Amidst the steady flow of rancor and partisanship coming from Washington, there is one piece of good news that has not made many headlines. Congress may be on the cusp of removing hemp from the federal controlled substances list and officially classifying it as an agricultural commodity.
Provisions of a standalone bill titled the Hemp Farming Act were included in the larger Farm Bill that recently passed both the House and the Senate. However, the House blocked language to make hemp legalization part of their version of the bill, language the Senate included.
Therefore, a bicameral conference committee must combine both bills into a single piece of legislation that will then go to the president. There is no guarantee that hemp legalization will make it into the final version of the Farm Bill, but the chances are reasonably good considering the bipartisan support legalization currently has. Hemp and marijuana both come from the cannabis sativa L plants but have different attributes. Hemp does not have the psychoactive properties because it has far lower levels of tetrahydrocannabinol (THC) than marijuana. Hemp is cultivated from the stalks and seeds of cannabis sativa plants, which has very low THC content, and not the flower or buds like marijuana.
Traditionally hemp has been used to make thread, cordage, paper, and cloth due in large part to its exceptionally robust and durable qualities. The National Hemp Association contends that industrial hemp has up to 50,000 uses, from agricultural and medicinal to applications in biofuels and construction material. Currently, Canada, China, and Europe grow most of the hemp used to make products in the United States. America used to treat hemp like any other agricultural commodity until the early 20th century when Congress passed the Marihuana Tax Act of 1937. That act levied prohibitive taxes and licensing requirements on farmers of hemp fibers and sellers of hemp products.
During World War II, America’s supply of hemp from the Philippines was cut off. To meet the necessary wartime demands for hemp, the federal government lifted restrictions, issued special permits to farms, and subsidized hemp cultivation. Hemp cultivation went back to the status quo after the war when the restrictions and licensing requirements were re-imposed.
The Controlled Substances Act of 1970 classified the Cannabis Sativa L plant as an illegal schedule I drug (a classification it shares with heroin, LSD, and ecstasy). This, in turn, imposed strict regulations on the cultivation and research of hemp as an agricultural commodity. Growing hemp was not prohibited per se; however, growers were required to register with the Drug Enforcement Administration (DEA) which made for a nearly impossible barrier to entry into the market considering the potential civil and criminal liability growers faced for even minor infraction.
The 2014 Farm Bill allowed states to implement laws enabling state departments of agriculture and universities to grow hemp for research purposes. Since 2014 some thirty plus states have industrial hemp programs for research purposes. This allows researchers to grow hemp through registration with state regulatory agencies rather than the onerous and costly process of registering through the DEA. However, the 2014 Farm Bill did not permit hemp cultivation for commercial purposes. Some states have simply ignored the federal prohibition and legalized licensed commercial hemp cultivation within their state borders.
Some states did this prior to 2014. Still, growers are not able to sell their raw plants and cannot transport them across state lines under federal interstate commerce regulations until after the first phase of hemp processing. Many states have utilized hemp research and pilot programs to great effect, but have since realized that the benefit to the several states will not come unless the restrictions at the federal level are loosened.
There is an artificial ceiling on the productivity and success of state hemp industries so long as the federal government regulates hemp in the same manner it regulates schedule I drugs. Several essential benefits to hemp commercialization come with federal legalization.
First, it will give states ultimate control over their hemp industries without unnecessary federal intervention. With less federal restrictions and more state control comes innovation.
Next, lifting the restriction on interstate commerce in hemp seeds, plants and products will allow the industry to establish domestic supply chains and tap new commercial markets both domestically and internationally.
Last, federal hemp legalization will open up banking and other financial services to hemp farmers, sellers, manufacturers, and entrepreneurs that have previously either been prohibited or discouraged due to hemp’s designation as a schedule I drug. Access to capital will increase the viability of hemp as a cash crop. Hemp legalization is a significant step in the right direction and one that has not received a lot of attention although it has the potential to make a significant economic impact in the coming years if signed into law.
Nigel Jeffries is a lawyer in Charleston.