“The 2018 Farm Bill fills in the gaps left by the 2014 Farm Bill and clarifies that hemp and hemp products are legal.”  The bill includes an important clarification on the difference between hemp and marijuana.  Under Section 10113, "the term 'hemp' means the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis."   This means any cannabis plant or product that contains more than 0.3 percent THC will still be considered marijuana under federal law.

This legislation creates an opportunity for farmers and small businesses to tap into a market that has proven very lucrative in the states where marijuana is legal.  However, these businesses need to remember, hemp, not marijuana, is legal and that this market access is still heavily restricted.  Interested businesses should consider their state’s Controlled Substance laws, determining whether they:

  • Allow hemp cultivation but prohibit products manufactured from hemp,
  • Allow only non-ingestible hemp products,
  • Permit hemp products only when used for medicinal purposes,
  • Restrict hemp products shipped from outside the state,
  • Require hemp products to be registered, or
  • Require manufacturers, distributors or retailers of hemp products to be licensed.

Successful integration of hemp-related business into the mainstream market will also require financial support.  However, financial institutions have their own challenges with supporting these businesses under the Farm bill.  Due to the complicated nature of legality, financial institutions should consider introspection of their own Compliance program, policies and controls, specifically:

  • Consulting with in-house counsel to understand what is permitted under federal and state law;
  • Identifying any possible hemp actors within their customer base;
  • Evaluating the institution’s risk appetite for offering services to hemp-related businesses;
  • Designating a key individual(s) as the representative and monitor of the related activity.

A successful market integration of hemp as a regulated and compliant new product could be a solid case study in the lobby for the federal legalization of marijuana.