Trump Administration Approves USDA Hemp Rules

It’s been almost a year since the signing of the 2018 Farm Bill by President Trump, which acknowledged the differentiation between marijuana and hemp. Hemp was removed from the list of controlled substances because it has a low concentration of THC (the psychoactive compound in marijuana). The billion dollar revenue industry has seen increased interest from American farmers across all states. However, the regulations were limiting because they were not well stipulated.

The 2018 Farm Bill hemp rules gave leeway for the cultivation of hemp under State or Indigenous Tribal plans and USDA registration. The current approval of interim final hemp rules seeks to provide guidelines on hemp cultivation under federal laws. That has not only elicited interest from farmers only but also cannabis investment companies. 

Contents of the USDA Hemp Rules

The interim rules not only contain guidelines on USDA hemp cultivation regulations, but also provisions of production under Indigenous Tribal and State plans.

  • Collection, maintenance, and retention of information on land under hemp production. The data should include location and the acreage under hemp cultivation. The farmer should fill out this form and submit it to the Federal security Agency officers within their county.
  • Sampling and testing of THC levels from the cannabis plant. The law stipulates that any cannabis plant with THC levels over 0.3% is classified as marijuana. Marijuana is still subject to the Controlled Substance Act as a schedule I drug because of its psychoactive effects.  However, while still federally illegal, some states have legalized medical and recreational use of marijuana. The provision offers a 15 day sampling and testing window before the time of harvest.
  • Disposal of non-compliant hemp material by authorized personnel. The State or Tribal plans should stipulate how any cannabis plant with THC amount above 0.3% should be destroyed.
  • Compliance with enforcement procedures. The provision stipulates on how farmers and manufacturers should cooperate with both state and federal agencies that oversee hemp farming and manufacturing. The interim hemp law provides the minimum requirement for all plans like the procedure of disposal of non-compliant cannabis material.
  • Sharing of information by hemp producers. As a farmer, you should provide the necessary information like contacts and location. Businesses should also issue their registered names and acreage under hemp.

What does Approval of Hemp Rules Mean to Stakeholders?

Hemp farmers have been eagerly waiting for the finalization of the guideline on hemp production. The government had promised to deliver the final USDA hemp rules before the end of the year. The timing will help farmers to start the new year (2020) with clarity on what is expected of them. After the release of the interim guideline, interested parties have a period of 60 days to give their comments. After the lapse of the period, the final law will take effect and run for a period of 2 years.

Hemp production was marred by regulatory uncertainties which were stifling the booming industry. American farmers have had rough economic times because of the soybean industry decline. The cannabis industry has served to provide a sort of lifeline to farmers. The current demand for hemp products is high and that makes the prices favorable to farmers. 

Apart from farmers, financial institutions were also facing a dilemma regarding hemp financing. According to CNBC, the hemp industry generated revenues of over $1 billion in 2018. Therefore, with the expectations of the industry to grow ten-fold in the next 5 years, it is a sector of interest for financial institutions. Most banks were cautious of the legal risk in the provision of hemp financing. Though the SAFE Banking Act brought some clarity, most institutions have been waiting for approval of USDA hemp rules to give hemp production financing a nod. 

Another controversy that rocked hemp production is insurance for cannabis farming. In 2019, there were no concrete policies that covered hemp cultivation. Though the new regulations do not give direct clarity, its approval offers more light to the insurance industry. 

Industries that rely on hemp raw materials will also benefit from the approval. We will see more producers entering the market. The rising interest will also fan demand for hemp derivatives. 

Most institutions have been waiting for approval of USDA hemp rules to give hemp production financing a nod
Most institutions have been waiting for approval of USDA hemp rules to give hemp production financing a nod

Resolving Interstate Hemp Commerce

Previously, it was quite a struggle to bring harmony between states on cannabis issues. In some states, cannabis production is still illegal. The differences in hemp regulations was creating conflicts when it came to the transportation of raw materials. The approved USDA hemp rules clarify that the transportation of hemp is legal across all states.

The clarification comes in handy when transporting cannabis across states like Idaho. One company that suffered from the grey areas in the transportation of hemp was Blue Sky Scientific LLC after the loss of industrial hemp. The company’s truck was seized by Idaho officers for transporting hemp through the state. The crop was in transit to Colorado for processing from Oregon. USDA hemp rules will do away with such irregularities and inconveniences to the hemp industry. 

Hemp stakeholders have something to smile about as they wait for the new 2020 planting season. The USDA regulations will streamline the industry, making it easier for farmers, financial institutions, and manufacturers to operate.  The approval comes at the right time to reduce the plight of farmers who have suffered from hard economic times. The leaders, as well as the agencies, have thrown their weight in support of the move to approve the rules. 

It is upon all stakeholders to take up the opportunity and give their comments before the law takes effect. If you are an interested party, you should air your views to USDA. The regulations will be effective for the next two years after taking effect. There is a new dawn for farmers who want to cast their nets in the hemp industry.