I. Maintain Status Quo on Hemp Food Regulation

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1 AgTech Scientific Alliance One International American Herbal Products Association American Shaman Ananda Hemp Anavii Market Atalo Bluebird Botanicals CV Sciences CW Hemp Elemental Processing Elixinol GenCanna Global General Hemp Gotham Green Partners Harrod s Creek Farm Hemp Industries Association Hemp Today Irwin Naturals Isodiol MHR Brands National Hemp Association North American Industrial Hemp Council Real Hemp S&H Hemp Unique Food Works Virginia Industrial Hemp Coalition Williams Ranch Co. Vote Hemp Zilis UPDATED RECOMMENDATIONS FOR IMPROVEMENTS TO HR 3530 March 10, 2018 The U.S. Hemp Roundtable is deeply grateful to Reps. Comer, Goodlatte, Massie and Polis for their hard work and strong leadership in crafting and introducing the Industrial Hemp Farming Act of Representing dozens of firms from across the country, at each link of the hemp supply and sales chain as well as boasting the ex officio membership of all the industry s major grassroots organizations the Roundtable pledges its energies and resources in securing bill passage. Last fall, the Roundtable shared a few modifications to make HR 3530 even stronger, enabling the full development of a vibrant U.S. hemp industry. Since then, officials from the Food and Drug Administration (FDA) have weighed in with a technical assistance memorandum, while Senators McConnell, Paul, and Wyden have prepared companion legislation which is expected to be introduced shortly. Responding to these developments, we offer the following updated priority amendments and wish list requests: PRIORITY AMENDMENTS I. Maintain Status Quo on Hemp Food Regulation Hemp products have been sold as food and supplements for decades pursuant to federal law. There have been a few suggestions made recently by federal agencies, however, that such food sales could be the subject of enforcement actions. HR 3530 currently includes language that suggests that the FDA could regulate an unapproved, adulterated or misbranded drug or food. While this provision has no legal effect, the industry is concerned that it provides a green light to the FDA to launch enforcement actions against hemp products as an unapproved or adulterated food or drug. Indeed, FDA counsel has suggested an improved version in its technical assistance memorandum. We recommend Section 5(1) s replacement with a much simpler sentence, that word-for-word has been offered by FDA counsel: "Nothing in this Act, or the amendments made by this Act, may be construed to alter the provisions of the Federal Food, Drug, and Cosmetic Act."

2 II. Clarification of the Definition of Hemp HR 3530 defines hemp in a similar fashion as the 2014 Farm Bill: all parts of the Cannabis sativa L plant, as long as they are under a particular THC concentration threshold. A few federal agencies, however, have interpreted the definition written in the Farm Bill differently to suggest that certain parts of the hemp plant should be treated as a controlled substance, no matter the THC level, and/or that hemp-derived products should not be placed into interstate commerce. Indeed, the FDA technical assistance memorandum opines that the definition of hemp section (Section 3) does not clarify the control status of industrial hemp, research hemp and tetrahydrocannabinols ; and that having the Schedule I status of a substance in question raises some issues for FDA. The Senate bill addresses these concerns precisely and would prevent misinterpretation in the future. Furthermore, the FDA raises concerns about the finding section (Section 2), Section 2, arguing that it is too broad and may contribute to current confusion among US companies and consumers as to what types of products made from hemp cannabis are legal. Accordingly, we offer the following suggested amendments: A) Delete the first 44 lines of Section 3 Definition of Hemp (excerpted at the end of this memorandum) and replace it with the following language from the Senate bill: (a) In General. Section 102 of the Controlled Substances Act (21 U.S.C. 802) is amended (1) in paragraph (16) (A) by striking (16) The and inserting (16)(A) Subject to subparagraph (B), the ; and (B) by striking Such term does not include the and inserting the following: (B) The term marihuana does not include (i) hemp; or (ii) the ; and (2) by adding at the end the following: (57) The term [industrial] hemp means the plant Cannabis sativa L. and any part of that plant, including all [resins], 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.. (b) Tetrahydrocannabinol. Schedule I, as set forth in section 202(c) of the Controlled Substances Act (21 U.S.C. 812(c)), is amended in subsection (c)(17) by inserting after Tetrahydrocannabinols the following:, except for tetrahydrocannabinols in the plant Cannabis sativa L. if the delta-9 tetrahydrocannabinol concentration meets the concentration limitation for hemp under section 102(57).

