Ever since hemp was finalized in the 2018 farm bill, producers have been eager to learn more. We’ve covered several different meetings on this topic and just about every one of them is packed with growers who wonder if this might be the next best way to diversify and find new revenues.
Yet, for those who were also growing hemp under pilot projects this year, we have also heard troubling stories about people paying thousands of dollars for seed that didn’t germinate well or producing a crop that exceeded legal limits. And of course, some states still have not legalized hemp production within their borders, including South Dakota, Idaho, Mississippi and New Hampshire.
An estimated 500,000 acres of hemp were grown this year, but the industry’s future growth is uncertain, said Greg Ibach, the U.S. Department of Agriculture’s undersecretary for marketing and regulatory programs. Producers will likely be evaluating their plans based on their experience this year with growing and marketing the crop, he said.
Here’s what we know for the states where hemp can be produced and transported for 2020, according to recently released details from the USDA.
The rule, which fulfills a mandate of the 2018 farm bill, lays out regulations for approval of plans submitted by states and Indian tribes for the domestic production of hemp.
The rule also establishes a federal plan for producers in states or on reservations that won’t have USDA-approved plans. States will no longer be allowed to stop the interstate shipment of hemp that is lawfully produced under the regulations.
The rule includes procedures for tracking the land where hemp is grown, testing for concentration levels of THC, the psychoactive compound found in higher amounts in marijuana, and for disposing of non-compliant plants. There also are procedures for sharing information with law enforcement.
USDA sought to “provide a fair, consistent and science-based” regulatory framework for states, tribes and individual producers to follow, said Agriculture Secretary Sonny Perdue. “At USDA, we are always excited when there are new economic opportunities for our farmers, and we hope the ability to grow hemp will pave the way for new products and markets,” he said.
Perdue said the testing protocols will “ensure that hemp grown under this program is hemp and nothing else.” Hemp would have to be tested at laboratories registered with the Drug Enforcement Administration.
In addition to the rule, USDA is also releasing guidelines with specific steps for sampling and testing hemp for THC. The guidelines provide information for inspectors and hemp-testing laboratories.
There will be a 30-day waiting period for USDA to start licensing producers whose states do not have their own regulatory plans.
Once state and tribal plans are in place, hemp producers will be eligible for several USDA programs, including insurance coverage through whole farm revenue protection. But Bill Northey, USDA’s undersecretary for farm production and conservation programs, said that excessive levels of THC won’t be a covered loss under the whole farm policies.
Many hemp producers also will be eligible for the Non-insured Crop Disaster Assistance Program.
The Farm Service Agency also will offer operating, ownership and on-farm storage loans for next year, Northey said.
“Overall, we’re pleased with the regulations coming out,” said Vote Hemp President Eric Steenstra, who has been involved in the industry for more than 25 years. “We’re pleased USDA worked so quickly to try to do this.”
But he also said he is worried about the rule’s requirement that hemp must be tested at labs registered with the DEA. As defined in the 2018 farm bill, which removed it from the list of federally controlled substances, hemp contains 0.3% or lower of THC, or tetrahydrocannabinol, the psychoactive ingredient in cannabis that provides a “high” at much higher levels.
“That’s just going to be a bottleneck,” said Steenstra, since hemp growers all will be harvesting their crop within 30 to 45 days.
He questioned why DEA labs would be needed considering that hemp is not a controlled substance. “Congress specifically removed hemp from the Controlled Substances Act—they never said anything about DEA labs,” Steenstra said.
The rule also says hemp crops must be destroyed by a person authorized under the Controlled Substances Act to handle marijuana if testing shows they exceed the “acceptable THC level” of 0.3% on a dry weight basis, also considering a measurement of uncertainty.
“For example, if the reported [THC] content concentration level on a dry weight basis is 0.35% and the measurement of uncertainty is plus or minus 0.06%, the measured [THC] content concentration level on a dry weight basis for this sample ranges from 0.29% to 0.41%,” the rule says. “Because 0.3% is within the distribution or range, the sample is within the acceptable hemp THC level for the purpose of plan compliance.”
In the rule, USDA estimates that producer returns from hemp-based product sales will go from $300 million in 2018 to $600 million by 2022, however, the agency noted that, “It is difficult to estimate the increase in total returns to producers as a result of this rule,” USDA said.
Meanwhile, the emerging industry is still waiting for the Food and Drug Administration to weigh in with regulations on the safety of CBD products made with hemp flowers.
“If FDA does not provide clarity about their plans for future regulation of CBD, there will continue to be uncertainty and downward pressure on the CBD portion of the hemp market,” USDA said in the rule.
Editor’s note: Agri-Pulse Editor Sara Wyant can be reached at www.agri-pulse.com. Steve Davies contributed to this article.