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OUR LEGAL CHALLENGE TO USDA’S HEMP PRODUCTION RULE (7 CFR 900)

February 24, 2020.

USDA’s Interim Rule on hemp production contains critical errors that are severely damaging the US hemp industry, particularly small- and medium-sized businesses. Had the Department followed the law in considering public comment and analyzing impacts on small businesses prior to promulgating the rule, these errors could have been avoided. With farms now preparing for the 2020 season, and with months-long efforts by industry stakeholders and senior government officials to collaborate with USDA having yet to produce results, we see no alternative but to seek judicial relief to mitigate the havoc being wrought upon the US hemp industry.


Our companies, each having suffered severe damages because of the rule’s misguided requirements, have therefore retained counsel to challenge the rule in Federal court. Specifically, we assert that the Department has violated two Federal laws: the Administrative Procedures Act (APA), by failing to consider public notice and comment before issuing the rule; and the Regulatory Flexibility Act (RegFlex), by failing to analyze the rule’s impacts on small businesses. Furthermore, these violations raise concerns that many provisions of the rule are arbitrary and capricious, also unlawful under APA, including these: ebruary 24, 2020. USDA’s Interim Rule on hemp production contains critical errors that are severely damaging the US hemp industry, particularly small- and medium-sized businesses. Had the Department followed the law in considering public comment and analyzing impacts on small businesses prior to promulgating the rule, these errors could have been avoided. With farms now preparing for the 2020 season, and with months-long efforts by industry stakeholders and senior government officials to collaborate with USDA having yet to produce results, we see no alternative but to seek judicial relief to mitigate the havoc being wrought upon the US hemp industry.


Our companies, each having suffered severe damages because of the rule’s misguided requirements, have therefore retained counsel to challenge the rule in Federal court. Specifically, we assert that the Department has violated two Federal laws: the Administrative Procedures Act (APA), by failing to consider public notice and comment before issuing the rule; and the Regulatory Flexibility Act (RegFlex), by failing to analyze the rule’s impacts on small businesses.

Furthermore, these violations raise concerns that many provisions of the rule are arbitrary and capricious, also unlawful under APA, including these:

1. Exclusion of sampling error from THC testing endangers farms with false findings of non-compliance.
2. Sampling of flowering tops contradicts the scientific basis for the 0.3% THC threshold.
3. The 15-day testing window is unpractical given testing-lab capacity and variable farming conditions.
4. The definition of post-decarboxylation is unsupported by science and overestimates the amount of THC in hemp crops, endangering farms with false findings of non-compliance.
5. Requiring the use of DEA-certified labs is unpractical given lab capacity and restricts competition.

Together, our three companies represent the full value chain of hemp production subject to the rule—nursery production, cultivation and primary processing, and distribution:

  • Cultivaris Hemp, with decades of experience in virus-free stock production and more than 950 million young plants under its belt, produces clean-stock hemp starter plants for distribution through a network of rooting stations throughout the US and around the world.
  • Meristem Farms develops, cultivates and processes distinctive hemp flower crops for wellness consumer markets through regenerative organic agriculture, the time-honored creativity of breeders, and the boot-packed intuition of growers and farmers who turn meristems into medicine.
  • Hemp Trading Network provides hemp distribution and logistics support to thousands of hemp companies, ranging from the smallest family-owned farms to sophisticated international conglomerates, including over 5000 farm acres under contract throughout the US and abroad.

Our legal team at Eversheds Sutherland LLP is preparing our formal complaint for filing in Federal court. We anticipate being ready to file for immediate relief by March 16, 2020. Meanwhile, we continue to work with USDA in the pursuit of sensible, logical and science-based rules that reflect the intent of Congress, and we wish to engage actively with interested stakeholders, government officials and trade associations so that this effort may produce beneficial outcomes for all concerned. To join the discussion, please email us at usda-rule@meristemfarms.com.


Herrick Fox, CEO / Meristem Farms, LLC / Morrisville, Vermont /www.meristemfarms.com
Josh Schneider, CEO / Cultivaris Hemp, LLC / San Diego, California / www.cultivarishemp.com
Shayla Hayward, CEO / Hemp Trading Network, LLC / Ashland, Oregon / www.hemptradingnetwork.com