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USDA to issue hemp farming regulations this fall

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Friday, July 26, 2019 9:41 PM
Lawmakers legalized hemp after a decades-long campaign, but some of the details are still being ironed out, including rules around banking services and insurance coverage.

WASHINGTON – When U.S. Congress legalized hemp in the 2018 Farm Bill, it allowed Colorado’s burgeoning hemp industry to thrive even more.

The number of acres registered for hemp cultivation in Colorado jumped from 12,024 in 2017 to 30,950 in 2018, according to the Colorado Department of Agriculture. Data for this year’s acreage is not yet available, but it could exceed 60,000 acres as the number of registered land areas rose from 1,075 in 2018 to about 2,600 so far in 2019.

But as hemp products such as CBD oil grow in popularity, some hemp growers and businesses have had trouble securing financial services from banks.

“It’s sort of an intertangled issue, cannabis as a whole,” said Erica Stark, director of the National Hemp Association. “With hemp being legal, marijuana is still not federally legal, and as you can tell, people are confused.”

Hemp and marijuana both come from the cannabis plant, but hemp is not marijuana. The 2018 Farm Bill removed hemp as a controlled substance at the federal level as long as its THC concentration doesn’t exceed 0.3%.

But while hemp is now a legal crop, growers are still operating under the 2014 Farm Bill – which authorized some hemp research pilot programs – until the U.S. Department of Agriculture issues its hemp regulations. As a result, hemp growers haven’t yet benefited from crucial commodity crop Farm Bill provisions, such as crop insurance.

This gray area between legislative legalization and administrative rulemaking has also spooked some banks from providing financial services to hemp businesses, Stark said.

“There’s a perceived risk,” Stark said. “I think more so it’s because there haven’t been official regulations released by USDA. They’re still able to use that as an excuse to say that there’s uncertainty.”

Greg Ibach, undersecretary of agriculture for marketing and regulatory programs, told the U.S. Senate Agriculture Committee on Thursday that the USDA is reviewing a draft of the rule. The agency plans to publish it by this fall in order to accommodate the 2020 growing season. Until then, hemp organizations, bank associations and lawmakers have called for leadership by federal financial regulators.

Last month, the American Bankers Association wrote a letter to the Federal Reserve calling on it to clarify hemp’s legal status. Sens. Mitch McConnell, R-Ky., and Ron Wyden, D-Ore., wrote to the Farm Credit Administration in April asking it to ease any concerns member institutions may have about providing financial services to hemp businesses.

“Legal hemp businesses should be treated just like any other agricultural businesses and not discriminated against,” the senators wrote.

While federal agencies have yet to give guidance on the issue, Michelle Bowman, a board member of the Federal Reserve, told the Senate Banking Committee June 5 that her agency would do so soon.

“We would not discourage banks from banking with these types of customers,” Bowman said. “We’ll try to clarify that. Hemp is not an illegal crop.”

The Environmental Protection Agency and the Food and Drug Administration will also play roles in regulating parts of the hemp industry, such as hemp feed for animals and CBD oil for human consumption.

William “Wild Bill” Billings is a co-founder of the Colorado Hemp Project, an education and consulting company. He said he welcomes regulations because they will help alleviate the banking problem and inform consumers about pesticides used in hemp farming.

“The industry’s only been rockin’ and rollin’ for a few years,” Billings said. “In the first three years, it was still the Wild West, and now it’s going to be regulated by the USDA. So them days are over.”

Once the USDA issues its regulations, it will solicit plans from states, territories and tribes about how they want to tailor industrial hemp cultivation guidelines to their jurisdictions.

Colorado state officials will hold stakeholder meetings on their plan, the Colorado Hemp Advancement and Management Plan, through December. A public meeting will be held Aug. 16 at the Old Fort in Hesperus. Interested parties are invited to RSVP online or by calling (303) 869-9103.

James Marshall is a student at American University in Washington, D.C., and an intern for The Durango Herald.

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