What the 2018 Farm Bill Actually Means for Hemp Legalization

Updated Jun 16, 2022

The monumental Agriculture Improvement Act of 2018 (simply known as The Farm Bill) was signed into law on December 20, 2018, and has since changed the face of the way the legal cannabis industry operates. To call the legislation landmark might not even do it enough justice. And all without actually legalizing cannabis medically or federally. But what exactly is the 2018 Farm Bill?
If you weren't paying close attention and reading the ins and outs of what the Farm Bill changed and how it might seem like another piece of legislation pushed through by lawmakers, that's just a loose assortment of pork barrel-style changes. Once you dig into the bill a little bit, however, you'll find that the 2018 Farm Bill was the first of its kind in many respects, opening the door to multiple multi-billion dollar fully legal industries from which investors, entrepreneurs, and consumers can benefit!

What is the 2018 Farm Bill & Why is it Special?

For the first time, hemp was removed from the Controlled Substances Act. Yes, industrial hemp has been legal for a few years now, and it will continue to be treated as an agricultural product well into the future. The change was so dramatic that the legislation is known in some circles as the 2018 Hemp Farm Bill or Hemp Bill 2018. Thanks to the Farm Bill, residents in the US can enjoy a wide variety of hemp CBD products without breaking the law. 

That's a key reason why CBD and other CBD-infused products have exploded into a thriving industry projected to be worth as much as $47.2 billion by only 2028. On top of that, we've seen the rapid growth and rise of other hemp-derived cannabinoid products like Delta-8, thanks to the new hands-off approach to hemp legalization language in the 2018 Farm Bill.  

More importantly, it has opened the door for continued conversations surrounding cannabis federal legalization, which will hopefully have its moment in the spotlight soon. After all, with the prior financial successes of recreational markets in legal states all around the country and the explosion of hemp-derived cannabinoids, it's clear that once the federal prohibition on cannabis is lifted, there's a lot of money to be made. And we have the 2018 Farm Bill to thank for that proof of concept!

What is Hemp?

Before we dig too deep into the language and consequences of the bill, we should first take a minute to define some terms. Most importantly, we wanted to highlight some differences between standard THC-rich cannabis products and hemp. 

Hemp is botanically the same species as marijuana. However, hemp lacks its most common cannabinoid-tetrahydrocannabinol (THC), which provides a well-known psychoactive effect.

 Depending on the variety, THC levels in marijuana can reach around 30 percent, while THC levels in hemp are less than 0.3 percent This lack of THC is why hemp has historically been used for industrial purposes like making rope, sails, paper, and clothing. Although THC is not prominent in hemp, CBD is. 

CBD is a non-psychoactive cannabinoid that interacts with receptors in the immune and central nervous systems to provide medicinal benefits. It is used successfully to treat various ailments, disorders, and diseases such as chronic pain, anxiety, insomnia, epilepsy, and depression.

What Does the 2018 Farm Bill Do?

Before the passage of the 2018 bill, it was legal for states to establish pilot programs to grow and study hemp on a limited basis to gauge the market for hemp-derived products. Currently, the bill allows for broad hemp cultivation and makes it legal to ship hemp-derived products across state lines for commercial purposes. It also removes the restrictions on selling, transporting, or possessing hemp-derived products.

As you might expect from a federal bill, restrictions and conditions exist. The law does dramatically expand the potential for hemp production, but it does not create a system that allows hemp to be grown by just anyone. 

With the 2018 Farm Bill, hemp cultivation without a license is against the law. Growing hemp with THC content above 0.3 percent is also a violation of the law. Within the bill is language outlining potential punishment for repeat offenders. States will be heavily regulated; there is now a shared federal and state regulatory authority that handles hemp production, and there are specific steps that states must take to develop regulatory plans to submit to the federal government for approval. 

State departments of agriculture must consult with the state's governor and chief law enforcement officer to devise a plan to submit to the Secretary of the USDA for approval. If states decide not to develop their regulatory program, the USDA will implement a regulatory program under which hemp growers must comply.

Despite the myriad of laws and rules that need to be followed, hemp farmers all over the country have made a whole lot of money from now being allowed to plant, harvest, and sell their crops to CBD brands all over the country! 

What is the Future for Hemp Farmers?

Hemp can be used in so many different products that the potential market is vast. That's a key reason why the value of hemp production totaled somewhere in the range of $824 million in 2021 alone. That massive figure is likely due to the versatility of the hemp plant.  

Hemp fibers are used in fabrics, insulation, paper, textiles, yarns, carpeting, and construction materials. Salad dressings and cooking oil can contain hemp seeds. Hemp seeds can also be crushed to create hemp seed oil used by the cosmetic industry and included in shampoos and soaps. 

Legislators at the state level are aware of the potential and are addressing various policy issues such as how they will define hemp, license growers, and regulate and certify seeds. 

Currently, 41 states have enacted legislation to establish industrial hemp cultivation and production programs. Additionally, since hemp grows very quickly and easily compared to many other crops, farmers can grow it on the side as an insurance product in case something goes wrong with their first harvest.

What are the Challenges Ahead for Hemp?

In the U.S., while hemp is still very new despite its massive growth over the past five or so years, and as with any new product, there are issues related to how it will be branded, how markets will be developed, how it will be sold, and how it will be regulated that still needs to be worked out. 

There may be demand for products made with hemp and farmers growing hemp, but that doesn't mean farmers can quickly get the product to a processor and then to the public. After all, while hemp famously grows quickly and easily, demand could explode to the point where farmers won't be able to keep up. Many aspects need to be developed to create a dependable and commercially viable supply chain, especially in the wake of COVID-related disruptions. 

There is also the issue of extracts from hemp being sold and marketed as CBD when, in fact, they do not have the same medicinal elements as CBD. Conversely, there is the lingering issue of CBD's legality. When it comes to CBD, anything derived from marijuana plants with more than 0.3 percent THC is classified as a Schedule I controlled substance under the Controlled Substances Act (CSA). When derived from hemp, it is considered legal and not covered by the CSA. How these differences will be monitored and regulated remains to be seen.

Another factor to keep in mind is the lack of regulation. Since there's no governing body overseeing the production and testing standards for CBD-infused products all over the web and health food store shelves, a lot of snake oil is sold. Some products that don't claim to be full-spectrum have shown to be THC-rich, while analysis of other products has found there to be no CBD in there at all. Until cannabis is legalized at the federal level and a regulatory body can start testing products, consumers should opt for brands that have set standards of third-party lab testing behind their various products.  

Another question mark deals with crop insurance. As defined in the 2018 Farm Bill, a producer who gets a portion of revenue from hemp is still eligible to participate in the Whole Farm Revenue Protection Plan (a federal risk management safety net for all commodities on a farm under one insurance policy). But if a farmer has insurance on hemp and is found to be over the 0.3 THC limit,and the crop has to be destroyed, will the farmer receive compensation?

The Bottom Line

The 2018 Farm Bill and hemp have a complicated relationship. Removing hemp from the Controlled Substances Act and labeling hemp as an agricultural product are significant advances. 

It has aided in more people discovering the health benefits of the chemical compound CBD. It has also normalized the consumption of cannabis products in the household, regardless of the legalization of THC. But there is still a great deal to do in integrating hemp and hemp products into the marketplace and continuing to research the plant to understand all its components and qualities better. 

It will remain a highly regulated crop and is yet another issue that finds state and federal governments struggling to move forward in unison.

What do you think of the Farm Bill? Have you integrated hemp into your life yet? Tell us in the comments below!