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States reviewing hemp laws in wake of changes at federal level that removed production barriers

by Carolyn Orr ~ February 2019 ~ Stateline Midwest »
For decades, the lack of a commercial hemp industry has made the United States an outlier among most of the world’s developed countries. That may soon change, and some states in the Midwest have already been pursuing policies to ensure their farmers can make the most of this new market opportunity.
“Hemp could be a valuable crop,” North Dakota Rep. Dennis Johnson says, “but we need processors and market diversity and reliable regulations. “The 2018 farm bill goes a long way toward doing this.”
Enacted at the end of last year, the new law legalizes industrial hemp (it must have a THC concentration level of below 0.3 percent), allowing for market-scale cultivation and the interstate sale of products. In another important change for producers, the new farm bill allows hemp to be included in federal crop insurance.
What is the role for states?
Some may choose to serve as the primary regulatory authority of hemp production, by establishing a licensing system that conforms with federal guidelines and that gets approved by the U.S. Department of Agriculture. This is the purpose of legislation introduced in early 2019 in states such as North Dakota (HB 1349), Minnesota (HB 303) and Indiana (HB 1385 and SB 516).
To conform with federal guidelines, any state-run licensing programs must include restrictions on locations, THC testing procedures, and plans for crop disposal and farm inspection. In states that don’t request to have their own regulatory and licensing programs, hemp growers will be able to apply directly to the USDA.
But to grow hemp legally, growers must also live in a state that permits production. At least as of early 2019, prohibitions on this activity were still in place in some Midwestern states (see map).
The trend in recent years, though, has been a loosening of state restrictions. For example, after the 2014 federal farm bill began allowing for smaller-scale research and pilot projects, most states in the Midwest followed with legislation of their own. And over the past two years — prior to passage of the new farm bill — legislators in states such as Illinois (SB 2298), Michigan (HB 6330, HB 6331 and HB 6380) and Wisconsin (SB 119) passed laws to allow for hemp farming and state-run licensing systems. (Michigan voters also legalized industrial hemp via a ballot measure this fall.)
In contrast, in states such as Iowa, Ohio and South Dakota, statutory language does not differentiate marijuana and hemp. As a result, hemp production is illegal. (As of the end of January, legislation to address hemp production was being discussed in all three of these states, but no bills were close to passing.)
Among the Midwest’s states, North Dakota has long stood out for its policies to allow for industrial hemp production, as well as its legal battles with the U.S. Drug Enforcement Agency over the issue. Now, federal policy is aligning much more closely with the vision long held by many North Dakota lawmakers and farmers.
“It all comes down to very persistent growers, legislators and agriculture commissioners who saw the value in this crop,” Samantha Brunner of the North Dakota Department of Agriculture says.
Since the 2014 farm bill began permitting pilot research projects, North Dakota and Minnesota have been among the nation’s top-producing states for hemp. Some other Midwestern states are now hoping to join them. As production increases, processing becomes an important consideration for growers. Cannabidiol (CBD) oil appears to have the greatest potential for profitability among growers because of rising consumer demand for it. However, the sale of CBD oil is illegal in some states — in Nebraska and South Dakota, for example. And in states such as Iowa and Ohio, statutory language doesn’t distinguish hemp-produced CBD oil from prescription-required medical marijuana. Discussions related to CBD oil are ongoing in all of these states.


Article written by Carolyn Orr, CSG Midwest staff liaison to the Midwestern Legislative Conference Agriculture & Natural Resources Committee.