Establishment of a Domestic Hemp Production Program

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 990

[Doc. No. AMS-SC-19-0042; SC19-990-2 FR]

Establishment of a Domestic Hemp Production Program

AGENCY:

Agricultural Marketing Service, Department of Agriculture (USDA).

ACTION:

Final rule.

SUMMARY:

This final rule supersedes the interim final rule that established the Domestic Hemp Production Program, as mandated by the Agriculture Improvement Act of 2018 (2018 Farm Bill). This rule includes regulations used by the Department of Agriculture (USDA) to approve plans submitted by States and Indian Tribes for the domestic production of hemp. This rule also includes regulations on the Federal hemp production plan for producers in States or territories of Indian Tribes that do not have their own USDA-approved plans. The program provides requirements for maintaining records about the land where hemp is produced, testing the levels of total delta-9 tetrahydrocannabinol, disposing of non-compliant plants, licensing hemp producers, and ensuring compliance under the new program.

DATES:

This rule is effective March 22, 2021.

FOR FURTHER INFORMATION CONTACT:

Bill Richmond, Branch Chief, U.S. Domestic Hemp Production Program, Specialty Crops Program, AMS, USDA; 1400 Independence Ave. SW, Stop 0237, Washington, DC, 20250-0237; Telephone: (202) 720-2491, Fax: (202) 720-8938, or Email:

William.Richmond@usda.gov.

SUPPLEMENTARY INFORMATION:

This rule is issued under the authority of section 10113 of the 2018 Farm Bill (Pub. L. 115-334; December 20, 2018), which amended the Agricultural Marketing Act of 1946, as previously amended (7 U.S.C. 1621

et seq.

) (AMA), by adding Subtitle G (sections 297A through 297E). Section 297B of the AMA requires the Secretary of Agriculture (Secretary) to evaluate and approve or disapprove State or Tribal plans regulating the production of hemp. Section 297C of the AMA requires the Secretary to establish a Federal plan for producers in States and territories of Indian Tribes not covered by plans approved under section 297B. Section 297D of the AMA requires the Secretary to promulgate regulations and guidelines relating to the production of hemp under sections 297B and 297C in consultation with the U.S. Attorney General.

AMS issued an interim final rule (IFR) on October 31, 2019 (84 FR 58522), and began its initial implementation of the program. To date, USDA has approved approximately 45 State and Tribal hemp plans. However, not all of the States and Tribes have implemented their plans for various reasons, including the need to take additional steps to complete State legislative or rulemaking processes or to establish the regulatory scheme as well as the extension of the 2014 Farm Bill Program. Thus, as of November 2020, twenty States and nine Tribes have submitted reports on their respective programs. Based on the reports submitted by States and Tribes in 2020, producers have planted 6,166 acres under the 2018 Farm Bill hemp plans, of which approximately 730 acres were subject to disposal.

As of the effective date of this final rule, the interim final rule is superseded. This final rule replaces the IFR at 7 CFR part 990, effective March 22, 2021. The Agricultural Marketing Service (AMS), which has been delegated authority to administer the U.S. Domestic Hemp Production Program, provided multiple opportunities for public comment. AMS accepted comments during an initial comment period from October 31, 2019, through December 31, 2019. This initial comment period was extended for an additional 30 days on December 18, 2019 (84 FR 69295), ending January 29, 2020. AMS reopened the comment period for 30 additional days on September 8, 2020 (85 FR 55363), ending October 8, 2020. A total of approximately 5,900 comments were received during all comment periods from States; Indian Tribes; industry and agricultural organizations; private citizens; members of Congress, the scientific community; agencies; and individuals involved in the growing, processing, transporting and marketing of hemp. A summary of the public comments received and AMS's responses appear under “Comment Analysis” in section IX of this document.

I. Introduction

Hemp is a commodity with numerous industrial and horticultural uses including fabric, paper, construction materials, food products, cosmetics, production of cannabinoids (such as cannabidiol or CBD), and other products.

1

While hemp was produced previously in the United States (U.S.) for hundreds of years, its use diminished in favor of alternatives. Hemp fiber, for instance, which had been used to make rope and clothing, was replaced by less expensive jute and abaca imported from Asia. Rope made from these materials was lighter, more buoyant, and more resistant to saltwater than hemp rope, which required tarring. Improvements in technology further contributed to the decline in hemp use. The cotton gin, for example, simplified the processing of cotton, which replaced hemp in the manufacture of textiles.

1

Section 297D(c) of the AMA explicitly preserved the authority of the U.S. Food and Drug Administration (FDA) to promulgate regulations and guidance related to the production of hemp under the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301

et seq.

) (FD&C Act) and section 351 of the Public Health Service Act (42 U.S.C. 262) (PHS Act).

See

section 297D(c)(1) (“Nothing in this subchapter shall affect or modify . . . the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301

et seq.

); section 351 of the Public Health Service Act (42 U.S.C. 262); or the authority of the Commissioner of Food and Drugs and the Secretary of Health and Human Services . . . ” under those Acts).

The hemp industry continued in the U.S. until the Marihuana Tax Act of 1938. This Act ended the legal production of hemp in the United States, and hemp was added to Schedule I of the Controlled Substances Act (CSA), 21 U.S.C. 801

et seq.

Prior to the 2018 Farm Bill, all

Cannabis sativa

L., regardless of delta-9 tetrahydrocannabinol (THC) concentration level, fell within the CSA definition of “marihuana” unless the product fell under a narrow range of exceptions (

e.g.,

the “mature stalks” of the plant).

2

As a result, many aspects of domestic production of what is now defined as hemp was limited to persons registered under the CSA to do so.

2

Although the statutory spelling is “marihuana” in the Controlled Substances Act, this rule uses the more commonly used spelling of marijuana.

Under the Agricultural Act of 2014 (2014 Farm Bill), Public Law 113-79, State departments of agriculture and institutions of higher education were permitted to produce hemp as part of a pilot program for research purposes. The authority for hemp production provided in the 2014 Farm Bill was extended until January 1, 2022, by the Continuing Appropriations Act, 2021, and Other Extensions Act (Pub. L. 116-260) (2021 Continuing Appropriations Act).

Hemp production in the U.S. has seen a resurgence in the last several years.

Since importation of seed is covered under USDA's Animal and Plant Health Inspection Service (APHIS) regulations, this final rule does not regulate hemp

seed imports. APHIS regulates the importation of all seeds for planting to ensure safe agricultural trade. Hemp seeds can be imported into the U.S. from Canada if accompanied by either: (1) A phytosanitary certification from Canada's national plant protection organization to verify the origin of the seed and confirm that no plant pests are detected; or (2) a Federal Seed Analysis Certificate (SAC, PPQ Form 925) for hemp seeds grown in Canada. Hemp seeds imported into the U.S. from countries other than Canada may be accompanied by a phytosanitary certificate from the exporting country's national plant protection organization to verify the origin of the seed and confirm that no plant pests are detected.

This final rule does not address the exportation of hemp. Should there be sufficient public interest in exporting hemp in the future, USDA will work with industry and other Federal agencies to help facilitate this process.

The 2018 Farm Bill requires USDA to promulgate regulations and guidelines to establish and administer a program for the production of hemp in the United States. Under this new authority, a State or Indian Tribe that wants to have primary regulatory authority over the production of hemp in that State or territory of that Indian Tribe may submit, for the approval of the Secretary, a plan concerning the monitoring and regulation of such hemp production. For States or Indian Tribes without an approved plan, the Secretary is directed to establish a Departmental plan to monitor and regulate hemp production in those areas.

The 2018 Farm Bill specifies requirements that all hemp producers must meet. These include licensing requirements; recordkeeping requirements for maintaining information about the land where hemp is produced; procedures for testing the THC concentration levels for hemp; procedures for disposing of non-compliant plants; compliance provisions; and procedures for handling violations.

For the purposes of 7 CFR part 990, and as defined in the 2018 Farm Bill, the term “hemp” means the plant species

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. Delta-9 tetrahydrocannabinol, or THC, is the primary intoxicating component of cannabis. Cannabis with a THC level exceeding 0.3 percent is considered marijuana, which remains classified as a Schedule I controlled substance regulated by the Drug Enforcement Administration (DEA) under the CSA.

The term “State” means any of one of the fifty States of the United States of America, the District of Columbia, the Commonwealth of Puerto Rico, and any other territory or possession of the United States. The term “Indian Tribe” or “Tribe” has the same definition as in section 4 of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 5304). This final rule also includes the definition of “territory of an Indian Tribe” to provide clarity to the term because the AMA does not define it. The final rule defines “territory of the Indian Tribe” as (a) all land within the limits of any Indian reservation under the jurisdiction of the United States Government, notwithstanding the issuance of any patent, including rights-of-way running through the reservation; (b) all dependent Indian communities within the borders of the United States whether within the original or subsequently acquired territory thereof, and whether within or without the limits of a state; (c) all Indian allotments, the Indian titles to which have not been extinguished, including rights-of-way running through the same; and (d) any lands title to which is either held in trust by the United States for the benefit of any Indian Tribe or individual or held by any Indian Tribe or individual subject to restriction by the United States against alienation and over which an Indian Tribe exercises jurisdiction. Under an approved Tribal plan, the Indian Tribe will have regulatory authority over hemp production within its Territory.

3

A full list of terms and definitions relating to part 990 can be found under “Definitions” in section IV.

3

We note that if an Alaskan Native Corporation wants to produce hemp on land it owns in fee simple, it would need to have a State or USDA license, whichever is applicable, because that land does not qualify as Indian Country and the Corporation does not have jurisdiction over that land.

This rule is divided into several sections. The first section provides a general introduction to the rule. This section does not go into a detailed description of all parts of the rule or about the provisions of the rule that are discussed later on in other sections. Sections for State and Tribal plans as well as the USDA plan contain general information on land use, tribal jurisdiction authority, sampling, testing, disposal and remediation, compliance provisions, information sharing, certification of resources, and State and Tribal plan approvals. The USDA section also includes USDA hemp license provisions and suspension. These two sections provide general provisions that are discussed in more detail in the comment analysis section. Sections containing definitions, severability and the regulatory analysis are included before the regulatory language. The reader may be best served by reading the comment section to determine the changes made to this rule.

II. State and Tribal Plans

Section 297B (7 U.S.C. 1639p) of the AMA requires that States or Indian Tribes seeking primary regulatory authority over the production of hemp in that State or territory of that Indian Tribe, submit, for the approval of the Secretary, a plan concerning the monitoring and regulation of such hemp production. State or Tribal plans must be submitted to USDA and approved prior to their implementation. Nothing preempts or limits any law of a State or Tribe that regulates the production of hemp and is more stringent than the provisions in Subtitle G of the AMA.

AMS received extensive public input on the regulatory requirements for State and Tribal hemp plans. Incorporating the input received, the following sections explain the changes to the regulatory requirements for State and Tribal hemp plans.

A. Land Used for Production

The 2018 Farm Bill and the IFR required that plans include a process by which relevant information regarding the land used for hemp production in their jurisdiction is collected and maintained. Certain information on mailing addresses and hemp production sites must be collected for each licensee covered by the State or Tribal plan.

The information required to be collected includes a legal description of the land and geospatial location for each field, greenhouse, or other site where hemp is produced. Geospatial location is necessary because many rural locations do not have specific addresses, and these coordinates will assist with the proper identification of hemp production locations.

In addition to the land information required to be collected by the appropriate State or Indian Tribe, AMS chose to require licensed producers, including those under the USDA plan, to report their hemp crop acreage to the Farm Service Agency (FSA). Although many commenters opposed this requirement based on costs around the time and travel expense necessary to physically visit the appropriate FSA County Office, AMS has determined that maintaining the FSA reporting

requirement is essential for several reasons. AMS recognizes that in some cases producers may travel to FSA offices miles away incurring additional time and cost. These costs are incorporated in the expected burden of this program.

First, USDA is statutorily required to provide law enforcement with certain “real-time” information about who is growing hemp, whether their license is in good standing with the regulatory body issuing the license, and the location(s) where hemp is being grown. Having FSA collect the necessary information enables USDA to provide the most accurate and “real-time” information to law enforcement, as required by Subtitle G of the AMA. Second, FSA offices serve as useful resources to all farmers and, in collaboration with other USDA agencies, can provide a wide range of insurance, risk management, and conservation program guidance and information. These offices currently serve the agricultural industry within their communities, where producers can establish farm and producer records, record their licensing information, and report crop acreage. The producer may also, with supporting documentation, update their FSA farm records for leases, sub-leases, or land ownership. Requiring farmers to visit the FSA office ensures that they receive information on the availability of these helpful tools and programs. This is particularly important for new farmers, who may not be aware of the wide range of programs and services offered by USDA.

Further, FSA maintains the technology necessary for data collection and geographical land identification. These tools will provide easy access to information needed for law enforcement and for other agricultural programs. AMS has determined, for these reasons, to continue to require the reporting of hemp crop acreage to FSA.

Based on input from commenters, USDA is also clarifying the distinction between the term “lot” as defined in the IFR, and the term “subfield” as it relates to FSA reporting. Although this final rule uses the term “lot” to discuss the land where hemp is grown, when a producer visits the FSA office to report hemp crop acreage, FSA staff will help producers determine the applicable FSA-specific term for designating the location(s) where hemp is being grown. The terminology used by FSA to denote land areas include terms like “farm,” “tract,” “field,” and “subfield,” which are equivalent to AMS's term “lot.” FSA staff will not provide a “lot number” to producers as described in the IFR. FSA will use designations that they currently use such as track, field, or subfield, depending on the specific area. This designation does not change the requirements or the information submitted for law enforcement. AMS will amend the form to reflect these terms. When reporting to FSA, producers must provide their State or Tribe-issued license or authorization number. A link to FSA information on how to report hemp crop acreage to FSA is available at

https://www.fsa.usda.gov/Assets/USDA-FSA-Public/usdafiles/FactSheets/2019/crop-acreage-reporting-19.pdf

and is available on the USDA hemp production program website.

As described in the IFR, certain State hemp pilot programs operating under the 2014 Farm Bill authority developed “seed certification” programs to help producers identify hemp strains with potentially lower THC concentrations. The term “certification” in this context means tested or verified, but it does not necessarily mean certified for varietal purity. USDA acknowledges that this remains a significant hurdle to the hemp industry and is committed to assisting with the research and development of compliant hemp varietals. Although AMS encourages States and Tribes to develop seed-certification programs if sufficient data is available, AMS has determined, at this time, that requiring the use of certain “compliant” varietals or establishing National rules for State-level certification programs is inappropriate. AMS will look at best practices from States and Tribes to evaluate if a program would be applicable to a USDA plan. If applicable, USDA may develop a performance-based sampling program. Such a program will require USDA to conduct rulemaking and comment procedures.

