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Hemp provisions guaranteed to be in new Farm Bill: McConnell

By Rick Schettino
Nov 17, 2018

Although Washington D.C. lawmakers are still haggling over some of the details of the 2018 Farm Bill, a provision in the bill which would legalize hemp nationwide will be in the final version to be signed by President Trump, according to Senate Majority Leader Mitch McConnell.

Shortly after the midterm elections, McConnell pledged that the Farm Bill will be among his top priorities when Congress reconvenes. "We're trying right now to make sure there's a farm bill and before the end of the year,” McConnell told reporters in his home state of Kentucky last week. Speaking of the hemp provisions McConnell promised, “If there's a farm bill it will be in there, I guarantee you that.”

[Canopy Growth’s Linton: “For sure there’s a marijuana bubble”]

McConnell was also instrumental in the passage of the 2014 Farm Bill which famously included a provision allowing the cultivation of hemp in a number of states for research and development.

An all-encompassing bill

The Senate-approved version of the bill assures that hemp and its derivatives "would be treated as agricultural commodities and removed from the purview of the Controlled Substances Act and the Drug Enforcement Administration," wrote Daniel Shortt in CannaLawBlog.

Just how big of a deal this is cannot be overstated. State lawmakers are already reworking legislation to take advantage of the new rules with one state going so far as to amend their constitution.

U.S. farmers grew over 25,000 acres of hemp last year. The Hemp Business Journal estimates that more than $820 million worth of hemp products were sold in the United States in 2017 including hemp foods, cosmetics, textiles, construction materials. CBD oil supplements accounted for 23 percent of that total. Hemp Business Journal also estimates that sales will pass $1 billion before 2018 is over, and could reach $1.9 billion by 2022, with $646 million of that being attributed to CBD and its derivatives.

[Revenues fall in Canopy Growth’s worst quarter in three years]

Another industry analyst firm, Brightfield Group, is even more optimistic claiming that CBD might also top marijuana sales within the next few years.

One thing is clear. With each passing year, more and more of the revenue from hemp products being sold in the U.S. is remaining in the U.S. rather than going to overseas industries. Passage of the current farm bill will only hasten that shift.

The 2018 Farm Bill’s current status

Earlier this year, Mitch McConnell drafted language for a standalone hemp bill which would finally divorce hemp from the federal definition of marijuana and have it removed from the DEA’s list of controlled substances, among other provisions. The bill quickly gained the support of influential lawmakers.

Then, not long after the measure was introduced, McConnell strategically inserted the proposed rule changes into the farm bill essentially guaranteeing that the matter would gain the attention it deserved.

In July, the Senate signed off on a version of the farm bill which included McConnel's hemp legalization language. The House version of the bill also passed, however it did not include the hemp provision. The House-Senate conference committee must now hash out a final bill to send to the president’s desk for signing.

Aside from Sen. McConnell, other individual players in Farm Bill negotiations include Senate Agriculture Chairman Pat Roberts, Senate Ag Ranking Member Debbie Stabenow, and House Ag Chairman Mike Conaway.

[Amidst staggering net losses, MedMen’s spending spree comes at a steep price for investors]

The Farm Bill is required to be renewed every four years. So the question is not whether or not it will pass but whether or not the hemp language will be included in the final version of the bill.

The reason McConnell feels that he can guarantee that the measure will remain in the final version of the bill is that the main points of contention which are holding it up do not include the hemp provision, but rather focus on unrelated issues such as food stamp eligibility requirements.

What are the implications for hemp?

Currently, 40 states in the U.S. have legalized the cultivation of hemp in one form or another. Some of those programs follow the rules set up under the 2014 Farm Bill while some are leapfrogging federal regulations as is happening nationwide with marijuana.

The hemp provisions in the new bill are designed to remove the bulk of Federal regulations on the cultivation of hemp. This will affect the medicinal cannabis industry, the food industry, the cosmetics industry, animal feed, construction and manufacturing, and possibly industries such as biofuel and plastics.

Although the cultivation of CBD-rich hemp, which is essentially marijuana with negligible amounts of THC, will become federally legal, the main impetus of the bill is the economic potential of industrial hemp. CBD-rich hemp is grown for its flowering tops, whereas industrial and agricultural hemp are grown for their valuable fibers and seeds.

