By Geoffrey Taylor, MA
Valley Ag Voice
As if 2020 hasn’t already been a tumultuous year for many hemp farmers across the country, newly released regulations and rules from both the United States Department of Agriculture and the Drug Enforcement Agency have many growers, processors and extractors scrambling to adapt to these changes. With a steep decline in the value of hemp and processed hemp derivatives, these regulatory changes can and likely will massively impact the prospects for a successful 2021 growing season.
According to an August 2020 article from Hemp Industry Daily, the United States hemp market saw a 79 percent decrease between April 2019 and April 2020. This sharp decline is indicative of the growth of the industry across the country which showed a 27 percent increase in new growers from 2019 to 2020. When applying new regulations from these agencies to a growing industry with shrinking margins, the impact on growers, processors and extractors can and likely will be immense.
On August 20, the US Drug Enforcement Agency, or DEA, issued their interim final rule regarding the concentration of delta-9 tetrahydrocannabinol, or more commonly known as THC, in hemp-derived products and how any product in excess of the standardized 0.3% THC can be deemed a Schedule 1 drug, putting hemp farmers and industry operators at immense risk for prosecution under antiquated drug enforcement policies from the US Government.
The DEA noted that “the definition of hemp does not automatically exempt any product derived from a hemp plant, regardless of the Δ9-THC content of the derivative. In order to meet the definition of ‘hemp,’ and thus qualify for the exemption from [S]chedule I, the derivative must not exceed the 0.3% Δ9-THC limit.”
This implies that if a hemp-derived product exceeds a concentration of 0.3% or greater during any point of growing, processing or extracting, it inherently becomes an illegal substance subject to enforcement by the DEA along with state and local authorities, based upon the respective hemp policies of the jurisdiction. This puts many hemp growers at immense legal risk as concentrations of peripheral cannabinoids such as THC in hemp can exceed 6 to 7 times their typical amount during the extraction process, though they are often removed within the extraction process to meet Farm Bill compliance standards.
In response to the DEA’s recent interim final rule, the Hemp Industry Association has taken action to halt these potentially devastating policies. According to a September 22, 2020 press release from the Hemp Industry Association based in South Carolina, the DEA has taken unlawful action to assert jurisdiction over the hemp industry in direct conflict with the 2018 Farm Bill.
To compound the DEA issues facing hemp industry operators, the United States Department of Agriculture, or USDA, the USDA has approved a one-year extension for state hemp program compliance with regulatory requirements issued earlier this year. Though this may be a welcome extension for growers in states without compliant hemp farming program plans, it can present itself as a challenge for growers in numerous states across the country. With 47 states currently having a regulated hemp production marketplace, the adherence to previous legislative actions in 2014 and 2018 have created a hodge-podge of regulatory compliance standards which presents a challenge for national standardization.
With this inherently two-tiered system of current regulation based on the extension, growers in state who operate on the regulatory framework of the 2014 Farm Bill will have an inherent strategic advantage over those whose states adhere to the 2018 Farm Bill standards. For others in states with Pilot Programs or highly regulated hemp programs, the extension stands to hold them back from a national standard for hemp production for yet another growing year.
For California growers, this presents a unique challenge as the California Hemp Farming Plan submitted to the USDA is still under review which can either be accepted or rejected by the USDA based upon numerous factors. Upon acceptance, the State of California will have a federally recognized hemp regulatory framework that guides statewide production in compliance with basic USDA standards. Once the plan is either accepted or rejected, California growers can plan on greater predictability in regulatory compliance moving forward.
Though this year has presented itself as a challenge to many hemp growers, the outcomes of the DEA interim rules and USDA hemp program delays present themselves as yet another level of ambiguity in a rapidly growing marketplace. As more states come online in hemp production, California growers needs special consideration from state and local level Agricultural officials to remain competitive in the national and global hemp marketplace.