As 2014 Farm Bill loosens federal restrictions, states look to gain new revenue.
Although many people are already aware that a number of states are legalizing marijuana for medicinal and even recreational use, fewer may know about recent federal and state law changes that loosen restrictions on industrial hemp production in the U.S.
Hemp comes from the same plant as marijuana and can be used to make a large variety of consumer products, but is cultivated from parts of the plant that lack the chemical in marijuana that makes people high.
A small section in the Farm Bill that was recently passed by Congress and signed by President Obama legalizes the growth of industrial hemp for research purposes by state departments of agriculture and higher education institutions in states where hemp cultivation is legal under state law.
The bill enables eligible researchers to grow hemp through registration with a state’s department of agriculture instead of with the Drug Enforcement Administration (DEA). DEA registration is an extremely costly process which is still required for industrial hemp growers that do not meet the criteria set forth in the Farm Bill.
Industrial hemp and marijuana both come from Cannibus sativa plant, but hemp is cultivated from cannabis stalks and seeds, which contain only trace amounts of tetrahydrocannabinol (THC)- the narcotic in marijuana. By contrast, marijuana is composed of cannabis flowers, or buds, which “contain 3-15% of THC by weight.” Consequently, hemp cannot produce the same psychological effects as marijuana. But hemp fibers and seeds can be used to make various products, including textiles, cosmetics, paper, food, medicine, and even biofuel.
Opponents of strict federal hemp regulation argue that hemp is a high yield crop that could produce substantial tax revenues for states under a looser federal approach, pointing to hemp’s usefulness, economic potential, and eco-friendliness.
While hemp was “widely grown” in early American history, the crop came under close scrutiny from the federal government in the 1930s as the public became fearful of marijuana. This fear helped prompt passage of the Marihuana Tax Act of 1937– the “first federal law restricting hemp production . . . requiring growers, importers, and processors of this crop to be registered and taxed.” In 1970, the Controlled Substances Act classified the Cannibus sativa plant as an illegal “schedule I drug,” which imposed strict regulations on the cultivation of industrial hemp as well as marijuana.
Under the Controlled Substances Act farmers can only grow hemp after registering with the DEA. In practice, registration’s high costs “make hemp production prohibitive, even at the research level.” Registration requires, among other things, substantial documentation, FBI background checks, and high security measures around the hemp plot, including security fencing and a 24-hour monitoring system. Only one grower in U.S. history has successfully registered with the DEA to grow hemp.
Nevertheless, despite tight controls on hemp cultivation, U.S. manufacturers and retailers may still legally import hemp products not designed for human consumption to the U.S. to produce and sell hemp products without running afoul of federal regulations. As a result, the U.S. reportedly imports about $2 billion worth of hemp from Canada and China each year as opposed to growing it domestically.
The Farm Bill marks the first step toward the development of a legal hemp industry in the U.S. The law initiates an industrial hemp pilot program designed to “study the growth, cultivation, and marketing of industrial hemp,” which the law defines as any part of the Cannibus sativa plant that contains less than 0.3% of THC.
States are mulling a change in approach as well. Ten states currently permit the growth of industrial hemp for commercial use, and many states, including Washington, are considering proposed bills that would legalize industrial hemp altogether. Kentucky is launching five pilot projects to research hemp. Meanwhile, Colorado’s Department of Agriculture (CDA) recently promulgated regulations to manage the growth of hemp for research and commercial purposes.
Colorado’s Industrial Hemp Regulatory Program Act legalized hemp for both research and commercial use in 2013, and the CDA recently promulgated rules under the Act. The state regulation, which takes effect on March 1, 2014, covers the registration of hemp growers and the inspection of hemp crops to ensure that marijuana is not being grown with hemp. Even though it is legal to grow and use marijuana in Colorado, state regulations do not permit marijuana to be grown outdoors like industrial hemp; rather, marijuana must be grown in secured, indoor facilities.
Under Colorado’s regulations, hemp growers will need to obtain a state permit by registering with the CDA annually. To register, growers will need to specify whether their crop will be used for research or commercial purposes. They will also need to pay a registration fee, with a higher fee required for commercial hemp.
Colorado hemp growers must also demonstrate to the CDA’s satisfaction that their crop will contain less than 0.3% THC. To enforce this limitation on THC content, the CDA will annually inspect one third of growers’ crops. Growers will be notified of inspections, and those who are growing marijuana illegally may have their hemp registration suspended or revoked and may face additional penalties.
The CDA warns growers that cultivating industrial hemp is still generally illegal under federal law, despite the relaxation of rules for research purposes. Growers may face several issues arising from federal rules aimed at deterring hemp cultivation, including the inability to import hemp seeds from other states and countries, the lack of pesticides listed for hemp under federal pesticide regulation, the jeopardizing of federal farm subsidies and bank assistance, and the need to process hemp in-state prior to export. Additionally, it is unclear how the DEA and federal prosecutors will handle cases of industrial hemp cultivation that violates federal law.
The DEA is reportedly opposed to loosening federal regulations on hemp production. In October, the Huffington Post released what it claimed was a set of DEA talking points on the issue. The purported talking points suggest that the DEA is concerned about the ability of growers to quickly convert industrial hemp into “hash oil” which supposedly has an abuse potential, robberies at industrial hemp production sites, the ability of hemp growers to conceal marijuana production in their facilities, and the possibility that hemp can still be used as a recreational drug despite its low THC content.
Recently, the L.A. Times Editorial Board argued that “few sensible growers of marijuana would raise their plants in a hemp field,” as doing so would cause the varieties to cross-pollinate, diluting each plant’s effectiveness.
