California Farmers and State Officials Seek Ways to Bypass Federal Hemp Regulation

In October 2019, the U.S. Department of Agriculture published its interim final rule on hemp in a bid to give the hemp sector some semblance of order. The industry exploded after the 2018 Farm Bill legalized industrial hemp, mostly pushed by the demand for hemp-derived CBD oil. However, due to a very loose regulatory structure, the industry was fraught with issues that made it difficult for hemp growers to operate.

While the arrival of the interim final rule on hemp was applauded, it soon became apparent that some of the proposed regulations would be counterproductive to the budding sector. Growers in California, notably, have registered their concern about a portion of the rules.

For the past six years, the state of California has successfully run its own hemp program, and a large number of growers believe that the new rules will throw off the routine that they’ve grown accustomed to, making administering, harvesting and testing much more difficult.

“We’ve been very vocal that California has a lot more knowledge about this than someone sitting in Washington, D.C. If we follow the regulations as written by the U.S. Department of Agriculture, there won’t be a hemp crop,” says State Senator Don Coram.

The Farm Bill defined hemp as cannabis with less than 0.3% THC, the chemical that creates marijuana’s infamous high and the law instructed states and tribes interested in growing hemp to create their own programs and submit them to the USDA for approval. At the moment, the California Department of Agriculture is finalizing the state’s plan after gathering input from nearly 200 stakeholders.

“Basically, we want to keep a lot of things the way they are now, and we want to ensure California leads the hemp industry in the country,” says Brian Koontz, the state agriculture department’s industrial hemp program manager. The plan is scheduled to be completed this spring.

The state agriculture department submitted comments to the USDA regarding the federal hemp rules, stating that “key provisions of the interim rule will raise barriers to entry for small farmers that could prevent this critically important constituency from entering the market.”

Some of the state’s recommendations include changing what happens to ‘hot ‘hemp,’ that has exceeded the federally mandated THC limit by allowing ‘remediation’ of the crops instead of destroying them. The state would also like to give growers 30 days to harvest, instead of the 15 days provided by the draft final rule, and to allow state or tribe certified labs to test hemp instead of using only DEA-certified labs.

Analysts believe that sector players like Champignon Brands Inc. and MCTC Holdings Inc. (OTC: MCTC) are watching to see how the federal authorities will respond to the recommendations made by key state players, such as California.

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