DENVER, Colo. (March 29, 2018) – Yesterday, the Colorado Senate unanimously passed a bill that would further mainstream the state’s industrial hemp industry. Final passage of this bill would likely pave the way for faster development of the state’s hemp market, and further nullify federal prohibition in practice and effect.
A bipartisan coalition of two senators and two representatives introduced Senate Bill 205 (SB205) on March 12. The legislation would include the unprocessed seeds of industrial hemp in the definition of “commodity” within the “Commodity Handler Act” and include industrial hemp itself in the definition of “farm products” within the “Farm Products Act.” In effect, this would subject any person acting as a commodity handler of hemp seed or a farm products dealer of hemp to the licensing requirements already in place for commodities and farm product dealers.
Currently, commodities include hard seeds or fruits such as wheat, corn, oats, barley, rye, sunflower seeds, soybeans, beans, grain sorghum and other seeds. Farm products include any “unprocessed product of the soil,” livestock, milk, honey, and hay. By adding hemp to these definitions, state law will treat industrial hemp more like other agricultural products, mainstreaming the industrial hemp industry. While it will mean more regulations for handlers, it will likely serve to instill confidence in the market and removes the impression that hemp is something “different.” In effect, the proposed law will move the state a step closer to “normalizing” hemp and to treating it the same as any other farm product.
The Senate passed SB205 by a 35-0 vote.
FEDERAL FARM BILL
In 2014, Congress cracked the door open for hemp in the U.S. with an amendment to the 2014 Farm Bill. The law allows hemp cultivation for research purposes, but prohibits “commercial” production.
The “hemp amendment” in the 2014 farm bill —
…allows State Agriculture Departments, colleges and universities to grow hemp, defined as the non-drug oil-seed and fiber varieties of Cannabis, for academic or agricultural research purposes, but it applies only to states where industrial hemp farming is already legal under state law.
In 2016, the U.S. Department of Agriculture and Drug Enforcement Agency released a “statement of principles” to guide interpretation of the hemp section in the Farm Bill. It states, “The growth and cultivation of industrial hemp may only take place in accordance with an agricultural pilot program to study the growth, cultivation, or marketing of industrial hemp established by a State department of agriculture or State agency responsible for agriculture in a State where the production of industrial hemp is otherwise legal under State law.”
In short, the current federal law authorizes farming of hemp – by research institutions, or within state pilot programs – for research only. Farming for commercial purposes by individuals and businesses remains prohibited.
The definition of “commercial” and the extent to which sales and marketing are allowed under the rubric of “research” remains murky. This has created significant confusion.
The statement of principles also asserted that industrial hemp programs are limited to fiber and seed. It didn’t mention the CBD oil or other edible hemp products.The DEA has apparently interpreted that to mean they remain illegal.
Under Colorado law, farmers can ignore federal prohibition and grow hemp commercially anyway. While prospective hemp growers still have to take federal law into consideration, by eliminating the state requirement for federal permission the law clears away a major obstacle to widespread commercial hemp farming within the state’s borders.
Several other states with federally-compliant hemp programs, such as Kentucky, North Dakota, Minnesota and New York, have grown significant acreage under federally-approved research programs. This takes the first step, but with federal shackles in place, these states are not legally allowed to develop any kind of commercial market. Ironically, many of these “federally compliant” programs are not actually federally compliant.
Other states, including Oregon, Maine and Vermont have simply ignored federal prohibition and legalized industrial hemp production within their state borders.
Colorado was the first state with widespread commercial hemp production. Farmers began growing hemp in southeast Colorado back in 2013 and the industry is beginning to mature. The amount of acreage used to grow industrial hemp in the state doubled in 2016 to nearly 5,000 acres, and nearly doubled again in 2017.
The Oregon legislature initially legalized industrial hemp production in 2009. While it was technically legal to grow hemp in the state, farmers didn’t take advantage of the opportunity for nearly five years. When the Oregon Department of Agriculture finally put a licensing and regulatory program in place early in 2014, farmers began growing hemp. The initial regulatory structure placed significant limits on hemp farming and effectively locked small growers out of the market. In 2016, Gov. Kate Brown signed House Bill 4060 into law. It relaxed state laws regulating hemp already on the books and made the crop more like other agricultural products. Within months, the Oregon Department of Agriculture had already promulgated new rules under the reformed law. According to Oregon’s Cannabis Connection, the rules set the stage to creates a “massive” medical hemp market. The state produced 3,469 acres of hemp in 2017.
Both Colorado and Oregon demonstrate how loosening rules at the state level encourage the market and allow hemp a legitimate commercial hemp industry to develop.
HUGE MARKET FOR HEMP
According to a 2005 Congressional Research Service report, the U.S. is the only developed nation that hasn’t developed an industrial hemp crop for economic purposes.
Experts suggest that the U.S. market for hemp is around $600 million per year. They count as many as 25,000 uses for industrial hemp, including food, cosmetics, plastics and bio-fuel. The U.S. is currently the world’s #1 importer of hemp fiber for various products, with China and Canada acting as the top two exporters in the world.
During World War II, the United States military relied heavily on hemp products, which resulted in the famous campaign and government-produced film, “Hemp for Victory!”
SB205 now moves to the House for further consideration. At the time of this report, it had not recieved a House committee assignment. Once it does, it will have to pass by a majority vote before moving forward in the legislative process.
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