On January 15, 2021, the U.S. Department of Agriculture issued the final rule for hemp production in the United States. The rule, which goes into effect on March 22, 2021, expands and formalizes previous guidance on the disposal of non-compliant or “hot” establishments (those with THC concentrations above 0.3%). Importantly for the industry, the new disposal rules eliminate unnecessarily burdensome oversight by the DEA and create opportunities for recovery.
Growers are not required to use a DEA dealer or law enforcement to dispose of plants that do not meet DEA requirements. Instead, producers can use conventional on-farm disposal methods. Some of these disposal options include plowing under plants that do not meet IDEA requirements, composting into “green manure” for use on the same land, processing, landfilling or incineration. Because the DEA is no longer involved in this process, USDA regulations simplify disposal options for producers of this agricultural product.
Further, the final rule allows for the “regeneration” of nonconforming plants. The ability to remove and destroy noncompliant floral material while retaining stems, petioles, leaf material, and seeds is an important yield and cost-saving measure for growers, especially small producers. Recovery can also be achieved by grinding the entire plant into “biomass,” which is then retested for compliance. Biomass that is not retested does not meet cannabis requirements and must be destroyed. The USDA has issued additional hygiene guidelines. It should be noted that this guideline requires that batches be stored separately during biomass production, that the biomass produced be stored and labeled separately from each other and from other eligible hemp batches, and that seeds removed from the hemp should not be used for propagation purposes.
The final rules contain strict record keeping requirements, which ultimately protect producers and must be approved. For example, growers must document the removal of all nonconforming plants by completing the USDA Condensation Plan Producer Disposition Form. Growers must also keep records of all plants removed, including the original of the retest results. Records must be kept for at least three years. Although the USDA has not conducted spot checks to date, the Department may conduct spot checks at permit holders.
While this federal directive provides some clarity for cannabis producers, the risk of lawsuits related to waste disposal remains. The environmental impact of the industry is unknown, and there are potential issues related to tort liability or compliance with federal and state regulations. For example, as noted above, while there are incineration and composting options for non-compliant facilities, the final rule does not address the potential risk of complaints for smoke or odor emanating from these methods.
At the federal level, compliance with the Resource Conservation and Recovery Act (RCRA), the Comprehensive Environmental Compensation and Liability Act (CERCLA), and other regulations such as those of the Occupational Safety and Health Administration (OSHA) can be problematic. In addition to government enforcement of HMA and CERCLA compliance, these hazardous waste laws also allow private parties to bring claims. Plant materials from cultivation are not considered hazardous, but process liquids from extraction or distillation (ethanol, acetone, etc.) are. Under RCRA, a person may bring a civil action for “immediate and substantial danger” against any person who produces or stores hazardous waste in a manner that poses an immediate and substantial danger to health or the environment. Under CERCLA, private parties who bear the costs of removal or remediation may take legal action to recover the costs from other responsible parties.
At the state level, there may be problems with the administration of state agencies and state laws. In California, for example, several state agencies oversee the production and disposal of cannabis and hemp. CA Proposition 65 requires warning labels for products containing certain chemicals, including pesticides, heavy metals, and THC. California’s Environmental Quality Act (CEQA) requires an environmental impact assessment of wastewater or pesticides before a cultivation permit is issued. Both environmental impact laws allow some form of private litigation.
Given the diversity and evolution of rules and regulations governing cannabis cultivation, cannabis growers still need to seek professional advice and assistance when entering this highly regulated industry.
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