Transporting Hemp Across State Lines is Still Risky

Back in September 2018, I wrote about how important it was for hemp businesses to carefully plan the routes they would use to ship hemp and hemp products, including hemp-derived CBD. This is because some states are hostile towards hemp and do not recognize a difference between hemp and marijuana.

My article was written prior to the passage of the Agricultural Improvement Act of 2018 (“2018 Farm Bill”), which expanded federal law to cover a wider range of commercial hemp activity and gave the US Department of Agriculture (“USDA”) regulatory authority over the cultivation of hemp. With regards to the interstate transfer of hemp, section 10114 (b) of the 2018 Farm Bill states the following:

TRANSPORTATION OF HEMP AND HEMP PRODUCTS.—No State or Indian Tribe shall prohibit the transportation or shipment of hemp or hemp products produced in accordance with subtitle G of the Agricultural Marketing Act of 1946 (as added by section 10113) through the State or the territory of the Indian Tribe, as applicable.

In plain english, this means that states and Tribes can’t prohibit hemp or hemp products from passing through their state or territory if the hemp or hemp products were produced in compliance with Section 10113 of the 2018 Farm Bill. On it’s face this provision may look like hemp businesses no longer need to fear state-level enforcement against hemp or hemp products entered into interstate commerce. However, that is not necessarily the case and businesses who hang their hat on section 10114 do so at their own risk.

The problem with relying on section 10114 is that it appears to be contingent on Section 10113 of the 2018 Farm Bill. Section 10113 of the 2018 Farm Bill covers hemp production (which you can read about here). In summary, Section 10113 indicates that the USDA will oversee hemp production at the federal level by approving of state and Tribal plans covering the cultivation of hemp. States and Tribes will submit plans to the USDA for approval. Section 297C of the 2018 Farm Bill requires that the USDA establish its own plan and and issue licenses to cover the cultivation of hemp in states or Tribal territories where that state or Tribe’s plan for hemp cultivation has not been approved.

The USDA has not yet approved of any state or Tribes plan. It also has not created its own plan under Section 297C. That means that any hemp legally cultivated in the US was done so under Section 7606 of the 2014 Farm Bill. The 2014 Farm Bill allows states to implement agricultural pilot programs to research the cultivation of industrial hemp. State departments of agriculture can issue licenses for the cultivation of hemp. Some states have interpreted this to cover commercial activity. However, the 2014 Farm Bill provides no explicit protection for the interstate transfer of industrial hemp.

Returning to the 2018 Farm Bill, Section 7605 (b) of the 2018 Farm Bill extends Section 7606 of the 2014 Farm Bill for one year after the USDA establishes a plan under 297C. That provision is not contained within Section 10113. Section 10114’s prohibition on interference with the interstate transfer of hemp does not reference the 2014 Farm Bill. Therefore, Section 10114’s protection against interference with the interstate shipment of hemp or hemp products may not currently apply to hemp or hemp products currently in transit because they cannot yet be cultivated “in accordance with” Section 10113.

On the other hand, the intent of Congress seems to indicate that hemp and hemp products should be commercially distributed throughout the country. The 2018 Farm Bill changes the Controlled Substance Act (“CSA”) by explicitly removing “hemp” from the definition of marijuana. It also defines hemp as an agricultural commodity that is eligible for federal crop insurance. Additionally, it allows the USDA to license the cultivation of hemp in a state or Tribal territory that does not have an approved plan. Additionally, an administrative law judge has held that products containing CBD derived from 2014 Farm Bill industrial hemp are allowed to be distributed in the US mail. Also, a federal judge in West Virginia recently lifted a restraining order that limited a hemp cultivator from transporting processed hemp to a Pennsylvania lab that would process it into CBD isolate, because “the Court has become increasingly doubtful of the Government’s case on the merits.” This is due, at least in part, to the 2018 Farm Bill’s removal of hemp from the CSA. (A copy of the order is provided by Hemp Industry Daily, which also wrote about the decision here.)

We’ll likely get additional insight into the question of whether companies can ship 2014 Farm Bill hemp across state lines as there is currently a lawsuit pending between Big Sky Scientific, LLC (“Big Sky”) and the Idaho State Police. I’ll provide some additional insight on this case later this week.

For now, the bottom line is that hemp businesses must still carefully consider their shipping plans for hemp and hemp products. Blind reliance on Section 10114 to protect against local law enforcement is ill advised. Until the 2018 Farm Bill is fully implemented by the USDA, states may seize hemp shipments. Hemp businesses should avoid transporting their products through states that show hostility towards hemp. If you have questions about other ways to mitigate the risk of state level enforcement, please contact our regulatory attorneys.