So, what is the Farm Bill?

The Farm Bill1 is an omnibus federal bill that authorizes a suite of agricultural and food programs, from crop protection to conservation, rural development to forestry protection. The sweeping nature of the bill – which clocks in at nearly 1,000 pages – allows for comprehensive policy decisions about the nation’s most pressing food and agricultural issues.

The Farm Bill is supposed to be renewed every five years, but in recent years, it has required extensions. The 2012 version of the Farm Bill was passed two years late in 2014. The 2018 Farm Bill was set to expire at the end of 2023 but has been extended until the end of 2024.

A brief history

The first Farm Bill was adopted in 1933 as part of the New Deal. It provided financial assistance to farmers following the Great Depression. In those years, surplus supply of commodity crops was driving prices down, creating an agricultural crisis. The bill attempted to fix this by paying farmers to reduce production and providing loans that insured against low prices. The goals were to reduce market volatility and protect the food supply.

Over time, the Farm Bill has expanded greatly. It now includes risk management tools, such as crop insurance, and financial assistance programs, such as grants and loans, that support rural development and conservation. The Farm Bill also includes nutrition assistance programs, such as the Supplemental Nutrition Assistance Program or SNAP, which account for about 75% of its total budget.

The intersection between hemp and the Farm Bill

Hemp was once an essential crop and strategic resource in the United States, used for ships, ropes, and canvas. But hemp farming declined significantly following the adoption of the Marihuana Tax Act of 1937, which included hemp in the definition of “marihuana” and subjected both to heavy taxes and restrictions. When the Controlled Substances Act was adopted in 1970, hemp was again included with cannabis and classified as a Schedule I drug.

The 2014 Farm Bill was the first attempt to reintroduce hemp farming in the United States. It allowed states to establish pilot programs to grow hemp for research purposes. Under the pilot programs, hemp could be cultivated by either a university or a farmer authorized by the state department of agriculture.

The pilot programs2 were successful in achieving this goal. By 2018, states reported more than 90,000 acres of hemp were being grown under the pilot programs. By 2019, that increased further to 146,065 acres – close to the 146,200 acres reported in 1943, before U.S. hemp production largely ceased.

The 2018 Farm Bill further normalized hemp cultivation. Hemp was added to the Agricultural Marketing Act, made eligible for federal crop insurance, and removed from the Controlled Substances Act. Hemp cultivation (and interstate commerce) was legalized under USDA-approved State or Tribal Plans, or the USDA Plan itself, which require:

• Registration or reporting

• Testing of plants to ensure delta-9 THC is below 0.3%

• Periodic inspections and compliance

But here’s where things got a bit wonky...

The definition of hemp substantially changed between the 2014 and 2018 versions of the Farm Bill. The 2014 definition was specific to plants and corresponding plant material. But the 2018 definition was expanded to include extracts, derivatives and isomers.

Here’s the 2014 Farm Bill definition:

“The term “industrial hemp” means the plant Cannabis sativa L. and any part of such plant, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.”

And the 2018 Farm Bill definition:

“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.” (emphasis added)

The more recent definition has created a loophole3 for the conversion of non-intoxicating hemp cannabinoids into highly-intoxicating ones using chemical synthesis.

The DEA has attempted to distinguish between cannabinoids that are naturally occurring in hemp (and therefore deemed legal) from cannabinoids that are not naturally occurring in hemp or are too chemically manipulated to be considered hemp (and are therefore classified as either cannabis or synthetic drugs). But everyone is confused – including courts, which have issued conflicting opinions.

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What’s ahead

The 2018 Farm Bill was scheduled to expire at the end of 2023, but it was extended until late 2024. As the deadline approaches, there is a great deal of discussion about issues that could be addressed in the next version.

On the hemp cultivation side: A major challenge for hemp farmers is that THC content in Cannabis sativa plants can be variable and influenced by extraneous factors, such as seed quality and neighboring or wild hemp plants. When THC content exceeds 0.3%, federal law requires the crop to be destroyed. But farmers don’t always know whether the plant will exceed that threshold until it’s close to maturity. This can lead to the destruction of some or all of a harvest, well after costs have been incurred, which can be financially devastating and is not covered by federal crop insurance.

On the finished product side: The sprawling definition of hemp has led to a national market for intoxicating hemp products which are widely available to youth and lack basic product safety standards. The FDA has both declined to regulate these products and also has also not taken any meaningful enforcement action to stop their proliferation. Some are calling on Congress to close the loophole, while others are calling for the establishment of a regulatory framework4.

