CBD and the Agriculture Improvement Act of 2018—What’s in the “Green” and Whats Not

CBD and the Agriculture Improvement Act of 2018—What’s in the “Green” and Whats Not

April 05, 2019

The hot topic of 2019—the treatment of CBD and CBD products after the Agriculture Improvement Act of 2018 (the “AIA”). On December 20, 2018 the AIA was passed and became public law. With it came a historic provision exempting what is defined as “hemp” under the AIA from the Controlled Substances Act and allowing US citizens to be in possession of it. 

“Hemp” as defined by the AIA is “the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.” Woah—a lot to unpack for such a short buzzword. So what does the passage of the AIA really mean? Well, it means quite a bit, and were are going to break it down in laymen’s terms for you—


               The Purchase and Sale of CBD Based Products

The question a lot of people jump to when hearing this news, “can I buy or sell CBD anywhere now?” Well . . . that depends. The short of this answer is yes, and well, no. As explained further below, while the federal government has made it legal to possess, sell, and buy CBD products, the States still have the authority to regulate CBD as they wish, and yes, may still make it illegal to do any three of those things while in their jurisdiction.

If CBD is legal in the State you live in, then yes, you can go and get some CBD with no worries! Drop that CBD bath bomb right in the tub and enjoy its benefits. However, when it comes to the question of selling, you still have to be wary of a few things—making sure that any product you sell truly fits the definition of “hemp” under the AIA and potential additional State and Local regulations on the sale of such products. 

As we talked about before, the definition of “hemp” is quite complicated. To boil it down, its all parts of a cannabis plant, so long as the plant has no more than a 0.3% THC concentration when tested. Well, that’s easy to determine . . . if you’re a scientist. What about if you’re a regular joe trying to step into the CBD game and make some sales in this booming market? Well, what’s recommended is that you get a Certificate of Analysis (COA) on any CBD product you plan on selling. The good thing is that these tests aren’t too expensive and there are a lot of companies out there marketing themselves as a cannabis industry-specific lab to perform this in. Go ahead, type one search into google and it will be at the top of your results page. Once you get this COA, then you should be ready to sell your CBD product with no worries . . . unless you haven’t done your homework with the State and Local laws your subject too.

As mentioned above, the State and Local jurisdictions you live in still have the power to impose stricter laws on the production, sale, purchase and possession of CBD. Man . . . what a lot of leg work to do for something that the Federal government says is legal, right? Well, we here at Coach’s Reserve are looking to help you out—below you can find a matrix of the States in which CBD is legal, where there is still some grey area with medical license requirements, and the States where CBD is still a big no-no. Shouldn’t everyone have a good coach to show them the way?


               How the Financial System is Viewing CBD

Well, now that you’ve made your first sale of a CBD product, you should just be able to stick that cash in the bank, right? Well, not so fast—a whole lot of banks still aren’t willing to step into business with people working in the CBD industry. Quite honestly, I don’t blame them—there is a lot of potential for abuse with this program, and a lot of them are afraid that they’ll be dealing with frauds who are still selling THC products under the guise of CBD. This leaves them open to a lot of legal liability if one of their customers gets caught for this.

So, you ask, where do you store your CBD profit when banks won’t take your money? First, be resourceful—besides the possibility, I discussed above, a lot of bankers (or people for that matter) aren’t familiar with the recent change to the treatment of CBD under the AIA. If you can make a connection with a local bank and get them to hear you out, then they may allow you to bank with them. That’s really easier said than done. In that case, a good alternative is to look for a bank who specializes in customers in what they deem as “high risk” industries—those hopping into CBD sale and production, cruise lines, production and sale of Kratom, etc. These banks are expensive and hard to find—most of them operate online and will cost you a few grand to get an account opened. Make sure to do your research to make sure that they are legitimate before paying any application fees or making any initial deposits.

If you’re looking to be a virtual merchant of CBD (and able to find a solution to the above), you’ll find it much easier to find a merchant processor who’s willing to work with you. There are tons of them out there who have been created with CBD or cannabis specific brands—type in “CBD merchant processor” in google and see what happens. While a google search will turn a page plentiful of these merchant processors, almost all of them will be plentiful with fees. They too consider operators in the CBD industry to be “high risk” and thus charge you higher fees for every transaction that runs through your online platform ranging from 5.5% - 8% fee on all gross sale proceeds PLUS another 35 cent fee for every transaction. That’s quite a lot—no wonder why CBD product prices are so high. The only benefit you may get from connecting with one of these high-risk merchant processors is their industry knowledge—since they work with banks every day, they may be able to refer you directly to bankers who will be willing to get an account opened for a CBD business.


               Legality of CBD in States—Not as Legal as You Think

While the Federal government made CBD legal in their eyes, they still reserved powers for the State under the AIA that allow them to maintain their regulations on the production of hemp and any stricter provisions they have on the production, sale, or purchase of hemp and CBD products derived therefrom. As you can see in the matrix below, there are a lot of States that follow the Federal law and have CBD legal, some that have stricter requirements on people purchase/use of CBD, and those states who still have hemp and CBD products illegal on their books.

However, there is one thing that the Federal government took away from the States, and that is the States ability to prohibit the transportation of hemp and CBD related products across their State lines to other States. Why can (and did) the Federal government do this? Well, without getting too technical, they did it because they have the power to do so and they actually wanted to make it easier to streamline the booming CBD market. Who would have thought! So if you make a sale of a CBD product from a state in which it is legal, and you have to cross through another State where it is illegal to get to your ultimate destination, then have no fear, you’ll be able to make it through the State safely.



Is Hemp and CBD Legal in This State?


