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Nov 22, 2019
Breaking Down USDA’s Rule and North Carolina Law

Marne Coit, agricultural law lecturer at North Carolina State University, breaks down the different ways North Carolina could potentially manage hemp production given current state laws and the USDA’s new hemp rule.

On Oct. 31, 2019, the USDA released its interim final rule (IFR) which establishes the US Domestic Hemp Production Program (DHPP). This rule, in conjunction with the law in NC, dictates the law for the production of hemp in the state of NC. This is a new rule with a lot of details with significant implications for growers. We are working to understand how this law will impact growers here in NC and know that there are a lot of questions. Please note that this is a complicated and evolving area of law, and we are doing our best to get timely information to the industry here in NC. It will also change over time, so it is important to stay informed, and realize that the information provided here will change. We will continue to post as updates become available.

The purpose of this post is not necessarily to get into all of the details of the new rule, but to provide an explanation about what the current law is here in NC, and what the possible scenarios are.

Brief Summary

As of today (Nov. 21, 2019), we are still operating under the rules of the NC pilot program, the same program we have been operating under for the past 3 seasons. This may change, based on what happens with our state Farm Act and also whether NC decides to remain under the rules of the pilot program or decides to go under the USDA’s plan for the 2020 growing season. This will be explained in more detail below.

Bottom Line

There is likely to be volatility based on the changing legal landscape for the next three years, at a minimum. Please keep this in mind when making any decisions about starting or continuing to produce hemp, or investing in other parts of the supply chain.

Explanation of USDA’s New Rule & NC State Law – Where We Are Today

The USDA’s interim final rule was published in the Federal Register on October 31, 2019, and became effective the day that it was published. The rule sets out the USDA’s plan for hemp production. It also allows states to submit a state plan for approval to the USDA. If a state plan is accepted by the USDA, then growers in that state have to follow the rules of their state plan. If a state does not submit a state plan, and does not intend to, then the growers in that state may apply directly to the USDA for a license.

It is important to note that just because the rule is effective as of October 31, 2019, it does not mean that everyone automatically has to comply with all of the provisions of the rule. In fact, the rule specifically allows states to continue under their pilot programs for the 2020 growing season if they choose to.

The October 31, 2019 effective date is important, though, because it starts the clock for certain provisions of the rule. Some of the most relevant are:

For states like NC that currently have a legally valid pilot program in place, they have 30 days after the rule is published to decide whether to stay under their current program for the 2020 growing season, or they may opt to go under the USDA’s plan for the following year.

Starting on Nov. 30, 2019 individuals in states that do not have an approved production plan may apply for a license directly from USDA. However, the USDA has stated that there cannot be two different licensure tracks operating at one time (meaning a state program and the federal program through the USDA). If individual growers contact the USDA to obtain a license the USDA will first check with the state department of agriculture that grower is from to confirm whether or not the state intends to submit a state plan. If the state does intend to submit a plan, then the USDA will not issue a license to that grower.

We do not have a final decision yet as to whether NC plans to continue to operate under our current pilot program or will opt in to the USDA’s program for the 2020 growing season.

  • It is possible that in NC we could continue to operate under the current program for the 2020 growing season, and then opt to fall under the USDA’s plan.
  • It is possible that we could continue to operate under the current program for the 2020 growing season, and during that time submit our state plan to USDA for approval. To do this, the General Assembly would need to pass legislation that gives the N.C. Department of Agriculture & Consumer Services authority to create our state plan. The current proposed farm act, SB 315, would provide this authority to NCDA&CS. However, this is not currently law.
  • It is possible that NCDA&CS could decide to go under the USDA’s plan starting immediately.

It also starts the clock on a two year time period during which the USDA needs to develop a final rule. So, the final rule from USDA should be published by the end of Oct. 2021.

The rule states that the public comment period will be open for 60 days after the rule is published. So the open comment period will close on Dec. 30, 2019. Comments can be submitted via the Federal eRulemaking portal. More information about submitting comments can be found in the Federal Register.

Marne Coit, agricultural law lecturer, North Carolina State University and North Carolina State University Extension


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