[Supreme Cannabis reports record first-quarter earnings]

Currently, most of the agricultural and industrial end products of hemp, as well as a good portion of medicinal products are imported to the U.S., meaning that the market for these products is already there. Passage of the bill means that the flow of capital out of the country can be redirected, and remain in the U.S. economy.

In a report in Forbes entitled, “The Age Of Hemp: Global Advanced Industrial Applications,” Giadha De Carcer, Founder and CEO of New Frontier Data writes that hemp is “already being integrated into several mature markets such as food, textiles, construction, personal care, and nutraceuticals. This relatively quiet cannabis relative is emerging as a potential commodity ripe to not only impact but possibly revolutionize tech-driven markets and economies around the world.

One of the most important effects that the farm bill could have is the easing of banking restrictions for hemp growers and processors which are the result of the unwillingness of banks to do business in a market that is still federally illegal.

U.S. states preparing for hemp legalization

States such as New Jersey, Colorado, Arizona, and others are already working to upgrade their hemp regulations ahead of federal measures. These states will have a head start in being able to take advantage of hemp’s new legal status. Below are just a few of the more prominent examples.

Colorado

In Colorado on election day, a ballot measure passed that removes the definition of hemp from the Colorado Constitution, and puts the ability to revise the definition into the hands of state lawmakers. Amendment X, as it’s called, is intended to give state lawmakers more flexibility and to take advantage of a broader federal definition.  

Colorado was the only state to have industrial hemp defined in its constitution which currently specifies that hemp strains must contain no more than 0.3 percent THC, which is also the current federal definition. However, proponents of the hemp provisions in the federal farm bill are hoping it will raise the federally mandated THC maximum to 1 percent.

California

California, the world's fifth largest economy, is expected to become a dominant force in the hemp industry —however, progress in hemp law reform has been frustrating stakeholders for years.

Twelve years ago, Gov. Arnold Schwarzenegger, vetoed a fairly comprehensive hemp bill, expressing concern 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.”

A bill was just recently signed in California that attempts to expand cultivation of industrial hemp. Although the action is a little late, Senate Bill 1409 authorized the California Department of Food and Agriculture to institute hemp pilot programs under Section 7606 of the 2014 Farm Bill.

More importantly, in 2013, Gov. Brown signed the California Industrial Hemp Farming Act, SB 566. However, the rules are contingent upon the federal government authorizing the cultivation of hemp — which appears to be imminent.

[Snoop Dogg stopped by the White House after election day to smoke a blunt and say “F*ck the President.”]

In 2016, the passage of Proposition 64 legalized recreational use of marijuana for adults ages 21 and over. Within the law was a provision which allows the cultivation of hemp for industrial and research purposes. However, a number of bureaucratic hurdles still remain.

Furthermore, in a move which astounded many industry advocates, the state’s Department of Health recently ruled that adding CBD to food — including CBD oil, itself — is prohibited by law until it is granted GRAS status, which stands for generally regarded as safe by the FDA. According to the DOH, the only legal CBD in California is that which is derived from marijuana and sold in dispensaries.

That being said, it’s still business as usual in the state and no threats have been made by authorities to pull products off shelves or shut down the many operations that sell CBD oil and CBD-infused edibles.

Elsewhere in the country

South Carolina’s General Assembly approved a hemp pilot program in 2017 allowing farmers to grow up to 20 acres of hemp. That limit doubles in 2019 to 40 acres. More than 160 farmers have already applied for the permits. Twenty farmers currently participate in the program. And the Department of Agriculture plans to double that as well. Lawmakers in the state are discussing the possibility of offering unlimited licensing and acreage by 2020.

Last month in Illinois, Gov. Bruce Rauner signed Senate Bill 2298, known as the Illinois Industrial Hemp Act allowing farmers, in conjunction with a university or other recognized research group, to cultivate industrial hemp for commercial purposes. The new law not only legalizes the cultivation of hemp, but it also legalizes the extraction of CBD.

Also, back in May, Arizona jumped the federal gun and a new hemp law was signed by Gov. Doug Ducey which allows for the cultivation of hemp as well as the extraction of CBD. The news has caused an explosion of CBD stores in the past few months both online and around town.

It’s important to point out that the passage of the Farm Bill doesn’t mean that farmers across the country may immediately begin planting hemp. Because each state would have to decide for itself how to regulate hemp and it’s cannabinoid-rich extracts, there is a chance, although unlikely, that a small number of states could end up opting out making hemp —and possibly CBD — illegal in the state.

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