The term “seed certification,” as found in the Federal Seed Act and its Regulations, refers to a third-party verification process that assures seed customers that they are receiving pure varieties and high-quality seed for planting purposes. The Federal Seed Act grants authority to seed certifying agencies in each State to administer varietal seed certification standards for all major agricultural crops, including hemp. Recognized seed certifying agencies are members of the Association of Official Seed Certifying Agencies (AOSCA), and they administer uniform AOSCA standards and inspect crops being grown for seed throughout the production process to maintain varietal purity. These activities protect seed customers in both domestic and export markets. Seed produced under these types of certification programs ensure a distinct, recognized variety that is properly tested and legally labeled. Seed certification under the Federal Seed Act is concerned with many varietal characteristics, not solely THC concentration. This enables farmers to confidently purchase seed of a suitable variety, by purchasing seed certified as to variety. Using certified seed, as described in the Federal Seed Act regulations and AOSCA standards, is an option for states and tribes if they have the data to support that the seed would work in their environment. While varietal certification does not absolutely ensure a specific THC content, the fact is that THC content (or at least a range) is a reliable varietal characteristic. Therefore, if the farmer is able to confidently purchase seed of a suitable variety by purchasing seed certified to variety, they at least know what to expect from the variety in their area.

For this reason, AMS recommends the use of hemp seed from varieties that have undergone varietal certification, following the process outlined in the Federal Seed Act Regulations, and produced following AOSCA standards. This recommendation will assist hemp farmers to purchase recognized hemp varieties that have been tested for purity and are properly labeled.

Additionally, AMS administers the Plant Variety Protection Office (PVPO) that is actively accepting applications of seed-propagated hemp for plant variety protection. The PVPO provides intellectual property protection to breeders of new varieties of seeds, tubers, and asexually reproduced plants. Under the U.S. Plant Variety Protection Act, PVPO examines new applications and grants certificates that protect varieties for 20 years (25 years for vines and trees). Certificate owners have rights to exclude others from marketing and selling their varieties, manage the use of their varieties by other breeders, and enjoy legal protection of their work. This work, however, does not certify seeds for THC content.

B. Tribal Jurisdictional Authority

The final rule clarifies the extent of a Tribe's regulatory authority over hemp production within its Territory. Several commenters stated that language in the IFR raised uncertainty as to whether Indian Tribes could regulate hemp production by non-Indians operating on fee lands within a Tribe's Territory. To address this uncertainty, § 990.4(b)(4) of the final rule now provides that “[u]pon USDA approval of a Tribal plan, a Tribe may exercise jurisdiction and therefore primary regulatory authority over all production of hemp in its Territory regardless of the extent of its inherent

regulatory authority.” Thus, as long as the land at issue qualifies as land within the territory of an Indian Tribe under § 990.1 of the final rule, an Indian Tribe with a USDA-approved plan may regulate all hemp production on that land. USDA determined that this additional language is consistent with Congressional intent in the 2018 Farm Bill and best ensures that hemp production is managed consistently throughout the Territory of an Indian Tribe.

If an Indian Tribe desires to have primary regulatory authority over the production of hemp in its Territory, under the 2018 Farm Bill, the Tribe may submit a plan to USDA. Section 297C of the AMA provides that “In the case of a State or Indian Tribe for which a State or Tribal plan is not approved under section 297B, the production of hemp in that State or the territory of that Indian Tribe shall be subject to a plan established by the Secretary to monitor and regulate that production.” Hence if a Tribe does not regulate hemp production within its Tribal Territory, USDA, not a State with an approved plan, will regulate hemp production program within that Territory.

Sections 297B and C plainly show that Congress chose to take a territorial approach to the Tribal regulation of hemp production under the AMA. If Congress only wanted Indian Tribes to assume primary regulatory authority over hemp production in areas within their inherent jurisdictional authority it could have stated this. Instead, Congress opted for a land-based approach and delegated to Tribes the authority to assume hemp production regulatory authority throughout their territories. In consideration of the statutory language and the overall statutory scheme of the 2018 Farm Bill, USDA has determined that an Indian Tribe with an approved plan may regulate hemp production throughout its territory without regard to the Indian Tribe's ability to demonstrate inherent regulatory authority under the factors set forth in

Montana

v.

United States,

450 U.S. 544 (1981). Because Congress did not define Territory of the Indian Tribe in the AMA and did not include discussion in the legislative history of the meaning of this term, USDA is exercising its authority to issue regulations to implement the provisions in the 2018 Farm Bill to define this term in this manner.

USDA's decision is in-line with agency determinations where the agency determined that Congress delegated a Tribe with authority to exercise regulatory authority over non-Tribal fee land within reservations. EPA Interpretive Rule: Revised Interpretation of Clean Water Act Tribal Provision, 81 FR 30183 (May 16, 2016); EPA Final Rule: Indian Tribes—Air Quality Planning and Management, 63 FR 7254 (Feb. 12, 1998);

Arizona Public Serv. Co.

v.

EPA,

211 F.3d 1280 (D.C. Cir. 2000).

Moreover, USDA's decision is practicable and prevents piecemeal licensing by Tribes and USDA within a single Tribal Territory. If a Tribe was only able to exercise primary regulatory authority over hemp production within its Territory when it could demonstrate the inherent authority to do so, USDA could be required to regulate some hemp production within the Territory—for example, it could foreseeably be required to regulate hemp production by non-Indians operating on fee lands in certain cases. Such a system would be confusing for producers and regulators alike.

For the foregoing reasons, the final rule now clearly explains that upon USDA approval of a Tribal plan, a Tribe may exercise primary regulatory authority over all production of hemp in its Territory regardless of the extent of its inherent regulatory authority, as reflected in §§ 990.2 and 990.4 of the final rule.

C. Sampling for Total THC

AMS is changing certain aspects of the sampling requirements. This section addresses performance-based sampling, how to sample hemp plants, sampling agents, and the harvest window after sampling takes place.

Sampling Requirements

AMS received significant input from commenters on how hemp sampling procedures and requirements should be changed. When referring to “sampling,” we mean the process of collecting cuttings from hemp plants for purposes of compliance testing.

Performance Based Sampling

The IFR required State and Tribal hemp programs to collect samples from the flower material of the cannabis plant. The IFR also required State and Tribal hemp programs to collect enough samples to ensure at a confidence level of 95 percent that no more than one percent (1%) of the plants in the lot would exceed the acceptable hemp THC level. Guidance issued concurrently with the IFR explained these requirements in greater detail. The sampling requirements in the IFR did not consider geography, environmental factors, State or Tribal level seed certification programs, or other factors faced by States and Tribes when developing sampling requirements for their hemp programs. AMS is modifying the sampling provisions as presented in the IFR to allow States and Tribes to develop performance-based sampling requirements. Performance-based sampling achieves defined objectives and focuses on results. It differs significantly from a prescriptive action in which licensees are provided detailed direction on how those results are to be obtained. A performance-based approach would simply set a performance objective (

e.g.,

reliability of 95 percent) and allow the States and Tribes considerable freedom in how to achieve that reliability objective with their sampling methodology.

Some State hemp regulators have successfully developed sampling requirements that ensure adherence to State and Federal regulations, while allowing for flexibilities due to limited State resources and State and Tribal differences. States expressed extensive concerns about the requirements in the IFR that all lots must be sampled and tested, due to significant logistical and fiscal impacts. They explained that, since most hemp in a given region is harvested at the same time, sampling must be completed within a very short time frame by only a few individuals. Several States also explained how sampling occurs under established State programs and described the different ways that perceived risk determines State requirements. Some States utilize different sampling requirements for broad end-use categories like “fiber/grain” hemp versus “cannabinoid” hemp, while others base their requirements on historical THC concentrations of certain varietals or on the characteristics and growing history of a certain farm or producer. While these States' plans have not been approved under the 2018 Farm Bill regulations, we believe that providing States and Tribes the flexibility to develop sampling plans based on data they gather during an extended period of time may be an effective method at ensuring the overall acceptable hemp THC level of hemp grown in the State or Tribe. AMS agrees that sampling requirements should allow States and Indian Tribes more flexibility in the management of their hemp regulatory programs.

AMS agrees that requiring sampling from every lot may be burdensome and expensive for State and Tribal regulatory entities and producers. AMS also finds compelling the arguments presented by States' regulatory agencies and other commenters that there are different risk factors for hemp used for fiber and grain versus hemp used for cannabinoids. Data submitted with

comments show that the THC levels of hemp used for cannabinoids are frequently higher than those of hemp for fiber and grain. The FDA authorizes the marketing of few types of cannabinoid products. This final rule does not cover cannabinoid products.

AMS also acknowledges that research institutions face special circumstances when conducting hemp research. Accordingly, this rule provides sampling and testing flexibility to these institutions and producers working with them to conduct hemp research. Producers that produce hemp for research, along with the research institution itself, must obtain a license from a State, Tribal Government, or USDA. However, the hemp that is produced for research is not subject to the same sampling requirements provided that the producer adopts and carries out an alternative sampling method that has the potential to ensure, at a confidence level of 95 percent, that the cannabis plant species

Cannabis sativa

L. that will be subject to this alternative method will not test above the acceptable hemp THC level. Research institutions and producers growing hemp for research purposes shall ensure the disposal of all non-compliant plants. Research institutions and producers growing hemp for research purposes shall also comply with the reporting requirements including reporting disposal of non-compliant plants. Research institutions that handle “hot” hemp must follow CSA requirements for handling marijuana.

States and Indian Tribes are allowed to develop performance-based requirements for these institutions. However, the alternative method must have the potential to ensure, at a confidence level of 95 percent, that the cannabis plant species

Cannabis sativa

L. that will be subject to the alternative method will not test above the acceptable hemp THC level.

AMS views this flexibility as necessary to help support research and development as it relates to hemp production. This decision allows these types of research facilities and institutions to confidently oversee the study of hemp through trialing and genetics research, which AMS believes to be critical to the growth of industry, particularly in its infancy. Over time, the flexibility provided by this final rule will help to stabilize industry by providing greater understanding of hemp genetics and how certain varietals respond differently to growing conditions in various geographic locations. All producers are expected to benefit from such knowledge as they will be made aware of the more stable and consistently reliable hemp varietals. Any non-compliant plants produced by research institutions as a result of research and development will still need to be disposed and verified through documentation. Research and development facilities are still required to be licensed by States and Tribes. Research institutions must follow licensing and reporting requirements.

In performance-based approaches, measurable or calculable parameters are available to determine whether the performance standard is met. These performance parameters are identified to provide measures of performance and the opportunity to take corrective action if performance is lacking. In the case of hemp, the performance parameter is the 0.3 percent THC level and other measures are included in this final rule if the parameter is not achieved such as disposal and remediation.

USDA finds that in order to increase regulatory effectiveness, it makes sense to allow States and Indian Tribes to consider performance-based alternatives when developing sampling plans. If the objective or intended result can be achieved by setting a readily measurable standard that is enforceable, the proposed requirement should merely specify the objective or result to be obtained rather than prescribe to the licensee how the objective or result is to be attained. In other words, requirements should be performance-based, and highly prescriptive rules and requirements should be avoided absent good cause to the contrary.

The sampling requirements for State and Tribal plans allow for States and Indian Tribes to develop unique sampling protocols for hemp growing facilities under their jurisdiction. Sampling protocols must be sufficient at a confidence level of 95 percent that no more than one percent of the plants in each lot would exceed the acceptable hemp THC level and ensure that a representative sample is collected that represents a homogeneous composition of the lot. Alternatively, the final rule allows States and Indian Tribes to adopt a performance-based sampling protocol. A performance-based protocol must have the potential to ensure, at a confidence level of 95 percent, that the cannabis plants will not test above the acceptable hemp THC level. USDA encourages the alternative protocol to consider seed certification processes or process that identifies varieties that have consistently demonstrated to result in compliant hemp plants in that State or territory of the Indian Tribe, whether the producer is conducting research on hemp at an institution of higher learning, whether a producer has consistently produced compliant hemp plants over an extended period of time, and other similar factors. AMS believes this will provide needed flexibility to States and Indian Tribes to develop logical and enforceable sampling requirements that take into consideration their unique circumstances. AMS will still require States and Indian Tribes to submit their individual sampling requirements for review as a component of the plan approval process. Sampling protocols submitted by States and Indian Tribes must comply with the thresholds established by the 2018 Farm Bill and this final rule. If performance-based sampling requirements are not included in a State or Tribal plan, the method used for sampling must be sufficient at a confidence level of 95 percent that no more than one percent of the plants in each lot would exceed the acceptable hemp THC level and ensure that a representative sample is collected from every lot, and thereby every producer must be sampled and tested. When evaluating sampling protocols submitted by States and Indian Tribes, USDA will evaluate the risk of producing non-compliant material to determine approval or disapproval. In evaluating the risk, USDA will take into consideration whether the performance-based factors the State or Indian Tribe used have the potential to assure compliance at a 95 percent confidence level.

Since USDA cannot develop performance metrics that would be applicable independently from where the producer is located, producers licensed under the USDA plan are subject to the sampling requirements in the rule. USDA guidelines provided on the USDA website at

https://www.ams.usda.gov/rules-regulations/hemp/information-sampling

describe best practices for complying with those requirements.

USDA recognizes that several States and Tribes may include performance-based sampling in their plans and that their experience could demonstrate that their sampling procedures may be adaptable to the USDA plan. If USDA finds this to be the case, USDA will explore a performance-based sampling scheme for producers under the USDA plan in the future through notice and comment rulemaking.

Where To Take Samples on the Hemp Plant

AMS will retain the requirement that pre-harvest samples be taken from the flower material of hemp plants. However, this rule clarifies the number

of inches of plant material needed for the sample and provides greater detail as to where exactly on the plant to make a cutting. The IFR required that samples be taken from the “flower material” of hemp plants. Further, in guidance material issued concurrently with the IFR, AMS explained in greater detail where exactly on the plant to make a cutting by recommending samples be taken from the top third of the plant, “just underneath a flowering material.” Many commenters argued that samples should be taken from the “whole plant” or that a “homogenized” sample should be taken to include the stem, stalk, leaves, and seeds along with flower material. Alternatively, some commenters proposed that samples be taken post-harvest from shredded whole plant material, otherwise known as “biomass.” Advocates of these positions asserted that THC levels of the whole hemp plant are better represented by samples collected from the entire plant, and not just from floral material. Other commenters advocated for sampling of a certain size or length of cutting. Such commenters advocated adoption of the sampling methods they or others had used under pilot programs. Many State agriculture departments suggested AMS continue to require samples taken from flower material.

Even though many commenters felt that whole plant sampling should be allowed, AMS is of the opinion that since THC is concentrated in the flower material of the plant, the flower material is more appropriate to test than the entire plant. AMS will modify the sampling requirement to state that the sample shall be approximately five to eight inches from the “main stem” (that includes the leaves and flowers), “terminal bud” (that occurs at the end of a stem), or “central cola” (cut stem that could develop into a bud) of the flowering top of the plant. This change is consistent with the sampling practices in several States that established hemp programs pursuant to the 2014 Farm Bill authority. AMS determined that this standard strikes an appropriate balance between the need to collect a sufficiently large portion of the plant's flower (where THC and other cannabinoids are at their most concentrated), and the need to avoid cutting a portion that is so large that it would be logistically difficult to transport, dry, and prepare for lab testing. Based on the information discussed above and the experience and expertise of States and other commenters already engaged in hemp production pursuant to the 2014 Farm Bill authority, AMS is including new requirements herein.

