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Hemp Farmers in Colorado Advised of Challenges

February 28, 2014
By: Nate Birt, Top Producer Deputy Managing Editor google + 
Colorado Hemp Seeds
  
 
 

Farmers who intend to plant Colorado’s first industrial hemp crop can register starting March 1, though they should be aware of several unanswered legal questions, the Colorado Department of Agriculture says.

"There are challenges in this first year, and I think the most important thing is that we want those who are interested in cultivating to do so, to come to the department and register," explains Ron Carleton, deputy commissioner of agriculture. "But we at least want them to be aware that there are challenges."

While it isn’t clear how many people will register to grow hemp, the agriculture department has fielded numerous queries from throughout the state in the past few months.

The issue is complicated because while Colorado has legalized cultivation of industrial hemp—also called Cannabis spp—the practice remains illegal at the federal level. Recent activity in Washington, though, has permitted some flexibility. For example, Carleton notes, memos from the U.S. Department of Justice and U.S. Department of Treasury have indicated that while Cannabis remains illegal, the federal government will defer enforcement to individual states.

"In both cases, they indicated they wanted to see a rigorous and robust state regulatory system to ensure that the rules and the laws were followed and that this stuff wasn’t being funneled for purposes that were illegal or improper," he says. Those memos include guidance for financial transactions related to Cannabis by banks, though the financial sector has indicated it does not have adequate clearance to begin opening accounts.

Additionally, a provision of the 2014 farm bill permits industrial hemp cultivation and research in authorized states, Carleton says. U.S. Rep. Jared Polis (D-CO) and U.S. Sen. Mitch McConnell (R-KY) collaborated to pass the measure.

"I thought that was a very important step in this evolving legal structure with regard to industrial hemp," Carleton notes.

While Colorado state law permits only outdoor hemp cultivation for research and development, Carleton adds, there has been talk in the legislature of expanding that authority to indoor cultivation, which would extend the growing season year-round. Commercial growers can cultivate either way.

With that history in mind, Colorado is looking ahead to its inaugural hemp planting season. Growers considering applying for planting should be conscious of several factors, Carleton says:

Seed quality and procurement: While farmers will not be asked to disclose the source of their hemp seed, they will need to verify that the seed they intend to plant will produce hemp that contains THC levels of less than 0.3% on a dry weight basis. "Since industrial hemp has been illegal in this country, there’s no certified seed that anyone’s aware of within the United States," Carleton explains. "Most of the certified seed is out of the country in places like Canada and China, and under federal law, you can’t import viable hemp seed." At least 33% of farmer registrants will be inspected annually, and hemp fields will be randomly sampled before testing at a state-run biochemistry lab that also tests products such as fertilizer.

Pesticide application: Only a handful of pesticides can be applied on hemp without violating pesticide labeling laws or other regulations. None are registered for the crop under federal law. "That’s a process we’re working through now, and we hope to have something a little more definitive on that in the not too distant future," Carleton says.

Farm programs: Planting industrial hemp can jeopardize participation in federal crop insurance, farm loans and the conservation reserve program. A lawyer should be consulted about specific concerns.

Processing: Hemp farmers must process the crop in-state before shipping it across state lines, and they must be able to provide proof of a purchase agreement with a processor. "We’re excited about that part of it because that’s economic development, that creates jobs and there’s a likelihood that some of these facilities will be in rural areas, which could be very good for economic development."

It’s unclear how many processing facilities will be available for the 2014 harvest because the agriculture department does not regulate those businesses. Instead, regulation is managed by multiple state departments including revenue, regulatory affairs, Secretary of State and, in some cases, health. "We want to be able to track and show that the hemp is being cultivated and is going to a processor to be processed into whatever—fiber, oils, soap, a whole range of products," Carleton explains.

Registration for hemp farmers will remain open through May 1. The annual registration fee for commercial production is $200 plus $1 per acre. The fee for research-and-development production is $100 plus $5 per acre.

Farmers will be asked to verify the location and amount of intended acreage to be planted to hemp; to confirm that seeds meet approved THC levels; to identify an expected harvest date; and to verify that they will have a purchase agreement with a processor.

"This is the first year, and this is a novel program for us," Carleton says. "We’ve established a rigorous and robust regulatory system that’s going to facilitate the program. But people should not measure the success of the program in the first year alone. This is going to be an evolving program."

Click here for complete industrial hemp details from the Colorado agriculture department.  

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