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Growing pains aired at hemp industry summit

South Boston News
Richmond / February 26, 2020
Caution was the watchword of the day as stakeholders in the burgeoning field of hemp production gathered Monday in Danville for the third annual Industrial Hemp Summit, sponsored by the Institute for Advanced Learning and Research (IALR).

Speaking to a crowd of more than 400 growers, processors, scientists, and business leaders involved in the hemp industry, Bill Richmond, chief of the USDA Domestic Hemp Production Program, reminded them that the 2018 Farm Bill that decriminalized hemp “is still in its infancy.” As a result, the USDA has yet to develop a final set of rules governing growing and testing protocols, and the department is still in the process of approving state plans for implementing these rules.

What Richmond heard in response from summit goers was open frustration. Testing facilities that have developed protocols aimed at upholding the letter of the law in the 2018 Farm Bill complained that they have since been told their labs are out of compliance.

The language in the Farm Bill defines hemp as cannabis sativa (the family of plants that includes marijuana) with Delta-9 THC concentrations — one of two forms of THC found in the cannabis plant. THC content must not exceed a level of 0.3 percent on a “dry-weight” basis.

Many hemp crop certification labs have spent hundreds of thousands of dollars to develop tests that measure the Delta-9 THC levels in hemp — only to be told that new rules under development by USDA call for labs to test for “total THC,” which is a different metric.

A plant geneticist with a DEA-approved testing lab in North Carolina told Richmond that under these proposed rules, which are more stringent than the language of the 2018 Farm Bill, she expects more than 50 percent of hemp plants tested will be “hot.”

“Hot” plants contain THC content greater than 0.3 percent — at which point hemp becomes illegal and must be destroyed.

New hemp farmers — defined as those with a growing history of one year or less — and farmers without a hemp processing facility contract were frustrated to learn that USDA crop insurance pilot programs will not cover them for the coming year.

Also, farmers who grow what is known as “smokable hemp” are now learning that their crop could be outlawed, even though their intent was to ship the product to states that allowed the processing and possession of smokable hemp. Richmond said the USDA would not step in to help these farmers, because the agency’s jurisdiction stops once a plant is tested and found to be compliant with the mandated 0.3 percent THC level.

The 2018 Farm Bill specifically allows for hemp in all forms to be shipped via interstate commerce, but states including North Carolina have bills pending to outlaw the possession and production of smokable hemp.

Richmond could not say if farmers who grow hemp for fiber and grain purposes and who harvest plants before they flower will still be required to test their plants for THC. Hemp THC is found mainly in the buds and flowers. He also could not tell farmers what portion of the plant — the whole plant versus the top one-third — would be used to measure THC levels, saying there is not enough data available to the agency to set this measure.

Richmond admitted that the rules, as currently proposed, do not include an appeals or remediation process for plants that test over the allowable THC limit. USDA also does not have provisions to protect farmers whose plants develop higher than the allowable 0.3 percent THC limit as a result of unplanned cross-pollination or factors outside their control.

Richmond’s answer to most questions posed was “stay tuned as these rules are evolving.” He also pressed attendees to submit comments about the rules as these — which, he said, would be helpful in moving the regulatory process forward.

The USDA has closed its current comment period after receiving nearly 5,000 comments about the proposed rules. Richmond said he expects to reopen the comment period in the fall but did not give a specific date. USDA final rules for hemp production go into effect Oct. 31.

Eric Steenstra, a lobbyist with Vote Hemp and president of the California Hemp Council, warned that the “obvious meddling by the DEA [Federal Drug Enforcement Agency] and drug czar” will be reflected in the USDA rules. “Congress never intended for the DEA to have an active role in the hemp regulatory scheme,” said Steenstra.

Specific examples of DEA overreach, Steenstra said, include the requirement that testing labs be DEA-registered and only the top third of hemp plants be tested to assess THC levels. Research done by the Institute for Advanced Learning and Research in Danville shows that “top-only sampling leads to an overestimation of THC content in plants.” A more reliable test would take samples from the entire plant, he said.

Regulators with state agriculture departments in Virginia, North Carolina, Kentucky and Tennessee also urged caution — but from a different perspective. They spoke of a “shake-up” that this nascent industry is currently undergoing. Market prices for hemp have plunged by an average of 82 percent since July — from a high of $4.35 per pound to $0.74 per pound. Processing facilities are shutting down, leaving farmers with barns full of hemp. Two facilities in Kentucky filed for bankruptcy protection in the past year.

One local farmer in Mecklenburg County said that while the processing facility he has a contract with has not filed for bankruptcy, it had not paid him for his crop and it is not processing his plants.

Doris Hamilton with the Kentucky Department of Agriculture said scenarios like this are becoming increasingly common as processors over-promise and under-deliver. The situation could get worse as more and more farmers jump onto the hemp bandwagon without a contract or a plan for what they will do with their crop once it is harvested.

In 2019, more than 120,000 acres were approved for growing hemp across Virginia, Kentucky, North Carolina, and Tennessee.

Anni Self with the Tennessee Department of Agriculture said that companies and individuals that are surviving or thriving in this time of uncertainty are owners of CBD stores and companies that are “vertically integrated” — that grow, process and market a value-added project. She also said the $20 and $30 per-pound price that growers thought they were going to make from hemp was both “unreasonable and unsustainable.” She expects production levels to continue to drop over the short haul before leveling out.

The news was not all gloom and doom for the industry. Fifth District Rep. Denver Riggleman said that he and a Kentucky congressman are about to introduce a bipartisan bill that will address some of the biggest complaints he’s heard about the domestic hemp program. The bill seeks to raise the allowable THC levels in plants from 0.3 percent to 0.5 percent or higher. It also would extend from 15 to 30 days the time between testing and harvesting of plants, and remove DEA involvement in hemp testing.

Riggleman said the bill will also include an appeals process that will allow growers whose crops exceed the allowable THC limit to seek alternative or additional tests. Finally, the bill offers incentives in the form of tax breaks for growers and processors of hemp that will allow the domestic hemp market to succeed at home and on a global scale.

Riggleman said there is “a lot of misunderstanding about what hemp is” among members of Congress, and it is up to those in the hemp industry to educate their Representatives and Senators about the crop, its many uses and the economic benefits that could flow from a burgeoning hemp industry — one that includes food items, supplements, building materials and even medical equipment and pharmaceuticals.

Jean-Sebastien Gros with CSX Agricultural in Elkton, Fla., said the country has only begun to understand all of the uses for hemp. He is in the process of building a laboratory focused on using hemp for the production of medical equipment and food preservation devices. He said the plant’s antimicrobial resistance makes it ideal for these uses.

Gros also said studies being done in Japan and across Europe are looking at another cannabinoid compound found in hemp, CBG. Early test results with CBG suggest it might have a role in regulating blood pressure and may reduce inflammation. Due to its anti-bacterial properties, it may stop the spread of MRSA, a highly contagious staph infection that is tough to treat with current drug regimens.

Asked what he sees ahead for the industry, self-billed hemp attorney Rob Kight predicted a bumpy shake-out period for growers, but added the U.S. is poised to become a world market leader in hemp production.

“A lot of this ‘shake-out’ could be mitigated with solid regulation,” he said. Gros added the industry could grow and benefit if the government would move away from its current focus on regulation to one of economic development.

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