What’s next for hemp pilot programs?
The 2014 Farm Bill contained a provision for university research into hemp cultivation, processing and development through government-initiated programs. Some individual states allowed hemp cultivation through their agricultural agencies, while maintaining a required research component for participating farmers. Many states produced annual post-harvest reports that discussed the hemp season, growing challenges, and the plant science data collected during the season.
In December 2018, President Trump signed an updated Farm Bill that dropped those requirements and created a broader nationwide hemp economy. This did not include a path to legalizing CBD, nor any provisions for hemp / cannabinoid consumable foods, cosmetics, or dietary supplements. This just created a framework for growing hemp.
Some states regulate hemp processing, manufacture, distribution, and even retail sales in parallel with regulating marijuana markets. This blog examines the current status of the hemp pilot programs and the approval of the federal cultivation plan.
A regulatory saga
USDA oversight was introduced earlier this year as part of the implementation of the Farm Bill. Currently, federal law allows states, Native American tribes, and territories to regulate the cultivation of hemp themselves, but only after they have submitted regulatory plans to the USDA for approval.
As part of the USDA’s hemp framework, the agency has also established a federal cultivation license program for farmers in states, territories, and territories who are not interested in developing hemp cultivation.
The approval of a state plan by the USDA doesn’t require major changes to a hemp program or the hemp industry in a particular state. At the same time, states can give up the licensing of individual activities. Washington State decided earlier this season to remove the licensing requirements for hemp processing and other licenses previously set out in the US state’s pilot program.
When the provisional regulation was first passed in October 2019, states were given one year to submit plans for federal approval and the transition from the pilot program phases. Late last year, the USDA announced the first states to receive planning permits: Louisiana, Ohio, and New Jersey. In the months leading up to the current growing season, additional states and strains received approval.
The process was slow in the beginning. At the start of the current hemp season, there were more states operating under pilot programs approved years ago than with approved plans.
By mid-July, 23 states had continued pilot programs while 21 plans were approved. Some states and territories were working on laws or plans to be drawn up, and only two states chose to issue the USDA: New Hampshire and Mississippi. Numerous other states had plans to review.
The USDA was in no hurry to approve further plans in the summer, but nearly half of the previously declared pilot states moved to the “Under Review” column with the expectation that the pilot programs would end this season.
By mid-September, four more state plans had been approved, twelve of which were under review. With the plans being reviewed and approved by the federal government that summer, it was felt by state agricultural regulators and the USDA that the provisional settlement would expire by the end of this week: October 31; a deadline for submitting the plan and an expiration date for existing pilot programs. Some state regulators panicked over shortcomings in the proposed rules, including testing requirements and efficacy limits.
Farmer confusion continued in a handful of states: Hawaii, New York, and Virginia. Regulators found they were unable to manage their programs due to the expectations set in the final regulation and the introduction of new regulations. In a letter to producers in August that year, New York Agriculture Commissioner Richard A. Ball expressed his displeasure with the current Temporary Final Rule, stating:
“In the ministry’s view, many of the requirements for the amount and timing of sampling and testing, non-compliant crop disposal, and reporting are unrealistic and place an inadequate burden on growers and any state interested in managing a compliant program.”
At that time, the state decided to give up regulating hemp cultivation, forcing farmers to apply to the USDA for licenses that would go into effect on November 1st. Similarly, the Virginia Department of Agriculture and Consumer Services and the Hawaii Department of Agriculture announced the need for growers to apply for federal licenses in mid-September. In total, the decisions of these regulators would affect over 3,300 licenses.
A saga continues
Farmers began applying for USDA producer licenses, but the game changed again on October 1 when President Trump signed a rolling funds resolution that would fund the federal government through December. One component of this is the extension of the hemp pilot programs until a new sunset date on September 30, 2021.
With these changes, New York and Virginia canceled their plans to opt for a federal license and instead continued their own pilot programs through 2021 to relieve thousands of licensees. Starting this week, Hawaii will continue to retire its program and opt for USDA assistance in licensing its small but gradually growing hemp industry. Regulators have told growers that the continuation of the pilot system will include sampling and testing requirements until later in 2021, according to a letter from the Virginia Department of Agriculture and Consumer Services.
As of yesterday, 30 states have approved their growing plans and 10 states have reviewed their plans. These plans can be sent back to state regulators for modification, but it is likely that they will all be approved before spring planting.
Only five states are continuing their next season with pilot programs: In addition to New York and Virginia, these include Montana, North Carolina and Rhode Island. It’s worth nothing that Montana, New York, and North Carolina are three of the ten largest states in the country for hemp by acreage, according to a Hemp Business Daily summer report. Changes for 2021 and beyond in these states remain to be seen.
At the start of this season, the number of states remaining in pilot programs indicated one of two things: a lack of clarity and more time to devise plans that will get federal approval and with progress made after the preliminary one Final rule are dissatisfied. A second public comment period opened in early fall, and several states, including New York and Hawaii, publicly voiced concerns and opposition.
In the 2021 season, regulators of the remaining states, along with other industry stakeholders, such as individual farmers, agricultural trade groups, testing laboratories, and other cannabis activists, may continue to raise concerns.
Given the number of states with plans approved and reviewed, this number makes it unlikely that pilot programs will ensure further extensions through 2022. Federal regulators and Congress may be more likely to improve the existing framework by regulating or changing the farm bill; Further federal changes would affect producers across the country, regardless of which agency issued the license.