Maine’s Hemp Policies Remain Turbulent as the Legislature Reconvenes

The legislature is reconvening on hemp issues this coming Thursday, January 9. The Committee on Agriculture, Conservation and Forestry is considering a simple resolve "Directing the Department of Agriculture, Conservation and Forestry to Submit to the United States Secretary of Agriculture a Plan for Continued Implementation of the Maine Industrial Hemp Program." This resolve is self-explanatory; it will direct the Department to submit a plan to the USDA for hemp production which would finally bring Maine’s program in line with federal law. 

What this resolve doesn’t do is address a more pressing issue with Maine’s hemp policies at the moment: the continued crackdown on CBD products manufactured out-of-state. We’ve heard multiple reports of state inspectors telling retailers to sell whatever is on their shelves, but not to buy any more CBD products from outside Maine. The policy formally took effect on January 1 (though the original guidance issued by the State said December 1), and it remains to be seen how aggressive the crackdown will be, especially since a large portion of current CBD ingestible products on the shelves in Maine are from elsewhere.

Do the Proposed USDA Hemp Rules Threaten Our CBD Industry?

We’re hearing concerns from some farmers and CBD manufacturers that the proposed USDA hemp rules, released earlier this week, could make it much more difficult to provide high-quality CBD products in the U.S. The concern, as I can best articulate it since I’m not a farmer, is that full-spectrum CBD is largely available in plants that have a longer growth cycle, but these plants may also have THC levels above 0.3 percent by virtue of being in the ground for longer. Under current regulations, some farmers and producers have found ways to reduce the THC content following harvest, which allows them to sell full-spectrum CBD products with compliant THC levels. The new USDA regulations, though, require that the crop be tested for THC content 15 days prior to harvest. Any crops with an excess of THC will need to be discarded. This eliminates the possibility of growing for longer and eliminating excess THC after the fact.

I can’t speak personally to whether this perceived threat is real or overblown, but its one interesting example of the many consequences (intended or otherwise) the new federal regime will have on the industry.

One other, related, strain: Though hemp must have THC levels below 0.3 percent, these new rules create a couple of safe harbors. First, they recognize that testing labs have margins of error, and so if your crop tests at 0.34 percent THC, but the lab results have a 0.05 percent margin of error, then the crop is legal and you’re good to go. Second, if your crop is above 0.3 percent but below 0.5 percent THC, you can’t sell it, but you also won’t be prosecuted. These rules basically recognize the inherent uncertainty involved with growing hemp.

USDA Hemp Rules Nearly Finalized

We haven’t seen a draft of the rules yet, but the latest news is that the White House has signed off on the proposed rules and they’ll be released any week now. Once the rules are released, a public comment period will begin. The USDA is still claiming that final rules will take effect before the end of 2019. 

The Maine Department of Agriculture, Conservation and Forestry (which houses our hemp program) is likely to respond by drafting and proposing new rules of its own. These rules will likely parallel the federal rules including any THC potency testing guidelines, quality control standards, and broader cannabinoid testing requirements. 

Maine will also seek USDA approval of a state regulatory plan governing hemp. Once this approval is obtained, Maine hemp will finally be legal.

NCUA Advises Credit Unions They Can Provide Financial Services to Hemp Businesses

Last week, the National Credit Union Administration (“NCUA”) released interim guidance advising federally insured credit unions that they may provide certain financial services to legally operating hemp businesses. The interim guidance was released in response to the passage of the 2018 Farm Bill in December 2018 that removed certain hemp-derived products, including cannabidiol, from the list of Schedule 1 drugs in the Controlled Substances Act. 

The NCUA advises credit unions that they need to “understand the complexities and risks involved” if they choose to serve hemp-related businesses, and reminds credit unions that they “must have a Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) compliance program” that addresses the risks related to hemp-related businesses. While the guidance encourages credit unions to “consider whether they are able to safely and properly serve lawfully operating hemp-related businesses within their fields of membership,” it also reminds credit unions of the “long and successful history” many credit unions have had in “providing services to the agricultural sector.”

The NCUA will issue additional guidance after the U.S. Department of Agriculture publishes its final regulations and guidelines.

Is This the Beginning of Another Maine Crackdown on CBD?

Maine regulators are going after CBD food products again, it appears. Inspectors from the Department of Agriculture, Conservation and Forestry have been handing out the letter pasted below to retailers and others in Maine over the past week. According to these "guidelines," the State is interpreting LD 630 to require that any CBD edibles contain CBD derived from Maine-grown hemp. Given the language in LD 630, this approach seems like it could cause more problems than it prevents, and could be putting the state on the fast track to litigation. Especially since the State is promising to begin enforcing this new policy on August 1, less than three weeks from now.

But, We May Have More Dispensaries and More (Legal) Cannabis Growing in New Hampshire

Last time: No Recreational Cannabis This Year and No New “Alternative Treatment Center” Licenses

However . . .

Even though the Senate killed the effort to add additional licenses, it has passed legislation (HB 335) that provides DHHS with authority to allow current license holders operating ATCs to open a second dispensary location within their geographic licensed areas. The opening of a second location is subject to Department approval and may not be used for cultivation. The bill now goes to Governor Sununu.

The Legislature has also passed two bills (HB 364 and HB 459), which will make it easier to grow cannabis in New Hampshire. HB 364 permits qualifying patients and designated caregivers to cultivate cannabis for therapeutic use. The bill also permits qualifying patients and designated caregivers to donate excess cannabis to other qualifying patients. The bill sailed through the House, but passed the Senate on a party-line vote and may be vetoed by the governor. HB 459 seeks to promote the cultivation of hemp in the State by defining it and establishing a committee to study the federal guidelines on growing hemp. It sailed through the House and Senate and awaits action by the governor.