AMS is publishing updated sampling guidance concurrently with this final rule. This guidance describes how to comply with this requirement regarding where to take the sample from the plant as well as other sampling requirements in the final rule. While the sampling guidance provides best practices for meeting the requirements, States, Indian Tribes, and USDA licensees may adopt sampling procedures that differ from the guidance so long as those procedures meet the standards in this final rule.

Sampling Agents

The IFR required a Federal, State, local, or Tribal law enforcement agency or other Federal, State, or Tribal designated person to collect hemp samples for the purposes of testing THC levels in hemp. Comments in response to the IFR presented several concepts concerning how sampling agents should be designated and/or trained. Comments mostly suggested the need for enhanced training requirements for sampling agents to promote consistency in the ways that samples are collected nationwide. Based on comments received regarding sampling agents, AMS will provide additional training resources for sampling agents. These training documents will explain how sampling agents can meet the sampling requirements of this regulation. States and Indian Tribes with an approved plan may require the sampling agents used in their jurisdiction to take the USDA training, or they may develop their own custom training incorporating USDA requirements with additional State or Tribal requirements. States and Tribes must maintain information, available to producers, about trained sampling agents.

Other comments on the topic of sampling agents spoke to the strain on State and Tribal resources of requiring agents to take samples instead of producers. Commenters presented two proposals to alleviate this strain—allowing producers to collect their own samples and reducing the volume of farms and plants from which samples are collected. AMS is retaining the requirement that only designated agents can collect samples. This ensures that there is consistency in sampling throughout the industry. The flexibilities provided to States and Indian Tribes with primary regulatory authority over hemp in their jurisdiction will likely reduce the number of samples required to be collected and thus reduce the burden on designated sampling agents.

Harvest Window

The IFR required harvest within 15 days of sampling. AMS received comments regarding the challenges presented by the 15-day harvest requirement, including the logistical challenges to State and Tribal agencies charged with overseeing the collection of samples in this short timeframe, the logistical challenges to producers in harvesting hemp crops in this short timeframe, and testing challenges faced by laboratories in having to conduct compliance analyses in this short timeframe. Commenters suggested lengthening the 15-day harvest requirement to a longer period of time—with some asking for up to 60 days.

AMS agrees with the arguments presented by commenters and recognizes the challenges imposed on the industry by the 15-day harvest requirement. AMS must also balance the logistical challenges of a harvest window requirement with the fact that THC concentration in hemp generally increases the longer the plant is in the ground. AMS now understands from data provided in comments that THC concentration does not increase linearly and is impacted by a myriad of environmental factors including moisture, wind, temperature, disease, sunlight, and soil, as discussed in the Comment Analysis section of this rule. The regulatory objective is to ensure, as best as possible, harmonization of the THC levels in the pre-harvest sample and that of the harvested material. Requiring that samples be taken prior to harvest is the best way to judge the THC concentration of the plant and the lot the sample represents. AMS recognizes that the most accurate measurement would be at time of harvest, but also understands the logistical practicalities discussed above and therefore has determined the most balanced approach is 30 days. For these reasons, AMS is expanding the window within hemp must be harvested after sampling to 30 days.

Under this final rule, no more than 30 days prior to the anticipated harvest of cannabis plants, a “sampling agent” must collect samples for compliance testing. If producers do not harvest within 30 days of sampling, the plant will likely have a higher THC level at harvest than the sample that is being tested. This requirement balances the need for accuracy with the logistical realities faced in the sampling and testing processes and will yield the most accurate measurement of the THC level at the point of harvest. Increasing the window within hemp must be harvested after sampling from 15 to 30 days will

better allow for variables such as testing, weather, agricultural practices, and equipment delays.

D. Testing Laboratories

The IFR introduced regulatory requirements for laboratories testing hemp for compliance purposes. AMS also issued guidance with the IFR to explain best practices for hemp testing laboratories (

www.ams.usda.gov/rules-regulations/hemp

). Based on comments to the IFR, AMS is changing certain parts of these regulations and updating the accompanying testing guideline. While the testing guidance provides best practices for meeting the regulatory requirements, States, Indian Tribes, and USDA licensees may use test procedures that differ from the guidance so long as those procedures meet the standards in the final rule.

Registration With DEA

The IFR required all hemp testing laboratories to be registered with the DEA in accordance with the CSA (21 U.S.C. 823(f)). On February 27, 2020, AMS announced a delay in enforcement of this requirement until October 31, 2020, or the publication of a final rule, whichever came first (USDA, DEA Provide Options for Labs, Disposal of Non-Compliant Hemp Plants. Thursday, Feb. 27, 2020)

4

AMS announced this enforcement delay to allow additional time to increase DEA registered analytical lab capacity and avoid potential delays to producers in receiving test results. Although AMS received comments in opposition to this requirement, AMS is retaining the requirement in this final rule that any laboratory testing hemp for purposes of regulatory compliance must be registered with DEA to conduct chemical analysis of controlled substances in accordance with 21 CFR 1301.13. This requirement also applies to any laboratory testing hemp throughout the growing season to informally monitor THC concentration. Registration is necessary because laboratories could potentially handle cannabis that tests above 0.3 percent THC on a dry weight basis, which is, by definition, marijuana and a Schedule 1 controlled substance. Instructions for laboratories to obtain DEA registration, along with a list of approved laboratories, are available on the USDA Domestic Hemp Production Program website. AMS is aware that there are still not enough DEA-registered hemp testing facilities in some States or territories of Indian Tribes. However, since the IFR was published, numerous laboratories have applied for registration and DEA is working diligently to process these requests. Given the limited number of DEA-registered labs available to hemp producers, delay in enforcement of this requirement is continued until December 31, 2022. AMS anticipates this delay will provide adequate time for testing facilities to obtain DEA registration.

4

www.ams.usda.gov/press-release/usda-dea-provide-options-labs-disposal-non-compliant-hemp-plants.

Laboratory Testing Requirements

Section 297B(a)(2)(A)(ii) of the AMA requires that State and Tribal plans for primary regulatory jurisdiction include a “procedure for testing, using post-decarboxylation or other similarly reliable methods, delta-9 tetrahydrocannabinol concentration levels of hemp produced in the State or territory of the Indian Tribe.” Since not all testing methods include decarboxylation, AMS is requiring that the total THC, which includes the potential conversion of tetrahydrocannabinolic acid (THCA) into THC, be reported and used for purposes of determining the THC content of a hemp sample.

The IFR included requirements on how laboratories conduct hemp testing for the purposes of regulatory compliance to assure that total THC levels were measured. Commenters provided extensive input on testing requirements, particularly the requirement to test for “total” THC instead of only “delta-9” THC. AMS is retaining this requirement.

AMS looked at current testing methodologies that would meet the decarboxylation requirement set in the 2018 Farm Bill. In gas chromatography (GC) testing, heat is applied to the sample, which decarboxylates THCA, producing delta-9 THC, so that the final delta-9 THC result is actually a total THC result. GC is the more traditional technique used for THC testing and was the technique used by Dr. Small

5

in his research that derived the 0.3 percent threshold that was used as a basis for the 2018 Farm Bill requirement and is used by law enforcement as the threshold to differentiate hemp from marijuana. In his research papers, the 0.3 percent threshold is based on

total available

delta-9 THC, which is the sum of THCA and delta-9 THC in the plant material.

5

Small, E.; Beckstead, H.D.; Chan, A. The Evolution of Cannabinoid Phenotypes in Cannabis.

Economic Botany, 29,

219-232, 1975.

Liquid chromatography (LC) testing does not involve the use of significant heat, so that the THCA in a sample does not generally decarboxylate. Results can be reported for THCA and delta-9 THC separately. When LC is used, the total THC needs to be calculated post-testing in order to report results as a “post-decarboxylation” delta-9 THC value. The requirement to report the total THC value as the THC content regardless of testing methodology used ensures testing consistency across the program.

Samples must be tested using post-decarboxylation or other similarly reliable analytical methods by which the total THC concentration level reported accounts for the conversion of THCA into THC. Acceptable testing methodologies currently include gas or liquid chromatography with detection.

The total THC, derived from the sum of the THC and THCA content, shall be determined and reported on a dry weight basis. In order to provide flexibility to States and Tribes in administering their own hemp production programs, alternative testing protocols will be considered if they are comparable to and similarly reliable as the baseline mandated by section 297B(a)(2)(A)(ii) of the AMA and established under USDA regulations and procedures. Updated USDA procedures for sampling and testing will be issued concurrently with this rule and will be provided on the USDA website.

Reporting requirements for laboratories are discussed later in Section X (Regulatory Analysis) of this final rule. To clarify these requirements, laboratories conducting testing for purposes of monitoring THC concentration throughout the growing season are not subject to these reporting requirements. These tests are for the producer to monitor his or her production as it grows and not to comply with pre-harvest testing requirements in this rule. Only laboratories conducting the “final” test that will be used to determine whether a sample is compliant are subject to reporting requirements.

Measurement of Uncertainty

This final rule requires that laboratories calculate and include the Measurement of Uncertainty (MU) when they report THC test results. “Measurement of uncertainty” is defined as “the parameter, associated with the result of a measurement, that characterizes the dispersion of the values that could reasonably be attributed to the particular quantity subject to measurement.” This definition is based on the definition of “uncertainty (of measurement)” in section 2.2.3 of the Joint Committee for

Guides in Metrology

6

100:800, Evaluation of measurement data—“Guide to the Expression of Uncertainty in Measurement” (JCGM Guide). The National Institute of Standards and Technology (NIST) Technical Note 1297, “Guidelines for Evaluating and Expressing the Uncertainty of NIST Measurement Results” (TN 1297), is based on the JCGM Guide. AMS also relied on the Eurachem/Co-Operation on International Traceability in Analytical Chemistry's “Guide on Use of Uncertainty Information in Compliance Assessment, First Edition 2007”. Colloquially, the measurement of uncertainty is similar to a margin of error. When the measurement of uncertainty, normally expressed as a +/− with a number (

e.g.

+/- 0.05), is combined with the reported measurement, it produces a range, and the actual measurement has a known probability of falling within that range (typically 95%). Laboratories should meet the AOAC International

7

standard method performance requirements for selecting an appropriate method to determine the MU.

6

The Joint Committee for Guides in Metrology is composed of international organizations working in the field of metrology. Its membership includes the Bureau International des Poids et Mesures, the Organisation Internationale de Métrologie Légale, the International Organization for Standardization, the International Electrotechnical Commission, the International Union of Pure and Applied Chemistry, the International Union of Pure and Applied Physics, the International Federation of Clinical Chemistry and Laboratory Medicine, and the International Laboratory Accreditation Cooperation.

7

USDA established the Association of Official Agricultural Chemists in 1884. In 1965, it changed its name to the Association of Official Analytical Chemists and became an independent organization in 1979. In 1991, it adopted its current, legal name as AOAC International.

This final rule requires that laboratories report the MU as part of any hemp test results. The rule also includes a definition of “acceptable hemp THC level” to account for the uncertainty in the test results. The reported THC concentration of a sample may not be the actual concentration level in the sample. However, the actual THC concentration is expected to be within the distribution or range calculated when the reported THC concentration is combined with the measurement of uncertainty.

The use of MU for purposes of determining the acceptable hemp THC level does not alter Federal law with regard to the definition of hemp or marijuana. As stated above, the 2018 Farm Bill defines hemp as the plant species

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 THC of not more than 0.3 percent on a dry weight basis. Likewise, the Federal (CSA) definition of marijuana continues to include those parts of the cannabis plant as specified in 21 U.S.C. 802(16) (and derivatives thereof) that contain more than 0.3 percent THC on a dry weight basis. The foregoing provisions of Federal law remain in effect for purposes of Federal criminal prosecutions, as well as Federal, civil, and administrative proceedings arising under the CSA.

The definition of “acceptable hemp THC level” is also retained in this final rule. States and Indian Tribes shall adopt this concept in their plans. This definition explains how to interpret test results that include the MU with an example. The application of the MU to the reported delta-9 tetrahydrocannabinol concentration on a dry weight basis produces a distribution, or range. If 0.3 percent or less is within the distribution or range, then the sample will be considered to be hemp for the purpose of compliance with the requirements of State, Tribal, or USDA hemp plans. For example, if a laboratory reports a result as 0.35 percent with a measurement of uncertainty of +/−0.06, the distribution or range is 0.29 percent to 0.41percent. Because 0.3 percent is within that distribution or range, the sample, and the lot it represents, is considered hemp for the purpose of compliance with the requirements of State, Tribal, or USDA hemp plans. However, if the MU for that sample was 0.02 percent, the distribution or range is 0.33 percent to 0.37 percent. Because 0.3 percent or less is not within that distribution or range, the sample is not considered hemp for the purpose of plan compliance, and the lot it represents will be subject to disposal. Thus the “acceptable hemp THC level” is the application of the MU to the reported delta-9 tetrahydrocannabinol content on a dry weight basis producing a distribution or range that includes 0.3 percent or less. As such, the regulatory definition of “acceptable hemp THC level” describes how State, Tribal, and USDA plans must account for uncertainty in test results in their treatment of cannabis. This definition affects neither the statutory definition of hemp, 7 U.S.C. 1639o(1), in the 2018 Farm Bill nor the definition of “marihuana,” 21 U.S.C. 802(16), in the CSA.

Sections 297B(a)(2)(A)(iii) and 297C(a)(2)(C) of the AMA require that cannabis plants that have a THC concentration level of greater than 0.3 percent on a dry weight basis be disposed of in accordance with the applicable State, Tribal, or USDA plan. Because of this requirement, producers whose cannabis crop is not hemp will likely lose most of the economic value of their investment. Thus, AMS believes that there must be a high degree of certainty that the THC concentration level is accurately measured and is in fact above 0.3 percent on a dry weight basis before requiring disposal of the crop.

The NIST Reference on Constants, Units, and Uncertainty states that “measurement result is complete only when accompanied by a quantitative statement of its uncertainty. The uncertainty is required in order to decide if the result is adequate for its intended purpose and to ascertain if it is consistent with other similar results.”

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Simply stated, knowing the measurement of uncertainty is necessary to evaluate the accuracy of test results.

8

https://physics.nist.gov/cuu/Uncertainty/international1.html.

Comments to the IFR generally expressed support for requiring that the measurement of uncertainty (MU) be accounted for when testing the THC concentration of hemp, due to the variability in laboratory testing equipment and complex mathematical principles involved. Comments also provided several suggestions on ways to improve the calculation of MU. Many comments advocated specifying an MU to create uniformity in testing across the nation.

