This article is authored by managing attorney, Garrett Graff.
Hemp is one of the most environmentally sustainable agricultural products as hemp is cultivated in a variety of climates and its uses are innumerable, including food, fuel, fabric, bioplastics, paper, and other industrial products. The Agriculture Improvement Act of 2018 (“2018 Farm Bill”) removed hemp from the Controlled Substances Act (“CSA”), and the Drug Enforcement Administration’s (“DEA”) control as the cultivation of hemp has been federally decriminalized. As hemp continues to grow as a global commodity, even more so now since the global pandemic has demanded the development of additional revenue sources, the complex process of international shipping follows.
Hemp Import and Export Obstacles
Importers and exporters have encountered regulatory obstacles when shipping hemp and finished products that contain hemp-derived ingredients. The United States Department of Agriculture (“USDA”) issued guidance concerning certain hemp imports and exports, along with the U.S. Customs and Border Protection (“CBP”); nevertheless, importers and exporters face onerous hurdles when shipping hemp and hemp-derived products. As a result, importers and exporters are in a risky and often unclear position when shipping hemp.
The import and export process begins with properly identifying the goods in the shipment. Although this appears to be a simple step, this can be difficult because certain shipments of hemp products do not fall under a Harmonized Tariff Schedule (“HTS”) category and/or follow CBP guidance documents. The HTS governs all products and attaches a tariff code to each individual item that is being imported or exported. Some hemp products, including textiles, are covered by the HTS, but many hemp products are not. The CBP does not maintain the HTS; rather the U.S. International Trade Commission oversees the HTS, which adds to the regulatory ambiguity.
Hemp Seeds and Plants Have Received USDA Guidance
Hemp seeds and plants have received specified guidance from the USDA; however, specific requirements often depend upon the product and the origin or destination. Canadian hemp seeds, for example, can be imported into the U.S. if accompanied by either a phytosanitary certification from Canada’s National Plant Protecting Organization (“NPPO”) or a Federal Seed Analysis Certificate for hemp seeds to verify the seed’s origin and confirm the absence of pests. Canadian hemp plants also require a phytosanitary certification. Hemp seeds can be imported from other countries if accompanied by a phytosanitary certificate from the exporting country’s NPPO and with other forms, as required. Hemp plants from countries other than Canada must be accompanied by both a phytosanitary certificate from the exporting country’s NPPO and a PPQ 587 Permit for importing plants or plant products.
Unfortunately, since the 2018 Farm Bill, neither USDA nor CBP have provided definitive guidance concerning other hemp-derived materials, including raw hemp, intermediate processed materials, and finished products. Thus, businesses might still elect to proceed in importing/exporting the materials utilizing best practices and seeking to be as transparent as possible. That said, certain risks of regulatory interference, and even product seizure, still exist.
Hemp Inspections By CBP Upon Arrival to US Customs
Upon arrival to a U.S. customs port, CBP will likely inspect the hemp shipment to ensure USDA compliance. However, CBP inspections put hemp shipments in a vulnerable position. When conducting inspections, one of CBP’s tasks is to distinguish legal hemp products from illegal marijuana. At this time, there is no uniform testing method for CBP inspections, and CBP currently employs various field tests – which do not quantify the amount of THC (as below/above 0.3% THC), rather only disclosing the mere presence of THC – which means your shipments may be seized for extended periods of time. These risks directly impact product quality and degradation when shipping. Finished products containing hemp-derived ingredients have created frustrating obstacles as the USDA’s hemp regulations do not address the import or export of finished products. Those shipping finished products should prioritize adherence to FDA regulations and guidance, keeping in mind that the FDA has asserted that hemp-derived CBD cannot be added to food or marketed as a supplement because of potential consumer health risks.
Particular hemp products attract CBP attention more than others. Shipments of early-stage hemp clones are particularly hard to test because, prior to germination, hemp and marijuana genetics express very similar characteristics and potencies. The CBP testing capabilities are limited, which leaves clone shipments at the mercy of the CBP.
Though there has been a decrease in hemp seizures, it is essential for importers to evaluate product compliance, such as packaging and labeling requirements, or risk potential denial and re-exportation. The obstacles exporters face when exporting depend upon the regulations of the importing country. Importantly, CBP seemingly is greatly concerned with shipments entering the U.S., rather than shipments being exported and leaving the country. Although import processes are generally stricter, CBP monitors and imposes requirements for particular exports that may require businesses to obtain a proper export license, if required. It is important to recognize that countries of destination may mandate THC levels less than the 0.3% threshold, which leaves noncompliant shipments subject to seizure and destruction.
As hemp import and export guidance continues to evolve, importers and exporters should be sure to be diligent when navigating domestic and international hemp regulations. Hoban Law Group is fully equipped to discuss the complex needs of your shipment and help facilitate the process; we encourage you to give us a call today.