Final thoughts

The goal of re-establishing hemp production in the United States was/is a worthy endeavor. Hemp is a renewable resource, and its potential to support sustainability goals through biofuels, bio-plastics, and bio-energy is only beginning to be understood. But much of the conversation about hemp’s agricultural potential has dwarfed by the so-called intoxicating hemp loophole.

There are many pathways Congress could take to resolve this - from establishing a regulatory framework to clarifying current legality. Answers are needed - and the policy solutions should be as nuanced as the problem itself.

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Learn more about the Farm Bill:

• Farm Bill Primer: What Is the Farm Bill? (Congressional Research Service)

• Economic Viability of Industrial Hemp in the United States: A Review of State Pilot Programs (U.S. Department of Agriculture) – see Appendix E for a selection of legislation relevant to hemp, including relevant text from the 2014 and 2018 Farm Bills

• Field to Table: A Farm Bill Primer (National Conference of State Legislatures)

• Primer for Counties: 2023 Farm Bill Reauthorization (National Association of Counties)

If you want to learn more about a specific topic in cannabis policy, you can email your questions and suggestions to info@cannabispolicylab.com.

When I was a cannabis regulator, I loved talking to officials in newly legalized states and countries to share advice and lessons learned. The conversations were surprisingly candid. When you’re one regulator talking to another, you can share what’s working, what’s not, and what you wish you could change in a way that you can’t when speaking to anyone who hasn’t carried the responsibility of implementation.  

Ohio has experience regulating cannabis; they legalized medical use in 2016 and are active participants in the National Cannabis Regulators Association (CANNRA). Regulators will need to determine how to modify their current regulatory model, rather than learn how to regulate this industry anew.

In any case, here’s the advice that I used to give governments new to regulating cannabis:

1. Learn from others

When California legalized non-medical cannabis, there were only a handful of states that had already legalized, and most of them were only newly into implementation. There wasn’t a lot of long-term experience to draw from. That’s changed.

It’s now been more than a decade since Colorado and Washington first legalized non-medical cannabis. Regulators from 45 U.S. states and territories, and Canada, routinely share best practices through CANNRA. There is a lot of experience to learn from and a lot of people willing to share what they know.

2. Visit cannabis businesses

You can read and talk about cannabis policy, but there are some things that you can’t really understand until you’ve walked a facility and talked to the operators. Use your newfound relationships with regulators to set up tours of businesses operating legally in their states. Visit both compliant and non-compliant businesses. Ask a lot of questions.

In my experience, business owners are more than happy to share their approach, explain machinery and processes, answer your “dumb” questions, and tell you about the challenges that keep them up at night. Understanding how businesses are run is an undervalued trait in government. If you invest time to understand, they’ll take the time to educate you.

3. Help adults understand cannabis

We spend a lot of time talking about educating youth, but we don’t spend nearly enough time talking about how to educate adults. Many state legalization laws have come with a small pool of funding for education about what’s legal or not and driving under the influence. But we’re missing an opportunity for the type of responsibility messaging that could reduce long-term risks and help the nation avoid the type of unhealthy relationship that we currently have with alcohol.

Adults have more exposure than ever to cannabis, and they need guidance about how to be responsible consumers. Harm reduction messaging could help adults know what to expect, choose safer products, and store cannabis in a manner that prevent kids from getting access to it in the home.

4. Don’t overlook medical use

As more states legalize non-medical use of cannabis, regulator and business attention is turning away from medical use – sometimes to the detriment of patients. Products that medical patients value most are often not as commercially successful for recreational users, which represents a much larger slice of the market.   

There aren’t many great examples of states that have continued to enhance their medical cannabis programs after non-medical legalization occurs. We all can do better in this area, so don’t lose sight of how and why cannabis was first legalized. Talk to patient advocates, including Americans for Safe Access. Talk to cannabis clinicians. Get your state’s medical board involved.

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A word of caution

There was one terrible piece of advice that I remember hearing a lot when we first legalized (and still hear to this day). It went like this: “Regulate cannabis strictly to start, and then you can loosen rules later as you need.”

That is awful advice. Terrible, horrible, no good, very bad advice.

Government has a responsibility to protect consumers, the public, the environment, etc. But adding rules that you know are overly strict is not responsible. It’s creating a mess that someone else will have to clean up later1.

Here’s how I think about policy:

• Everything has risks, and every rule you create costs money.

• Businesses have to spend money to comply with rules, and the more rules you make, the more it costs to run the business. The more it costs to run a business, the higher the barriers will be for smaller businesses to enter the legal market or achieve success.  

