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American agriculturalists eagerly embraced the opportunity to cultivate hemp following its legalization under the 2018 farm bill, viewing this potentially profitable crop as a beacon of hope for sustaining their agricultural enterprises in challenging economic times.
However, a recent shift in policy by the U.S. Department of Agriculture (USDA) has introduced a significant hurdle for some of these farmers, particularly those who have elected to cultivate both hemp and its federally illegal counterpart, cannabis, in states where the latter’s cultivation is permissible. This decision by the USDA to revoke hemp licenses from such farmers has introduced a new layer of complexity and uncertainty in the agricultural sector.
The plight of these farmers was succinctly articulated by Sam Bellavance, a cannabis cultivator in Vermont. Bellavance, who held distinct licenses for the cultivation of both cannabis and hemp, found himself in a precarious position when the USDA rescinded his hemp license earlier this year. This revocation, as Bellavance attests, dealt a significant blow to his business operations, with an estimated financial loss of at least $250,000 in revenue, a substantial sum that underscores the financial ramifications of this policy shift.
This dichotomy in the treatment of hemp and cannabis, crops that are agronomically similar yet diverge drastically in their legal statuses, epitomizes the broader challenges faced by farmers in this nascent market. The legal landscape is characterized by a striking dissonance between federal and state laws, particularly because a majority of the American populace resides in states where the possession of cannabis by adults is legally sanctioned. Furthermore, public support for the legalization of cannabis is robust, with surveys indicating that 70 percent of Americans are in favor of such a measure. Notwithstanding the increasing acknowledgment and legalization on a state level, cannabis continues to be categorized at the federal level as a Schedule I substance. This classification designates it as a substance with substantial potential for misuse and lacking in recognized medical utility, effectively grouping it alongside substances like heroin.
Officials within the hemp industry have voiced their frustrations regarding the absence of clear legal and regulatory guidance from the federal government. This lack of clarity has had a deterrent effect on retailers, dissuading them from engaging in the sale of hemp-derived products and subsequently leading to a depreciation in the market value of hemp.
This uncertainty and the associated economic pressures have had a tangible impact on hemp cultivation across the nation. In 2019, a year following the legalization of hemp, farmers planted an impressive 275,000 acres of the crop. However, this figure experienced a drastic decline, plummeting to a mere 21,000 acres in the subsequent year, as reported by Hemp Benchmarks. This steep reduction in cultivation levels is indicative of the challenges and apprehensions facing the hemp farming community in the current legal and economic climate.
In summary, the revocation of hemp licenses by the USDA for farmers who are also cultivating cannabis in legal states has introduced a complex dilemma, reflecting the larger challenges in an industry where hemp and cannabis, though agriculturally similar, are governed by vastly different legal frameworks. This situation not only affects individual farmers but also has broader implications for the hemp industry, highlighting the need for greater clarity and consistency in federal regulations.
USDA’s Hemp License Revocations Stir Controversy in the Cannabis Market
The United States Department of Agriculture’s (USDA) recent actions to revoke hemp licenses have introduced additional turbulence into an already unsettled market. This move has prompted widespread discussion and criticism, underscoring the ongoing challenges in reconciling state and federal laws regarding cannabis-related crops.
Tim Bryon Fair, the founder of Vermont Cannabis Solutions, a law firm, has expressed his consternation over this regulatory conundrum. He highlights the paradox inherent in the current legal framework, where a substantial portion of the American population, approximately 55 percent, resides in jurisdictions where cannabis is legally sanctioned, yet it remains prohibited at the federal level. Fair describes this situation as “absurd” and “insane,” reflecting a sentiment shared by many stakeholders in the industry.
This predicament is not isolated to a single instance but affects numerous farmers across multiple states. For example, in states such as Vermont and Mississippi, several farmers have found themselves stripped of their hemp licenses after venturing into their state’s regulated cannabis industry. This information, as reported by POLITICO, reveals the extent and impact of the USDA’s policy. In a similar vein, a hemp grower in Missouri recounted how the USDA notified him in April 2023 of the impending loss of his hemp license should he apply to participate in Missouri’s newly legalized cannabis industry.
Interestingly, there exists a stark contrast in the enforcement of these regulations across different states. Several state-run hemp programs, which have received USDA approval, continue to issue licenses to farmers who are also cultivating cannabis under state-sanctioned licenses. This discrepancy raises questions about the consistency and fairness of the application of these regulations.
