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Hemp Farming Act of 2018 Thinkstock/torstengrieger

Hemp farming in California plagued by roadblocks

Efforts to grow hemp in California have faced roadblocks for more than a decade. Among the impediments: state bureaucracy.

Gov. Jerry Brown recently signed a bill in California that could promote the growth of industrial hemp farming, but the nascent industry is still at the mercy of what it perceives as a slow-moving state bureaucracy.

Senate Bill 1409 authorized the California Department of Food and Agriculture (CDFA) to carry out agricultural hemp pilot programs under Section 7606 of the 2014 Farm Bill, the legislation signed by former President Barack Obama.

“We’ve asked the department in the past to get going with a pilot program, so we can be federally compliant as a state,” said Patrick Goggin, a San Francisco-based senior attorney at Hoban Law Group. “They kind of pushed back, saying, ‘Well, we don’t have that authority.’”

Even now, following Brown’s signing of what hemp advocates described as a “cleanup bill,” commercial farmers haven’t got the green light from government officials to plant seeds in the ground.

“They’ve done nothing,” said Chris Boucher, a hemp farmer in Imperial Valley, California, referring to CDFA. “It’s just the biggest bureaucracy I’ve ever witnessed.”

California’s agricultural sector contributes tens of billions of dollars to the economy. Efforts to grow hemp, though, have faced hurdles for more than a decade. Partly to blame: federal law’s long-held prohibition on cultivation of the crop.

Governors’ Vetoes

Consider actions taken by Arnold Schwarzenegger, the 38th governor of California. Twelve years ago, he vetoed a bill that would have excluded “industrial hemp” from the definition of marijuana and authorized the cultivation and processing of the crop under certain conditions.

While praising the legislature for seeking to expand the state’s economy, the governor expressed concern in a letter to members of the California State Assembly that Assembly Bill 1147 “would give legitimate growers a false sense of security and a belief that production of ‘industrial hemp’ is somehow a legal activity under federal law.”

Schwarzenegger noted federal statutes neither defined industrial hemp nor distinguished between cannabis plants based on the content of tetrahydrocannabinol (THC), the psychoactive compound in marijuana. Under the state bill, industrial hemp could contain no more than three-tenths of 1 percent THC.

The governor also cited concerns by law enforcement that the bill’s implementation “could place a drain on their resources and cause significant problems with drug enforcement activities.”

In 2007 and 2008, Schwarzenegger vetoed similar efforts to legalize hemp in California. Federal law, he noted at the time, still treated all cannabis plants as marijuana, and failure to obtain permission from DEA to grow cannabis could expose a person to criminal penalties.

Subsequent legislation (SB 676) to establish a pilot program for the cultivation of industrial hemp in several counties was vetoed in 2011 by Brown.

“Although I am not signing this measure, I do support a change in federal law,” he wrote to members of the California State Senate. “Products made from hemp—clothes, food and bath products—are legally sold in California every day. It is absurd that hemp is being imported into the state, but our farmers cannot grow it.”

Other Impediments

In 2013, Brown signed the California Industrial Hemp Farming Act, SB 566. The bill’s effectiveness, however, was contingent on federal law authorizing hemp-growing activities.

After Obama signed the 2014 Farm Bill, it seemed hemp farming in California would get off the ground. But in a 15-page legal opinion, the office of then-State Attorney General Kamala Harris determined California’s hemp law couldn’t be reconciled with section 7606(a)(1) of the Farm Bill “and the Controlled Substances Act to the extent that it would permit industrial hemp cultivation for commercial purposes, or for any purpose other than agricultural or academic research.”

In short, Harris—now a U.S. senator—expressed a narrower interpretation of which activities were authorized under the Farm Bill’s hemp provision than other states, including Colorado and Kentucky.

“When we went to meet with the CDFA, we said, ‘Hey, the federal government just passed the Farm Bill, and oh by the way, here’s how it’s being interpreted in Kentucky,” reflected Eric Steenstra, president of Vote Hemp, a grassroots nonprofit organization in Washington. “They’re letting farmers grow it. You guys should do the same thing.”

California officials weren’t receptive to the request. CDFA, Streenstra said, deferred to Harris and reported it couldn’t authorize a program like the one that was being overseen by the Kentucky Department of Agriculture.

“They said no, ‘The attorney general says we can’t do that, but we could do university research,’” Streenstra said.