• Government costs increase as the system gets more complicated, too, because more training and staffing are needed. It also makes it harder to set and communicate priorities (to staff and the public).

• As a policymaker, you need to make sure you understand the actual versus perceived risks, so you don’t end up creating a bunch of costs that are disproportionate to the risk being mitigated.

We know a lot more today than we did in the mid 2010s about which rules are effective and which are not. Use this information, and don’t overthink it (or overregulate it).

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If you’re a government official trying to figure out cannabis regulation, feel free to reach out: info@cannabispolicylab.com. We’re happy to share what we’ve learned, put you in touch with others, and point you to some great resources.

A decade ago, U.S. cannabis legalization was on a roll. Medical cannabis was legal in 19 states, and Colorado and Washington had just adopted the nation’s first non-medical cannabis legalization measures. The federal government had stopped calling their drug policies a “war on drugs” (although the policies themselves hadn’t changed very much).

The conflict between state and federal cannabis laws was growing, and federal prosecutors needed guidance on how to navigate the divide.

Enter James Cole.

Cole was the Deputy Attorney General for the U.S. Department of Justice. His job was to direct and guide prosecutors on the enforcement of federal laws.

In 2013, Cole issued a memo to all U.S. Attorneys advising them to de-prioritize prosecution of cannabis businesses that followed state laws. The memo didn’t limit the federal government’s ability to enforce the law, and it didn’t provide a defense for anyone caught violating those laws. Instead, it basically said that there were some types of cannabis crimes worth prosecuting and some that weren’t worth using limited resources for.  

The memo became known as the “Cole Memo.” It described eight priorities for federal enforcement and encouraged states to incorporate these into their cannabis laws:

• Prevent cannabis sales to minors

• Prevent cannabis revenue from going to criminal organizations

• Prevent cannabis from moving from legal states to other states (“diversion”)

• Prevent state-legal cannabis from being used as a front for illegal activity or drug trafficking

• Prevent violence and use of firearms by cannabis businesses

• Prevent drugged driving (DUIs) and negative public health effects

• Prevent cannabis from being grown on public lands

• Prevent cannabis possession on federal property

Memos, memos and more memos

The Cole Memo wasn’t the first DOJ memo about cannabis. Then Deputy AG James Ogden issued one in 2009, which gave basically the same guidance but in an era of medical cannabis laws.

Ogden’s memo also said that the size of the operation should be a factor when deciding to prosecute. Individuals and their caregivers should be left alone, but large-scale operations1 (even when their purpose was to provide medical cannabis) should still be prosecuted. Cole reiterated this position against commercial operations in 2011, before walking it back in the 2013 memo.

The Cole Memo didn’t address tribes, and the same conflict existed between federal and tribal laws. In 2014, then DOJ Director Monty Wilkinson issued a memo to address this slightly-different question. Wilkinson said the Cole Memo’s eight priorities also applied to federal cannabis prosecutions in Indian Country, and attorneys should work closely with tribal governments (and… you know… keep us posted on what you do…).

So, that’s five memos within five years, which is pretty illustrative of how quickly cannabis policy was and is changing.

Enter Jeff Sessions.

Sessions became the U.S. Attorney General in February 2017. He was notoriously anti-cannabis, and he was sick of all the DOJ memos encouraging prosecutorial discretion. On January 4, 20182, he issued a memo of his own rescinding all of the previous cannabis memos.

Everyone wondered how Sessions’ memo would affect states, but it really didn’t. The priorities of the Cole Memo continued to be the priorities of state cannabis laws, and everyone continued along in the weird grey space of state-federal conflict.   

The DOJ memos were helpful for understanding the federal government’s perspective and priorities (and maybe they imparted some tiny peace of mind), but they weren’t binding on law enforcement or attorneys.

Enter Merrick Garland?

Review is now underway to potentially move cannabis from Schedule I to Schedule III (which a ton of people have now written about this, including me and Jeremy Berke). Importantly, rescheduling would do nothing to address conflicts between state and federal law, so it doesn’t really fix the confusing landscape that led to all these memos.

There are some people suggesting that, if rescheduling occurs, U.S. Attorney General Merrick Garland should be the next to issue a memo addressing these continued conflicts.

Memo or no memo, U.S. states will continue on with their grand cannabis experiments, businesses will continue to live with hope but uncertainty, and the chasm between state and federal law will continue to grow3.

