How can I participate in the Industrial Hemp Pilot Program? 

Hemp cultivators must have a license to participate in an industrial hemp program under federal and state law. In North Carolina farmers who want to grow hemp must submit an application for a license to the Industrial Hemp Commission.  Applications are reviewed and approved by Commission members. The Industrial Hemp Commission is responsible for developing rules and applications for those participating in the program. The statutes governing hemp in North Carolina can be found at N.C.G.S. § Chapter 106 Article 50E and administrative rules are located at 02 NCAC 62 .0101-.0109.

Hemp processors are not required to be licensed under the North Carolina Hemp Pilot Program but must be registered with the State. Processors are required to register by filing a form with the NC Hemp Commission and at the end of each calendar year report the total weight and type of industrial hemp processed. 

Failure to properly comply with the various statutes and regulations can result in civil and criminal penalties and sanctions. An attorney experienced with the unique issues in the hemp industry is recommended for anyone seeking to enter the business.

What do I need to do to be a part of the Industrial Hemp Pilot Program?

If you intend to grow hemp, complete and submit an application with the NC Industrial Hemp Commission and wait for approval. If you intend to be a processor, register with the State by submitting the necessary form with the Hemp Commission. The information contained in your application or registration form will need to be amended and updated with the Hemp Commission to reflect any change to your business practices occurring after approval.   

How do I obtain industrial hemp seed for planting?

Identifying a seed source and all the associated costs remain the responsibility of the grower. On the application for a license to participate in the North Carolina Hemp Program, applicants are required to indicate the origin and certification information for the intended type of seed. Additionally, if a change is made to the type of seed used, licensees must amended their information on file with the NC Hemp Commission. 

02 NCAC 62 .0101 details the regulations for seeds and transplants that may be cultivated under the North Carolina Hemp Program. Generally, seeds or transplants must either meet the criteria established by the North Carolina Crop Improvement Association and carry a certifying tag of varietal purity or be produced lawfully by a licensed grower under an industrial hemp program within the United States with  documentation that the crop from which the seed or transplants were harvested had a THC analysis of 0.3% or less by dry weight.

Hemp seed imported from outside the United States falls under the authority of the United States Department of Agriculture. Hemp seeds can be imported from Canada if accompanied by a phytosanitary certification verifying the origin of the seed and absence of plant pests or a Federal Seed Analysis Certificate. Hemp seeds may be imported into the United States from countries other than Canada if accompanied by a phytosanitary certificate from the exporting country’s national plant protection authority to verify the origin of the seed and confirm that no plant pests are detected.  

Lawfully procuring hemp seed and complying with all applicable regulations can be confusing so securing experienced counsel is recommended.  

What CBD products are legal to sell in North Carolina?

Generally speaking, non-food CBD products derived from state and federal compliant hemp are legal in North Carolina.  

Under federal and state law, industrial hemp is classified as part of a cannabis plant with less than 0.3% tetrahydrocannabinol (THC) concentration, based on the product’s dry weight. If a crop meets these criteria, it may be cultivated legally without being classified as marijuana—a Schedule I controlled substance. This means that derivative products of industrial hemp, such as cannabidiol (CBD) products, may be legally produced and transported in interstate commerce.

Despite the recent change in the law, cultivation of industrial hemp and its derivative products like CBD must still comport with the regulations of federal and state agencies. Although state and federal law allow for the regulated growth, processing, transport, and sale of hemp and CBD products, the Food and Drug Administration has been quick to assert its enforcement authority under the Federal Food Drug and Cosmetic Act. The FDA’s current position is that the addition of CBD to food and dietary supplement products is not permissible and enforcement action may be taken against violators. While the FDA has taken no enforcement action other than issuing warning letters—at least for the time being—businesses should be wary of combining active hemp derivatives like CBD with food or dietary supplements.

At the state level, the NC Department of Agriculture and Consumer Services has issued letters to companies that are in potential violation of state and federal law related to CBD containing foods. The State’s focus appears to be educating those involved in the hemp industry rather than punitive action. In a 2019 statement, the Department of Agriculture stated that the letters are intended to advise noncompliant companies of the current status of the law. While the State’s compliance strategy is subject to change and legal action is possible, for the time being, warning letters have not penalties or fines.

Can I sell CBD online?

Yes. It is legal to sell hemp and CBD products online as long as the product is sourced from industrial hemp and the THC content is below 0.3%. It is advisable to maintain compliance records including laboratory test results for the particular product sold, licenses, and compliance reports for two years from the date of sale. Again, be aware that food and dietary supplements containing CBD are still prohibited under FDA regulations and the marketing and sale or such products is not permissible.

What regulations are there about mailing CBD?

There are very few additional regulations restricting the mailing of hemp so long as the mailer complies with all applicable federal, state, and local laws pertaining to hemp production, processing, distribution, and sales. 

Hemp and hemp derivatives including CBD products can be shipped with private carriers like UPS and FedEx as well as mailed through the US Postal Service to domestic addresses. NC shippers must be properly licensed and/or registered to participate in the Hemp Pilot Program and are responsible for ensuring that the shipped product does not exceed the 0.3% THC concentration. The mailer should retain records for 2 years from the date of mailing showing compliance with such laws, including laboratory test results, licenses, or compliance reports. If you are shipping liquid hemp products be sure to follow the USPS guidelines to ensure leaks do not delay or prohibit mailing.

How is hemp taxed? How is CBD taxed?

As a derivative of hemp, CBD is indistinguishable from hemp from a tax perspective.  Beginning in 2019 following hemp’s reclassification as a non-controlled substance, hemp businesses are now able to deduct all of their normal operating expenses like any traditional business. For the same reason, because hemp is now recognized as a lawful federal and state agricultural commodity, normal tax rules and regulations are applicable and should be observed. If you have specific questions about your tax obligations for hemp growth or sales, contact the attorneys at Dysart Willis Houchin & Hubbard.

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