USDA does not recommend establishing an MU upper limit (maximum) because (1) MU is typically not standardized, but is controlled using standard test methods, and (2) USDA does not have the data to set an upper limit so setting it would be arbitrary, not scientific. The hemp and scientific industries are just beginning to discuss standard test methods and the final rule does not establish an explicit test method. Setting an upper limit or maximum MU does not resolve the core issue and would not encourage or drive labs to improve accuracy and precision.

Setting an upper limit would in effect be setting a maximum or absolute MU. This may encourage labs to adopt the maximum MU as their MU, rather than drive for a smaller uncertainty. USDA may allow for establishing limits in the future, if needed, once methods are established and USDA has access to Proficiency Testing results and the reported MUs. We encourage States and Tribes to monitor, review and evaluate MU to evaluate trends and outliers, which may indicate “lab shopping” for higher MUs. The requirement for hemp

testing laboratories to incorporate a MU is being retained in this regulation.

Laboratory Accreditation

In the IFR, AMS requested input on establishing a fee-for-service hemp laboratory approval process or a requirement for laboratories to obtain ISO 17025 accreditation for labs that wish to offer THC testing services. Comments reflected a range of views across the industry, both in support of and in opposition to additional laboratory certification requirements. In general, commenters preferred more regulatory flexibility to address the widespread concern of insufficient laboratory capacity as a result of laboratory certification/registration/accreditation requirements. Other commenters were opposed to accreditation requirements due to the cost. While AMS strongly encourages laboratories to be accredited to ISO/IEC 17025 (by an International Laboratory Accreditation Cooperation Mutual Recognition Agreement (ILAC MRA) signatory accreditation body), we also acknowledge that ISO 17025 accreditation requires significant time and financial commitment to pursue and maintain. The time and cost involved is most challenging for smaller and start-up labs. The initial accreditation can cost $5,000-$10,000 (and in some case more) and yearly ongoing costs are $3,000-$8,000. Smaller labs may not have the resources to pursue accreditation in a timely manner or they may have to spend additional time and money for consultants to assist them in setting up a quality management system and to navigate the application and audit processes.

Based on insufficient laboratory capacity at this time and the cost involved in adding this requirement, AMS will not provide an AMS administered lab approval program or require ISO 17025 accreditation. However, AMS remains committed to assisting the hemp laboratory testing community and is available to assist in the development of a laboratory approval program in the future. As explained in the IFR, if such hemp laboratory approval program is developed by AMS, such process will be conducted by USDA, AMS Laboratory Approval Service, which administers the Laboratory Approval Program (LAP). State and Tribal plans are free to include certain additional requirements for hemp testing laboratories, including ISO accreditation or other proficiency schemes.

E. Disposal and Remediation of Non-Compliant Plants

State and Tribal plans are currently required to include procedures for ensuring effective disposal or remediation of plants produced in violation of part 990. Plants that are removed as a result of poor plant health, pests, disease, or weather events, along with removal of male or hermaphrodite plants as part of a cross-pollination prevention plan, are not subject to the disposal requirements herein. This final rule retains the disposal requirements explained in the IFR but clarifies what “disposal” means and explains how the process must be conducted. This final rule also includes remediation as an option to remove non-compliant plants.

As explained in the IFR, if a producer grows cannabis exceeding the legal 0.3 percent THC level, the material must be disposed of in accordance with the CSA and DEA regulations because such material constitutes marijuana, a Schedule I controlled substance under the CSA. The material must be collected for disposal by a person authorized under the CSA to handle marijuana, such as a DEA-registered reverse distributor, or a duly authorized Federal, State, Tribal, or local law enforcement officer. In the final rule, AMS is incorporating flexibilities for disposal that were announced on February 27, 2020 (

https://www.ams.usda.gov/rules-regulations/hemp/enforcement

). Some of these new options include, but are not limited to, plowing under non-compliant plants, composting into “green manure” for use on the same land, tilling, disking, burial, or burning. These methods are intended to allow producers to apply common on-farm practices for the disposal of non-compliant plants. One of the top considerations in making this change was to minimize, to the extent possible, the resource impact to State, Tribal, and local law enforcement in handling hemp that is out of compliance. In addition, we are confident that any disposal options make the product unusable and therefore is not at risk for entering any streams of commerce. Based on comments received, AMS is permanently retaining these on-farm disposal flexibilities.

AMS received comments on this requirement describing the expense associated with destroying cannabis in accordance with the CSA, primarily the requirement that disposal be conducted offsite by a reverse distributor or other law enforcement officer. Based on this input, AMS, in coordination with DEA partners, delayed enforcement of the disposal requirements in the IFR. In the final rule, producers have several options on how to handle non-compliant plants. Producers do not need to use a DEA-registered reverse distributor or law enforcement to dispose of non-compliant plants. Producers may dispose of the plants using one or more of the means described by AMS at

https://www.ams.usda.gov/rules-regulations/hemp/disposal-activities.

It is the Agency's intent that these methods allow producers to apply common on-farm practices as a means of disposal while rendering the controlled substance non-retrievable or non-ingestible. Under this final rule, State and Tribal plans must still include procedures to verify disposal. This may come in the form of in-person verification by State or Tribal representatives, or alternative requirements the direct growers to provide pictures, videos, or other proof that disposal occurred successfully. Producers under the USDA plan must document the disposal of all non-compliant plants. States and Indian Tribes operating under approved hemp production plans and producers under the USDA plan must notify USDA of any occurrence of non-conforming plants or plant material and provide the disposal record of those plants and materials monthly.

State and Tribal plans must include procedures to verify disposal, whether through the use of in-person verification by State or Tribal representatives, or requirements for producers to provide pictures, videos, or other proof that disposal did in fact occur. State and Tribal plans must also include requirements to submit to AMS the monthly disposal and remediation report documenting any on-farm disposals or remediations that occurred during the prior month. As of November 2020, twenty States and nine Tribes operating under the 2018 Farm Bill reported 4,192 licensed producers representing 6,166 acres planted. Of these acres planted, there were 231 disposals representing 730 acres disposed due to not meeting the 0.3 percent acceptable hemp THC level.

AMS did not provide additional remediation options in the IFR. The only remediation alternative was to completely dispose of the non-compliant material. AMS is adding remediation to this final rule based on comment. AMS received many comments suggesting the inclusion of procedures to allow for non-compliant cannabis to be “remediated.” AMS agrees with this suggestion and is publishing remediation techniques concurrently with this rule that can be

followed to remediate non-compliant plant material into compliant form. As described in the IFR, hemp exceeding the acceptable THC level may not be further handled, processed, or enter the stream of commerce. AMS believes that hemp producers should have the opportunity to remediate non-compliant crops in order to minimize financial risk associated with the loss of investment in their hemp crop. For this reason, this final rule allows remediation activities, either disposing of flower materials and salvaging the remainder of the plant or blending the entire plant into biomass plant material. Through both forms of remediation, producers may be able to minimize losses, and in some cases produce a return on investment while ensuring that non-compliant material does not enter commerce.

If a producer elects to perform remediation activities as allowable under this final rule's provisions (referenced above), an additional sampling and testing of the post-remediated crop must occur to determine THC concentration levels. Only those successfully remediated crops will be allowed to enter the stream of commerce, and all other remaining non-compliant crops must then be disposed.

AMS believes the inclusion of remediation and post-harvest sampling into the final rule provides the additional flexibility requested by commenters that expressed the need for producers to have greater opportunity for success as established and beginning farmers entering hemp production.

F. Compliance With Enforcement Procedures, Including Determination of Negligence and Annual Inspection of Hemp Producers

The IFR required State and Tribal plans to include compliance procedures to ensure hemp was being produced in accordance with the requirements of this part. Comments to the IFR were generally opposed to the compliance requirements, particularly as they relate to the definition of negligence. Producers, along with State and Tribal regulatory agencies, found the negligence requirements in the IFR overly harsh and strict. This final rule changes these compliance procedures, particularly how “negligence” is determined. In the context of this regulation, negligence is defined as a failure to exercise the level of care that a reasonably prudent person would exercise in complying with the regulation. The definition employed in this rule is derived from the definition of negligence in Black's Law Dictionary.

See

BLACK'S LAW DICTIONARY (10th ed. 2014) (defining

negligence

as “[t]he failure to exercise the standard of care that a reasonably prudent person would have exercised in a similar situation”).

This final rule increases the negligence threshold from 0.5 to 1.0 percent THC and clarifies how States and Indian Tribes determine when to suspend or revoke a producer's license. AMS believes that raising the negligence threshold from 0.5 percent to 1.0 percent THC will increase flexibility to farmers as they learn more about how to grow compliant hemp and as the availability of stable hemp genetics improves. In developing the compliance requirements for State and Tribal plans, AMS recognizes that there may be significant differences across States and Indian Tribes in how they will administer their respective hemp programs. This final rule provides that a producer shall not be subject to more than one negligent violation per calendar year.

State and Tribal hemp plans must still include requirements to conduct annual inspections of, at a minimum, a random sample of hemp producers to verify hemp is not being produced in violation of this rule, along with a procedure for handling violations.

In accordance with the 2018 Farm Bill, States and Indian Tribes with their own hemp production plans have certain flexibilities in determining whether hemp producers have violated their approved plans. However, there are certain compliance requirements that all State and Tribal plans must contain. This includes procedures to identify and attempt to correct certain negligent acts, such as failing to provide a legal description of the land on which the hemp is produced, not obtaining a license or other required authorizations from the State or Tribal government, or producing plants exceeding 0.3 percent total THC. States and Indian Tribes may include additional requirements in their plans.

This final rule specifies that hemp producers do not commit a negligent violation if they produce plants that exceed the acceptable hemp THC level and use reasonable efforts to grow hemp and the plant does not have a THC concentration of more than 1.0 percent on a dry weight basis. AMS recognizes that hemp producers may take the necessary steps and precautions to produce hemp, such as using certified seed, using other seed that has reliably grown compliant plants in other parts of the country, or engaging in other best practices, yet still produce plants that exceed the acceptable hemp THC level. AMS believes that a hemp producer in that scenario has exercised a level of care that a reasonably prudent person would exercise if the plant does not have a THC concentration of more than 1.0 percent on a dry weight basis. AMS arrived at this increased tolerance based on input from commenters, particularly State agriculture departments that operated hemp research programs under the 2014 Farm Bill, along with data provided by laboratories testing hemp subject to 2018 Farm Bill requirements. The 0.5 percent was based on data from three states participating in the 2014 Farm Bill pilot program. AMS believes raising the negligent violation threshold from 0.5 percent to 1.0 percent in the final rule provides a greater buffer and reduces farmers' exposure to risk of violation accrual and license suspension.

AMS recognizes the violation threshold may incentivize (or disincentivize) innovation by research institutions and producers. AMS acknowledges more innovation and research across industry will bring more stability to stakeholders. AMS believes the 1.0 percent threshold incentivizes innovation across industry more so than a 0.5 percent violation threshold. Further, comments addressed the negative impact of the accrual of negligent violations on the financial stability of the individual business. They described how a hemp grower's access to credit and insurance is jeopardized when negligent violations accumulate and lead to a determination of culpable negligence. Comments explained that lending institutions and insurance providers look for risk factors. They also raised questions about how the accrual of negligent violations may be interpreted by lender or providers. Comments said that many insurers will not cover crop losses if losses are due to the growers' negligence.

AMS acknowledges institutional lenders view violations as risk factors in decision making. AMS also notes that not all culpable violations are derived from the accrual of negligent violations. Culpable violations may be the result of producers violating other parts of the 2018 Farm Bill. However, the 2018 Farm Bill explicitly considers certain actions as constituting negligent violations. AMS's intention is to provide a threshold between 0.3 percent THC level and what would be considered a negligent violation so not all hemp that tests over the 0.3 percent be considered a negligent violation. Because a producer will not have committed a negligent violation every time he or she grows hemp with a concentration of hemp above the 0.3 percent level, this will assist producers when requesting loans or other financial assistance.

Several comments suggested that a 0.5 percent negligence threshold threatens the survival of farmers in an emerging industry. Comments suggested that the low threshold is a barrier to entry for new farmers or farmers with no experience growing hemp, who risk high initial capital investments to establish operations. Comments argued that the low threshold favors larger farms using industrialized hemp varieties and production practices, and that the low negligence threshold in the IFR would unnecessarily criminalize farmers working with a legal agricultural commodity. Increasing this threshold to 1.0 percent benefits producers, including small and new farmers, that intended to grow hemp but whose crops tested “hot” even though they made reasonable efforts to grow hemp.

In cases where a State or Indian Tribe determines a negligent violation has occurred, a corrective action plan shall be established. The corrective action plan must include a reasonable date by which the producer will correct the negligent violation. Producers operating under a corrective action plan must also periodically report to the State or Tribal government, as applicable, on their compliance with the plan for a period of not less than two calendar years following the violation. A producer who negligently violates a State or Tribal plan three times in a five-year period will be ineligible to produce hemp for a period of five years from the date of the third violation.

Several comments explained how these requirements as written in the IFR were confusing and difficult to administer. Particularly, commenters explained how a producer could easily receive three negligent violations during one growing season, which would lead to an automatic licensing revocation for the following five years. For example, a producer may grow hemp in three different locations. If the hemp becomes non-compliant cannabis, all in one season, the producer would lose the license in one season. Commenters described this as too strict and too severe a penalty for honest mistakes that many first-year hemp producers will certainly make. AMS agrees and wishes to clarify that this is not the intent of the regulation. AMS acknowledges that producers may have more than one production area and that they may harvest at different times. Tests results may be over the allowable limit on those production areas but the planting was performed at the same time using the same seeds. Allowing for only one violation per season would help minimize duplication of enforcement. This final rule provides that a producer shall not be subject to more than one negligent violation per calendar year. As it is customary in agriculture, practices vary due to many factors such as weather, availability of labor, transportation and storage capacity and more. Due to many factors, producers make determinations about planting and harvest cycles. In certain circumstances, producers may plant before the first cycle has been harvested specially when they plant in multiple locations. Calendar year is easier to administer and will allow for various growing seasons.

Each geographical area has a growing season based on specific temperature, weather, soil or other factors in that region, therefore this rule is defining growing season as a calendar year. This will allow flexibility, including a year-round season if States and Indian Tribes have a warmer climate or greenhouse growing.

Negligent violations are still not subject to criminal enforcement action by local, Tribal, State, or Federal government authorities under this regulation.

State and Tribal plans also must contain provisions relating to producer violations made with a culpable mental state greater than negligence, meaning acts made intentionally, knowingly, or with recklessness. This definition is derived from the definition of negligence in Black's Law Dictionary. See BLACK'S LAW DICTIONARY (10th ed. 2014) (giving as a definition of

negligence

“[t]he failure to exercise the standard of care that a reasonably prudent person would have exercised in a similar situation”). If it is determined a violation was committed with a culpable mental state greater than negligence, the State agriculture department or Tribal government, as applicable, shall immediately report the producer to the Attorney General, USDA, and the chief law enforcement officer of the State or Indian Tribe.

