Marijuana Extract Rule Stifles Hemp Industry

5 things the USDA got wrong with its hemp proposal

Farmers and senators are among those who have raised concerns over various parts of USDA's interim hemp regulations.

Let’s start by counting the ways the U.S. Department of Agriculture (USDA) interim regulations around hemp growing hit the nail on the head and everyone agrees are solid proposals to build a legitimate hemp industry in the country.  

  • Crop insurance is becoming available in select counties. These are usually places where hemp growing is documented to be “viable” and which also, for western states, have irrigation, according to Brian Koontz, the Colorado Department of Agriculture hemp program manager, at the Colorado Winter Hemp Summit panel discussion held in Boulder in January. Even then, insurance typically pays for only the price of the seeds lost—painfully inadequate if a farmer suffers hail damage in mid-season. If a seed crop is under contract, that may help in getting a higher return from crop damage. 

And that’s about it.

“This is a government bureaucratic agency,” noted Garrett Graff, attorney with the Hoban Law Group, based in Denver. “Since when did any get it right the first time?”

Everyone from senators to farmers take issue with various parts of USDA interim regulations.

“These decisions were made by people in ivory towers,” said Cindy Sovine, a Colorado lobbyist. “They’re unworkable rules.”

“They suck,” was the simple assessment from Samantha Walsh, CEO and co-founder of the Tetra Public Affairs political consultancy. “The USDA took a restrictive approach, centered around the specter of marijuana."

The USDA issued interim rules giving states detailed requirements to implement the hemp provisions of the 2018 farm bill. The interim rule will last two years, then the agency will reassess.

The provisions include maintaining information on the land where hemp is grown, testing levels of THC, disposing of plants not meeting requirements, licensing and compliance requirements for sampling and laboratory testing.

Comments are accepted here, and the comment period ends Wednesday, Jan. 29.

Tweaks required

Oregon Democratic senators Ron Wyden and Jeff Merkley sent a letter to the USDA with five suggestions that, taken together, stand to “boost rural economies in every corner of the country.”

Many in the hemp industry echo these concerns.

These suggestions include:

  • Testing deadline. The senators called the 15-day testing deadline after harvest “an impossible obstacle" for growers to overcome. “It’s going to go hot while you wait to get tested,” said Sovine.
  • Get the DEA out. Again. Remove the requirement that testing labs must be registered by the Drug Enforcement Administration (DEA). The DEA was aced out of the hemp business with the 2018 farm bill. This proposal would bring this federal agency back into it. “Having the DEA in farming,” said Tim Gordon, president of the Colorado Hemp Association as well as the Functional Remedies brand, “is counter-intuitive to the wants of the U.S. farmer.”

These two alone are causing much consternation among farmers. One is that it’s a tight time limit for farmers, to have to wait for testing agents, and then go to a DEA lab that most likely is nowhere near the farm.

“Labs create bottlenecks,” said Sovine. “This is most unworkable.”

Labs that test medical or recreational marijuana are approved by the DEA. But if those labs want to also test hemp, according to Adam Orens, at MPG Consulting and the MJ Policy Group, they have to “build a new building” so as to ensure no cross-contamination between marijuana and hemp.

  • Testing methods. The senators asked to allow testing for delta-9 THC using methods that specifically do not involve the application of heat or decarboxylation, and to remove all requirements for converting THCA into THC, as the 2018 farm bill allows for flexibility in testing methods by allowing “other similarly reliable methods.”

The rule also says that all parts of the plant must be below 0.3 percent THC by dry weight. But some parts of the plant, like the trichomes on the flower, will always be above that level.

“Are we going to create a nation of farmers who are felons?” asked Bob Sievers, Ph.D., a former University of Colorado analytical chemistry profession and researcher, and former CU Regent. “There are some aspects of the USDA’s draft regulation that almost ensures that will be the case.”

  • Negligence threshold. This is the difference between treating hemp like a drug and actually working to build a legit hemp industry. That’s because, per the 2018 farm bill, the definition of hemp is Cannabis sativa that contains no more than 0.3% THC. The so-called negligence threshold, per the draft rules, is set at 0.5%, which the senators described as “arbitrary and far too low.”

That’s because, the senators opined, a reasonably prudent hemp producer could take the necessary steps and precautions to produce hemp—such as using certified seed, using seed that has reliably grown compliant plants in other parts of the country, and engaging in other best practices—yet still produce hemp plants that exceed this 0.5% THC concentration.

“The 0.4 threshold is hot, subject to destruction but you would not be charged with a crime,” said Graff. “But if you go to 0.6 percent you are now deemed to have intentionally cultivated marijuana and have your license revoked.”

There’s a lot of movement to push that number higher, given the margin of error with farmers cultivating hemp. Colorado and Oregon have a negligence threshold set at 1.0 percent. Many countries around the world are also working on legislation to codify the 1.0% level. 

"Minor technical violations of the program should not be punitive and should be allowed to be corrected without penalty," said Richard Rose, author of the Richard Rose Report. Click here to see Rose's voluminous comments to the USDA. "Regulate like potatoes, not drugs." 

“If the USDA wants to do it right,” said Patrick Goggin, an attorney at the Hoban Law Group, “they have to give farmers options for on-property with animals, or stripping the flowers and leaves so the stalks material can be used. Congress was clear when they used the term ‘disposal,” and ‘destruction’ is not necessarily disposal.”

The penalty for going hot could mean total crop loss and potential criminal violations.

“The USDA could retain value in the system,” said Orens. “We need to set up alternative supply chains this material could enter.”

Because, face it, nobody is going to smoke even 1 percent THC and experience euphoria. But there is lots of room for hemp-based products to thrive in, from car panels to hempcrete, textiles and bioplastics.

“I’d like to stick to 1 percent for negligence,” said Koontz. (Remember, he’s the guy in charge of the Colorado Department of Agriculture.) “It works pretty good. We had 99 people test over the allowed limit, but only 11 were over 1 percent.”

  • Disenfranchised workers. As a nod to law enforcement interests when drawing up the legislation for the 2018 farm bill, Kentucky Republican Senator Mitch McConnell inserted language that prevented people who previously received a felony conviction from entering the hemp business.

“The 2018 farm bill was very cruel around making it difficult for people disenfranchised from the war on drugs from entering the industry,” said Sovine. “The only thing the USDA did right was isolated that particular part of the law to cultivation only and not to ancillary businesses.”

A criticism is that while a person cannot grow hemp if he or she otherwise has a drug-related charge, murderers and rapists are free to apply.

Taken together, there is much to comment upon. Hemp is different from marijuana, with a great deal more promise to disrupt every industry from oil and plastics to paper and healthcare.

But the first pass by the USDA has some people scratching their heads over whether the federal apparatus really wants anything to do with hemp.

That would be too bad, because many farmers struggle to eke out a living growing corn or soybeans, while hemp might fetch a farmer $1,500 an acre. But what price paradise?

“We’ve got farmers saying they’re going to go back to more predictable crops,” said Sovine. "There’s more certainty they won’t be put in jail.”

The domestic hemp production program rule becomes final Nov. 2, 2021.

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