USDA in late January closed the public comment period on its interim final rule for hemp production but there remains a great deal of confusion about the guidelines as the 2020 growing season quickly approaches.
Many growers viewed 2019 as an “educational opportunity” on many fronts. And a lot of those lessons were quite painful, like the destruction of crops that exceeded THC levels. There has also been a problem with bankruptcies across the industry, including end-users and extractors that remove CBD oil from the plants, leaving farmers with contracts empty-handed. What’s more, the market is currently oversupplied which has pushed prices down significantly. This is a particular problem with CBD, which the FDA prohibits from being used in food. That whole side of the industry is yet another regulatory minefield.
Current USDA rules require that hemp crops don’t exceed a total THC content of 0.3%. Hemp contains THCA, an acidic compound, and delta-9 THC, a neutral compound. When exposed to heat or light, THCA converts to delta-9 THC, the main psychoactive component of the cannabis plant. Researchers disagree on what causes THC levels to rise above the allowable limits on hemp plants grown from seeds that are supposedly low-THC, but THC levels are known to fluctuate based on weather and other factors over which farmers have no control. Critics of the limit are pushing to have it raised to 1% but the USDA recently said that it’s not possible because of the way it’s written into the Farm Bill. One Kentucky lawmaker has advised producers to only grow what they can afford to lose.
Most domestic hemp producers in 2019 operated under the 2014 Farm Bill rules, which outlines provisions for the USDA to eventually approve specific state-submitted plans for regulating the production of Industrial Hemp. For 2020, the USDA has approved six states’ plans and is reviewing a dozen more, including the plan for Montana — the top hemp-growing state in 2018 with 22,000 licensed acres, according to nonprofit Vote Hemp. Ten states are still drafting their plans to submit to USDA, while the agency directed Connecticut, Oregon, and Tennessee to make changes to their plans. Three states still prohibit hemp cultivation: Idaho, Mississippi and South Dakota.
Many states have opted to operate their 2020 hemp production seasons under the 2014 pilot program. By choosing to extend their current rules, these states effectively withdrew their requests for approval from the USDA for this season.
Most states remain concerned about the regulatory burden that the USDA’s rules place on their agriculture departments. The stringent sampling protocols in the USDA’s rules require law enforcement to visit all farms within a 15-day window before harvest, which makes hemp programs very expensive for states to operate. Colorado said many of the rules are “unnecessary, burdensome and may potentially have a devastating impact” on the industry, citing everything from a lack of seed-breeding guidance to the fact that the USDA didn’t set up a system to document hemp for interstate transportation.
After issuing its hemp production rules in October, the USDA initially said that farmers in areas that have legalized hemp production but opted out of regulating it could apply for federal licenses. The form lists no application or licensing fees and requires only that interested growers submit a federal background check. According to the USDA, the license application process is open for the entire year in 2020, though the agency could take up to 60 days to approve licenses for farmers. Licenses are valid for three years. In subsequent crop years, the USDA will accept license applications from Aug. 1 to Oct. 31.
Producers who live in states that will host a hemp production program – or in states where hemp production is not legal – are not eligible for a license under the USDA. New Hampshire is the first state that has decided against hosting a state hemp production program, making individual producers eligible to apply for production licenses under the USDA’s authority.
There is some good news for those in the space, as this year the Federal agriculture officials have introduced two crop insurance programs for hemp. I’m told both are designed to protect farmers growing the new commodity from damage during natural disasters, and should provide a much-needed safety net for hemp farmers. If you are interested in learning more about the deadlines and limitations on who is eligible for the Multi-Peril Crop Insurance and Noninsured Crop Disaster Assistance Program, click HERE.
Growing hemp is without a doubt is a challenge even without the rules and regulatory headwinds. Producers thinking about introducing the crop to their own operations need to do their homework. The best starting point looks to be your own state’s ag department. The Hemptopia website offers handy links to approved state programs HERE. You also might want to check out the National Hemp Association’s website, which is packed with useful information and links to other resources as well. Click HERE . (Sources: Hemp Industry Daily, National Hemp Association, USDA, Politico)