3 B) Adding to Section 5 Rule of Construction, a new Section (3) Industrial hemp, and any product or extract made from industrial hemp (including viable seed), shall not be considered marihuana and can be processed, transported, sold, and used through interstate and overseas commerce. C) Amending Section 2 Finding as follows: The Congress finds that industrial hemp is a non-narcotic agricultural commodity that is used in tens of thousands of legal and legitimate products, such as clothing, biofuels, materials, plastics, feed and food. III. Federal Agency Treatment of Hemp as an Agricultural Product, not a Controlled Substance The principal objective of HR 3530, as stated in its findings and its provisions, is to treat low-thc hemp as a non-narcotic agricultural commodity. Yet HR 3530 still contemplates the robust involvement of the U.S. Department of Justice, which is both an inefficient use of limited federal law enforcement dollars, and duplicative, given robust state regulation and administration of hemp programs. Further, despite a rule of construction that clarifies that retailers and end users are not subject to reporting requirements, the bill still implies that DOJ s reporting and inspection jurisdiction extends all the way through the hemp supply and sales chain. We recommend the deletion of Section 3(c) (Reporting Requirements) and Section 4 (Administrative Inspections). Alternatively, we recommend their replacement with the following language: Section 3(c): With regard to the growth production, storage, distribution or use of which the State in which such conduct occurs or the tribe having jurisdiction over the area of Indian country (as defined in section 1151 of title 18, United States Code) in which such conduct occurs submits to the Secretary of the United States Department of Agriculture to the Attorney General, upon the Attorney General s Secretary s request Section 4: (3): places where industrial hemp or research hemp is grown produced, stored, distributed, or used. (5): Any land on which industrial hemp or research hemp is grown produced, stored, distributed, or used shall be subject to inspection by the United States Department of Agriculture, in accordance with the provisions of this section, for compliance with the provisions of this Act. WISH LIST REQUESTS We are cognizant that one piece of legislation will never be able to address all of the needs and concerns of any industry. We also recognize that introducing certain new ideas into the draft could implicate the jurisdiction of additional congressional committees, potentially slowing down the bill s progress. That being said, we offer the following amendments to clarify a few critical issues that would help protect the nascent industry through its initial financial challenges, and that could be introduced at any point of the legislative process. We recommend adding the following new sections to the bill:

4 a) The United States Department of Agriculture shall--- (A) Define industrial hemp and research hemp as specialty crops, making them eligible for all programs and benefits that accrue to specialty crops, but only if such designation does not limit hemp s eligibility from other Department support or programming, and only if it does not place hemp under more onerous oversight and reporting requirements; (B) Ensure that industrial hemp and research hemp are eligible for grants, loans, organic certifications, tax credits and crop insurance programs as other agricultural commodities, and that research on hemp can be undertaken by any federal agency or division; and (C) Develop uniform testing protocol in consultation with industry stakeholders and self-regulatory organizations to share with state departments of agriculture to measure the amounts of tetrahydrocannabinol in hemp and hemp products. b) The Secretary of the Treasury shall exempt a depository institution from the reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970 (Bank Secrecy Act) as amended, 31 U.S.C. 5313(a) with respect to any transaction relating solely to payments or transfer of currency or monetary instruments in connection with the cultivation, processing, sale, manufacture or transportation of industrial hemp. The cultivation, processing, sale, manufacture or transportation of industrial hemp shall not be considered a possible violation of law or regulation for purposes of such Act, 31 U.S.C. 5318(g)(1), nor shall the same be treated as a specified unlawful activity under or within the meaning of the Money Laundering Control Act of 1986 as amended, 18 U.S.C c) Viable seed varieties of industrial hemp that are listed on the Organisation for Economic Co-operation and Development (OCED) List of Varieties eligible for seed certification, or certified by a U.S. or state government agency, may be imported or exported without the requirement of a permit from the Drug Enforcement Administration. d) Section 1: The Federal Crop Insurance Act (7 U.S.C et seq.) is amended as follows- (a) In section 508(a)(2) (7 USC 1508(a)(2)), strike the and after potatoes and, after sweet potatoes, add and industrial hemp, and (b) In section 518 (7 USC 1518), after native grass, add industrial hemp (as defined in section 7606(b) of the Agricultural Act of 2014 (7 U.S.C. 5940(b)) and grown pursuant to the laws of a State authorizing such production), and (c) In section 522(c) (7 USC 1522(c)), add a new subsection, as follows: Not later than for the 2020 crop year, the Corporation shall approve one or more policies or plans of insurance submitted under section 508(h) of this Act (7 USC 1508(h) for sale to producers to ensure the production of industrial hemp as defined in section 518 of this Act. Add subsection to FCIA section 522(c): Not later than 90 days after enactment of this section, the Corporation shall enter into a contract with a qualified entity to carry out research and development regarding a policy to ensure the production of industrial hemp as defined in federal law and grown pursuant to the laws of a State authorizing such production. Corporation shall approve the policy developed under this section for sale to producers.

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