State and Tribal plans also must prohibit any person convicted of a felony related to a controlled substance under State or Federal law from participating in the State or Tribal plan and from producing hemp for 10-years following the date of conviction. An exception applies to a person who was lawfully growing hemp under the 2014 Farm Bill before December 20, 2018, and whose conviction also occurred before that date. This exemption language must be included in all State and Tribal hemp plans, whether they administered a 2014 Farm Bill research pilot program or not.

The 2018 Farm Bill does not define what it means to “participate in the [State or Tribal] program.” AMS is not requiring States and Indian Tribes to adopt a specific definition. Instead, they must define who those persons are in their plan. The definition must include one individual for whom a criminal history records check can be conducted for each license or authorization that the State or Indian Tribe issues. The final rule identifies and defines “key participants” as those participating in the USDA plan. State and Tribes may, but are not required, to adopt this definition for their plans.

The State or Indian Tribe will need to review criminal history reports for each individual identified as participating in its program. The final rules defines “criminal history report” as the Federal Bureau of Investigation's Identity History Summary. The State or Indian Tribe may review additional reports or checks to determine whether an individual may participate in its plan. Finally, any person found by the USDA, State, or Tribal government to have materially falsified any information submitted to the program will be ineligible to participate.

G. Information Sharing

The IFR included requirements for State and Tribal plans to contain procedures for reporting specific information to USDA. Limited comments were received on these requirements. This information has been transmitted already by many States and Tribes to USDA. This information meets the requirements set in the 2018 Farm Bill. Therefore, the following requirements are the same as required under the IFR and are in subpart F of this final rule. This is separate from the requirement to report hemp crop acreage with FSA as discussed above.

The information required includes contact information for each hemp producer covered under the plan, including name, address, telephone number, and email address (if available). If the producer is a business entity, the information must include the full name of the business, address of the principal business location, full name and title of each employee for whom the entity is required to submit a criminal history report, and an email address if available, and Employee Identification Number (“EIN”) of the business entity. Producers must report the legal description and geospatial location for each hemp production area, including each field, greenhouse, or other site used by them, as stated in section A of this preamble. The report also shall include the status of the license or other

required authorization from the State or Tribal government, as applicable, for each producer under a hemp production plan. States and Indian Tribes will submit this information to USDA not later than 30 days after the date it is received using the appropriate reporting requirements as determined by USDA.

These reporting requirements are found at § 990.70 in this final rule. Further explanation of the specific information to be submitted, the appropriate format, and the specific due dates for the information is discussed in Section X (Regulatory Analysis) of this final rule. This information submitted from each State and Tribal plan, along with the equivalent information collected from individuals participating under the USDA plan, will be assembled and maintained by USDA and made available in real time to Federal, State, Tribal, and local law enforcement, as required by the 2018 Farm Bill. All information supporting, verifying, or documenting the information submitted to USDA must be maintained by the States and Indian Tribes for at least three years.

Under § 990.70(c), States and Indian Tribes must also submit annual reports regarding the total planted, harvested, and disposed acreage. Additionally, because the final rule provides for remediation of plants, the final rule requires all remediated acreage to be reported as well. Similarly, under § 990.71(c), all USDA hemp plan producers must submit annual reports to USDA detailing total planted acreage, total acreage disposed and remediated, and total harvested acreage.

H. Certification of Resources

All State and Tribal plans submitted for USDA approval must also have a certification stating the State or Indian Tribe has the resources and personnel necessary to carry out the practices and procedures described in their plan. Section 297B of the AMA requires this certification, and the information is important to USDA's approval of State and Tribal plans, in that all such plans must be supported by adequate resources to effectively administer them. This section has not changed from the IFR.

I. State and Tribal Plan Approval, Technical Assistance and USDA Oversight

Since the publication of the IFR, AMS has worked extensively with States and Indian Tribes in developing hemp production plans. As States and Indian Tribes begin the work of modifying their plans to incorporate the changes herein, we encourage States and Indian Tribes to continue working with and sharing information with AMS. States and Tribes may need to change plans based on changes in this final rule because their State or Tribal laws may no longer match the requirements in this final rule. Even though some of the changes in this final rule are less burdensome, State and Tribal plans must follow their own legislations. Accordingly. They must amend their plans. During the plan development and/or revision process, States and Indian Tribes are encouraged to contact USDA so we may provide technical assistance in developing plan specifics. Since the publication of the IFR, USDA approved over 60 State and Tribal plans within the 60-day requirement. USDA approved plans that comply with the 2018 Farm Bill and with the provisions of the IFR. For the 2021 planting season, the 2018 Farm Bill, amended by the Continuing Resolution (CR) (Agriculture Improvement Act of 2018 (7 U.S.C. 5940 note; Pub. L. 116-260)), provided that States and institutions of higher education can continue operating under the authorities of the 2014 Farm Bill until January 1, 2022. AMS clarified the avenues for Tribal participation under authorities in the 2014 Farm Bill to grow industrial hemp for research purposes. This clarification is available on the AMS website:

https://www.ams.usda.gov/content/usda-clarifies-industrial-hemp-production-indian-Tribes.

Due to this extension, many States decided to remain under the 2014 Farm Bill provisions and rescinded their previously approved plans. All States are eligible to remain or start programs under the 2014 Farm Bill provisions. As a result, USDA will oversee 20 State and 20 Tribal plans under the 2018 Farm Bill until new States and Tribes submit more plans under the 2018 Farm Bill provisions.

As of November 2020, States and Tribes operating under the 2018 Farm Bill reported 4,192 licensed producers representing 6,166 acres planted. Of these acres planted, there were 231 disposals representing 730 acres disposed due to not meeting the 0.3 percent acceptable hemp THC level. This data is limited because even though many States and Tribes have approved plans, they have not all been fully implemented. USDA expects more data will be available as the 2021 season begins and States and Tribes implement their programs.

USDA will use the procedures in this rule, which are substantively similar to those in the IFR, to review and approve State and Tribal plans. If a plan does not comply with the requirements of the Act and this regulation, it will not be approved. However, USDA has worked with many States and Tribes submitting plans to assist them in meeting the requirements and obtaining approval for their plans.

If a plan is not approved, USDA provides a letter of notification outlining the deficiencies identified. The State or Tribal government may then submit an amended plan for review. If the State or Tribe disagrees with the determination made by USDA regarding the plan, a request for reconsideration can be submitted to USDA using the appeal process as outlined in section V of this document. Plans submitted by States and Indian Tribes must be approved by USDA before they can be implemented.

States and Indian Tribes can submit their plans to USDA through electronic mail at

farmbill.hemp@usda.gov

or by postal carrier to USDA. The specific mailing address is provided on the USDA Domestic Hemp Production Program website.

If the State or Tribal plan application is complete and meets the criteria of this part, USDA issues an approval letter. Approved State and Tribal plans, including their respective rules, regulations, and procedures, are posted on USDA's hemp program website.

A USDA-approved State or Tribal plan will remain in effect, unless approval is revoked by USDA pursuant to the revocation procedures discussed in this section or unless the State or Tribe makes substantive revisions to their plan or their laws that alter the way the plan meets the requirements of this regulation. Additionally, changes to the provisions or procedures under this rule or to the language in the 2018 Farm Bill may require plan revision and resubmission to USDA for approval. Changes to applicable Federal and State or Tribal statutes may also require plan revision and resubmission to USDA for approval and may lead to plan revocation if the plan is not amended. Should States or Indian Tribes have questions regarding the need to resubmit their plans, they should contact USDA for guidance.

A State or Tribal government may submit an amended plan to USDA for approval if: (1) The Secretary disapproves a State or Tribal plan; or (2) the State or Tribe makes substantive revisions to their plan or to their laws that alter the way the plan meets the requirements of this regulation, or as necessary to bring the plan into compliance with changes in other applicable law or regulations.

If the plan previously approved by USDA needs to be amended because of

changes to the State's or Tribe's laws or regulations, such resubmissions should be provided to USDA within 60 days from when the new State or Tribal law or regulations are effective. Producers will be held to the requirements of the previous plan until such modifications are approved by USDA. If State or Tribal government regulations in effect under the USDA-approved plan change, but the State or Tribal government does not resubmit a modified plan within 60 days of the effective date of the change, USDA will issue a notification to the State or Tribal government that approval of its plan will be revoked. The revocation will be effective no earlier than the beginning of the next calendar year. If a plan is revoked, producers previously subject to an approved plan would be eligible to apply to USDA for a license. This is a change from the IFR that allowed for resubmission because of a change in State or Tribal law or regulations within a calendar year. This modification is due to USDA's need to know in a timelier manner, since such laws and regulations are the foundations of the hemp plans. The words of the plans do not have meaning if they are not aligned with current authorities.

USDA has the authority to audit States and Tribes to determine if they are in compliance with the terms and conditions of their approved plans. If a State or Indian Tribe is noncompliant with their plan, USDA will work with that State or Indian Tribe to develop a corrective action plan. However, if additional instances of noncompliance occur, USDA has the authority to revoke the approval of the State or Tribal plan for one year or until the State or Tribe become compliant. AMS still believes that one year is sufficient time for a noncompliant State or Indian Tribe to evaluate problems with their plan and make the necessary adjustments. Should USDA determine the approval of a State or Tribal plan should be revoked, such a revocation would begin after the end of the current calendar year, so producers will have the opportunity to adjust their operations as necessary. This will allow producers to apply for a license under the USDA plan so that their operations do not become disrupted due to the revocation of the State or Tribal plan.

III. Department of Agriculture Plan

The 2018 Farm Bill requires USDA to administer a hemp production plan for producers in jurisdictions where hemp production is legal but is not covered by an approved State or Tribal plan. The USDA licensing remains available to producers in States and Tribal territories without a USDA-approved hemp plan. All hemp produced in a jurisdiction without an approved State or Tribal plan must meet the requirements of the USDA plan. The requirements for producers operating under the USDA plan are similar to those operating under approved State and Tribal plans.

Regulatory requirements for producers licensed under the USDA plan in this final rule differ in some cases from corresponding requirements in the IFR and are explained in the following section. Comments submitted to the IFR generally did not address these requirements specifically; rather they focused on the broader requirements around sampling, testing, and disposal, to which all hemp producers are subject, whether licensed by a State, a Tribe, or USDA.

A. USDA Hemp Producer License and Criminal History Report

To produce hemp under the USDA plan, producers must apply for and be issued a license from USDA. USDA has been accepting applications from producers since October 2019. Any license issued by USDA prior to publication of this final rule will remain in effect and subject to the original expiration date. As of the issuance of this final rule, USDA has issued 380 licenses under the USDA plan.

While a State or Tribal government has a draft hemp production plan pending for USDA approval, USDA will not issue USDA hemp production licenses to individual producers located within that State or Tribal territory. Once USDA approves a hemp production plan from a State or Tribe, it will deny any license applications from individuals located in the applicable State or Tribal territory. If USDA disapproves a State or Tribal hemp production plan, individual producers located in the State or Tribal territory may apply for a USDA hemp production license, unless hemp production is illegal in the State or Tribal territory where they intend to produce hemp.

Comments to the IFR described confusion around the application window for when USDA would receive and process applications as described in the IFR. The IFR said that for the first year after USDA began to accept applications, applications could be submitted any time. For all subsequent years, license applications and license renewal applications would have to be submitted between August 1 and October 31. AMS requested input on this application window, and commenters were generally opposed. Under this final rule, USDA will accept applications for USDA hemp production licenses on a rolling basis to better accommodate the needs of producers. AMS continues to encourage the submission of applications well before the planting season so AMS has adequate time to process the applications. All applications must comply with the requirements as described below. The license application is available online at the USDA Domestic Hemp Production Program website at

https://www.ams.usda.gov/rules-regulations/hemp/information-producers.

Applications may be submitted electronically or by mail.

The producer license application requires contact information such as name, address, telephone number, and email address (if available). If the applicant represents a business entity, and that entity will be the producer, the application will require the full name of the business, address of the principal business location, full name and title of the key participants on behalf of the entity, an email address if available, and EIN of the business entity. All applications must be accompanied by a completed criminal history report. Several comments to the IFR expressed opposition to this requirement. AMS is retaining this requirement since verification of compliance with the felony restriction is a statutory requirement. If the application is for a business entity, a completed criminal history report must be provided for each key participant.

Some commenters expressed concern with the requirements pertaining to “key participants,” particularly with the requirement that all key participants undergo a background check. To the extent the commenters equated a criminal history check with a background check, AMS is retaining this requirement, since key participants are those individuals responsible for ensuring compliance with the regulatory requirements contained herein. If key participants are not subject to criminal history checks, AMS cannot ensure statutory restrictions on individuals with felony convictions related to controlled substances are met per Section 297B(e)(3)(B)(i) of the AMA. AMS notes that it will not conduct any other checks into the background of key participants.

Key participants are a person or persons who have a direct or indirect financial interest in the entity producing hemp, such as an owner or partner in a partnership. A key participant also includes a person in a corporate entity at executive levels including the chief executive officer, chief operating officer, and chief financial officer. This does not

include other management positions like farm, field, or shift managers. The final rule also specifies that the definition of key participant does not include a member of the leadership of a Tribal government who is acting in their capacity as a Tribal leader, except when that member exercises executive managerial control over hemp production. AMS added this specification to address concerns raised by Indian Tribes regarding issues that can arise when a Tribal leader is also involved in the production of hemp in their capacity as a Tribal leader. While AMS understands the issues that can arise when a Tribal leader is subject to the felony conviction restriction, AMS must also ensure that all required entities operating under a USDA plan comply with Section 297B(e)(3)(B) of the AMA. Therefore, the definition of key participants still encompasses Tribal leaders who exercise executive managerial control over hemp production.

USDA will not accept criminal history reports completed more than 60 days before the submission of an application, because the 60-day window provides USDA with an expectation that the findings of the report are reasonably current and accurate.

The criminal history report must indicate the applicant has not been convicted of a State or Federal felony related to a controlled substance for the 10 years prior to the date of when the report was completed. An exception applies to a person who was lawfully growing hemp under the 2014 Farm Bill before December 20, 2018, and whose conviction also occurred before that date.

In addition to providing the information specified, the application will also require license applicants to certify they will adhere to the provisions of the plan.

Once all the necessary information has been provided, applications will be reviewed by USDA for completeness and to determine an applicant's eligibility. USDA will approve or deny license applications unless the applicant is intending to produce hemp in a jurisdiction that has submitted a plan to USDA or has a plan approved by USDA, in which case the application for a USDA license will be denied. Applicants will be notified if they have been granted or denied a license either by mail or email.

If an application is denied, the applicant will receive a notification letter or email specifying why the application was denied. If an application is denied because it is incomplete, the applicant will have the option of resubmitting a revised application. If the application was denied for other reasons, the applicant will have the opportunity to appeal USDA's decision in accordance with the appeals process outlined in the regulation in subpart D.

