Evolving legal and regulatory Challenges in U.S. Import and Export of industrial Hemp Products

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Evolving legal and regulatory challenges in U.S. import and export of industrial hemp by products

von Kate Strickland Hoban Law

Now more than ever, the American industrial hemp industry faces challenges that directly impact the European hemp industry, a longtime source of raw material and oils for American processors and manufacturers.

For decades, cultivators and processors in Europe exported non-psychoactive industrial hemp oils and byproducts to the United States with relatively minimal resistance. Under U.S. federal law enacted as early as 1937, the U.S. Congress specifically excluded certain portions and varieties of the Cannabis plant from consideration as a controlled substance – namely, the stalks, stems, fibers, hurd and non-viable seed – thus allowing for the import and export of these hemp materials, oils and derivatives processed from the same. A federal Court of Appeals confirmed this policy in the early 2000s in Hemp Indus. Ass'n. v. DEA, 357 F.3d 1012 (9th Cir. 2004) and Hemp Indus. Ass'n v. DEA, 333 F.3d 1082 (9th Cir. 2003). These exemptions apply, the Court found, even if trace amounts of naturally occurring tetrahydrocannabinol (THC) are present.

When importing and exporting industrial hemp materials through the United States, both parties must submit completed forms with the United States Customs and Border Patrol (CBP). These forms include designation of a tariff code based on the type of product and whether it is intended for human consumption.

For example, when a U.S. business imports European industrial hemp materials, both parties would designate the shipment with one of several hemp-related tariff codes offered by CBP. However, the analysis does not end here. In the current U.S. regulatory environment, there are several additional considerations which cannot be overlooked.

The importer must also attest to the use of the products. If intended for human consumption, the U.S. Food and Drug Administration (FDA) may inspect and review the shipment with respect to FDA regulations. Currently, the FDA purportedly considers cannabidiol (CBD), a non-psychoactive cannabinoid that naturally occurs in industrial hemp, to be precluded from marketing as a “dietary supplement”. Further, the FDA considers CBD to be an “adulterant”, supposedly preventing CBD from use as an ingredient in products intended for human consumption. Resultantly, the FDA has periodically seized shipments for alleged violation of its regulations, despite prevailing U.S. law and the Hemp Indus. Ass'n. v. DEA decisions.

Successful import and export of industrial hemp materials also relies upon the particular CBP port and customs agent inspecting the shipment. In some cases, shipments freely come and go in favorable ports; conversely, in some ports, shipments of industrial hemp derivatives are seized as if the shipment is illegal “marihuana”. In those cases, sometimes the shipment is locked away in the proverbial vault, and in other cases, CBP notifies the importer and exporter and allows for the opportunity to either confirm the legality of the shipment or return the shipment to sender.

Of increasing concern is the seizure of shipments by CBP on the basis of supposed DEA rules and interpretations of law. Recently, in seizing products, CBP and DEA cited drug codes purportedly assigned by the DEA to CBD, cannabigerol (CBG), another cannabinoid naturally occurring within Cannabis, and as of December 2016, a designation newly created by the DEA, “marihuana extract”. Importantly, none of these designations appear in U.S. federal law and do not appear to be within the DEA’s authority. Yet, numerous federal and state agencies routinely defer to the DEA’s interpretation, whether or not grounded in law – thus creating practical issues for importers and exporters of industrial hemp materials.

Lastly, inconsistent laws within individual U.S. states relating to the definition of “marihuana” also sparks confusion and unpredictable regulatory enforcement concerns. Law enforcement in a growing number of states has seized industrial hemp products from retailers’ shelves. And, just recently, GW Pharmaceuticals has sought for lobbyists to pass legislation in certain states to monopolize CBD products in GW Pharmaceuticals’ favor, not unlike the decision in the United Kingdom from October 2016 relating to CBD.

It is strongly recommended that businesses wishing to import and export industrial hemp materials to and from the United States retain legal counsel experienced in regulatory law concerning industrial hemp to address these considerations: adhering to the applicable laws and regulations, developing certifications and retaining knowledgeable customs agents to facilitate shipments of industrial hemp products.