(This story has been updated to include new details about how the law could potentially affect the cannabis industry.)
President Donald Trump signed hemp legalization into law Thursday, a change that’s expected to unleash seismic market changes for the entire cannabis industry.
Trump’s signature on the 2018 Farm Bill takes hemp, defined as cannabis below 0.3% THC, out of the Controlled Substances Act.
The change also applies to extracts from hemp, including CBD.
The law takes effect immediately, meaning federal drug authorities must treat hemp like any other agricultural commodity, such as wheat or potatoes.
Hemp farmers will face none of the business and regulatory obstacles that apply to higher-THC varieties, which are still defined as marijuana and remain a Schedule 1 drug.
Marijuana entrepreneurs, for their part, are cheering the change because:
- It offers legal business opportunities for MJ companies that want to diversify into a new plant.
- Also, the law could open a channel for MJ companies to access public markets and other financial tools unavailable to companies selling Schedule 1 drugs.
Take the case of Vertical, a cannabis producer and retailer based in Agoura Hills, California. The company has operations in four states and plans to spin off a separate hemp company, called Vertical Wellness, in hopes of listing on the Nasdaq.
Here’s what you need to know about the new law:
- Cannabis plants above 0.3% still are defined as Schedule 1 drugs, though licensed hemp producers can’t be charged with a crime if their hemp exceeds the THC limit, making it marijuana.
- But THC that comes from hemp is no longer a controlled substance.
- The U.S. Department of Agriculture (USDA) must develop national hemp regulations “as expeditiously as practicable,” which is an uncertain time frame. The national plan must include procedures for checking hemp plants’ THC content and plans to destroy plants with too much THC.
- The U.S. Food and Drug Administration (FDA) retains authority over foods, drugs and cosmetics. That means that while CBD becomes legal Jan. 1, it doesn’t mean it is legal to add hemp or CBD to food products or dietary supplements.
- States, territories and Indian tribes have no deadline to submit hemp-regulation plans to the USDA. But once they submit a proposal, the USDA has 60 days to approve or reject it.
- If a state’s hemp-oversight plan is rejected, growers there will be “subject to a plan established by the (USDA) to monitor and regulate that production.”
- The USDA has one year to study the 42 hemp states’ progress with the plant and “determine the economic viability of the domestic production and sale of industrial hemp,” with the findings due to Congress.
The hemp industry has been pushing for legalization for decades, but the plant’s long association with high-THC varieties kept it locked alongside heroin and marijuana in Schedule 1, the most restricted drug classification in the United States.
The Farm Bill gives no direction for how law enforcement is supposed to tell whether THC came from legal hemp or from illegal marijuana.
Kristen Nichols can be reached at firstname.lastname@example.org