USDA to publish rule allowing widespread hemp production this week, which could help the industry's growing pains - Entrepreneur Generations

The U.S. Department of Agriculture says they plan to publish a final rule on Thursday allowing farmers nationwide to legally begin widespread hemp production, effective immediately. The rule "establishes requirements for licensing, maintaining records on the land where hemp will be grown, testing the levels of THC — the active ingredient in marijuana that causes a high — and disposing plants that don’t meet the requirements," David Pitt reports for The Associated Press.

The rule is none too soon. Though hemp cultivation was legalized nationwide in the 2018 Farm Bill, the industry has been experiencing growing pains as the crop's booming popularity has outpaced laws to govern its growth and distribution. Farmers are also complaining about difficulties with banking and a lack of financial protections when distributors and processors don't live up to their promises.
An article from the Lexington Herald-Leader gives examples from Kentucky, though other states are seeing the same issues.

For instance, a group of Kentucky farmers filed suit against processor GenCanna on Oct.11, complaining that the hemp company was exploiting their lack of legal and financial protection, Janet Patton reports. The farmers and GenCanna had agreed to buy a building from the Burley Tobacco Growers Cooperative for $1.2 million and turn it into a hemp drying facility, but the farmers complain that the company never provided a promised hemp dryer. They "also allege that GenCanna didn’t provide them with hemp to plant until it was too late in the growing season to make other arrangements, forcing them to accept 'horrific' contracts and plants that have produce a lower yield crop," Patton reports. Some small-time Ohio Valley hemp farmers have formed a cooperative, partly to gain a stronger position in bargaining with processors.

Seed quality is another problem. In another example, Lexington hemp company Elemental Processing sued Oregon-based HP farms for $44 million because they said HP farms sold them the wrong kind of hemp seed. Farmers need the CBD-rich "feminized" seeds, but it's impossible to tell the sex of a hemp seed until it grows. "According to the lawsuit, farmers planted 1,100 acres that had to be plowed under after the plants turned out to be male, costing the company millions," Patton reports.

Hemp processors and distributors are facing problems too, especially in the start-up phase, since banks are reluctant to lend to them, Patton reports. Until very recently, even major legal cannabis operations in states like California were obliged to operate as cash-only businesses because banks refused to deal with them.

Things should be a little more stable in the hemp industry soon, since the the 2018 Farm Bill stipulates that hemp will be eligible for crop insurance starting next year, Patton reports.




from The Rural Blog https://ift.tt/2po7X8Y USDA to publish rule allowing widespread hemp production this week, which could help the industry's growing pains - Entrepreneur Generations

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