Hemp: A Possible Blossoming Business for America’s Small Farms

By Prianka Sharma, Assistant Chief Counsel

From rope to clothing, biodiesel to hempcrete, plant-based ingestible protein to CBD balm, the uses of hemp are far-reaching. Up until the passage of the 2018 Farm Bill however, it was illegal (aside from a few exceptions discussed below) for the public to grow hemp in the United States. This first changed under the 2014 Farm Bill, when state departments of agriculture and higher education institutions were permitted to produce hemp for research purposes. In 2018, Congress took definitive steps to legalize the production of hemp by removing it from the list of controlled substances altogether and tasking the U.S. Department of Agriculture (USDA) with creating regulations and administering a program for domestic hemp production.

In response to this law on October 31, 2019, USDA published an interim final rule for domestic hemp production with two main components. One component outlined the procedure for state departments of agriculture and Indian tribes to apply to administer their own production programs. If these entities chose not to administer their own programs, however, they could use a program administered by USDA. For those states that ban hemp production, the state law would control, and production would remain illegal. However under the Farm Bill, those states would have to allow interstate transport of hemp products. The second component of the rule laid out requirements that all producers must meet in order to legally grow hemp, regardless of who administered the plan. These requirements are summarized in  this fact sheet published by Advocacy.

Recognizing the immense interest small growers have in the rule and in growing hemp in the country, and the resulting potentially billion dollar industry, Advocacy embarked on an ambitious and lengthy outreach effort to hear from small businesses. In November, Advocacy presented at a hemp symposium in Arizona. At the symposium Advocacy spoke with producers, small labs, and distributors of hemp products from around the country. Advocacy also met with small growers and the Arizona Department of Agriculture to learn about their program. It was here that Advocacy staff were first introduced to the concerns that many other producers would later echo.

Advocacy then attended a hemp summit in Kentucky where staff spoke with small growers, representatives of the Kentucky Farm Bureau, and representatives of university hemp programs. Being one of the first states to implement a hemp production plan, producers in this state had several thoughts about the rule and its impact on their ability to grow hemp. Advocacy also learned about the concerns that educational institutions have with the program, and the wide reach the rule would have if left as-is without modification.

Advocacy Staff Visiting a Small Hemp Farm in Virginia

In December, Advocacy toured a small hemp farm in Virginia to learn about how the crop is grown and harvested. On this farm, the producers are using their hemp to create biofuel, bedding for livestock, fiber for clothing and rope, and various other products. During this visit, Advocacy learned about the various non-CBD uses for hemp, and that the rule as written would stifle the ability of small producers to grow for purposes other than manufacturing CBD products. It should be noted that USDA’s rule does not differentiate between hemp grown for CBD uses, and hemp grown for other purposes.

Advocacy also held its own forum in Pennsylvania where concerns were raised about the length of time between testing and harvest, especially for those growers that do not use technology, such as Amish communities. Finally, in an effort to obtain diverse perspectives, Advocacy staff attended events and spoke with small growers, state departments of agriculture, distributors of hemp and CBD products, universities, and small labs in the District of Columbia and 17 states: California, Colorado, Florida, Idaho, Illinois, Iowa, Maine, Maryland, Minnesota, Nevada, New Jersey, New York, North Carolina, Oregon, Tennessee, Vermont, and Wisconsin.

The one commonality that all stakeholders expressed was the “chilling” effect the rule would have on the hemp industry. Advocacy summarized the key points made by small businesses in a public comment letter sent to the Secretary of Agriculture on January 29, 2020.

Following the conclusion of the public comment period, and in response to stakeholder comments including those of Advocacy, USDA published guidance regarding certain testing and sampling requirements. This guidance directly addresses some of the concerns raised and adds leniency to the regulated industry with respect to the requirements of Drug Enforcement Agency certified labs, and destruction of non-compliant crops.

At this stage, Advocacy and the regulated community are eagerly awaiting further action from the agency including additional guidance, and the publication of a final rule by fall of 2021. The hemp community is hopeful that the agency will consider some key modifications to the rule so that hemp can blossom into a successful industry.

Prianka Sharma is an Assistant Chief Counsel for Advocacy whose portfolio includes agriculture, energy, and natural resources. Sharma can be reached at Prianka.sharma@sba.gov.