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Legal Q&A: Legal Distinctions Between Marijuana and Hemp

Q: Is there a Legal Distinction Between Hemp and Marijuana?

A: Yes. With talks of marijuana legislation occurring once more, it’s important to remember that there is a legal distinction between hemp and marijuana. 

As of publication of this article, the growing and production of hemp is legal in Wisconsin (subject to certain requirements) while marijuana remains unlawful on both a state and federal level. A key component of this distinction is that the Agriculture Improvement Act of 2018 removed hemp from the definition of marijuana in the Controlled Substances Act. This paved the way for rulemaking which ultimately provided states the ability to implement their own programs. Wisconsin is one such State. 

Effective October 29, 2020, Wisconsin’s Hemp Pilot Research Program converted to the Hemp Program. The Hemp Program is consistent with the pilot program and allows Wisconsin’s hemp growers to plant, grow, and process hemp legally. Marijuana is not legal under this program. It’s also worth noting that hemp and marijuana are physically, and chemically different. While such a discussion is outside the scope of this article, it is important to understand that there is a difference. Just as a bank that works with farmers of various crops, or restaurants and bars, or steel mills and factories is likely to have some knowledge of the industry to better understand their relationship, it is important to become familiar with hemp, and, as its legality shifts in more states (such as the case recently in Illinois), marijuana. 

In short, a bank should have procedures in place to identify the extent to which a business is engaged in the growing or production of hemp or marijuana. If the business is engaged in the growing or production of hemp, bank should confirm whether it is done so legally, under Wisconsin’s Hemp Program. Because legal hemp is still a relatively new commodity, it can be difficult to know where to start, let alone in relation to marijuana. To the extent that you have any questions on the matter, do not hesitate to contact WBA Legal’s Scott Birrenkott at 608-441-1200 or wbalegal@wisbank.com

Birrenkott is WBA assistant director – legal. For legal questions, please email wbalegal@wisbank.com

Note: The above information is not intended to provide legal advice; rather, it is intended to provide general information about banking issues. Consult your institution’s attorney for special legal advice or assistance. 

By, Alex Paniagua