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Blockchain could soon protect drivers hauling hemp

A Microsoft partnership asserts blockchain is “a perfect application” for hemp transport verification

USDA hemp rule expected to be issued early next year. (Photo: Jim Allen/FreightWaves)

The White House is reviewing a draft final rule on hemp production which may consider using blockchain technology to help protect drivers from being wrongfully arrested when hauling legal hemp across state lines.

Microsoft Corp. (NASDAQ: MSFT), Envision Blockchain Solutions LLC and Blockchain Agricultural Solutions Inc. are partnering on an effort that would use blockchain to provide real-time, shared information to law enforcement to not only avoid driver arrests but also the unlawful seizure of trucks and cargo.

“There is absolutely no reason why every single federal, state or municipal law enforcement officer should not know that a shipment of hemp being transported is a legally permitted shipment with accompanying manifest,” the companies assert in recent joint comments filed with the U.S. Department of Agriculture (USDA).

“Any seizure of a lawful hemp shipment must require a law enforcement officer to be able to articulate reasonable suspicion, above and beyond, the facts and data delivered to the law enforcement officer by the blockchain system. Otherwise, the officer must let the blockchain data stand on its merits. The blockchain information demonstrates to the law enforcement officer the shipment is a lawfully protected hemp shipment and is interstate commerce guaranteed” by the 2018 Farm Bill.

Hemp, like marijuana, is a type of cannabis. Cannabis with a THC level exceeding 0.3% is considered marijuana, which remains classified as a controlled substance regulated by the U.S. Drug Enforcement Administration (DEA). However, because they look and smell alike, hemp shipments have been intercepted by law enforcement in some states — even though it is legal to haul across state lines.

USDA issued in October 2019 an Interim Final Rule (IFR) for its U.S. Domestic Hemp Production Program to begin setting a regulatory framework for hemp production and sale, and for licensing and testing compliance, as required by the 2018 Farm Bill. After roughly 5,000 comments, the agency opened a second comment period in September 2020, which generated about 1,000 more, according to Bill Richmond, chief of the USDA’s Hemp Production Program, speaking at the Pennsylvania Hemp Summit on Wednesday.

Richmond confirmed that the final rule, which he said is on track to be issued early next year following review at the Office of Management and Budget, will likely include guidance related to 12 topics outlined in the second comment request, one of which was interstate commerce. “These are generally the issues we’re able to change ourselves at the department level, and do not necessarily need congressional action to modify,” Richmond said during the conference.

While the states and tribes may not prohibit the transportation of hemp, “law enforcement does not currently have the means to quickly verify whether the cannabis being transported is hemp or marijuana,” according to the IFR. The final rule, it stated, “will assist law enforcement in identifying lawfully produced hemp versus other forms of cannabis that may not be lawfully transported in interstate commerce.”

The key to electronic real-time shared information, Microsoft and its partners noted, is a distributed ledger that every agency within the hemp supply chain can join.

“Blockchain technology is a perfect application to distribute background checks and DEA registered laboratory results in real-time to any law enforcement officer and agency in the United States,” they point out. “Blockchain technology preserves the legacy data and links all documents and transactions associated with the permit holder, the product and the proceeds.”

The International Cannabis Bar Association (INCBA), whose members represent the cannabis and hemp industry, pointed out in its comments that drivers involved in unlawful arrests for hauling hemp are often independent contractors.

“Often, the drivers do not have the monetary means to obtain counsel and the arrest will remain on their record, despite the fact that the original material seized was lawful material. This is an unacceptable outcome of our domestic hemp program.”

To avoid such arrests, INCBA proposed that USDA include in its rule a requirement that drivers hauling hemp carry four pieces of documentation with them:

  • A copy of the grower or producer license.
  • A certificate of analysis (“COA”) for the hemp or hemp product that includes a cannabinoid potency profile demonstrating that the … THC content is below 0.3%.
  • Contact information for the producer or seller and the buyer or recipient.
  • An invoice or bill of lading that demonstrates where the hemp or hemp product is destined for delivery.

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John Gallagher

Based in Washington, D.C., John specializes in regulation and legislation affecting all sectors of freight transportation. He has covered rail, trucking and maritime issues since 1993 for a variety of publications based in the U.S. and the U.K. John began business reporting in 1993 at Broadcasting & Cable Magazine. He graduated from Florida State University majoring in English and business.