U.S. hemp lawmaking hindered by divergent priorities, soft market, report finds

Legislative challenges are starkly evident as lawmakers prepare to address hemp-related regulations in the upcoming U.S. Farm Bill – amid a drastic decline in the industry’s fortunes, according to a recent report from the Congressional Research Service (CRS) .

The CRS report underscores key issues at play in an intricate policy landscape, led by the sharp debate over products containing intoxicating hemp substances such as delta-8 THC. The products have sparked contentious legislative proposals at both state and federal levels. While some advocate for an outright ban to address public safety concerns over the synthetic hemp-derived substances, others argue for clear federal regulations that would keep the products legal.

‘Diverging policy goals’

“Hemp industry priorities for the next Farm Bill vary by national and regional groups, often with diverging policy goals and priorities, thus complicating policymaking,” the CRS report says of the pending legislation, originally the 2023 Farm Bill, which has yet to be finalized.

Aside from that contentious issue of the intoxicating products, key regulatory hurdles that policymakers must address include testing requirements, licensing processes, and the role of the Drug Enforcement Administration (DEA).

Under the current framework established by the 2018 Farm Bill, industrial hemp growers face stringent requirements, such as testing for tetrahydrocannabinol (THC) levels and background checks. Proposed amendments in previous congressional sessions aimed to relax some of those rules.

A shrinking industry

In addition to the legislative and regulatory challenges, the hemp industry has faced severe economic setbacks, the report observes, with the farm-level value of U.S. hemp production declining from $824 million in 2021 to $291 million in 2023, according to the U.S. Department of Agriculture (USDA). This contraction reflects reduced acreage and lower market prices for hemp products, particularly hemp flowers used for CBD, still the biggest hemp subsector.

The CRS report attributes part of this decline to regulatory uncertainty and market oversaturation following the crop’s legalization. For farmers, the risk of cultivating non-compliant hemp – commonly referred to as “hot” hemp, which exceeds the federal THC limit of 0.3% – remains a significant challenge, with about 20% of crops exceeding legal thresholds in recent years, the report notes.

Past efforts have pushed for raising the THC limit to a full 1.0%, which would not only protect farmers from over-the-limit crops but also make CBD production more efficient because CBD rises in hemp plants in proportion to THC.

Advocates push for support

In addition, CRS said hemp stakeholders are urging Congress to expand federal support through the USDA’s farm programs. Key proposals include:

• Increased funding for hemp genetics research, soil carbon sequestration studies, and the plant’s potential for phytoremediation.
• Expanded processing capacity for hemp fibers and promoting bio-based products, seen as critical for industry growth.
• Adding hemp to the USDA’s specialty crop program to unlock grants and additional support.
• Improved access to crop insurance, credit, and banking services for hemp farmers.

Product safety and the FDA

The CRS report also highlights unresolved issues regarding hemp-derived consumer products, such as CBD. The Food and Drug Administration (FDA) has yet to establish a regulatory framework for CBD, but has warned that products on the market are not safe enough to be sold lawfully as a dietary supplement. His agency has said it cannot regulate CBD under current law, and has urged Congress to create a new pathway to manage the substance.

Legislative proposals have sought to address this gap by requiring the FDA to establish safety standards and labeling requirements for hemp-derived products. However, the jurisdictional overlap between agriculture committees and health agencies has slowed progress, leaving many products in a regulatory gray area, according to the CRS report.

The renewed focus on hemp in the upcoming Farm Bill reflects broader debates about agricultural innovation, economic sustainability, and public safety. Hemp’s potential as a versatile crop makes it a potentially significant player in the future of U.S. agriculture. Yet, without clear and consistent policies, the industry risks stagnation, the CRS said.