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Resources

Department of Justice Memos:

• 2009 – Ogden Memo: Investigations and Prosecutions in States Authorizing Medical Use of Marijuana

• 2011 – Cole Memo: Guidance Regarding the Ogden Memo

• 2013 – Cole Memo: Guidance on Marijuana Enforcement

• 2014 – Wilkinson Memo: Policy Statement Regarding Marijuana Issues in Indian County

• 2018 – Sessions Memo: Marijuana Enforcement

Timeline of State Cannabis Legalization – Marijuana Business Daily

Rescheduling requires DEA review and rulemaking to change existing regulations, which could take anywhere from 14 months to 2 years. In that time, there will be a lot of details to be worked out – like how this new drug market will interact with existing state cannabis markets. Plus, it’s likely that the Legislative Branch will want to weigh in as well.

Bottomline… it will be a while before we know exactly how this would affect cannabis markets, consumers and patients.

Regardless of where we go next, this announcement is a huge milestone.

The recommendation to move cannabis to Schedule III is an acknowledgement by the federal government that there are a medical uses for cannabis.

The letter was sent by the Department of Health and Human Services (HHS), based on an extensive review conducted by the Food and Drug Administration (FDA), and with agreement from the National Institute on Drug Abuse (NIDA).

Three different federal agencies – that haven’t previously been supportive of cannabis use – publicly acknowledged that cannabis is medicine. That affirmation alone is a BIG deal.

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Medical cannabis patients may have the most to gain from rescheduling. State-by-state approaches to medicine create burdens for patients. Under the current system:

• Medical marijuana cards are typically only valid in the issuing state, which means patients may not have access to medicine when they travel.

• Oh, and patients might not be able to bring their medicine with them either. You can’t transport cannabis across state lines, and you can’t fly with it at all.

• There are people, known as “cannabis refugees,” who have had to move to another state to get access to needed medicine.

• Plus, insurance doesn’t cover doctor-recommended cannabis medicines.

Moving cannabis to Schedule III means cannabis patients would be treated like any other patient. It means greater standardization of products, more precise dosages. It also creates an obligation for doctors, nurses and pharmacists to be well-versed in its usage and effects (for both medical and recreational users), which would greatly expand the education that medical providers get about cannabis.

It would take time to see these benefits, though. A whole new supply chain would need to be established. And cannabis products may be required to go through some sort of drug approval process, which takes time and money.

Rescheduling wouldn’t resolve the conflicts that currently exist between state and federal law. Schedule III drugs are treated very differently than most of the state-legal cannabis markets. There are complex rules for their manufacturing, the businesses that handle them, the products themselves, and the manner of purchase. Almost none of the state cannabis laws align with these.

It's unclear how state cannabis markets would interact with – or even coexist with – a Schedule III drug market.  

• What does the transition from state-governed medical cannabis to Schedule III medical cannabis look like?

• Can products that are currently sold in state medical markets be sold in the Schedule III cannabis market?

• How will roles and oversight be divided between the feds and state officials?

• Which laws would apply to state-licensed cannabis businesses? Federal drug laws or state cannabis laws?

Rescheduling cannabis would ease federal tax burdens for businesses. Section 280E of the U.S. tax code prohibits businesses that sell Schedule I drugs from deducting normal business expenses on their taxes.

That means cannabis businesses pay way more in federal taxes than other businesses. By some estimates, cannabis businesses (whether illegal or state-licensed) pay an effective federal tax rate of 70%.

280E was written to penalize drug traffickers (here’s a great read on the history of this law). But it also hurts state-legal cannabis businesses who already face challenges accessing normal financial services, including loans and investment.

Moving cannabis to Schedule III would eliminate that extra tax burden.

But, cannabis would still be criminalized. Schedule III drugs can carry misdemeanor or felony charges for citations like simple possession. Rescheduling does little to change the War on Drugs, unless those low-level charges are addressed.

It’s also important to note that pharmacies dispensing Schedule III drugs generally can’t employ people with a drug felony. This sets up a conflict with social equity initiatives which encourage ownership by and employment of those targeted by the War on Drugs

Yesterday’s announcement was a major milestone, but it left us with more questions than answers.

As with most topics in cannabis policy, the details will matter.

It will be interesting to watch how this unfolds.

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Author’s Note:

It’s only been a week since we announced the launch of the Cannabis Policy Lab. And what a week it’s been!

Thank you to everyone who has expressed support for our mission. Thank you for subscribing to our newsletter. And thank you to the feds for news that reiterated just how important it is to understand the basics of cannabis policy.

We’ll try to keep these shorter in the future.

If you have any feedback on the newsletter or suggestions for future topics, email us at info@cannabispolicylab.com.  

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