In response to inquiries about its decision-making process, the USDA, through its spokesperson Allan Rodriguez, acknowledged the complexity of the issue, given cannabis’s status as a Schedule I controlled substance under federal law. Rodriguez emphasized the unique regulatory challenges that hemp producers face, which are not encountered by producers of more traditional agricultural commodities. He reassured that the USDA remains dedicated to assisting farmers in navigating the intricacies of hemp-related regulations and connecting them with various resources, including research, risk management, and conservation tools.
Furthermore, the USDA maintains that it administers its oversight uniformly across all states and growers participating in the hemp program. However, this assertion seems to be at odds with the apparent variances observed in the enforcement of licensing regulations.
The USDA is responsible for approving state hemp programs as mandated by the 2018 farm bill. In addition to this, the agency directly supervises hemp farmers in eight states, including Vermont, Mississippi, and Missouri, which do not have state-administered hemp programs. Notably, seven out of these eight states have state-run medical or recreational cannabis programs. According to reports, all farmers who have been denied the dual licenses of hemp and cannabis by the USDA are from states that lack state-run hemp programs.
In stark contrast, farmers participating in state-run hemp programs have been able to retain their cannabis licenses. This suggests a divergence in regulatory approaches, contingent on whether state or federal authorities oversee hemp cultivation. States like Oregon and Colorado have implemented specific guidelines in their state regulations, outlining protocols for farmers licensed to grow both hemp and cannabis, particularly emphasizing the need to keep these operations distinct and separate.
In summary, the USDA’s recent decisions to revoke hemp licenses from farmers also involved in state-sanctioned cannabis cultivation highlight a complex and often contradictory legal landscape. This situation underscores the broader challenges and inconsistencies faced by the hemp and cannabis industries in navigating the intricate interplay of state and federal regulations.
USDA’s Recent Actions Raise Concerns in Hemp and Cannabis Farming
The recent actions by the United States Department of Agriculture (USDA) to revoke hemp licenses from farmers who have also engaged in state-sanctioned cannabis cultivation have sparked a significant outcry among various stakeholders in the cannabis industry. This policy decision has been perceived by many as an unjustified and detrimental attack on smaller-scale farmers, particularly those operating in rural areas who are otherwise compliant with the law.
Connor Reeves, a cannabis attorney with McLaughlin PC in Jackson, Mississippi, expressed a strong sentiment regarding this situation, characterizing it as “another attack on the little guy.” According to Reeves, the USDA’s decision seems indifferent to the substantial impact it has on small farmers and individuals in rural parts of the country, many of whom have been following the law to the letter.
Adding to this perspective, Brittany Adikes, an attorney specializing in cannabis law at McGlinchey Stafford, criticized the USDA’s stance as overreaching. Adikes argued that the USDA’s interpretation of the regulation – which they cite to justify the license revocation – is not explicit in prohibiting a farmer from holding both a state cannabis license and a federal hemp license. She contended that the verbiage of the statutory provisions and regulations could be construed to imply that a farmer is prohibited from cultivating hemp and cannabis on the same parcel of land under a single license, as opposed to a complete prohibition on obtaining licenses for both activities.
The situation in Vermont further exemplifies the complexity of this issue. Cary Giguere, the Compliance Director for the Vermont Cannabis Control Board, explained that Vermont ended its state hemp licensing program in December 2022, as it was costly and did not offer additional flexibility or safety compared to the federal program. Consequently, Vermont farmers applied for USDA licenses, only to have these licenses rescinded upon joining the state’s emerging recreational cannabis program. This enforcement of hemp rules by the USDA appears inconsistent, even within states like Vermont, where some farmers reportedly still retain both federal hemp licenses and state cannabis cultivator licenses.
The impact of these policy shifts has been widespread. Sam Bellavance, a Vermont farmer whose situation was initially reported by Vermont’s Seven Days newspaper, is just one of many farmers across the state affected by the USDA’s actions. Similar experiences have been reported by farmers in other states, including Mississippi and Missouri.
