Amy Margolis of  Margolis Legal writes……

On the same day that the DEA decided not to reschedule cannabis they also released another document- a Statement of Principles for industrial hemp written jointly by the USDA, the FDA, DOJ and DEA. Consider this the Cole Memo for hemp.

I love hemp. I think it is the future. It will, and can, replace tobacco farms providing income for farmers, it can produce medicine on a large scale for very little money, and, until cannabis is federally illegal, hemp will lead the way on interstate commerce and much more.

In 2014, Congress passed the Agricultural Act/Farm Bill which provided some support, although not broadly enough, for the cultivation, research and “marketing” of hemp through universities or state department of agriculture pilot programs. As a result, we have seen companies like the Stanley Brothers create businesses out of cultivating, processing and distributing hemp oil that is high in CBD. And, it has made me insanely nervous when clients ask if they too can ship their hemp derived cbd oil across state lines.

(For those of you who don’t know, Oregon has an industrial hemp program that also allows for “marketing” and OLCC will allow hemp products to be sold in stores so long as they are tested according to OLCC cannabis rules as well as packaged and labeled appropriately).

While there is a lot to talk about in this Statement of Principles the most puzzling part is the most crucial. The DEA discusses how hemp is not 100% excluded from the Controlled Substance Act, how states must create certain types of regulatory programs, how hemp products must comply with FDA regulation and then, they write the following:

For purposes of marketing research by institutions of higher education or State departments of agriculture (including distribution of marketing materials), but not for the purpose of general commercial activity, industrial hemp products may be sold in a State with an agricultural pilot program or among States with agricultural pilot programs but may not be sold in States where such sale is prohibited.

This section appears to say a few important things that you should be seriously considering if you are interested in the hemp/CBD market.

 1. You can not engage in general commercial activity.

2. You can sell industrial hemp products over state lines but only to other states with pilot programs.

3. And, if I am reading it correctly, only to states, even if they have pilot programs, that allow for “marketing” of hemp products.

I am open to other interpretations to #3 but I am not sure how else to read it. Keep in mind while at least 30 states have some hemp regulation, only 16 of those have passed hemp regulation that include sales according to the National Conference of State Legislatures.

If I am reading #3 correctly, I would strongly urge people who are considering growing and selling hemp products (especially online) to do it very cautiously and to make sure that their products are only available in the states that allow for distribution.

(FYI, we have a call in to the information number on the “Statement” and will update when we have more clarity.)

Authored By: Amy Margolis Principal at Margolis Legal