NASHVILLE, Tenn. (Feb. 6, 2018) – Bills introduced in the Tennessee House and Senate would remove hemp and hemp products from the state’s list of controlled substances. Passage of this legislation would open the door for an expanding commercial hemp market in the state, setting the foundation to nullify federal prohibition in practice.
Sen. Steve Southerland (R-Morristown) introduced Senate Bill 2224 (SB2224) on Jan 31. Rep. Raumesh Akbari (D-Memphis) introduced House Bill 2512 (HB2512) the next day. The legislation would remove industrial hemp and products derived from industrial hemp from the state’s list of controlled substances. It also specifies that hemp and hemp products are not subject to forfeiture based solely on their composition.
Practically speaking, the passage of these bills would end any state enforcement actions against hemp growers or sellers of hemp products.
The Tennessee legislature initially legalized industrial hemp production in 2014. In 2016, Gov. Bill Haslam signed a bill expanding the hemp law to allow licensing of in-state hemp processors. The state awarded LabCanna the first processing license that same year. The company produces CBD oil, a compound that has proven effective in treating a number of medical conditions, including seizures, pain and anxiety. According to WKRN, the company also grows hemp for food and fiber on a 1,500-acre farm in Lobelville. LabCanna is hiring and its products will soon be sold in 300 additional retail stores, including LabCanna’s own storefront location opening in East Nashville, according to the TV station.
But the federal government insists the commercial production of hemp is illegal. That means even though LabCanna is operating under a state pilot program that purports to be federally compliant, the company’s retail business almost certainly violates federal law. Passage of this legislation would remove any threat of state prosecution like we saw in Indiana, and pave the way for expanding the hemp market in the state.
FEDERAL FARM BILL
In 2014, Congress cracked the door open for hemp in the U.S. with an amendment to the 2014 Farm Bill. The law allows hemp cultivation for research purposes, but prohibits “commercial” production.
The “hemp amendment” in the 2014 farm bill —
…allows State Agriculture Departments, colleges and universities to grow hemp, defined as the non-drug oil-seed and fiber varieties of Cannabis, for academic or agricultural research purposes, but it applies only to states where industrial hemp farming is already legal under state law.
In 2016, the U.S. Department of Agriculture and Drug Enforcement Agency released a “statement of principles” to guide interpretation of the hemp section in the Farm Bill. It states, “The growth and cultivation of industrial hemp may only take place in accordance with an agricultural pilot program to study the growth, cultivation, or marketing of industrial hemp established by a State department of agriculture or State agency responsible for agriculture in a State where the production of industrial hemp is otherwise legal under State law.”
In short, the current federal law authorizes farming of hemp – by research institutions, or within state pilot programs – for research only. Farming for commercial purposes by individuals and businesses remains prohibited.
The definition of “commercial” remains murky and has created significant confusion.
The statement of principles also asserted that industrial hemp programs are limited to fiber and seed. It didn’t mention the CBD oil or other edible hemp products.The DEA has interpreted that to mean they remain illegal. According to the DEA, CBD cannot be sold under any circumstances. WTHR interviewed DEA spokesman Rusty Payne.
“It’s not legal. It’s just not.”
Payne says cannabis plants are considered a Schedule I controlled substance, and medicinal oils derived from cannabis plants are illegal according to two federal laws: the Controlled Substance Act and the Food, Drug and Cosmetic Act. He said confusion surrounding the Agricultural Act of 2014 (better known as the “Farm Bill”) is frequently cited as legal justification by those who want to manufacture, sell or use CBD oil. The DEA believes the Farm Bill permits only CBD research — not CBD marketing and sales.
“Anybody who’s in violation [of the federal laws] always runs that risk of arrest and prosecution,” he said.
Passage of HB2312 and SB2224 would expand the market for CBD oil and other commercial hemp products. While prospective producers would still have to take federal law into consideration, by eliminating the possibility of state prosecution, the law would clear away a major obstacle to a widespread CBD sales, and more generally the development of a commercial hemp industry in Tennessee.
Several other states with federally-compliant hemp programs, such as Kentucky, North Dakota, Minnesota and New York, have grown significant acreage under federally-approved research programs. This takes the first step, but with federal shackles in place, these states are not legally allowed to develop any kind of commercial market. Ironically, like Tennessee’s, many of these “federally compliant” programs are not actually federally compliant.
Recognizing its limited research program was hindering the development of the industry, West Virginia dumped its federally compliant hemp program during the 2017 legislative session and will now issue federally non-compliant commercial licenses to growers. West Virginia Public Broadcasting confirmed limits imposed by the old program due to its conformity with federal law were holding back the development of a viable hemp industry and everyday farmers cannot benefit.
“But because of the strict requirements under the 2014 bill, growers are not able to sell their plants and cannot transport them across state lines to be turned into those usable products. That’s limited the ability to create a real hemp industry in the state.”
Other states, including Colorado, Oregon, Maine, California and Vermont have simply ignored federal prohibition and legalized industrial hemp production within their state borders.
Colorado was the first state with widespread commercial hemp production. Farmers began growing hemp in southeast Colorado back in 2013 and the industry is beginning to mature. The amount of acreage used to grow industrial hemp in the state doubled in 2016 to nearly 5,000 acres, and nearly doubled again in 2017.
The Oregon legislature initially legalized industrial hemp production in 2009. While it was technically legal to grow hemp in the state, farmers didn’t take advantage of the opportunity for nearly five years. When the Oregon Department of Agriculture finally put a licensing and regulatory program in place early in 2014, farmers began growing hemp. The initial regulatory structure placed significant limits on hemp farming and effectively locked small growers out of the market. In 2016, Gov. Kate Brown signed House Bill 4060 into law. It relaxed state laws regulating hemp already on the books and made the crop more like other agricultural products. Within months, the Oregon Department of Agriculture had already promulgated new rules under the reformed law. According to Oregon’s Cannabis Connection, the rules set the stage to creates a “massive” medical hemp market. The state produced 3,469 acres of hemp in 2017.
Both Colorado and Oregon demonstrate how loosening rules at the state level encourage the market and allow hemp a legitimate commercial hemp industry to develop.
HUGE MARKET FOR HEMP
According to a 2005 Congressional Research Service report, the U.S. is the only developed nation that hasn’t developed an industrial hemp crop for economic purposes.
Experts suggest that the U.S. market for hemp is around $600 million per year. They count as many as 25,000 uses for industrial hemp, including food, cosmetics, plastics and bio-fuel. The U.S. is currently the world’s #1 importer of hemp fiber for various products, with China and Canada acting as the top two exporters in the world.
During World War II, the United States military relied heavily on hemp products, which resulted in the famous campaign and government-produced film, “Hemp for Victory!”
As of the writing of this report, neither bill had been referred to a committee. Once they receive committee assignments, the bills will have to pass by a majority vote before moving forward in the legislative process.