Client Alerts
December 21, 2018

2018 Farm Bill Finally Blossoms Into Law, Hemp Here to Stay

Stites & Harbison Client Alert, December 21, 2018

On December 20th, President Donald J. Trump signed the 2018 Farm Bill into law, ending any speculation surrounding the bill’s in-limbo status. Following a series of rejections and revisions, the bill’s newest version was overwhelmingly approved by the Senate 87-13 on December 11, 2018, and passed by the House in a lopsided 369-47 vote the next day. The $867 billion farm bill will reauthorize many expenditures in the Agricultural Act of 2014, the United States’ prior farm bill. On one hand, the new bill maintains current farm and nutrition policies and imposes no new requirements on food stamp recipients (despite the President’s desire to toughen eligibility). On the other hand, the bill blows the barn doors wide open for hemp farming and CBD production, two potentially huge industries for Kentucky.

The new farm bill implements a wide range of provisions. It revises the Supplemental Nutrition Assistance Program (SNAP), while retaining all individual benefits previously in place. It preserves current food stamp work requirements. It expands some federal agricultural subsidies, and provides permanent funding for farmers markets and local food programs, but creates no additional impact on the national deficit. The bill also preserves the Conservation Stewardship Program, which pays farmers to strengthen conservation efforts.

Finally, and most importantly for Kentucky, the 2018 Farm Bill legalizes industrial hemp. Championed by Senate Majority Leader Mitch McConnell, the new bill expands hemp pilot program provisions of the 2014 bill (allowing states to grow hemp on an experimental basis, subject to regulation and licensing requirements), incorporates parts of the Hemp Farming Act of 2018, and important—for the first time—de-schedules certain cannabis products like hemp and hemp-derived CBD from the Controlled Substances Act.

By reclassifying hemp for commercial use, after decades of messy enforcement efforts that conflated marijuana and hemp (which lacks the THC concentration that gives marijuana its psychoactive properties), and removing it from the Controlled Substances Act, the new bill shifts hemp regulation away from the Drug Enforcement Agency to the U.S. Dept. of Agriculture. The new bill will allow the crop to be certified as organic, legalize interstate hemp commerce, expand financing and research opportunities, guarantee water rights to hemp farmers, and change the very definition of hemp to a non-drug commodity. The 2018 Farm Bill is breaking new ground (literally), and culminates over 80 years of gradually unwinding the antiquated, scientifically-questionable legacy left by the Marihuana Tax Act of 1937.

Kentucky hemp farmers and CBD retailers have been waiting impatiently for enactment, and these two industries are already primed to explode. Hemp has hundreds of uses, and continuing research will undoubtedly discover many more. From plastics and textiles to construction and automotive materials to animal feed and nutritional products, hemp has multiple applications that can help reduce dependence on fossil fuels and import needs, and ease environmental concerns. As for hemp-derived CBD oil, according to the Washington Post, dozens of studies show that the compound can treat epilepsy, anxiety, schizophrenia, heart disease, cancer, and other illnesses, though more thorough medical research is needed. As hemp transitions into a legal commodity, the global hemp market is expected to rise to $10.6 billion by 2025, with the CBD market possibly reaching $23 billion in the next decade.

Hemp has always been a profitable and sustainable crop, but its growth as an industry was stifled by regulation. Now, domestic revenue will flow from the textiles and hemp-based products manufactured under the new law. Kentucky hemp farmers will now have immediate access to the federal crop insurance program. Internationally, the farm bill may radically improve America’s agricultural competitor status on a global scale and help close the gap with China, which according to Forbes, currently dominates the cannabis market, producing 50% of the world’s supply. Since hemp is no longer illegal, farmers and entrepreneurs no longer face the same barriers to business, interstate commerce, and financing.

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