In Mississippi, for instance, farmer Eric Sorenson, also the founder of the Mississippi Industrial Hemp Association, was informed by the USDA that he would lose his federal hemp license after obtaining a license to grow medical cannabis from the state. Mississippi legalized medical cannabis in 2022, but the USDA’s correspondence with Sorenson indicated that his involvement in the state-sanctioned medical cannabis program precluded him from maintaining his hemp license.
In Missouri, the situation is analogous. Hemp farmer Chris Beerman, based in Joplin, transitioned to the federal hemp licensing program after Missouri’s state program was discontinued due to lack of funding. Beerman was informed by a USDA representative that his approval for a hemp license would be incompatible with participation in Missouri’s new state cannabis program. The cessation of Missouri’s state hemp program in early 2023 coincided with the legalization of recreational cannabis in the state.
Contrastingly, in states like Colorado, where separate but parallel state-run programs for hemp and cannabis have been in operation since 2012, the regulatory landscape is markedly different. In Colorado, hemp production is overseen by the Colorado Department of Agriculture, while cannabis is regulated by the Colorado Department of Revenue. Brian Koontz, the Hemp Program Manager at the Colorado Department of Agriculture, clarified that under their regulations, the only specific restriction is that hemp cannot contain THC concentrations exceeding three-tenths of a percent. There is no prohibition against hemp licensees also participating in the state’s cannabis industry. USDA approved Colorado’s hemp plan without imposing any restrictions on dual licensing, and this matter was not raised during USDA’s audit of Colorado’s hemp program earlier in the year.
This dichotomy in the enforcement and regulatory approach between different states highlights the complexity and inconsistency in the current legal landscape governing hemp and cannabis cultivation. The USDA’s policy decisions in this regard have not only affected individual farmers but have also brought to the fore broader questions about the harmonization of state and federal regulations in the cannabis industry.
USDA’s Policy Shift Sparks Concerns in Hemp and Cannabis Farming
The recent policy by the United States Department of Agriculture (USDA) to rescind hemp licenses from farmers engaged in both hemp and cannabis cultivation has stirred concerns and discussions among various stakeholders, yet it remains relatively under the radar in broader circles. This policy decision, which has significant implications for farmers and the hemp industry, has not been widely publicized or recognized.
Elucidating the regulatory stance, Brian Koontz, Hemp Program Manager at the Colorado Department of Agriculture, emphasized that their regulations expressly prohibit the commingling of cannabis and hemp on the same farm. This statement underscores the specificity with which some states are addressing the regulatory nuances of hemp and cannabis cultivation.
Despite the potential impact of the USDA’s actions, awareness among hemp industry officials and trade groups appears to be limited. When approached by POLITICO, representatives from these groups expressed that they were not previously aware of the revocation of USDA licenses by cannabis farmers. This lack of awareness indicates a gap in communication and understanding about the USDA’s enforcement actions within the hemp industry.
Similarly, lawmakers, including those representing states with both medical or recreational cannabis programs and USDA-run hemp programs, have shown a lack of awareness regarding this issue. Senator Eric Schmitt (R-Mo.) and Senators from states like Utah and Vermont, including Senator Mitt Romney (R-UT) and Senator Peter Welch (D-VT), conveyed to POLITICO that they were not cognizant of the problem. Senator Welch, in particular, expressed a need to investigate the matter further, acknowledging that if the situation were accurate, it would represent a significant conflict in the regulatory landscape.
The potential legal ramifications of the USDA’s policy decision have not gone unnoticed in the legal community. Brittany Adikes, a cannabis law attorney, speculated that the USDA’s actions might pave the way for legal challenges. She emphasized that this policy might conceivably run afoul of the Administrative Procedures Act, a fundamental pillar of administrative law in the United States governing the procedure by which federal agencies formulate and promulgate regulations. Adikes conveyed an inquisitiveness regarding the prospect of legal disputes arising from this scenario, especially within the states negatively impacted by the actions undertaken by the USDA.
The situation highlights a critical junction in the evolving legal landscape surrounding cannabis and hemp. The USDA’s decision to revoke hemp licenses from farmers who also cultivate cannabis, in states where it is legal, raises questions about the harmonization of state and federal laws, the role of administrative agencies in regulating emerging industries, and the potential for legal challenges in the face of regulatory conflicts. As the situation continues to develop, it will likely draw more attention from industry stakeholders, legal experts, and lawmakers, potentially leading to legal actions or legislative changes to address the emerging conflicts in this complex regulatory area.
