On July 30, 2019, Governor Mike DeWine signed Ohio Senate Bill 57 into law, making Ohio the latest state to take advantage of federal regulation allowing states to cultivate a strain of cannabis known as “hemp.”
Federal approval of the cultivation of hemp began in 2014, when the United States Congress passed the Agriculture Act of 2014 (the “2014 Farm Bill”), which created a new legal classification for cannabis products containing L. Sativa variety cannabis with a dry-weight delta-9 tetrahydrocannabinol (THC) concentration of 0.3%, also known as industrial hemp. The 2014 Farm Bill authorized state departments of agriculture and higher education institutions to grow and research industrial hemp with state law authorization.
Then, four years later, Congress took a step further and passed the Agriculture Improvement Act of 2018 (the “2018 Farm Bill”), which removed hemp from the federal listing of controlled substances in the Controlled Substances Act. Removing hemp as a control substance makes hemp an agricultural product. The 2018 Farm Bill allowed states to apply for primary authority to regulate commercial cultivation and processing of hemp products within certain federal guidelines.
In total, 41 states have taken advantage of the federal laws approving the cultivation of hemp products: 16 states including Michigan, Illinois, and Pennsylvania have established programs authorizing their state departments of agriculture and higher education institutions to grow and research industrial hemp products; 25 states have established a regime for the commercial cultivation, processing, and sale of hemp products in accordance with federal standards, including Indiana, Kentucky, and West Virginia (which has the least restrictive requirements in the nation regarding hemp cultivation).
With the governor’s approval of Ohio Senate Bill 57, Ohio is now among those states taking steps to participate in this growing industry. The Ohio Department of Agriculture will begin designing a regulatory structure for commercial cultivation of industrial hemp and will seek federal approvals for Ohio’s plans.
Like the 2018 Farm Bill, Ohio Senate Bill 57 removes hemp and hemp products from the definition of marijuana in Ohio law. The Bill also prohibits the State Board of Pharmacy from listing hemp and hemp products as controlled substances; authorizes the State Director of Agriculture to establish a plan for regulating hemp cultivation pending approval from the U.S. Department of Agriculture; and allows land being used in commercial hemp cultivation to be valued at current agricultural use value for tax assessment purposes.
Ohio Senate Bill 57 further authorizes Ohio’s Director of Agriculture to establish licensure programs for hemp cultivation and hemp processing. While the proposed scheme does not require a license to sell, purchase, or possess hemp, those interested in growing, harvesting, and storing the hemp will be required to obtain a cultivation license and those who intend to convert hemp into hemp products will be required to obtain a processing license.
Potential hemp cultivators and product producers will need assistance navigating the regulatory process for acquiring licensure, establishing policies for plant and product testing and disposal, and in complying with Senate Bill 57’s structure for dealing with compliance issues that might arise. Effective counsel will help operators in this new industry to avoid challenges which could lead to corrective action, licensure suspension, or revocation as laid out in Senate Bill 57.
At Crabbe, Brown & James, our attorneys have significant experience navigating administrative agencies’ complex rules and regulations surrounding license applications, renewals, and appeals in Ohio and throughout the country. Our clients include applicants to the Ohio Medical Marijuana Control Program including cultivators, processors, and dispensaries. Our legal team at Crabbe, Brown & James is uniquely positioned to advise and assist clients in this developing area of industry and commerce.