Once a license application has been approved, USDA will issue the producer license. Licenses are not transferrable in any manner. An applicant whose application has been approved will not be considered a licensed producer under the USDA plan until the applicant receives their producer license. Licenses do not renew automatically and must be renewed every three years.

Applications for renewal will be subject to the same terms and approved under the same criteria as initial applications unless there has been an intervening change in the applicable law or regulations since approval of the initial or last application. In such a case, the subsequently enacted law or regulation shall govern renewal of the license. Licenses will be valid until December 31 of the year that is at least three years after the license is issued. This date is not tied to the harvest and planting season. For example, if a producer applies for a license on August 1, 2021, and is granted a license on September 15, 2021, the license would expire December 31, 2024. A December 31 expiration date will allow licensed producers time to apply for a license renewal prior to their prior license's expiration and prevent a gap in licensing.

A producer licensed by USDA must report their hemp crop acreage to FSA. Producers must provide specific information to FSA, including, but not limited to, USDA license number, the specific location where hemp is produced and the acreage, greenhouse, building, or site where hemp is produced. The specific location where hemp is produced must be identified, to the extent practicable, by the geospatial location. FSA will provide assistance in identifying the hemp growing location. Please refer to the Section II of this document on State and Tribal hemp production program requirements for further discussion on FSA reporting requirements.

If at any time there is a change to the information submitted in the license application, a license modification is required. A license modification is required if, for example, the licensed business is sold to a new owner or hemp will be produced in a new location not described on the original application. Producers must notify USDA immediately should there be any change in the information provided on the license application.

B. Sampling for THC

The IFR stated that all hemp production must be sampled and tested for THC concentration levels. It is the responsibility of the licensed producer to pay any fees associated with sampling. AMS issued guidance on sampling procedures that meet the sampling requirements to coincide with publication of the IFR and will update the guidance with this final rule. AMS is requiring that all samples tested for THC concentration levels be conducted in DEA-registered laboratories. However, this requirement will not be applicable until December 31, 2022.

Significant input was received on the IFR sampling requirements. Please refer to section B under State and Tribal plans above and the discussion of comments below for a summary of findings. Producers under the USDA plan are subject to the sampling and testing requirements as outlined in the USDA guidelines for sampling and testing. Since USDA cannot develop a one size fits all performance-based sampling program, all producers licensed under the USDA plan must comply with the USDA sampling guidelines. USDA licensed producers are responsible for obtaining the services of sampling agents and hemp testing laboratories themselves. USDA is updating guidance on sampling procedures and training for sampling agents with this rule. USDA does not provide sampling or testing services and will not pay for those services.

State and Tribal hemp regulators have successfully developed sampling requirements that ensure adherence to State and Federal regulations, while allowing for flexibilities due to limited State resources and State and Tribal differences. They explained that, since most hemp in a given region is harvested at the same time, sampling must be completed within a very short time frame by only a few individuals. Several States also explained that perceived risk determines State requirements. Some States utilize different sampling requirements for broad end-use categories like “fiber/grain” hemp versus “cannabinoid” hemp, while others base their requirements on historical THC concentrations of certain varietals or on the characteristics and growing history of a certain farm or producer. AMS agrees that sampling requirements should allow States and Indian Tribes more flexibility in the management of their hemp regulatory programs.

AMS agrees that requiring sampling from every lot may be burdensome and expensive for State and Tribal regulatory entities and producers.

AMS finds that it makes sense to allow States and Indian Tribes to consider performance-based alternatives when developing sampling plans that take into account unique sampling protocols for hemp growing facilities under their jurisdiction. The sampling requirements for State and Tribal plans allow for States and Indian Tribes to develop unique sampling protocols for hemp growing facilities under their jurisdiction. Sampling protocols must be sufficient at a confidence level of 95 percent that no more than one percent of the plants in each lot would exceed the acceptable hemp THC level and ensure that a representative sample is collected that represents a homogeneous composition of the lot. Alternatively, States and Indian Tribes may adopt a performance-based sampling protocol. A performance-based protocol must have the potential to ensure, at a confidence level of 95 percent, that the cannabis plants will not test above the acceptable hemp THC level. USDA encourages that the alternative protocol consider seed certification processes or process that identifies varieties that have consistently demonstrated to result in compliant hemp plants in that State or territory of the Indian Tribe, whether the producer is conducting research on hemp at an institution of higher learning or that is funded by a Federal, State, or Tribal government, whether a producer has consistently produced compliant hemp plants over an extended period of time, and other similar factors. AMS believes this will provide needed flexibility to States and Indian Tribes to develop logical and enforceable sampling requirements that take into consideration their unique circumstances. AMS will still require States and Indian Tribes to submit their individual sampling requirements for review as a component of the plan approval process. If a State or Tribal plan lacks a sampling protocol, every lot, and thereby every producer must be sampled and tested.

When evaluating sampling protocols submitted by States and Indian Tribes, USDA will evaluate the risk of producing non-compliant material to determine approval or disapproval. In evaluating the risk, USDA will take into consideration whether the performance-based factors the State or Tribe used have the potential to ensure compliance at a 95 percent confidence level.

Since USDA cannot develop performance metrics that would be applicable independently from where the producer is located, producers licensed under the USDA plan are subject to the sampling requirements in the rule. USDA guidelines provided on the USDA website at

https://www.ams.usda.gov/rules-regulations/hemp/information-sampling

describe best practices for complying with those requirements. However, USDA would consider a performance-based sampling scheme for producers under the USDA plan, and amend the sampling requirements accordingly, if information collected by USDA in the future is sufficient to make this determination. Data must be reliable and able to be applicable across the production areas in the U.S.

Samples must be collected by a USDA-approved sampling agent, or a Federal, State, Tribal, or local law enforcement agent authorized by USDA to collect samples. As explained above, USDA is expanding the training requirements for sampling agents and will provide a list of authorized sampling agents on the USDA website. It is the responsibility of the licensed producer to pay any fees associated with sampling and testing. Sampling and testing guideline documents are being updated as part of this proceeding and are available on the USDA website.

The sampling procedures are designed to produce a representative sample for testing. They describe procedures for entering a growing area and collecting the minimum number of plant specimens necessary to accurately represent the THC content, through laboratory testing, of the sample to be tested.

C. Testing Laboratories

The THC level in representative samples must be at or below the acceptable hemp THC level. Testing must be conducted using post-decarboxylation or other similarly reliable methods where the total THC concentration level measured includes the potential to convert THCA into THC. Further, test results should be determined and reported on a dry weight basis, meaning the percentage of THC, by weight, in a cannabis sample, after excluding moisture from the sample. The moisture content is expressed as the ratio of the amount of moisture in the sample to the amount of dry solid in the sample.

Based on AMS's review of scientific studies, internal research and information gathered from the

United Nations Office on Drugs and Crime:

“

Recommended Methods for the Identification and Analysis of Cannabis and Cannabis Products”

(ISBN 978-92-1-148242-3), AMS has determined that testing methodologies meeting these requirements include gas or liquid chromatography with detection. As discussed earlier and stated in § 990.25(g), if a testing laboratory utilizes alternative testing methods, they must be reviewed and approved by USDA to assess their reliability, accuracy, and compliance with the requirements.

As explained earlier in this document, AMS is requiring that all testing of samples for THC concentration levels be conducted in DEA-registered laboratories. Enforcement of this requirement has been delayed until December 31, 2022. Non-DEA-registered labs can continue testing hemp for THC concentration until that time. Labs testing hemp for THC must meet standards of performance described in this regulation. Standards of performance ensure the validity and reliability of test results; that analytical method selection, validation, and verification are appropriate (fit for purpose); and that the laboratory can successfully perform the testing. Furthermore, the standards ensure consistent, accurate, analytical performance and that the analytical tests performed are sufficiently sensitive for the purposes of the detectability requirements under this final rule.

Laboratories conducting THC testing must also be registered with DEA to handle controlled substances under the CSA (21 U.S.C. 822 and 21 U.S.C. 844) and DEA regulations (21 CFR part 1301). USDA is adopting this requirement because of the potential for these laboratories to handle cannabis products testing above 0.3 percent THC. Such products are, by definition, marijuana, and a controlled substance. DEA registration requirements verify a laboratory's ability to properly handle controlled substances.

As previously explained in the requirements for State and Tribal plans, AMS is not adopting requirements that hemp testing laboratories be approved under a USDA Laboratory Approval Program or undergo ISO accreditation.

It is the responsibility of the licensed producer to select the DEA-registered laboratory that will conduct the testing and to pay any fees associated with testing. Laboratories performing THC testing for hemp produced under this program are required to share test results with the licensed producer and USDA. USDA will provide instructions to all approved labs on how to electronically submit test results to USDA. Laboratories may provide test results to licensed producers in whatever manner best aligns with their business practices, but producers must

be able to produce a copy of test results. For this reason, providing test results to producers through a web portal or through electronic mail, so the producer will have ready access to print the results when needed, is preferred.

Samples exceeding the acceptable hemp THC level are marijuana and will be handled in accordance with the procedures discussed in section C below.

Any licensee may request that the laboratory retest pre-harvest samples, if it is believed the original THC concentration level test results were in error. The licensee requesting the retest of the second sample would pay the cost of the test. The retest results would be issued to the licensee requesting the retest, and a copy would be provided to USDA or its agent.

Research Institutions Sampling and Testing

AMS also acknowledges that research institutions face special circumstances when conducting hemp research. Under the IFR, researchers and research institutions were required to comply with the same production requirements as commercial producers. Under this final rule, and as described in detail below, research institutions and the producers working with them are afforded greater sampling and testing flexibility to facilitate continued hemp research. Producers that produce hemp for research must obtain a USDA license. However, the hemp that is produced for research is not subject to the same sampling requirements provided that the producer adopts and carries out an alternative sampling method that has the potential to ensure, at a confidence level of 95 percent, that the cannabis plant species

Cannabis sativa

L. that will be subject to this alternative method will not test above the acceptable hemp THC level. The rule includes a performance-based standard for sampling for all licensed producers in section 990.24: “at a confidence level of 95 percent that no more than one percent (1%) of the plants in the lot would exceed the acceptable hemp THC level.” The performance-based standard for research is a modification of that standard: “the potential to ensure, at a confidence level of 95 percent, that the cannabis plant species

Cannabis sativa

L. that will be subject to this alternative method will not test above the acceptable hemp THC level.” We are comfortable with this modification to recognize that researchers may need flexibility to conduct their research and because the research hemp cannot enter the stream of commerce. USDA will monitor researchers' compliance with this standard as part of its normal oversight and compliance program.

USDA licensees shall ensure the disposal of all non-compliant plants. USDA licensees shall also comply with the reporting requirements including reporting disposal of non-compliant plants. Research institutions that handle “hot” hemp must follow CSA requirements for handling marijuana.

Performance based plans from research institutions where a State or Tribal plan is not in place will be reviewed by USDA. Notice and comment requirements under the PRA process will be followed before a final determination is made by USDA to move forward with approving performance-based plans for those producers under the USDA plan.

States and Indian Tribes are allowed to develop performance-based requirements for these institutions. However, the alternative method must have the potential to ensure, at a confidence level of 95 percent, that the cannabis plant species

Cannabis sativa

L. that will be subject to the alternative method will not test above the acceptable hemp THC level.

The research institutions must follow reporting requirements. AMS believes this exception is necessary to help support research and development as it relates to hemp production. This decision allows these types of research facilities and institutions to confidently oversee the study of hemp plants through trialing and genetics research. AMS believes this exception to be critical to the growth of industry, particularly in its infancy. Over time, the exception provided by this final rule will help to stabilize the industry by providing greater understanding of hemp genetics and how certain varietals respond differently to growing conditions in various geographic locations. All producers are expected to benefit from such knowledge as they will be made aware of the more stable and consistently reliable hemp varietals. Any non-compliant plants produced by research institutions as a result of research and development will still need to be disposed and verified through documentation. Research institutions must follow licensing and reporting requirements.

D. Disposal of Non-Compliant Product

Under the IFR, non-compliant product was required to be disposed of by persons authorized to do so under the CSA and had to be destroyed. As explained below, under this final rule, producers may handle non-compliant product disposal on the farm, and they have greater flexibility in remediating that product. USDA producers are required to follow procedures for ensuring effective disposal of cannabis plants produced in violation of this rule. Plants that are removed as a result of poor plant health, pests, disease, weather events, along with removal of male or hermaphrodite plants as part of a cross-pollination prevention plans, are not subject to the disposal requirements herein. This final rule retains the disposal requirements explained in the IFR, but clarifies what “disposal” means and explains how the process must be conducted. If a producer grew cannabis exceeding the acceptable hemp THC level, the IFR required that the material be disposed of in accordance with the CSA and DEA regulations because such material is marijuana, a Schedule I controlled substance under the CSA. The IFR required that material be collected for disposal by a person authorized under the CSA to handle marijuana, such as a DEA-registered reverse distributor, or a duly authorized Federal, State, Tribal, or local law enforcement officer.

As explained earlier, AMS is now allowing the flexibility to conduct on-farm disposals and also allowing for remediation options.

If the results of a test conclude that the THC levels exceed the acceptable hemp THC level, the laboratory will promptly notify the producer and USDA or its authorized agent. If a licensed producer is notified that they have produced cannabis exceeding the acceptable hemp THC level, the cannabis must be disposed of in accordance with the on-farm disposal options described herein.

Licensed producers notified they have produced cannabis plants exceeding the acceptable hemp THC level must arrange for disposal or remediation of the lot represented by the sample in accordance with the procedures as specified above and described on the USDA website at

https://www.ams.usda.gov/rules-regulations/hemp/disposal-activities.

Producers must document the disposal or remediation of all non-compliant cannabis. This can be accomplished by providing USDA with a copy of the documentation of disposal or remediation using the reporting requirements established by USDA. These reports must be submitted to USDA following the completion of the disposal or remediation process.

E. Compliance

As described below, this final rule changes the THC threshold for a negligent violation from 0.5 percent

under the IFR to 1.0 percent. Further, rather than being liable for multiple negligent violations in each growing season as under the IFR, this final rule provides that producers can only incur one negligent violation in each growing season, which prevents producers from accumulating multiple negligent violations and losing program eligibility after a single growing season.

USDA will maintain oversight of USDA-licensed hemp producers by conducting audits of USDA licensees and working with licensees with negligent violations to establish corrective action plans. Negligent violations by a producer may lead to suspension or revocation of a producer's license.

While USDA has not yet conducted any random audits, the department may conduct random audits of licensees to verify hemp is being produced in accordance with Subtitle G of the AMA no more frequently than every three years, based on available resources. The format of the audit will vary and may include a “desk-audit” where USDA requests records from a licensee, or the audit may be a physical visit to a licensee's facility. When USDA visits a licensee's facility, the licensee must provide access to any fields, greenhouses, storage facilities, or other locations where the licensee produces hemp. USDA may also request records from the licensee, to include production and planting data, testing results, and other information as determined by USDA.