Hemp research at the universities didn’t come to fruition either. “Basically, the universities were fairly conservative,” Streenstra explained, citing their concerns over jeopardizing their federal funding. “Most of them didn’t want to stick their neck out while it was still in this … sort of quasi-legal status.”

In 2016 through Proposition 64, California voters legalized the use, possession and purchase of nonmedical marijuana for adults ages 21 and up. Part of the ballot initiative’s intent was to “allow industrial hemp to be grown as an agricultural product, and for agricultural or academic research, and regulated separately from the strains of cannabis with higher delta-9 tetrahydrocannabinol concentrations.”

Prop 64 didn’t move hemp farming further along than previous efforts in the state legislature.

Before harvesting a crop, the ballot initiative said, certain growers—excluding industrial hemp “grown by an established agricultural research institution”—must “obtain a laboratory test report indicating the THC levels of a random sampling of the dried flowering tops of the industrial hemp grown.” The provision supported a restriction governing industrial hemp: that the crop contains no more than three-tenths of 1 percent THC in the dried flowering tops.

The problem? The lab issuing the test report needed to be registered with DEA. This language had been inserted in several bills over the years, including AB 1147 in 2006.

“When the California Department of Food and Agriculture called the DEA, they’re like, ‘Where are your approved labs?” said Lawrence Serbin, chairman of the Industrial Hemp Advisory Board, which makes recommendations to CDFA. “They’re [DEA] like, ‘We don’t have any. We don’t know what you’re talking about.’”

Prop 64, Serbin added, “tended to create a bit more problems and unanswered questions.”

SB 1409: “Cleanup Bill”

Serbin was among several sources who described SB 1409 as a “cleanup bill” that marked an improvement over Prop 64. The bill still required testing for THC, but the DEA language was omitted—rather, a lab approved by CDFA must issue a test report.

Steve Lyle, director of public affairs for CDFA, said SB 1409 provided clarity around existing law. In an email, he specifically cited as an example “statutory requirements for THC testing laboratories.”

SB 1409 also removed certain limitations, including a “requirement that industrial hemp be grown as a densely planted fiber or oilseed crop.”

“By removing limitations on the manner in which industrial hemp may be grown and the uses for which it may be grown,” SB 1409 concluded, “this act removes barriers to the growth of industrial hemp as an agricultural product, and for agricultural or academic research.”

Awaiting Registration

Before farmers can grow hemp commercially in California, they must first register with their local county agricultural commissioner. California law established a registration process for hemp farming, which Serbin and Goggin said is distinguishable from an approved permit or license.

But state officials haven’t yet made registration available, so with limited exceptions, farmers can’t plant the crop.

“The reason why hemp farming hasn’t really gotten off the ground in the state is because the department hasn’t issued and completed its rulemaking to set … the registration fee,” Goggin said.

In May, the Industrial Hemp Advisory Board approved a one-page registration form and agreed on a registration fee of $1,200, Serbin said. The form, which is now in CDFA’s hands, includes such rudimentary information as the business name and address of the grower, the location of the grow site, and whether the crop is being grown for fiber, flower, seed or a combination of those things.

Given the mild climate in California, farmers can likely harvest more than one crop annually from hemp, Serbin said.

“We expect hemp in California to be a powerhouse in that regard,” he proclaimed, “and it will basically lower the cost of all of these products around the country.”

Lyle said his agency is drafting regulations to establish a registration fee—a requirement under current state law and as amended by SB 1409. He said there is no current timeline for making registration available.

Lyle said CDFA is reviewing SB 1409 to determine how it will impact the department’s obligations. However, the bill “clearly requires CDFA to promulgate regulations in a few different areas,” he said.

For example, in addition to imposing requirements to approve labs and methods for THC testing, Lyle pointed out his department must develop sampling procedures through regulation.

“The rulemaking documents for the registration fee are under development and have not yet been posted for public comment,” he said.

Although CDFA doesn’t need to develop additional regulations before people can register to grow industrial hemp, Lyle cautioned “other regulations will be necessary for practical administration and enforcement of the law, such as the sampling procedures and laboratory approval mentioned above.”

County Prohibitions

“Established agricultural research institutions” are exempt from the registration requirement, but some counties in California have impeded such research.

Rick Gurrola is agricultural commissioner of Tehama County, a sparsely populated region in northern California that adopted a moratorium on hemp farming through the end of 2018. Gurrola said he and colleagues at other agricultural departments have expressed general concerns over the lack of a clear definition for “agricultural research institutions.”

