ingredients (hash oil requires high-THC marijuana, whereas hempseed oil uses low-THC industrial hemp), how they are produced (hash oil is extracted often using a flammable solvent, whereas hempseed oil is expeller-pressed or extracted mechanically, generally without chemicals or additives), and how they are used (hash oil is used as a psychoactive drug, whereas hempseed oil is used as an ingredient in hemp-based foods, supplements, and body care products). For more background information, congressional clients may contact the author of this report.
HIA, "2016 Annual Retail Sales for Hemp Products Estimated at $688 Million," April 14, 2017. The reported retail value of the U.S. hemp market is an estimate based on SPINS survey data, which tracks data and market trends on natural product industry sales. SPINS data do not track retail sales for Whole Foods Market, Costco, and other retail outlets that market hemp-based products. HIA adjusted SPINS-data upward to account for these gaps.
R. Hansen, "Industrial Hemp," Agricultural Marketing Resource Center, July 2015.
USDA, Industrial Hemp in the United States: Status and Market Potential, AGES001E, January 2000.
European Industrial Hemp Association (EIHA), "Press Release: Record Cultivation in Industrial Hemp in Europe in 2016," May 4, 2017.
EIHA, "The European Hemp Industry," May 2016.
23. For a list of countries, see National Hemp Association, "Countries Where Hemp Is Grown," http://nationalhempassociation.org/countries-where-hemp-is-grown/. 24.
Canadian Hemp Trade Alliance, "Health Canada Issues an Interim Class Exemption for Hemp," press release, November 22, 2016.
Canadian Hemp Trade Alliance, "Health Canada Issues an Interim Class Exemption for Hemp." See also Health Canada, "Notice to Industry" and "Section 56 Class Exemption in Relation to the Industrial Hemp Regulations," November 2016.
Vote Hemp, "Vote Hemp Releases 2017 U.S. Hemp Crop Report Documenting Industrial Hemp Cultivation and State Legislation in the U.S.," October 31, 2017.
Hemp Industry Daily, Hemp State Highlight: Kentucky," March 1, 2018.
P.L. 115-141, Division A, §729.
P.L. 115-31, Division A, §773, and P.L. 115-141, Division A, §729, respectively.
P.L. 115-31, §538, P.L. 113-235, Division B, §539; and P.L. 114-113, Division B, §543, respectively.
S. 1609, §204 (115th Congress).
HIA, et al., v. DEA, et al., amicus brief of Members of the U.S. Congress, 9th Circuit, No. 17-70162, https://polis.house.gov/uploadedfiles/amicus_brief.pdf. This amicus brief was written by attorneys for Members of the U.S. Congress. The 9th Circuit ultimately dismissed the casecourt case was ultimately dismissed by the Ninth Circuit in April 2018 on procedural grounds.
Information from the National Hemp Association, http://nationalhempassociation.org/.
S. Roesler, "ND Farmers File Another Industrial Hemp Appeal in District Court," Farm and Ranch Guide, June 4, 2010. 75. M. Brown, "First License Issued to Montana Hemp Grower," Missoulian, October 27, 2009.
Despite the plain language of the statute supporting DEA's position, the ninth circuit ruled in 2004 that the DEA rules were impermissible under the statute and therefore ordered DEA to refrain from enforcing them. Subsequently, in 2006, another federal court of appeals (the eight circuit) took a different view, stating, as DEA had said in its rules: "The plain language of the CSA states that schedule I(c) includes 'any material ... which contains any quantity of THC' and thus such material is regulated."…... Thus, the federal courts have expressed conflicting views regarding the legal status of cannabis derivatives.
See, for example, DEA, "DEA History in Depth," 1999-2003, and other DEA published resources.
DEA, "DEA Internal Directive Regarding the Presence of Cannabinoids in Products and Materials Made from the Cannabis Plant," May 22, 2018, https://www.deadiversion.usdoj.gov/schedules/marijuana/dea_internal_directive_cannabinoids_05222018.html.
For more information on marijuana's current status and on rescheduling, see CRS Report R43034, State Legalization of Recreational Marijuana: Selected Legal Issues,; and CRS Legal Sidebar WSLG1423, The Legal Process to Reschedule Marijuana (available from the author).
Some studies have raised issues related to hemp production and cultivation on tribal lands. See, for example, A Review of Hemp as a Sustainable Agricultural Commodity: Tools and Recommendations for Winona LaDuke's Hemp Farm and Sovereign Native American Tribes, Task Force report by the University of Washington's Henry M. Jackson School of International Studies, 2018; and J. S. Hipp and C. D. Duren, Regaining Our Future: An Assessment of Risks and Opportunities for Native Communities in the 2018 Farm Bill, University of Arkansas School of Law, June 2017.
Prior to S. 3042the Senate farm bill (H.R. 2), media reports indicated that S. 2667 was planned to be fast-tracked in the Senate through a procedural move (Rule 14), allowing the bill to skip over the committee process and go directly to the Senate floor for consideration. J. Carney, "Senate Fast-Tracks Bill Legalizing Hemp As Agriculture Product," The Hill, April 16, 2018.
Previous versions of the bill have differed. Section 3 of the 2009 bill would apply when a state has an industrial hemp regulatory scheme, whereas the 2011 bills would apply whenever state law permits "making industrial hemp," which a state might do by exempting hemp making from its controlled substance regulatory scheme. Section 3 of the 2009 bill would have afforded state officials "exclusive authority" to construe the proposed hemp exclusion from the definition of marihuanamarijuana (amending 21 U.S.C. §802(16)(B)), whereas the 2011 bills would include within the proposed industrial hemp exclusion (amending 21 U.S.C. §802(57)) any industrial hemp grown or possessed in accordance with state law relating to making industrial hemp.
113th Congress (H.R. 525, , S. 359); 114th Congress (H.R. 525, , S. 134). In the 114th Congress, the House and Senate bills differ in that S. 134 includes a provision that would allow states to override this determination if the U.S. Attorney General determines that the state law does not "reasonably" comply with the requirements of the proposed CSA amendments. H.R. 525 does not include this language.).
FDA, "FDA Warns Companies Marketing Unproven Products, Derived from Marijuana, thatThat Claim to Treat or Cure Cancer," November 1, 2017. See also FDA, "Warning Letters and Test Results for Cannabidiol-Related Products," https://www.fda.gov/newsevents/publichealthfocus/ucm484109.htm.
NASEM, The Health Effects of Cannabis and Cannabinoids: Current State of Evidence and Recommendations for Research (Washington, DC: National Academies Press). See also J. E. Joy, S. J. Watson Jr., and J. A. Benson Jr., eds., Marijuana and Medicine: Assessing the Science Base, Institute of Medicine, 1999.
See, for example, comments submitted by the American Botanical Council to FDA on Rescheduling of Cannabis, Docket No. FDA-2018-N-1072, April 23, 2018.
See also H.R.1823 1823 and S. 776S.776, Marijuana Revenue and Regulation Act.
This section was written with contributions from [author name scrubbed], who handles issues regarding USDA's research programs.
For more information on these USDA programs, see CRS Report R42771, Fruits, Vegetables, and Other Specialty Crops: Selected Farm Bill and Federal Programs.
Wisconsin Farm Bureau FederationWFBF, "Hemp…" September 8, 2017, and HIA, press release, September 13, 2017.

References: §7606
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