USDA will issue a summary of the audit to the licensee after the completed audit. Licensees who are found to have a negligent violation will be subject to a corrective action plan. Negligent violations include: (1) Failure to provide a legal description of the land on which the hemp is produced; (2) not obtaining a license before engaging in production; or (3) producing plants exceeding the acceptable hemp THC level. Similar to the requirements for State and Tribal plans, USDA will not consider hemp producers as committing a negligent violation if they produce plants exceeding the acceptable hemp THC level if they use reasonable efforts to grow hemp and the cannabis plant does not have a THC concentration of more than 1.0 percent on a dry weight basis. AMS believes that increasing the negligence threshold from 0.5 percent to 1.0 percent will increase flexibility to farmers as they learn more about how to grow compliant hemp and as the availability of stable hemp genetics improves. Further, producers may only receive one negligent violation per growing season, as determined by USDA based on a review of producer records. USDA will use a calendar year as a growing season.

When USDA determines that a negligent violation has occurred, USDA will issue a Notice of Violation. This Notice of Violation will include a corrective action plan. The corrective action plan will include a reasonable date by which the producer will correct the negligent violation or violations and will require the producer to periodically report to USDA on its compliance with the plan for a period of not less than the next two calendar years. A producer who has negligently violated the provisions of this rule three times in a five-year period is ineligible to produce hemp for a period of five years from the date of the third violation. Negligent violations are not subject to criminal enforcement.

Hemp found to be produced in violation of this regulation, such as hemp produced on a property not disclosed by the licensed producer or without a license, would be subject to the same disposal provisions as for cannabis testing above the acceptable hemp THC level. Further, if it is determined a violation was committed with a culpable mental state greater than negligence, USDA will report the violation to law enforcement.

The 2018 Farm Bill limited the participation of certain convicted felons in hemp production. A person with a State or Federal felony conviction relating to a controlled substance is subject to a 10-year ineligibility restriction on producing hemp under the Act. An exception applies to a person who was lawfully growing hemp under the 2014 Farm Bill before December 20, 2018, and whose conviction also occurred before that date.

F. Suspension of a USDA License

There are no changes to the IFR provisions related to suspension of USDA licenses in this final rule.

A USDA license may be suspended if USDA receives credible information that a USDA licensee has either: (1) Engaged in conduct violating a provision of this regulation; or (2) failed to comply with a written order from the AMS Administrator related to a negligent violation of this regulation. Examples of credible information are information from local authorities of harvested plants without testing or planting of hemp in non-licensed locations.

Any person whose license has been suspended shall not produce hemp during the period of suspension. A suspended license may be restored after a waiting period of one year. A producer whose license has been suspended may be required to comply with a corrective action plan to fully restore their license.

A USDA license shall be immediately revoked if the USDA licensee: (1) Pleads guilty to, or is convicted of, any felony related to a controlled substance;

9

(2) made any materially false statement with regard to this regulation to USDA or its representatives with a culpable mental state greater than negligence; or (3) was found to be growing cannabis exceeding the acceptable hemp THC level with a culpable mental state greater than negligence or negligently violated the provisions of this regulation three times in five years.

9

For a corporation, if a key participant has a disqualifying felony conviction, the corporation may remove that person from a key participant position. Failure to remove that person will result in a license revocation.

If the licensed producer wants to appeal any suspension or revocation decision made by USDA as described in this section, they can do so using the appeal process explained in section V of this document.

G. Reporting and Recordkeeping

The 2018 Farm Bill requires USDA to develop a process to maintain relevant information regarding the land where hemp is produced. Reporting requirements under this final rule, particularly the requirement to report hemp crop acreage to FSA, are discussed extensively in Section B of the State and Tribal plan requirements and the same requirements are applicable to USDA licensed producers.

In general, changes from the IFR allow producers more flexibility in defining for FSA the areas (instead of “lots”) they use for hemp production. USDA hemp production licensees can apply for licenses on a rolling basis under this final rule, in contrast to the limited period provided under the IFR. Reporting requirements under this final rule are revised slightly to allow producers to account for on-farm disposal of non-compliant product.

USDA's FSA is well suited to collect this information for the domestic hemp production program. FSA has staff throughout the United States who are trained to work with farmers to verify land uses. Many hemp producers are likely to be familiar with the FSA since they already operate traditional farms, and therefore already provide data to FSA on acres and crops planted. Producers may benefit from information to participate in other USDA programs through FSA offices. Licensed producers will be required to report their hemp crop acreage with FSA, and to provide FSA with specific

information regarding field acreage, greenhouse, or indoor square footage of hemp planted. This information must include street address, geospatial location or other comparable identification method specifying where the hemp will be produced, and the legal description of the land. Geospatial location or other methods of identifying the production locations are necessary, as not all rural locations have specific addresses. This information is required for each field, greenhouse, building, or site where hemp will be grown. USDA will use this information to assemble and maintain the data USDA must make available in real time to Federal, State, Tribal and local law enforcement as required by the 2018 Farm Bill and as described in section G below.

Specific procedures for reporting hemp acreage to FSA will be posted on the USDA Domestic Hemp Production Program website. All information will be maintained by USDA for at least three calendar years. FSA will assist producers in identifying the hemp growing locations since they have maps that allow for better identification. This is a procedure that FSA employees are very familiar with since it is used for other USDA programs. This rule also revises the definition of “lot” to include other terms used by FSA with the same meaning. FSA uses terms like “farm,” “tract,” “field,” and “subfield.” FSA staff will not provide a “lot number” to producers as described in the IFR. Instead, FSA will assist producers to identify the area where hemp is grown. More details are provided under the States and Tribal plan Section B earlier in this final rule.

Licensed producers are required to maintain copies of all records and reports necessary to demonstrate compliance with the program. These records include those that support, document, or verify the information provided in the forms submitted to USDA. Records and reports must be kept for a minimum of three years. Because the final rule allows producers to remediate plants, the final rule also requires producers to maintain records on all remediated cannabis plants.

Under the USDA plan, there will be additional reporting requirements for licensed producers. These include information requested in the application for a license and the record and reporting requirements needed to document disposal or remediation of cannabis produced in violation of the provisions of this rule. Specific reporting requirements are detailed in § 990.71.

H. Information Sharing With Law Enforcement

USDA is working to develop and maintain a database of all relevant and required information regarding hemp as specified by the 2018 Farm Bill. This database will be accessible in real time to Federal, State, local, and Tribal law enforcement officers through a Federal government law enforcement system. USDA AMS will administer and populate this database, which will include information submitted by States, Tribes, laboratories, and USDA licensed producers and information submitted to FSA. States and Tribes must provide information to USDA in a format that is compatible with USDA's information sharing system. USDA will work with States and Indian Tribes on system format and other information necessary to share information.

USDA will use this information to create a comprehensive list of all domestic hemp producers. USDA will also gather the information related to the land used to produce domestic hemp. This information will be comprehensive and include data from both State and Tribal plans and will include a legal description of the land on which hemp is grown by each hemp producer and the corresponding geospatial location or other identifiable location. Finally, USDA will also gather information regarding the status of all licenses issued under State and Tribal government plans and under the USDA plan.

This information will be made available in real time to Federal, State, local and Tribal law enforcement as required by the 2018 Farm Bill.

IV. Definitions

The following terms are integral to implementing Subtitle G of the AMA and establish the scope and applicability of the regulations of this final rule.

The term “Act” refers to the Agricultural Marketing Act of 1946. The 2018 Farm Bill amended the Agricultural Marketing Act of 1946 by adding Subtitle G, which is a new authority for the Secretary of Agriculture to administer a national hemp production program. Section 297D of Subtitle G authorizes and directs USDA to promulgate regulations to implement this program.

The “Agricultural Marketing Service” or “AMS” is the Agricultural Marketing Service of the U.S. Department of Agriculture is the agency the Secretary of Agriculture has been charged with the responsibility to oversee the administration of this new program.

The term “applicant” means any State or Indian Tribe that has applied for USDA approval of a State or Tribal hemp production plan for the State or Indian Tribe they represent. This term also applies to any person or business in a State or territory of an Indian Tribe not subject to a State or Tribal plan, who applies for a hemp production license under the USDA plan established under this part.

The term “cannabis” is the Latin name of the plant that, depending on its THC concentration level, is further defined as either “hemp” or “marijuana.”

Cannabis

is a genus of flowering plants in the family Cannabaceae, of which

Cannabis sativa

is a species, and

Cannabis indica

and

Cannabis ruderalis

are subspecies thereof. For the purposes of this part, cannabis refers to any form of the plant where the delta-9 tetrahydrocannabinol concentration on a dry weight basis has not yet been determined. This term is important in describing regulations that apply to plant production, sampling, or handling prior to determining its THC content.

The “Controlled Substances Act” is the statute, codified in 21 U.S.C. 801-971, establishing Federal U.S. drug policy under which the manufacture, importation, exportation, possession, use, and distribution of certain substances are regulated. Because cannabis with THC content concentration levels of higher than 0.3 percent is deemed to be marijuana, a Schedule I controlled substance, its regulation falls under the CSA. Therefore, for compliance purposes, the requirements of the CSA are relied upon for the disposal of cannabis that contains THC concentrations above the stated limit of this final rule.

The rule includes a definition of “conviction” to explain what is considered a conviction and what is not. Specifically, a plea of guilty or nolo contendere or any finding of guilt is a conviction. However, if the finding of guilt is subsequently overturned on appeal, pardoned, or expunged, then it is not considered a conviction for purposes of part 990. This definition of “conviction” is consistent with how some other agencies conducting criminal history record searches determine disqualifying crimes.

A “corrective action plan” is a plan agreed to by a State, Tribal government, or USDA for a licensed hemp producer, to correct a negligent violation or non-compliance with a hemp production plan, its terms, the applicable law(s) or this regulation. Corrective action plans may also be a plan set forth by a State or Tribal government with an approved

hemp production plan to correct a non-compliance of their program with their USDA-approved plan. This term is defined in accordance with the 2018 Farm Bill, which mandates certain non-compliant actions to be addressed through corrective action plans.

“Culpable mental state greater than negligence” is a term used in the 2018 Farm Bill to determine when certain actions would be subject to specific consequences. This term means to act intentionally, knowingly, willfully, recklessly, or with criminal negligence.

The term “decarboxylated” refers to the completion of the chemical reaction that converts THCA into delta-9 THC, the intoxicating component of cannabis. The decarboxylated value is also calculated using a molecular mass conversion ratio that sums delta-9 THC and eighty-seven and seven tenths (87.7) percent of THC-acid ((delta-9 THC) + (0.877*THCA)).

“Delta-9 tetrahydrocannabinol,” also referred to as “Delta-9 THC” or “THC” is the primary psychoactive component of cannabis, and its regulation forms the basis for the regulatory action of this part. As mandated by the Act, legal hemp production must be verified as having THC concentration levels of 0.3 percent on a dry weight basis or below. For the purposes of this part, delta-9 THC and THC are interchangeable.

The term “disposal

”

means the action or process of getting rid of cannabis that is non-compliant.

“DEA” is an acronym for the “Drug Enforcement Administration,” a United States Federal law enforcement agency under the United States Department of Justice. The DEA is the lead agency for domestic enforcement of the Controlled Substances Act. The DEA plays an important role in the oversight of the disposal of marijuana, a Schedule I controlled substance, under the regulations of this part. The DEA is also instrumental in registering laboratories to legally handle controlled substances, including cannabis samples that test above the 0.3 THC concentration level.

“Dry weight basis” refers to a method of determining the percentage of a chemical in a substance after removing the moisture from the substance. Percentage of THC on a dry weight basis means the percentage of THC, by weight, in a cannabis item (plant, extract, or other derivative), after excluding moisture from the item.

The “Farm Service Agency (FSA)” is an agency of the U.S. Department of Agriculture that provides services to farm operations including loans, commodity price supports, conservation payments, and disaster assistance. For the purposes of this program, FSA will assist in information collection of land being used for hemp production.

“Gas chromatography” or GC, is a scientific method (specifically, a type of chromatography technique) used in analytical chemistry to separate, detect, and quantify each component in a mixture. It relies on the use of heat for separating and analyzing compounds that can be vaporized without decomposition. Under the terms of this part, GC is one of the valid methods by which laboratories may test for THC concentration levels.

For the purposes of this part, the term “geospatial location” means a location designated through a global system of navigational satellites used to determine the precise ground position of a place or object.

The term “handle” is commonly understood by AMS and used across many of its administered programs. For the purposes of this part, “handle” refers to the actions of cultivating or storing hemp plants or hemp plant parts prior to the delivery of such plant or plant part for further processing. In cases where cannabis plants exceed the acceptable hemp THC level, handle may also refer to the disposal of those plants.

“Hemp” is defined by the 2018 Farm Bill as “the plant species

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.” The statutory definition is self-explanatory, and USDA is adopting the same definition without change for part 990.

“Liquid chromatography (LC)” is a scientific method (specifically, a type of chromatography) used in analytical chemistry used to separate, identify, and quantify each component in a mixture. It relies on pumps to pass a pressurized liquid solvent containing the sample mixture through a column filled with a solid adsorbent material to separate and analyze compounds. Under the terms of this part, LC is one of the valid methods by which laboratories may test for THC concentration levels. Ultra-Performance Liquid Chromatography (UPLC) is an additional method that may also be used as well as other liquid or gas chromatography with detection.

“Indian Tribe or Tribe” is defined in the 2018 Farm Bill by reference to section 4 of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 5304). The statutory definition is self-explanatory, and USDA is adopting the same definition without change for part 990.

A “key participant” is a person or persons who have a direct or indirect financial interest in the entity producing hemp, such as an owner or partner in a partnership. A key participant also includes persons in a corporate entity, including tribally-owned corporation individuals, at executive levels, including chief executive officer, chief operating officer, and chief financial officer. This does not include such management personnel as farm, field, or shift managers. This definition also does not include a member of the leadership of a Tribal government who is acting in their capacity as a Tribal leader except when that member exercises executive managerial control over hemp production.

“Law enforcement agency” refers to all Federal, State, Tribal, or local law enforcement agencies. Under the 2018 Farm Bill, State and Tribal submissions of proposed hemp production plans to USDA must be made in consultation with their respective Governors and chief law enforcement officers. Moreover, the 2018 Farm Bill contemplates the involvement of law enforcement in compliance actions related to offenses identified as being made under a “culpable mental state greater than negligence.” To assist law enforcement in the fulfillment of these duties, the 2018 Farm Bill also mandates information sharing that provides law enforcement with real-time data.

