Congress opened the door in 2018 to what many in the agriculture sector hope will be a 21st century money crop: hemp. But the budding industry must first escape the shadow of marijuana, hemp’s botanical cousin.
The efforts in Washington, as well as in state and tribal governments, to regulate hemp production seek a balance between encouraging the new industry and deterring pot growers who might sneak under the legal umbrella now covering hemp.
The Agriculture Department’s framework released in October exemplifies that approach.
The 2018 farm bill banned anyone with a felony drug conviction from participating in the hemp industry for 10 years, a provision included to win support for removing the plant from the Controlled Substances Act. But the language, intended to prevent those felons from key business roles in hemp, was murky and many feared the regulations might be overbroad and block them from even peripheral jobs growing, harvesting, transporting or selling hemp. The new regulations stipulate that the ban applies only to hemp farmers and their key business partners.
The framework offers new flexibility in some ways even as it appears to toughen other rules.
“For a lot of rural communities, this is an opportunity for new jobs,” says Grant Smith of the Drug Policy Alliance. But he added that too many lawmakers and policymakers “still don’t see them [hemp and marijuana] as different. They see the similarities.” He praised the USDA for fine-tuning its restrictions to avoid broad punishment for past drug convictions. Eventually, Smith says, Congress should end the drug felony provisions.
Chris Thorne, a board member of the Hemp Federation of America, a recently formed trade group, found fault with other parts of the USDA rules. “They are trying to define hemp through the lens of marijuana. It’s all about continuing the prohibition on marijuana as a controlled substance as opposed to expanding the opportunity to grow and produce industrial hemp.”
The basic regulatory approach stems from the 2014 farm bill, which included provisions backed by Kentucky Republican Mitch McConnell, now the Senate majority leader, that required hemp farmers be licensed or certified and that crop samples be tested. That law allowed limited production for research.
Congress followed up in the 2018 farm bill, legalizing hemp by removing it from the federal government’s Schedule 1 Controlled Substances list, where pot remains even though a majority of states have legalized it for medical or recreational use. That law directed the USDA to issue the framework.
The USDA kept the licensing and added a requirement that crop samples be tested by labs registered with the Drug Enforcement Administration. The department added criminal background checks for growers and “key participants” in a hemp farm partnership or business. The key participants provision appears to narrow the law’s 10-year ban on participation in the industry after conviction for a felony drug offense. Growers licensed under the 2014 farm bill are grandfathered and face no ban for felony drug convictions before 2018.
States and tribal governments will use the rules on drug convictions and other elements of the 161-page federal framework as the basis for writing their hemp regulations. The USDA will review their plans for compliance with the federal framework. They can be more stringent than the federal government, but must meet the minimum federal requirements.
The USDA framework focuses on felons and on the delta-9 tetrahydrocannabinol (THC) content.
A coalition of drug policy, social justice and agriculture organizations sought limits on the felon ban, saying that as written in the farm bill, everyone throughout the industry that grows, processes, transports or sells hemp could have been affected.
“I think we’re pleased USDA decided to limit the felony ban to key participants,” says Smith, of the Drug Policy Alliance. He says it’s absurd to think an individual with a conviction would jeopardize the chance to legally raise hemp by trying to grow marijuana.
The narrower application of the felony ban reflects bipartisan support for helping people reenter society after leaving prison, Smith says.
Under the rules, farmers risk seeing their harvest destroyed if tests show more than 0.3 percent THC on a dry weight basis.
The USDA provides flexibility on that content limit by allowing labs to establish a measure of uncertainty, or margin of error, for the results. But the USDA would require that tetrahydrocannabinolic acid (THCA), which is chemically different from THC, be counted toward the total THC level. And it wants plants tested 15 days before harvest.
Chris Fontes, CEO of Hemp Exchange, says the USDA should have set the THC level at 1 percent, noting it would still be well below marijuana, which can have THC readings of 30 percent. The 0.3 percent limit will be problematic for farmers raising hemp varieties for flowers that have high concentrations of THCA and cannabinol (CBD), an extract that is currently the most lucrative hemp product in the U.S. market.
By moving the testing closer to harvest, the USDA is going to get higher THC readings because the levels are known to rise as the plant matures, Fontes says. He added that states allowed testing 30 days before harvest under the 2014 farm bill.
Thorne, at the Hemp Federation of America, says his group is pushing for an alternative to destroying hemp fields with THC content above 0.3 percent. The plants could be used for compost, construction material, fiber for clothing and other applications that do not require people to smoke or consume the hemp, he says.
The USDA regulations also carry a big stick for farmers who are repeat offenders on the THC content. After three violations of the 0.3 percent limit in five years, a farmer could be banned from raising hemp for five years. Regulators who find willful disregard must notify the USDA, the Justice Department, and state or tribal law enforcement.
“Relative to growing soybeans or corn, this is a totally different ballgame on the regulatory side,” says Scott Bennett, who follows hemp issues as the American Farm Bureau Federation’s congressional relations director. “This is the wild, wild West, making legal a new crop for farmers to use, so there’s going to be some growing pains.”
He says growers may find the rules challenging at times but that the Agriculture Department took a pragmatic approach to meet directives in the 2018 farm bill.
Agriculture Department officials say they want to use experience from the 2020 hemp season to write a final set of regulations to replace the 2019 framework, which expires in two years.
Bennett says the Farm Bureau advises members to be cautiously optimistic about the future of hemp. There is a lot of interest in the plant, he says, but the network of suppliers, processors and other players that allow traditional agriculture to operate have to be developed for hemp to succeed.
“I don’t know if hemp farmers will always have to be licensed. Over time, we’ll have to see how this pans out,” he says, adding that “as people become accustomed to hemp as [a] real crop that will change.”
In South Dakota, Gov. Kristi Noem shows the hill of resistance regulators and the industry must climb to make hemp as routine as traditional crops. Noem has vowed to veto legislation that would allow the state to legalize hemp agriculture because she sees it as potentially opening the door to laxer enforcement of marijuana violations.
The two crops, both members of the cannabis family, have been linked for decades in the minds of policymakers and the public. In 1937, hemp got caught in the crossfire as Congress cracked down on marijuana with a law that heavily taxed all cannabis sales, including hemp. The financial squeeze was so great that domestic hemp production ended in the late 1950s.
When the federal government decided to declare marijuana illegal and put it under the Controlled Substances Act of 1970, lawmakers also put its look-alike cousin on the list of unlawful substances although hemp does not make people high.
Noem, a former Republican House member, cites Texas and Ohio, which approved legislation allowing hemp production, as case studies in the problem.
Police officers say they have a hard time distinguishing between hemp and marijuana without field tests that measure THC levels. In Texas, this means fewer arrests for misdemeanor possession of small amounts of marijuana although officers issue citations that could lead to convictions and fines.
Noem says South Dakota would comply with the new federal rules to allow the interstate transport of hemp, but adds that growing hemp in South Dakota will remain a punishable violation of state law.
“Conversations around hemp will continue, and I will continue to make the case that legalizing hemp will legalize marijuana by default,” Noem says.
“I remain opposed to industrial hemp in South Dakota because of the impact it will have on public safety and law enforcement’s ability to enforce drug laws.”