Sale/Production Completely illegal




Sale/Production completely legal












Legal on a medical level; Need medical marijuana card
























CBD has been legal as a treatment for seizure disorders in Wisconsin since 2014, and in 2017 the Senate expanded its legality to be used as a treatment for any medical condition a doctor recommended it for.


CBD oil can legally be prescribed to patients with over a dozen medical conditions, including cancer, multiple sclerosis, Parkinson's disease and seizure disorders. The legal limit a patient can have is 20 ounces of marijuana oil with no more than 5% THC, and the CBD amount must be equal to or greater than the THC.


Earlier in 2018, Indiana passed a law that made it legal to manufacture, sell in retail, possess and use CBD oil provided it had no more than 0.3% THC content in it. This was a major expansion of the legality of CBD, no longer requiring Indiana citizens to be on a patient registry to buy CBD oil.


In 2018, Kansas passed a law that exempted CBD products from the state's criminal code regarding marijuana. This allows for adults to legally purchase and possess CBD products as long as they contain 0% THC.


Kentucky has laws that allow for state-sponsored cultivation of hemp, which can be used to make CBD oil.


Mississippi made it legal for patients with severe epilepsy to use products high in CBD as long as they were low in THC in 2014. The cannabis extract must have more than 15% CBD, but no more than 0.5% THC, and must be done by or under the supervision of a licensed physician.


South Carolina legalized CBD for those suffering from severe epilepsy disorders (including Dravet Syndrome, the condition Epidiolex was created to treat). The cannabis extract for must have extremely trace amounts of THC.


The CBD law in Texas also makes an exception for intractable epilepsy patients. This went into law in 2015, and the extract must contain over 10% CBD and no more than 0.5% THC.


Update 5/10/2019: As of April 2019, the Texas House of Representatives passed a bill (HB1325) to legalize the sale of “hemp products”. “Hemp products” follow very closely to that of the Federal government’s definition—a finished product with a delta-9 tetrahydrocannabinol (THC) concentration of not more than 0.3% derived from a “hemp plant”. Additionally, a “hemp plant” means the cannabis plant with no more than a THC concentration greater than 0.3%. Essentially, you can buy or sell CBD products so long as then end product itself has less than 0.3% THC concentration and is derived from “industrial hemp” (plant with less than 0.3% THC concentration).


The Department of Public Health in Iowa allows for limited amounts of CBD oil for patients suffering from several medical conditions. This includes HIV/AIDS, cancer, ALS and seizures. Five dispensaries opened very recently in Iowa. This oil can be found in creams, capsules and more.


The law in North Carolina also only makes CBD legal for patients with intractable epilepsy. The CBD for this is made from hemp extract.


the only access to legal CBD is either by being part of a state-sponsored clinical trial, or having a debilitating medical condition for which they are currently under treatment. The access via debilitating medical conditions is also known as Leni's Law.


The state of Tennessee considers CBD made from hemp extract, not marijuana, to be legal. CBD is also able to be prescribed to patients with intractable epilepsy if it contains trace amounts (no more than nine-tenths of one percent) of THC


Virginia recently expanded legal CBD use when Governor Ralph Northram signed into law a bill that legalized CBD oil for any condition diagnosed by a licensed doctor or practitioner.


Wyoming has a particularly narrow law for CBD oil. It is only legal for patients with epilepsy that has not responded to other treatments. Neurologists have to give the state's Department of Health a statement about how the patient needs and would benefit from the CBD, made from hemp extract, and then the patient may be able to receive a card that allows them to receive cannabis with high concentrations of CBD and trace amounts of THC.


**This chart is subject to change. Please make sure to do your own research—the above chart to meant to serve as a guide and does not constitute the laws of each State as they are updated from time to time We here will make a concerted effort to keep this chart up to date as possible, but cannot provide any guarantee of its accuracy.**


Sources: https://www.greenroadsworld.com/pages/is-cbd-legal/; https://www.thestreet.com/lifestyle/health/is-cbd-oil-legal-14802001;



               More to Come: The Federal Government’s “Thumbs-Up” to CBD Research

The last and one of the more promising aspects of the AIA is the “thumbs-up” the federal government gave to researches on hemp and the CBD extracted from it. The AIA has given the researchers in the cannabis industry the opportunity to apply for a federal research grant on hemp—this is huge! Prior to this act, grants for research on hemp was hard to obtain. That’s because the federal government had hemp listed in the controlled substances act as a banned substance, and thus preventing the federal government from handing out grants for researches to look to the benefits of hemp, and its CBD extract, can provide to people. Actually, there is quite a bit of criticism going around with respect to the Federal government’s long time, antiquated view on the legality of hemp and lack of research as to how it could be used to benefit people. To check out some of the research that has been conducted on hemp and its CBD extract, see our other article {INSERT LINK TO CBD BENEFIT ARTICLE HERE].

This grant of power to start researching hemp and its benefits does not come without strings—the Federal government also imposed requirements to track the legitimacy of hemp research via a study on the research produced. Actually, the government agency overlooking hemp research is required to produce a report on this topic no later than one year after the enactment of the AIA—December 20, 2019. The government will likely use the results of this study for the basis of future regulations on hemp, CBD, and potentially other extracts of the hemp product. With that said, hopefully, those jumping into this field of research truly are conducting legitimate research—if not, this could lead to counter-productive legislation on the hemp and CBD industry by imposing more regulations on its production, sale and, purchase.



 **Nothing in this article is intended to be legal advice, and should not be used as the basis for any such decision. Please consult your legal advisor with regard to your actions in this emerging and developing area of law. Laws change quickly, so any action referred to in this the article may no longer be legal.**

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