Last year, Congress passed the Agricultural Improvement Act of 2018, which removed hemp from the controlled substances list and authorized states to adopt hemp cultivation programs.
In response, the Florida Legislature, during the 2019 regular legislative session, passed Committee Substitute for Committee Substitute for Senate Bill 1020 ("SB 1020") with near unanimous support, creating "the state hemp program" within the Florida Department of Agriculture and Consumer Services ("the Department)." Unless vetoed by Governor DeSantis, which would be unexpected, the bill will take effect on July 1, 2019.
As with any regulated industry, the passage of a new law is not the end, but rather, the beginning of the story, as SB 1020 directs the Department to promulgate rules for administering the State Hemp Program. Industry observers should note that the rulemaking process is often the most important, and litigious, phase for burgeoning industries. Here is what you need to know.
Current Status of Cannabis in Florida
The medical use of cannabis products for qualified patients has been legal in Florida since 2014. See § 381.986, Fla. Stat (2014). Section 381.986, Florida Statutes, has been amended numerous times since 2014, most notably after Florida voters in 2016 overwhelmingly approved an amendment to the State's constitution legalizing the medical use of marijuana by qualifying patients. See art. 10, § 29, Fla. Const.
Since the statute's inception, and even after passage of the constitutional amendment, there has been substantial litigation regarding the validity of the statute, as well as the implementing rules proposed by the Department of Health. Despite the seemingly endless litigation, the medical marijuana industry has taken off in Florida, with Medical Marijuana Treatment Centers ("MMTCs") popping up all over the State and more qualifying patients registering each day. We may see a similar, uneven launch to the agricultural hemp industry authorized by SB 1020.
What Hemp Is
A key difference between hemp and marijuana is the THC content. Hemp contains 0.3% or less THC content by dry weight, while marijuana contains more than 0.3% THC.
SB 1020 defines hemp as "the plant 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 thereof, whether growing or not, that has a total delta 9 tetrahydrocannabinol concentration that does not exceed 0.3 percent on a dry-weight basis."
"Hemp extract" is also defined in the bill as "a substance or compound intended for ingestion that is derived from or contains hemp and that does not contain other controlled substances."
Hemp can be used to produce a wide variety of products including industrial products, such as paper, clothing, and building materials, as well as food and medicinal products, such as cannabidiol ("CBD"). CBD products have become wildly popular in Florida, in spite of the fact that, until the passage of SB 1020, they have been unregulated and untested in the State.
What SB 1020 Does
The bill creates section 581.217, Florida Statutes, the "State Hemp Program" to regulate the cultivation of hemp in the State. The bill also includes legislative findings that hemp is an agricultural commodity and hemp-derived cannabinoids are not controlled substances or adulterants.
Under SB 1020, a license issued by the Department is required to cultivate hemp. When compared with the licensure requirements for MMTCs in section 381.986, Florida Statutes, the licensure requirements in SB 1020 are far less arduous. For example, a person seeking to cultivate hemp need only submit a full set of fingerprints to the Department and provide to the Department the legal land description and global positioning coordinates of the area where hemp will be cultivated.
The bill does not limit the number of licenses that can be issued. This is good news for those hoping to become a part of the hemp industry boom.
SB 1020 directs the Department to, by August 1, 2019, and in consultation with the Florida Department of Health and the Florida Department of Business and Professional Regulation "initiate rulemaking to administer the state hemp program." The rules must provide for "a procedure that uses post-decarboxylation or other similarly reliable methods for testing the delta-9 tetrahydrocannabinol concentration of cultivated hemp" and "a procedure for the effective disposal of plants, whether growing or not, that are cultivated in violation of this section or department rules, and products derived from those plants."
Distribution and Retail Sale of Hemp Extract
SB 1020 also sets forth requirements for distributing and selling hemp extract, including that the product (1) have a certificate of analysis prepared by an independent testing laboratory that confirms the product is of a certain type, and (2) be distributed or sold in packaging that includes certain information.
Federal Approval Requirement
In addition to licensure and rule requirements, SB 1020 directs the Department to seek approval of the state plan with the U.S. Secretary of Agriculture within 30 days after adopting rules. If the state plan is not approved, the Commissioner of Agriculture, in consultation with and with final approval from the Administration Commission, is to develop a recommendation to amend the state plan and submit the recommendation to the legislature.
Industrial Hemp Advisory Council
SB 1020 also establishes an Industrial Hemp Advisory Council to provide advice and expertise to the Department with respect to plans, policies, and procedures applicable to the administration of the state hemp program. The bill sets forth how the Council shall be comprised.
While there is no indication that the legalization of hemp will be as contentious as the legalization of medical marijuana, some open questions remain. First, although the Department of Agriculture and Consumer Services is tasked with promulgating rules, it must do so in conjunction with the Department of Health and the Department of Business and Professional Regulation. Given the Department of Health's experience in promulgating rulemaking for medical marijuana, which has been heavily litigated, it remains to be seen how these departments will work together in developing rules for the cultivation of hemp.
Additionally, because the licensure requirements in SB 1020 are so few, the Department has seemingly been afforded wide latitude in promulgating rules. How far the Department decides to go, and whether such an effort would be challenged, is unknown at this point. Another unknown is how, if at all, the new hemp industry in Florida will interact with the State's medical marijuana industry.
These and many other questions will be answered over the next several months as this new industry begins to take shape.
What to Do Now
Although the Governor has yet to sign SB 1020 into law, he is fully expected to do so. Thus, industry observers and those hoping to play a part in the forecasted hemp industry boom, should now focus their attention on the rulemaking process.
On June 6, 2019, the Department issued several Notices of Development of Rulemaking to implement SB 1020. The subject of the Notices include the permitting process and requirements for hemp extract, inspection and laboratory certification, seed standards, and the implementation of State Hemp Program generally.
These topics will be addressed at three different workshops held in various parts of the State:
1. South Florida Hemp Workshop on June 20, 2019, at 9 a.m. in Pembroke Pines:
Broward College, South Campus, Performing Cultural Arts Theater
7200 Pines Blvd.
Building 68 A, Room 151
Pembroke Pines, FL 33024
2. Central Florida Hemp Workshop on June 21, 2019, at 9 a.m. in Tampa:
Florida State Fairgrounds
4800 U.S. Hwy 301 N
Tampa, FL 336103
3. North Florida Hemp Workshop on June 24, 2019, at 9 a.m. in Tallahassee:
R.A. Gray Building Auditorium
500 S. Bronough St.
Tallahassee, FL 32399
The workshops will also be livestreamed by the Florida Channel for those unable to attend in-person.
Kristen Bond, Associate
Seann M. Frazier, Partner