In the wake of the 2018 farm bill, when Congress included provisions legalizing the production and marketing of industrial hemp by American farmers for the first time since 1970, many farmers responded to the new perceived opportunity by including hemp in their cropping mixture. As a result, the number of farmers seeking licenses from state agencies to grow this new crop expanded by more than 350 percent from 2018 to 2019, as the status of the crop shifted from an experimental to a legal crop, albeit still constrained by a number of restrictions.
The restrictions are in place because industrial hemp and marijuana are the same species, cannabis sativa, only differentiated by the amount of tetrahydrocannabinol (THC), the psychoactive component that is present in the plant. Under federal law, any cannabis sativa crop with THC tested above 0.3 percent is considered to be marijuana, and is still listed by the federal government as a schedule 1 drug under the Controlled Substance Act (P.L. 91-353) and treated as illegal at the federal level.
Of the estimated 511,000 acres licensed for hemp production in 2019, about 201,000 acres was reportedly planted with industrial hemp seed. If this number was accurate, only sweet corn and tomatoes had higher planted acreage totals among vegetable crops in that year. While cultivation practices used by farmers would categorize industrial hemp as a row crop, the projected revenue per acre from this crop in the first year after the farm bill, by at least some reports, could have been in the thousands of dollars per acre, for hemp grain subsequently processed into cannibidiol (CBD) oil or hemp oil, expected at that time to be demanded by a large and lucrative market as a food or medical ingredient.
Unfortunately, that market for CBD oil never really materialized, as after nearly four years since the 2018 farm bill was enacted, the U.S. Food and Drug Administration (FDA) has failed to promulgate regulations regarding the use of CBD oil for that purpose. Nor has it formally determined that CBD oil is useful “in the diagnosis, cure, mitigation, treatment, or prevention of any disease.” In fact, through early October, the agency had sent warning letters to 13 different companies in 2022, that they were selling products for nutritional or health purposes without FDA approval. The lack of regulatory certainty has suppressed the market for CBD oil, such that it was estimated in 2021 that 40,000 acres of industrial hemp was sufficient to meet that demand. Much of the hemp harvested in the fall of 2019 was never processed, and is still sitting in farm storage on many operations.
The VoteHemp survey of hemp producers recorded a nearly two-thirds drop-off in acres planted to hemp between 2019 and 2020, to just over 70,000 acres. Other unofficial surveys suggested a somewhat smaller decline. USDA’s National Agricultural Statistics Service (NASS) conducted its first official survey of hemp producers in 2021, releasing their report in February 2022. That survey found that 54,152 acres of industrial hemp had been planted in the 2021/22 crop year in open fields, with additional production in greenhouses or otherwise under protection totaling 15.6 million square feet. The top five hemp-producing states in the former category were Colorado, Montana, Texas, Oklahoma, Minnesota and California (tied for fifth place). Interestingly, hemp production in Kentucky, the home state of Senator Mitch McConnell who was so instrumental in obtaining the hemp-related provisions in the 2014 and 2018 farm bills and subsequent legislation, planted only 1,700 acres of industrial hemp in 2021, putting the state in 11th place. Among states raising hemp ‘under protection’, the top producers were in California, Colorado, Oregon, New York, and Florida.
USDA finalized its rules for growing hemp in January 2021, which include licensing requirements; recordkeeping requirements for maintaining information about the land where hemp is produced; procedures for testing the THC concentration levels for hemp; procedures for disposing of non-compliant plants; compliance provisions; and procedures for handling violations. The rules provided a somewhat higher ‘negligence’ threshold than had originally been envisioned, allowing farmers to face penalties only if their hemp crop’s THC concentration exceeded one percent, as opposed to the 0.5 percent level in the initial proposal. The final rule also specified that the testing must take place in labs approved by the U.S. Drug Enforcement Agency, although enforcement of that rule was delayed until 2023 due to a shortage of approved labs. Also, hemp producers supported an effort to seek a checkoff program for their crop in a survey announced in February 2021.
In the last few years other markets for products from hemp have begun to emerge, which should eventually help stabilize the acreage grown by U.S. farmers. In September 2022, it was announced that hempcrete, an alternative to concrete that is made from a mixture of hemp stalk hurds and lime, was approved for use as a building material in residential building codes in 49 out of 50 states beginning in 2023. The new material creates a fire-resistant fibrous insulation wall that also acts as a moisture regulator. In addition, the Hemp Feed Coalition submitted an application in 2020 to the Association of American Feed Control Officials (AAFCO) to consider hemp seed cake and meal to be approved as an ingredient for poultry feed.
On October 4th, 2022, President Biden announced that he was pardoning anyone who had been convicted of a federal crime for simple possession of marijuana, and urged state governors to do the same. He also requested that the Attorney General and the Secretary of Health and Human Services undertake an ‘expeditious’ review of how marijuana is treated under federal law. While industrial hemp was not mentioned by the President, it is possible that FDA will take this cue to complete its work in approving CBD oil as a food or supplement ingredient.