In an interview, he described the exemption from the registration requirement as a “significant loophole.”

Agricultural research institutions aren’t “required to meet the three-tenths of 1 percent THC content, and there’s no prohibition from them marketing their research products,” observed Gurrola, a member of the Industrial Hemp Advisory Board, who referenced state law.

In a follow-up email, Gurrola noted the law is silent on whether hemp grown by established agricultural research institutions is allowed to enter commerce or prohibited from doing so.

"The inability from the state to effectively define 'established agricultural research institution' that is uniformly applied throughout California has caused frustration and confusion for the hemp industry as well as local governments, and has resulted in moratoriums being implemented by some counties as a result," the agricultural commissioner stated in the email.

In the earlier interview, he also said his county barred the outdoor production of cannabis due to law enforcement’s concerns that people would be growing marijuana but purporting to grow hemp as an agricultural research institution.

Ron Bray is assistant agricultural commissioner of Riverside County, California, an area east of Los Angeles with an estimated population of 2.4 million. He said his county adopted an ordinance (449.248) in February that imposed a moratorium. In late March, the moratorium was extended for 10 months through a subsequent ordinance (449.249).

The ordinance “was adopted to address an ambiguity in the California Food and Agricultural Code’s definition of ‘an established agricultural research institution,’” Bray explained. “In some counties, growers attempted to claim exemption from regulation using educational institutions with questionable credentials. This moratorium prevents the growing of industrial hemp in unincorporated areas of the county by ‘established agricultural research institutions.’”

However, the University of California and California State University may cultivate hemp for research purposes because they are exempt from local ordinances, he added.

“It’s Super Frustrating”

Imperial County is among the regions in California that has allowed hemp to be grown under the research exception. Enter Boucher, CEO of Farmtiva, a cultivator of hemp that has a partnership agreement with Imperial Valley Conservation Research Center, a nonprofit group. As an “established agricultural research institution,” the hemp project is exempt from registration under state law. At the time he was interviewed in early October, Boucher was preparing to harvest his crop on the grounds of a former USDA research facility.

It’s familiar territory for him. He grew hemp at the same facility in 1994.

After Obama signed the 2014 Farm Bill, Boucher also gained experience working with agricultural officials in other states, including Colorado and Kentucky.

In those states, “[T]he department of agriculture was [like], ‘How can we help you?’” Boucher reflected. “’How can we assimilate this industry and create revenue and help the farmers?’”

“California is, ‘How can we stop you?’” he continued. “’How can we stop this from going forward?’”

Boucher is not the only one exasperated with the process.

“It’s super frustrating,” Goggin, the hemp lawyer, said. “Welcome to my life.”

Boucher said state officials have given various reasons for dragging their feet, including individuals at CDFA are retiring, and the agency is hiring new employees. Gurrola reported hearing similar observations, citing “staffing and resources at CDFA.”

“I get people calling me every week, ‘Why is this not happening?’” said Serbin, the founder of Hemp Traders, which, according to its website, is the nation’s largest supplier of hemp fiber products. State officials are “not that open about why it takes so long. I think ‘more or less’ they’re a little embarrassed about it.”

During a meeting in September with CDFA, the department was asked about the perceived delays in greenlighting commercial hemp farming.

“They just said, ‘Look … it’s something that’s never been done before with the department of agriculture,’” Serbin said, adding the agency explained it needs to regularly consult with its lawyers as it moves forward. “It’s more just internal bureaucracy as to why it’s taking so long. There’s nobody holding it back or anything.”

CDFA is planning to hold an all-day meeting Oct. 30 in Sacramento to discuss various hemp issues, including the definition of THC, procedures and responsibilities to destroy crops, and the development of an agricultural pilot program.

When asked about perceptions that it’s taking a long time to launch a hemp farming program, Lyle responded, “CDFA is proceeding deliberately in order to make this program as robust and comprehensive as possible.”

Editor’s note: Looking for an in-depth look at the current landscape of hemp-based CBD and strategies to mature it as an industry? Join us for the CBD and Hemp Extracts: How Do We Move Forward? workshop on Wednesday, Nov. 7, at SupplySide West 2018. This workshop is underwritten by CFH, CV Sciences, Elixinol, KGK Science, Neptune Wellness Solutions and RAD Extraction & Processing.

 

 

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