WSGR ALERT

For Hemp Rule, USDA Could Go Straight to Interim Final

May 1, 2019

With the intense pressure that the U.S. Department of Agriculture (USDA) is under to draft the hemp rule in time for the 2020 planting season, it is conceivable that the department could forgo issuing a proposed rule and proceed with issuing an interim final rule to expedite the process. By doing so, it would offer the Agricultural Marketing Service (AMS), the USDA agency drafting the rule, the benefit of implementing the rule immediately, while maintaining the ability to accept public comments and make modifications before it is finalized.

Under the Administrative Procedures Act (APA), an agency is allowed to skip the proposed rulemaking step and publish an interim final rule if it has decided that it would be impractical, unnecessary, or contrary to the public interest.

Proceeding directly to an interim final rule is not without precedent at USDA. One notable example was in 2002 when an investigation into a Listeria outbreak concluded that some establishments were not adequately addressing this contamination threat in their hazard analysis and critical control points (HACCP) plans or through other control measures. In response to this, the Food Safety and Inspection Service (FSIS) at USDA issued an interim final rule in June 2003 that detailed various requirements for addressing Listeria contamination. FSIS affirmed the interim final rule in June 2015 while also soliciting additional public comments; interestingly, this rule continues to maintain its interim status.

From the agency's perspective, an immediate implementation of the hemp rule would allow AMS to begin reviewing and approving state plans right away; this would give states the ability to license their farmers in advance of the 2020 planting season.

Problems Forthcoming?

While skipping the proposed rulemaking stage and proceeding with an interim final rule would please hemp growers and their congressional supporters, a number of pending issues may vex the hemp and cannabidiol (CBD) markets. Misunderstandings persist among stakeholder groups of what the hemp rule will accomplish, and it has the potential of creating additional problems if these misunderstandings continue.

The primary misunderstanding of the hemp rule is that it is much broader in scope, when in fact AMS is drafting a rule that only addresses the growing of hemp. AMS will not be drafting provisions related to imports and exports or testing of finished product, and these are critical components as these markets continue to expand.

Questions remain on how the Drug Enforcement Agency (DEA) and Customs and Border Protection (CBP) are going to process imports and exports, especially as it relates to testing of finished products. According to some reports, CBP is having difficulty determining how it intends to address this issue. USDA issued an import guidance recently, but that only addressed the importation of hemp seeds, and the testing provisions in the AMS rule only will apply to dry matter.

Confusion over the difference between tetrahydrocannabinol (THC) and CBD also could confound stakeholders and federal agencies. Because of a misunderstanding of the hemp rule being drafted, some food companies have begun considering developing CBD-infused food products, not recognizing that the Food and Drug Administration (FDA) still considers these products to be unlawful. While the FDA has formed an internal working group, and has scheduled a public meeting to examine how CBD-infused foods could be regulated, there are some reports that the agency does not seem inclined to address this issue expeditiously; sustained political pressure might be necessary to compel the FDA to act.

For other enforcement agencies, this confusion also could make it difficult to educate field staff and import inspectors on the differences between THC and CBD. It is conceivable that CBP could place holds on certain imported products, such as CBD oils and lotions that are perfectly legal to be imported into the U.S. This problem could be exacerbated if hemp and CBD markets are open without any testing methods in place for finished products.

If AMS decides to expedite the hemp rule and proceed directly to publishing an interim final rule, it is unlikely to encounter any congressional opposition because of the bipartisan support for this issue, and the need to meet the deadline for the 2020 planting season. However, significant work remains if there are going to be fully developed and functional markets for hemp and CBD products, and it is important to note that the rule being drafted by AMS is a small, initial step in that process.

Wilson Sonsini Goodrich & Rosati's FDA group is actively following developments on regulations impacting hemp and CBD. For more information, please contact Brian Ronholm, David Hoffmeister, Georgia Ravitz, Jamie Ravitz, or any member of WSGR's FDA group.