Hurry Up and Wait: California Passes New Hemp Law But Isn’t Required to Submit Federal Plan Until 2020

On September 13, 2019 — the final day of the 2019 legislative session — both houses of the California Legislature unanimously passed SB-153, which may be California’s most significant industrial hemp legislation since the California Industrial Hemp Farming Act took effect in 2017. Over the weekend, Governor Gavin Newsom signed SB-153 into law. 

While SB-153 includes numerous changes to California law relating to the cultivation of industrial hemp, arguably the most notable provision in SB-153 is Section 14, which amends the Food and Agriculture Code to require that California develop and submit an industrial hemp production plan to the United States Department of Agriculture (USDA) by no later than May 1, 2020. 

By way of background, the federal 2018 Farm Bill requires the USDA to “promulgate regulations and guidelines to implement [the provisions of the 2018 Farm Bill relating to industrial hemp] as expeditiously as practicable.”^[1] Under the 2018 Farm Bill, a state can submit an industrial hemp production plan to the USDA for approval. The 2018 Farm Bill also requires the USDA to create its own industrial hemp production plan, which will be the primary regulatory authority for the production of industrial hemp in states that do not submit their own industrial hemp production plan to the USDA.^[2] The USDA has already begun accepting the submission of industrial hemp production plans from states but it has also clearly stated that it “will not begin reviewing plans until [the federal] regulations go into effect.”^[3]

The USDA has expressed that its “goal [is] to have regulations in effect by the fall of 2019 to accommodate the 2020 planting season.”^[4] On September 16, 2019, it was reported that the USDA submitted its draft of the much-anticipated industrial hemp guidelines to the White House Office of Management and Budget for approval.^[5]

With the USDA submission window already open but virtually no guidance from the USDA as to the criteria for approval of an industrial hemp production plan, states generally are taking three different approaches in submitting their industrial hemp production plans to the USDA.

First, in what would be classified as the more aggressive approach, certain states have submitted industrial hemp production plans to the USDA even before the USDA’s guidance for those plans is publicly available. At least Kentucky, Pennsylvania, Tennessee, and Wyoming have already submitted industrial hemp production plans to the USDA. In fact, Kentucky submitted its industrial hemp production plan to the USDA on December 20, 2018, i.e., the same day the 2018 Farm Bill was signed into law. Presumably, one of the factors motivating these states is timing. As the 2018 Farm Bill requires the USDA to approve or disprove an industrial hemp production plan within 60 days of submission,^[6] these states’ plans are likely to be the first plans to be reviewed by the USDA after its regulations and guidelines are finalized. 

Second, in what could be classified as a more conservative approach, certain states have committed to submitting industrial hemp production plans to the USDA but have delayed actually submitting their plans until after the USDA is expected to publish its guidance for those plans. This is the approach taken by California in Section 14 of SB-153. Other states taking this more conservative approach include Ohio,^[7] Massachusetts,^[8] Missouri,^[9] and Texas.^[10] States could be taking this more conservative approach for a number of reasons. The Massachusetts Department of Agricultural Resources, for example, has expressed that it “is waiting for additional guidance from USDA before developing a plan to ensure compliance with the 2018 Farm Bill and regulations or guidance that will be promulgated by USDA.”^[11] California could be delaying for this reason, too, or maybe because California already has a robust statutory framework governing the licensing, production, testing, and inspection relating to the cultivation of industrial hemp in the state. The 2018 Farm Bill permits states to submit plans that simply “include a reference to a law of the State or Indian tribe regulating the production of hemp, to the extent that law is consistent with this subchapter.”^[12] So, California could simply decide to submit its current legal and regulatory framework after seeing the USDA’s guidance or after seeing what the USDA does with the plans already submitted by Kentucky, Pennsylvania, Tennessee, and/or Wyoming.   

Finally, despite the passage of the 2018 Farm Bill in December 2018, there still are at least a handful of states that simply prohibit the commercial cultivation of industrial hemp within their borders. This includes states like Mississippi and Idaho. These states seem unlikely to submit industrial hemp production plans to USDA any time soon.     

In addition to requiring California to submit an industrial hemp plan to the USDA by May 1, 2020, SB-153 includes other notable changes to the laws governing industrial hemp cultivation in California, including (1) narrowing the scope of who qualifies as an established agricultural research institution (EARI), (2) requiring EARIs to also register with the agricultural commissioner of the county in which it intends to cultivate industrial hemp (previously, only commercial cultivators were required to obtain these registrations), (3) adding a new definition of the term “industrial hemp” that identifies industrial hemp as an agricultural product, and (4) clarifying that industrial hemp cannot be cultivated at a licensed cannabis cultivation premises (but if it is, the industrial hemp will be considered cannabis – regardless of its THC content – and will be subject to cannabis-specific licensing and regulatory requirements). 

If you have questions or wish to learn more about the changing industrial hemp and/or cannabis legal landscape, please contact any of the authors of this alert.