Home Hemp How Federal Hemp Regulation Delays Hold Up the Industry

How Federal Hemp Regulation Delays Hold Up the Industry

by Andrew Ward

The hemp industry had spent much of 2019 waiting for regulations from the United States Department of Agriculture (USDA). The department announced that it had completed its draft rules in early fall 2019. However, after the draft laws were passed to the White House Office of Budget and Management, no further guidance on regulations had been handed down. 

By the end of October 2019, the USDA would, at last, release its plans for its Domestic Hemp Production Program. Reps for the department explained that the program’s aim is to create economic opportunities for farmers by growing hemp and creating new products from it. 

“We have had teams operating with all hands on deck to develop a regulatory framework that meets Congressional intent while seeking to provide a fair, consistent, and science-based process for states, tribes, and individual producers who want to participate in this program,” said U.S. Secretary of Agriculture Sonny Perdue.

In the months since the hemp industry has seen a flurry of legislative and business action. However, activity has combined with delays. This includes the further delay of federal hemp laws. With the market in limbo, several states have taken action for themselves. In doing so, they may run afoul of new regulations.

Pictured: Mandatory sampling and testing are two stress points for farmers and regulators alike. Depending on which rules the states adopt, these requirements may differ from state to state. 

Concerns Over Interim Rules

On October 31, 2019, the USDA interim final rules established the Domestic Hemp Production Program. That said, several states took up concerns with the proposed regulations. 

Those speaking up include Michigan, a recent dropoff from the USDA approval process. When announcing its decision, the state’s agriculture officials laid out several points of concern. They include worries around a 15-day window for sampling protocols, crop destruction methods and the level of involvement from the U.S Drug Enforcement Administration (DEA). Furthermore, the state raised concerns about the chance of entrepreneurial success for farmers and producers in Michigan if the interim rules became permanent. 

Michigan was far from the only voice of concern the USDA heard during the 60-day comment period for the interim rules. In all, over 4,600 comments were lodged by individuals and organizations alike. 

States Choose to Stick with 2014 Pilot Rules

The worries from the Great Lake State were met by additional concerns from others in the union. They include nine other states to extend their pilot programs rather than go through the approval process with the USDA. In addition to Michigan, numerous other states chose to stay with the 2014 pilot regulations. 

Two of the states choosing to stay with the 2014 pilot, Kentucky and North Dakota, previously had their hemp program proposals rejected by the USDA. Two other states, Montana and Tennessee, were also denied. As of February 12, 2020, Montana is listed as Under Review by the USDA, while Tennessee is listed as Pending Resubmission.

A variety of reasons surfaced for giving up on the USDA rules. When Colorado dropped its efforts in late January 2020, state officials explained that national rules were the issue. Officials stated that “Rather than serving the public interest, the (USDA rule) subverts it by precluding experienced stakeholders from shaping the regulatory scheme upon which their livelihoods depend.”

Kentucky, the first state to submit its plan to the USDA, chose to drop its efforts as well. State Agriculture Commissioner Ryan Quarles placed the onus on a suffering national marketplace, highlighting its shortcomings at this time. Quarles said, “The industry has changed dramatically, but the national hemp marketplace is experiencing some real challenges.”

The option to operate under the pilot program rules runs until October 31, 2020.

Concerns Continue, Problems Arise

As the delays continue, the industry continues to experience the ramifications. The new year began with distress that setbacks from the White House are now delaying licensing opportunities for farmers and other operators. A USDA rep told Hemp Industry Daily that the organization and the White House Office of Management and Budget were working on finalizing technical details, with applications being posted soon. No precise dates were provided. 

Even if licensing became a reality, some feel that current rules aim to harm operators rather than help. “Their business is to support farmers — and not punish farmers — and the rules as they’re written right now punish farmers,” Dove Oldham, a hemp grower in Portland, Oregon told Fox 7. Oldham pointed towards a lack of clarity being a prime worry. “There’s just a lot of confusion, and people are just looking for leadership.”

Insurance Rather Than Assurance

While the U.S. hemp market awaits guidance from the federal government, operators received a bit of clarity from the USDA in the form of insurance. The early February 2020 announcement introduced two types of insurance programs to be offered to licensed, compliant operations with a processor contract it can provide to the USDA. 

That said, the news came with a rather tough pill to swallow for the industry. Top officials noted that production rules will likely stay the same, for at least until 2020. Additionally, regulations surrounding THC potency limits and mandatory 2018 Farm Bill compliance must be taken up via legislative action. 

While not all appeared positive, the USDA’s Agricultural Marketing Service Bruce Summers did give hope concerning the 15-day testing window. Summers indicated that the USDA may make changes to this part of the final rule. The DEA leader also said that the lack of available DEA-approved testing sites was heard “loud and clear,” but did not specify what action is being considered or undertaken. 

Another subject Summers discussed at that time included the ongoing issue or legal hemp transporters being arrested and stopped for marijuana. Summers said the USDA is working with the DEA and FSA to develop a system to ensure a person or business is properly licensed.

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