Additionally, the Legislature passed two bills (HB 350 and SB 88) which would make it easier for patients to obtain the required certification from a licensed health care provider to qualify for therapeutic cannabis. HB 350 adds physician assistants to the list of licensed health care providers who are authorized to certify that criteria has been met for the use of therapeutic cannabis. SB 88 eliminates the requirement that a licensed health care provider certifying that a patient meets the criteria for the use of therapeutic cannabis have a pre-existing three-month relationship with the patient. These bills face uncertain prospects in the governor’s office.

The Latest USDA Guidance on Hemp Law

The United States Department of Agriculture (USDA) Office of General Counsel issued some guidance last week on its view of the current legal status of hemp. The takeaways are:

1. Hemp is no longer a Schedule I Controlled Substance under federal law.
2. At the moment, states cannot prohibit the interstate transport of hemp (or hemp products) lawfully produced under the 2014 Farm Bill. Why the 2014 Farm Bill, when the 2018 Farm Bill just became law, you might ask? Well, point 3 gets to this.
3. The 2018 Farm Bill loosened the requirements for hemp to be grown legally, but this more relaxed regime only takes effect after the USDA publishes the necessary regulations. Once these regulations are published, then states and tribes may not prohibit the interstate transport of hemp produced under a state or tribal plan or under a license issued by the USDA.
4. While states and tribes cannot prohibit the commerce of hemp legally grown elsewhere, they can enact and enforce laws which prohibit the growth of hemp within their territory.
5. The Food and Drug Administration (FDA) retains authority to regulate hemp under applicable FDA laws. In other words, the FDA can and will continue to crack down on those who make unapproved therapeutic claims related to CBD, and may continue to regulate the addition of CBD to food products.

Overall, this guidance is probably good news for those who are growing or sourcing their product legally, and want to reach a national market. It could also be interpreted as another baby step in the direction of nationwide legalization of one species of cannabis.

The TSA Warms up to CBD in Words, but What About Deeds?

So the TSA claims to have changed its policy over the weekend to permit travelers to carry hemp-derived CBD products with them in flight. The TSA website has been updated to state that “products/medications that contain hemp-derived CBD or are approved by the FDA are legal as long as it is produced within the regulations defined by the law under the Agricultural Improvement Act of 2018.” 

At first read, this seems like oils, gummies, topicals, edibles – they’re all a go! Prepare for take off! But then we get down to enforcement and implementation, and I’m left scratching my head. The Agricultural Improvement Act of 2018 (or the 2018 Farm Bill, as it’s better known) does legalize hemp and hemp products, but only when grown under certain requirements, with state and/or federal approval. How on earth is a TSA agent going to know whether your CBD is derived from hemp that was legally grown in Kentucky or illegally grown in Texas? (Texas may be a bad example since hemp/CBD is about to be legalized there too, but you get the point.)

I for one doubt that TSA agents will be specially trained in the legality of CBD and hemp. The more likely scenario is that this change in TSA regulation is intended to accommodate FDA-approved Epidiliox, the first federally approved drug containing CBD. If any other form, it’s hard to know how TSA agents will treat CBD for the foreseeable future.

What Is Going on in the World of Hemp?

Anyone involved in the hemp and CBD industry in Maine has been on a roller coaster ride this year. On December 20, 2018, hemp became (kind of) legal federally. But then the U.S. Food and Drug Administration said that non-approved food products containing CBD remained illegal. Then Maine regulators started telling retailers that they weren’t allowed to sell food products containing CBD, only to walk that position back. In response, the State Legislature passed LD 630, which legalizes the sale of food products containing CBD. Meanwhile, at the federal level, the FDA appears to be taking the position that virtually any CBD product meant for human consumption is illegal. 

Where does this leave us? Folks in Maine appear to be safe from enforcement for the time being, with the notable exception of those who make explicit claims that CBD has therapeutic benefits. If you’re growing, processing, or selling hemp and CBD, though, it’s unlikely that the feds are going to knock down your door tomorrow, and LD 630 is keeping the State at bay for now. But watch out, because rulemaking is coming, and we’re sure to see rules that aim to limit the import (and perhaps the export?) of CBD products, create strict labeling and testing standards, and limit the use of CBD in animal food. There will be more details on a lot of the specifics here in future posts, but the situation is certainly fluid. 

Bottom line: Legalities aside, it seems to be full speed ahead in Maine, with a few notable restrictions. Avoid making public claims of therapeutic benefits (like "CBD cures cancer"). Make sure that your product is clean, free of mold and pesticides, etc. and has a THC content below 0.3 percent. Do what you can to ensure your product is accurately labeled. (Check out this study, which concludes that 70 percent of CBD products are inaccurately labeled in terms of CBD content.) And be aware of quickly changing laws and rules at the state and federal level that could impact your business.

Welcome to Our Blog (and, What We’re All About)

Welcome to the Cannabis Law and Policy Update! You can expect updates and commentary on a potpourri of marijuana and hemp happenings at the state and federal level. We will be primarily focused on the law (since we’re lawyers), but in the broadest sense. Think everything from court decisions to legislation to regulation to enforcement, with our reactions and some practical advice sprinkled throughout.

At the moment, every week seems to bring some significant development in the world of cannabis law and policy. Maine’s rulemaking process for adult use marijuana is heating up, which means that a (legal) adult use industry is just around the corner; the legality of hemp and CBD is a complete rollercoaster ride; the Legislature is continuing to fix and tinker with Maine’s medical and adult use marijuana laws; and the feds remain curmudgeons all around. We’ll be hitting on specific angles in this arena all the time, so check back frequently and subscribe.