On March 28, 2019, South Carolina enacted the Hemp Farming Act (Act), which governs the cultivation, handling, and processing of hemp in South Carolina. The Act repealed (with limited grandfathering provisions, as described below) the existing statutes that created the hemp pilot program in South Carolina (Prior Law) under the Agricultural Act of 2014 (2014 Farm Bill). The Act makes it unlawful to cultivate, handle, or process hemp in South Carolina without a license issued by the South Carolina Department of Agriculture (SCDA) under a state plan (State Plan) pursuant to which the SCDA regulates hemp production in South Carolina, as contemplated by the Agricultural Improvement Act of 2018 (2018 Farm Bill).
The Act requires the SCDA to submit the State Plan to the U.S. Department of Agriculture (USDA) for approval within 60 days after the effective date of the Act. The SCDA has not, however, submitted the State Plan to the USDA, and the USDA has said that it will not approve any state plans until it has promulgated its own regulations under the 2018 Farm Bill, which it expects to do later in 2019.
After the passage of the 2018 Farm Bill, hemp is permitted to be cultivated and processed only pursuant to (i) the USDA’s regulations under the 2018 Farm Bill, (ii) a state plan implemented under the 2018 Farm Bill that has been approved by the USDA, or (iii) a state pilot program that complies with the 2014 Farm Bill. Since the USDA has not promulgated its regulations or approved any such state plans, hemp cultivation and processing in South Carolina (as in all states) currently must be conducted under a pilot program that complies with the 2014 Farm Bill.
The Prior Law did not require the licensing of handlers or processors in South Carolina. Under the Act, handling means possessing or storing hemp for any period of time other than in a vehicle during transport from the premises of one licensee to that of another licensee, but does not include possessing or storing hemp products (as defined in the Act), and processing means converting hemp into a marketable form.
The SCDA is currently accepting applications for processor licenses under the Act, but is not currently accepting applications for handler or grower licenses. All processors already operating in South Carolina as of the effective date of the Act are required to obtain licenses, and should file processor license applications with the SCDA promptly.
Prior to the enactment of the Act, the SCDA had already issued 40 licenses to growers for the 2019 growing season, the maximum number permitted under the Prior Law. The Act provides that those 40 grower licenses will remain valid for the terms thereof under the terms and conditions under which they were issued, and that the SCDA may issue additional grower licenses for the 2019 growing season under the Prior Act to any prior applicant that met the licensing criteria of the Prior Act but was denied a license solely because the SCDA had already issued the permitted 40 licenses for the year. The Act also provides that the Prior Law (under which those licenses are issued) will remain in full force and effect for those licenses during the term thereof. Since those grower licenses continue to be governed by the Prior Law, they should fall within the scope of the 2014 Farm Bill. Processor licenses issued by the SCDA after the enactment of the Act but prior to the adoption and approval of the State Plan may also be considered compliant with the 2014 Farm Bill if the processors will be taking hemp from growers who are participating in research under the Prior Law or under another state’s pilot program under the 2014 Farm Bill.
The Act defines hemp as the Cannabis sativa L. plant and any part of that plant with a THC concentration of not more than the greater of 0.3% and the concentration provided for by the federal definition of hemp. It contains provisions governing the licensing process and penalties for violations of the Act. The Act does not apply to the possession, handling, transport, or sale of hemp products or extracts. Hemp products, as defined in the Act, include products derived from or made by processing hemp plants or plant parts that are prepared in a form available for commercial sale, including hemp-derived cannabinoids.
In a related matter, in May of 2019 the SDCA issued its Hemp Products in Human Food Quick Guide. In that guide, the SCDA indicates that it cannot allow foods with cannabidiol (CBD) to be manufactured in South Carolina, because CBD is the active ingredient in an FDA-approved drug and was the subject of substantial clinical investigations before being marketed as a food or dietary supplement. Certain hemp products, such as hemp seeds, hemp seed oil, and “full spectrum” hemp oil, are, however, approved for use as food ingredients in South Carolina.