news December 16, 2019

Importing hemp into U.S. remains ‘total crapshoot’

Although the 2018 Farm Bill removed hemp and its derivatives with a THC concentration of no more than 0.3% from the Controlled Substances Act (CSA), government agencies reportedly face technological challenges testing for the THC threshold at the U.S. borders.

Josh Long | Dec 16, 2019

Despite the publication of interim regulations from USDA regarding domestic production of hemp, businesses striving to import and export hemp clones, materials and finished products to and from the U.S. face risks of enforcement actions, several attorneys said.

“As a matter of practice, if you want to import hemp into the United States, your chances of succeeding are just a total crapshoot,” said Jessica Wasserman, a former USDA lawyer who is now a partner in Washington with Greenspoon Marder LLP. “Some ports allow it in. Some ports don’t.”

She added, “If you call DEA headquarters, they’re like, ‘Oh, I don’t know. Talk to the ports.’ They’re [DEA officials] just letting them [Customs officials] do what they want.”

Although the 2018 Farm Bill removed hemp and its derivatives with a THC (tetrahydrocannabinol) concentration of no more than 0.3% from the Controlled Substances Act (CSA), government agencies reportedly face technological challenges testing for the THC threshold at the U.S. borders.

The Drug Enforcement Administration (DEA) and U.S. Customs and Border Protection (CBP) “are not implementing the law,” Wasserman said, “because they are saying, ‘We don’t have any way of measuring 0.3% above and below … we’re just de facto having a zero THC tolerance.’”

USDA says hemp seeds and plants can be imported into the United States from Canada and other countries if they meet certain requirements. But USDA’s interim regulations, hemp lawyers observed, don’t address the import or export of hemp finished products like lotions, gummies and vapes.

Complicating matters, there may be no way to test for the THC content of early-stage hemp clones, said Garrett Graff, managing attorney in Denver with Hoban Law Group, in an interview.

“How do you distinguish hemp genetics from marijuana genetics?” he asked. “At the genetic stage, prior to germination, those genetics may express very similar potencies. Could someone have a marijuana genetic obfuscated as a hemp genetic simply because it hasn’t flowered and blossomed as intended?”

He also suggested DEA’s testing capabilities are limited. Graff and his colleagues have had numerous conversations with CBP officials over the last five years or so.

“The Customs field agent will conduct a field test, and that test is simply … equivalent to a pregnancy test,” the lawyer said. “It simply provides a ‘yes’ or ‘no’ for the presence of either THC specifically or cannabinoids generally.”

Graff added no regulatory process has been undertaken to provide tariff codes for such things as bulk hemp flower, bulk hemp oil or bulk hemp-derived cannabinoids. According to a federal government official who spoke on background, the U.S. International Trade Commission—not the CBP—is responsible for creating and maintaining harmonized tariff schedule codes.

Businesses importing and exporting hemp are using “generic tariff codes,” Graff said. “Instead of saying, ‘This is a hemp product,’ they’re saying, ‘It’s a botanical extract,’ something of that nature because there is a lack of regulatory clarity or guidance or specific tariff code to be used.”

Although Congress treated hemp in the 2018 Farm Bill as an agricultural commodity, THC—the psychoactive compound found in significant quantities in marijuana—greater than 0.3% is considered a Schedule I controlled substance subject to DEA’s jurisdiction.

CBP must coordinate with DEA and other regulatory agencies like FDA and follow their policies, lawyers in Denver and the nation’s capital said. Importing and exporting certain finished hemp products into the U.S. could be problematic even if the THC falls within the Farm Bill’s definition because FDA has long asserted hemp-derived CBD cannot be added to food or marketed as a dietary supplement.

Further complicating efforts to import or export hemp, attorney Shawn Hauser cited “a patchwork of state laws” governing hemp cultivation and whether it can be lawfully grown. And countries outside the U.S. may impose a different THC limit or prohibit THC altogether, she said in an interview.

“It’s complicated nuance to ensure compliance with the laws of both jurisdictions” and use appropriate tariff codes, said Hauser, partner and chair of the hemp and cannabinoids practice group at Vicente Sederberg LLP in Denver. “There’s risk in engaging in cross-border transactions even though there’s legality now.”

Even if hemp is lawfully grown, and businesses have carefully studied the laws of the country of import or expert, a government agency may have a different interpretation of the law, she pointed out.

A DEA spokeswoman, Mary Brandenberger, referred questions about hemp imports and exports to USDA and CBP. “With the passage of the Agricultural Improvement Act of 2018, (known as the ‘Farm Bill’), USDA regulates hemp export,” she said in an email.

Rend Al-Mondhiry, senior counsel in Washington to Amin Talati Wasserman LLP, said CBP hasn’t described its expectations for imports of hemp plants or products. In an interview, she expressed hope CBP would develop “guidance that will give companies some certainty as to what they need in terms of documentation or anything else when they’re bringing products in to avoid detention and seizures.”

Kelly Cahalan, a CBP spokesperson, said the 2018 Farm Bill “contains several important changes regarding agricultural production and trade of the Cannabis Sativa L. plant and products derived from it,” but she noted marijuana remains a Schedule I controlled substance under DEA’s jurisdiction.

“In light of these changes, CBP is working closely with its partner government agencies (PGAs), including DEA, USDA, FDA and others, that have regulatory purview over Cannabis Sativa L. and its by-products (around and beyond the CSA) to assess the policy and regulatory changes and verify all importation requirements that will be necessary as a result of the 2018 Farm Bill,” Cahalan said in an email. “CBP administers and enforces importation laws and regulations on behalf of its PGAs, and coordinates with them actively at the border.”

Commenting on USDA’s interim regulations related to the U.S. production of hemp, she added, “While this interagency regulatory process is ongoing, and until updated requirements are finalized and implemented, existing importation and exportation protocols and trade filing guidance will remain in place.”

Ashley Garrigus, a USDA spokesperson, said the agency “continues to work with other federal agencies in areas of interest such as hemp imports and exports.”

“At this time, USDA is focused on receiving feedback from the public about the interim final rule to help us develop a final rule that provides the best tools possible for the industry,” Garrigus added in an email.

In USDA’s interim regulations, the agency described the circumstances in which hemp seeds from Canada and other countries can be imported into the United States. The agency noted its Animal and Plant Health Inspection Service (APHIS) will assert jurisdiction over “any pest-related issues if they arise” linked to imports of hemp plant materials.

But USDA’s interim regulations don’t impact the exportation of hemp and state, “Should there be sufficient interest in exporting hemp in the future, USDA will work with industry and other federal agencies to help facilitate this process.”

In an interview in early November 2019, Graff cited a decrease in the volume of hemp seizures over the past several months. But lawyers stressed additional guidance from CBP and others would be helpful to industry.

Without appropriate tariff codes, for example, companies may have an incentive to mislabel hemp products, Graff acknowledged.

“In the absence of regulatory guidance, industry is left to its own devices,” he concluded. “Obviously, we recommend best practices and being good actors and good stewards. But of course, not everyone will subscribe to that same perspective.”