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What the Farm Bill Means for US Farmers, Hemp Growers, and the Economy
The 2018 Farm Bill that went into effect January 1st is that rare bipartisan legislation that passed through Congress and was signed into law with very little drama. Monies to promote the local movement–farmers markets, research for organic farming, and farming education were made permanent. Farmers and their extended families get to keep their subsidies. Oh–and hemp farming has graduated from pilot programs to a legal, commercially marketable crop.
You Can Thank China for Legalizing Hemp Farming. Really.
Congress has been inching toward legalizing hemp for several years, as states are legalizing marijuana for recreational use, and country’s overall attitudes toward marijuana have relaxed. That’s all well and good, but let’s face it, Congress doesn’t much care that you and your neighbors are okay with pot. What they do care about–a lot–is that criminalizing hemp farming is a drain in the US economy. Just because growing hemp in the US is illegal doesn’t mean that hemp isn’t imported from other countries–primarily Canada–to the tune of $67 million in 2017. Data for 2017 is not finalized yet, but in 2016, hemp-based product sales totaled $688 million. The US imports some hemp from China, about 5%, and the current trade war with China factors into hemp farming in a couple of ways. First, even though Chinese hemp is a small portion of all imports, it’s a valuable commodity and for US manufacturers, new tariffs have made hemp unaffordable. Second, the Chinese trade war has had a drastic effect on US soybean and corn farmers–China stopped buying in late 2018, creating huge surpluses in inventory and huge stresses on farmers.
While China was flirting with Brazilian soybeans, Congress was negotiating the Farm Bill and realized the economic boom that hemp farming would give not only farmers in the US but manufacturers, too. Domestic hemp production keeps that $67 million spent importing hemp in the US, where it’s free from any tariffs. Exporting hemp is also a boom to the farmers who need replacement crops for soybeans and corn. In short, it’s a win-win for the entire US economy.
Hemp Is Legal but Highly Regulated
Hemp–and marijuana–were legal in the US until 1937, when Congress passed the Marihuana Tax Act. The bill was more prohibitive than the exorbitant excise taxes it placed on marijuana sales, making it illegal to possess or distribute it. It was repealed in 1969 when it was determined to be unconstitutional, but marijuana found itself a Class I drug–along with heroin, LSD, and peyote– in 1970 when Congress passed the Controlled Substances Act. This effectively banned the commercial production of hemp in the US for generations.
The Farm Bill brings cannabis out of the shadows as a viable crop for US farmers. Since it has not been commercially grown in here for generations, there is a steep learning curve for cultivating the plants. The USDA had been approving pilot programs for growing hemp for several years, primarily to gauge the market for a commercial product. Now that growing hemp is legal, it’s still highly regulated.
Section 10113 of the Farm Bill outlines the process for planting hemp. First, each state’s agriculture departments have to coordinate with the Governor and law enforcement to devise their guidelines, and the USDA has to okay that plan. Once the state has the go-ahead to license hemp production, farmers can apply for a license. Once the first hemp crops are harvested, farmers can transport and sell over state lines, just like they can tobacco and soybeans.
The Battle of the Hemp Sexes
The hemp plant is the male version of Cannabis Sativa and contains minute traces of THC—any hemp testing should show levels below 0.3%, or it’s not commercial hemp. The flowering female plant is the source of the high-concentration THC found in marijuana, and the two plants have to be separated for farming. If commercial hemp is found to have higher levels of THC, the farmer can lose his growing license.
At this point, opportunities for hemp production in the US are unlimited, but unwinding the details of the Farm Bill and hemp is going to take some time and legal expertise. If you have questions about hemp, let us help you navigate the fine points of how it’s going to impact you.
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