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Policymakers are struggling with the implication of decriminalizing and legalizing cannabis products for various uses. Growing public acceptance of cannabis has spurred lawmakers to act. While marijuana remains illegal under federal law, over half the states have legalized marijuana for medical or recreational use — setting up a conflict between state and federal law. On the other hand, Congress recently legalized the cultivation of non-intoxicating hemp products, tasking states to draw up their own regulatory schemes. Finally, the rising popularity of hemp-derived CBD oil, and its infusion in foods and beverages, raises many questions for public and private-sector decisionmakers.

Cannabis is a genus of flowering plants in the family Cannabaceae. Both hemp and marijuana are derived from cannabis, yet they are very different. Hemp is a cannabis plant selectively bred to contain a very low concentration (0.3 percent or less) of tetrahydrocannabinol (THC), the chemical that causes psychoactive effects. Marijuana plants, by contrast, are bred to produce a maximum of THC (between 15 and 40 percent). That’s why marijuana causes psychoactive effects, but hemp will not. Meanwhile, cannabidiol (CBD) is a non-intoxicating derivative of the hemp version of the cannabis plant.

Marijuana Legalization 

In the United States, marijuana remains illegal under federal law as a Schedule I controlled substance under the Controlled Substances Act (CSA). However, beginning in 1996, states began decriminalizing and setting up legal marketplaces for both medical and recreational use of marijuana. Currently, 33 states and Washington, D.C., have legalized the use of medical marijuana. Ten states and Washington, D.C., have additionally legalized the recreational use of marijuana.

Marijuana legalization has raised a number of challenges. Are employers liable for current and potential employees' use of marijuana on or outside the workplace? This is especially important for safety-sensitive jobs. How can employers or police confirm that someone is currently impaired from marijuana use? How should state tax recreational marijuana to balance revenue needs with cultivating a legal marketplace that will help drive out black-market purchases? What safeguards should be put in place to keep intoxicating marijuana, particularly of the sweets-focused edible variety, out of the hands of children? If there's a legal marketplace available in the state, how can market participants manage the flow of money when banks refuse to accept customers from industries deemed illegal under federal law? These concerns only scratch the surface and will take many years to be answered fully.

Hemp Production

Hemp refers to the durable soft fiber from the Cannabis plant stem (stalk) bred to contain a very low concentration (0.3 percent or less) of THC. Hemp and hemp-derived CBD, with their low levels of THC, are non-intoxicating varients of the Cannabis plant.

In late 2018, Congress passed, and President Trump signed into law, a farm bill containing a provision legalizing hemp. The 2018 farm bill, removed hemp (with less than 0.3 percent of THC) from the list of Schedule I drugs under the CSA and set a path for state agriculture departments to issue regulations for hemp production.

In October 2019, the U.S. Department of Agriculture (USDA) issued regulations for hemp production in the states. States that wish to have primary regulatory authority over hemp production may submit their own hemp production plans, after consultation with their governors and chief law enforcement officers, to USDA for approval. If a state has not explicitly banned hemp production within its borders, then farmers may be licensed under either a USDA approved state program, or, if the state does not have a USDA approved program, then under the federal USDA hemp program.

Over a dozen states either already submitted a hemp production plan to USDA or have directed state agriculture departments to do so. While most states have embraced the legalization of hemp, there has been some pushback. For example, South Dakota Governor Kristi Noem recently vetoed a bill allowing industrial hemp to be grown in the state and recently and has promised to veto similar bills during the 2020 legislative session. Law enforcement officials have expressed concern about their ability to differentiate hemp from marijuana plants.

Cannabidiol (CBD)

Cannabidiol (CBD) is a non-intoxicating derivative of the hemp strain of the cannabis plant, which is bred to contain 0.3 percent of THC or less, and therefore CBD does not cause a psychedelic effect. CBD is touted as offering myriad therapeutic benefits, however, the U.S. Food and Drug Administration (FDA) is still studying these claims, which leaves the legal status of selling CBD marketed items less than clear for retailers in the U.S. 

While hemp is no longer a controlled substance after the passage of the 2018 Farm Bill, the FDA still considers CBD a drug and therefore requires approval before selling food and health products infused with CBD. Currently, the FDA has only approved one prescription drug containing CBD: Epidiolex, which treats two rare, severe forms of epilepsy. The FDA is currently in the process of issuing regulations concerning the use of CBD in food and health products and accepted public comments on CBD through July 16, 2019. Despite statements issued by the FDA and its ongoing rulemaking process, many food, beverage, and cosmetics companies are currently selling products containing CBD in stores and online.

State lawmakers have passed a number of bills relating to CBD, covering issues such as research and testing of products containing CBD, exempting CBD from state controlled substances laws, and allowing certain CBD containing products to be sold. However, some states have taken steps to stop the spread of CBD until rules can be approved at the state or federal level. For example, the Washington State Department of Agriculture recently clarified that CBD is not an approved food ingredient under state or federal law and directed food manufacturers to remove CBD from their products and discontinue distribution of products containing CBD.