The term “lot” refers to a contiguous area in a field, greenhouse, or indoor growing structure containing the same variety or strain of cannabis throughout. In addition, “lot” is a common term in agriculture that refers to the batch or contiguous, homogeneous whole of a product being sold to a single buyer at a single time. Under the terms of this part, “lot” is to be defined by the producer in terms of farm location, field acreage, and variety (

i.e.,

cultivar) and to be reported as such to FSA. For FSA reporting purposes, FSA staff will determine the appropriate designation for the specific location(s) where hemp is being grown using FSA terminology such as “farm,” “tract,” “field,” and “subfield” to mean “lot” for the purpose of this rule.

“Marijuana,” or, as defined in the CSA, “marihuana,” means all parts of the plant

Cannabis sativa

L., whether growing or not; the seeds thereof; the resin extracted from any part of such plant; and every compound, manufacture, salt, derivative, mixture, or preparation of such plant, its seeds, or resin. The term ”marihuana” does not include hemp, as defined in section 297A of the Agricultural Marketing Act

of 1946, and does not include the mature stalks of such plant; fiber produced from such stalks; oil or cake made from the seeds of such plant; any other compound, manufacture, salt, derivative, mixture, or preparation of such mature stalks (except the resin extracted therefrom), fiber, oil, or cake; or the sterilized seed of such plant which is incapable of germination (7 U.S.C. 1639o(1)). “Marihuana” also means all cannabis that tests as having a THC concentration level on a dry weight basis of higher than 0.3 percent.

“Negligence” is a term used in the 2018 Farm Bill to describe when certain actions are subject to specific compliance actions. For the purposes of this rule, the term means failure to exercise the level of care that a reasonably prudent person would exercise in complying with the regulations set forth under this final rule.

Used in relation to the other terms and regulations in this part, “phytocannabinoids” are cannabinoid chemical compounds found in the cannabis plant, two of which are Delta-9 tetrahydrocannabinol (delta-9 THC) and cannabidiol (CBD). Testing methodologies under this part will refer to the presence of “phytocannabinoids” as either THC or CBD.

Under the terms of this program, “plan” refers to a set of criteria or regulations under which a State or Tribal government, or USDA, monitors and regulates the production of hemp. “Plan” may refer to a State or Tribal plan, whether approved by USDA or not, or the USDA hemp production plan.

The 2018 Farm Bill mandates that all cannabis be tested for THC concentration levels using “post-decarboxylation” or similar methods. In the context of this part, “post-decarboxylation” means testing methodologies for THC concentration levels in hemp, where the total potential delta-9-tetrahydrocannabinol content, derived from the sum of the THC and THCA content, is determined and reported on a dry weight basis. The post-decarboxylation value of THC can be calculated by using a chromatograph technique using heat, known as gas chromatography, through which THCA is converted from its acid form to its neutral form, THC. The result of this test calculates total potential THC. The post-decarboxylation value of THC, or total THC, can also be calculated by using a liquid chromatograph technique, which keeps the THCA intact, and requires a conversion calculation of that THCA to calculate total potential THC. See also the definitions for decarboxylation and total THC.

The term “produce,” when used as a verb, is a common agricultural term that is often used synonymously with “grow,” and means to propagate plants for market, or for cultivation for market, in the United States. In the context of this part, “produce” refers to the propagation of cannabis to produce hemp.

“Producer” means a producer as defined in 7 CFR 718.2 specifically of hemp. The 2018 Farm Bill mandates that USDA maintain a real-time informational database that identifies registered hemp production sites, whether under a State, Tribal, or USDA plan, for the purposes of compliance and tracking with law enforcement. AMS will maintain this system with the information collection assistance of FSA. In order to maintain consistency and uniformity of hemp production locations, USDA is using FSA to collect this information through their crop acreage reporting system. In this context, a common use of the term “producer” is essential to maintaining a substantive database. For this reason, the definition of “producer” incorporates the FSA definition of “producer” with the additional qualifier that they are a producer specifically of hemp. All producers are required to be licensed or authorized to produce hemp under the USDA Domestic Hemp Production Program.

“Remediation” refers to techniques utilized to transform non-compliant cannabis into something useful and compliant while disposing of non-compliant parts. Remediation can occur by removing and destroying flower material, while retaining stalk, stems, leaf material, and seeds. Remediation can also occur by shredding the entire plant into a bio-mass like material, then re-testing the shredded biomass material for compliance.

“Secretary” means the Secretary of Agriculture of the United States Department of Agriculture.

Section 297A of the Act defines “State” as any of one of the fifty States of the United States of America, the District of Columbia, the Commonwealth of Puerto Rico, and any other territory or possession of the United States. The statutory definition is self-explanatory, and USDA is adopting the same definition without change for part 990.

The term “State department of agriculture” is defined by the 2018 Farm Bill as the agency, commission, or department of a State government responsible for agriculture in the State. The statutory definition is self-explanatory, and USDA is adopting the same definition without change for part 990.

The term “store” is related to the term “handle” under this part and means to deposit hemp plants or hemp plant product in a storehouse, warehouse, or other identified location by a producer for safekeeping prior to delivery to a recipient for further processing.

The term “Territory of the Indian Tribe” means (a) all land within the limits of any Indian reservation under the jurisdiction of the United States Government, notwithstanding the issuance of any patent, including rights-of-way running through the reservation, (b) all dependent Indian communities within the borders of the United States whether within the original or subsequently acquired territory thereof, and whether within or without the limits of a State; (c) all Indian allotments, the Indian titles to which have not been extinguished, including rights-of-way running through the same; and (d) any lands title to which is either held in trust by the United States for the benefit of any Indian Tribe or individual or held by any Indian Tribe or individual subject to restriction by the United States against alienation and over which an Indian Tribe exercises jurisdiction.

The IFR defined the Territory of the Indian Tribe as “Indian Country” in 18 U.S.C. 1151 because section 1151 is a commonly acceptable approach to determine a Tribal government's jurisdiction. The final rule retains the language of section 1151, but adds item (d) to the definition of “Territory of the Indian Tribe.” This addition does not significantly expand the definition because many of the lands encompassed by item (d) were already considered as “Territory of the Indian Tribe” under the IFR. For example, off-reservation trust land, if not considered part of a reservation under section 1151(a), is generally considered within a dependent Indian community under section 1151(b).

See Club One Casino, Inc.

v.

Bernhardt,

959 F.3d 1142, 1149-50 (9th Cir. 2020); Felix Cohen, Cohen's Handbook of Federal Indian Law, section 3.04 (Nell Jessup Newton ed. 2012). Also, restricted fee lands outside of a reservation are often considered part of a dependent Indian community, provided the lands satisfy the two requirements of a dependent Indian community—lands that are (1) set aside by the Federal Government for the use of the Indians and (2) under federal superintendence.

Citizens Against Casino Gambling in Erie Cty.

v.

Chaudhuri,

802 F.3d 267, 281 (2d Cir. 2015).

However, because “dependent Indian communities” is an oft-litigated term that is interpreted varyingly amongst the courts, USDA decided to add item (d) to the definition of “Territory of the Indian Tribe” to add clarity and ensure nationwide consistency regarding the jurisdictional boundaries of regulatory authority over the production of hemp.

“Total THC” is the post-decarboxylation value of THC, either after testing with gas chromatography or LC after using a conversion factor. LC does not use decarboxylation as part of the process and this addition is to account for the conversion of THCA into THC if decarboxylation was part of the process. The addition of 87.7 percent of THCA is applicable if the testing laboratory uses LC with detection to measure the THC. Total THC is the measured THC plus 87.7 percent of THCA.

As defined by the 2018 Farm Bill, the term “Tribal government” means the governing body of an Indian Tribe. The statutory definition is self-explanatory, and USDA is adopting the same definition without change for part 990.

The “U.S. Attorney General” is the Attorney General of the United States.

“USDA” is an acronym that stands for the “United States Department of Agriculture.”

V. Appeals

The following paragraphs explain when and how to appeal a USDA decision. State or Tribal plans may include similar appeal procedures. No changes were made to this section based on comments.

An applicant for a USDA hemp production program license may appeal a license denial to the AMS Administrator. USDA licensees can appeal denials of license renewals, license suspensions, or license revocations to the AMS Administrator. All appeals must be submitted in writing and received within 30 days of the denial. Appeals may be submitted by mail or electronic form. This submission deadline should provide adequate time to prepare the necessary information required for the appeal. The Administrator will take into account the applicant or USDA licensee's justification for why the license should not be denied, suspended, or revoked, and then issue a final determination. Determinations made by the Administrator under the appeals process will be final unless the applicant or USDA licensee requests a formal adjudicatory proceeding to review the decision, which will be conducted pursuant to the U.S. Department of Agriculture's Rules of Practice Governing Formal Adjudicatory Proceedings, 7 CFR part 1, subpart H, which USDA will amend to add the Domestic Hemp Production Program. If the applicant or USDA licensee does not request that the Administrator initiate a formal adjudicatory proceeding within 30 days of the Administrator's adverse ruling, such ruling becomes final.

Appeals Under a State or Tribal Hemp Production Plan

A State or Tribe can appeal the denial of a proposed hemp production plan, or the proposed suspension or revocation of a plan by USDA. USDA will consult with States and Tribes to help ensure their draft plans meet statutory requirements, and that existing plan requirements are monitored and enforced by States and Indian Tribes. If, however, a proposed State or Tribal plan is not approved, or an existing plan is suspended or revoked the decision may be appealed.

If the AMS Administrator grants a State or Indian Tribe's appeal of a disapproval of its hemp plan, the proposed State or Tribal hemp production plan shall be approved as proposed. If the AMS Administrator denies an appeal, prospective producers located in the State or Tribal Territory can apply directly to USDA for a hemp license. Similarly, if an appeal of a denied proposed State or Tribal plan is denied, producers located in the impacted State or Tribal territory may apply for licenses under the USDA plan.

A State or Tribe appealing the suspension or revocation of their hemp production plan must explain the reasoning for the appeal and the appeal must be filed within the time-period provided in the letter of notification or within 30 business days from receipt of the notification, whichever occurs later. This timeframe should be adequate for the assembly of the information required to be submitted as part of the appeal.

VI. Interstate Commerce

Nothing in this rule prohibits the interstate commerce of hemp. No State or Indian Tribe may prohibit the transportation or shipment of hemp produced in accordance with this part and with section 7606 of the 2014 Farm Bill (expires January 1, 2022) through the State or the territory of the Indian Tribe, as applicable.

10

10

See

section 10114 of the 2018 Farm Bill and the USDA General Counsel's Legal Opinion on the Authorities for Hemp Production at

https://www.ams.usda.gov/content/legal-opinion-authorities-hemp-production.

VII. Outreach

As part of this rulemaking process, AMS held numerous meetings with State and Tribal governments and their representatives, industry organizations, groups and individuals with experience in the hemp industry, and representatives of law enforcement, as well as other Federal agencies.

In addition, USDA also conducted a listening session on March 13, 2019, that had more than 2,100 participants, and included comments from 46 separate speakers representing States, Tribes, producers, end-users, hemp organizations, and others. The recording of the listening session is available on the USDA website at

https://www.ams.usda.gov/rules-regulations/hemp.

On May 1 and 2, 2019, USDA also participated in Tribal consultation meetings for a total of 52 and 38 participants, respectively. On September 24, 2020, AMS conducted another Tribal Consultation with approximately 90 participants.

AMS published an interim final rule on October 31, 2019 (84 FR 58522), that established a temporary hemp production program and invited public comments on the program's provisions. The initial 60-day comment period was extended by 30 days on December 18, 2019 (84 FR 69295). The comment period was reopened for another 30 days on September 8, 2020 (85 FR 55363). A total of approximately 5,900 comments were submitted by States, Tribes, farmers, industry associations, and other interested groups and individuals during the combined comment periods expressing their views on the provisions of the IFR and suggesting modifications, many of which have been incorporated into this final rule.

Finally, in November 2019, AMS posted an informational webinar about the domestic hemp production program on its website (in English and Spanish) at

https://www.ams.usda.gov/rules-regulations/hemp.

AMS has also posted additional useful information for regulated entities and other interested persons on its website at

https://www.ams.usda.gov/rules-regulations/hemp.

As required by the Farm Bill, the Secretary developed this final rule and related guidelines in consultation with the U.S. Attorney General. In addition, USDA has submitted information to, and consulted with, the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate regarding updates on the

implementation of the hemp requirements in the Farm Bill.

VIII. Severability

This final rule includes a severability provision. This provision helps address the status of the regulations should a court vacate a particular provision. This section provides that if any provision of part 990 is found to be invalid, the remainder of the part shall not be affected.

IX. Comment Analysis

AMS accepted comments during an initial comment period from October 31, 2019 through December 31, 2019. On December 18, 2019 (84 FR 69295), this initial comment period was extended for an additional 30 days, ending January 29, 2020. AMS reopened the comment period for 30 additional days on September 8, 2020 (85 FR 55363), ending October 8, 2020. Comments may be accessed through

Regulations.gov

.

11

Reopening the comment period gave interested persons an additional opportunity to comment on the IFR. Comments were solicited from all stakeholders, notably those who were subject to the regulatory requirements of the IFR during the 2020 production cycle.

11

https://www.regulations.gov/searchResults?rpp=25&po=0&s=AMS-SC-19-0042&fp=true&ns=true.

.

AMS specifically requested comments on the 15-day sampling and harvest timeline; the possibility of establishing a fee-for-service hemp laboratory approval process for labs that wish to offer THC testing services; the possibility of requiring all laboratories testing hemp to have ISO 17025 accreditation; the number of labs already ISO 17025 accredited; additional examples of reasonable efforts to illustrate actions hemp producers can take in order to avoid committing a negligent violation under the program; the sufficiency of the hemp license application period; whether the information collection for the program is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; the ways to enhance the quality, utility, and clarity of the information to be collected; the ways to minimize the burden of the collection of information on those who are to respond, including the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology; whether there is information or data that may inform whether or not the market will experience a significant shift, either positive or negative, in the developing hemp market and on consumers; any data or information on what impacts the regulation may have on current and future innovation in the areas of industrial hemp usages and how much such impacts on innovation may affect rural communities; the potential for innovation and the uncertainty and its impact on the hemp market vis a vis steady State; and additional reliable data sources on the annual receipts of industrial hemp producers.

AMS received approximately 5,900 comments. Comments represented the views of States, Indian Tribes, hemp farmers and processors, universities, laboratories, trade associations, carriers, non-profit associations, other Federal government agencies, consumers, and other interested individuals. A summary of the comments and AMS's analysis and response follows.

Extention of Comment Period

Several commenters urged AMS to extend the public comment period to allow for small businesses to meaningfully participate in this rulemaking process. One reason given was that the comment period fell in the middle of the harvest season for much of the mid-Atlantic and southern hemp growers, excluding those who grow indoors, and therefore were too busy to comment. Other reasons given were the ongoing global pandemic as well as many other ongoing natural disasters nation-wide that have presented additional strains and unique challenges to agricultural operations.

AMS Response:

AMS provided an initial 60-day comment period and a 30-day extension and then reo

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