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The Farm Bill passed and hemp is legal, right? Not quite. Here’s what’s next.

By Bart Taylor January 27, 2019, 12:36 pm MST

If you're following the cannabis business, you know the 2018 Farm Bill creates an open and legal marketplace for hemp and hemp-derived products like CBD. Farmers can grow hemp, manufacturers can refine the crop into any number of new products, and cannabis businesses can act like real companies. They can operate between states, bank, borrow, insure, invest, and develop brands like any other business.

Just not yet. The Farm Bill requires each state to submit a plan to the USDA for approval signaling, among others, that its ready and capable to implement the new regulatory framework spelled out the legislation. Colorado, California, Oregon, Washington -- none have yet submitted their plan, in part because the USDA hasn't given the states much guidance.

For now, it's business as usual, according to Duane Sinning, division director for the Division of Plant Industry at the Colorado Department of Agriculture.

"Colorado continues to operate under the current plan, the ‘old rules,'" explains Sinning, even as work has begun on the USDA submittal. "We've been in discussions about testing protocols and other details in the Farm Bill."

Sinning says he is confident the state will lead, and not follow, throughout the process. "Our deliberative approach to the development of a regulatory environment has been successful and a model for other states, in part because we’ve utilized our Industrial Hemp Advisory Committee and input from our various stakeholders. And already discussions are happening between states so conflict doesn't develop," he adds.

As for a timeline, much will depend on the feds. "Without any guidance, everybody is kind of operating in the dark," Sinning says. "But I'd guess states will be submitting plans this summer and fall, including us. Depending on the statutory requirements, some legislatures won't convene until the follow year, so it may be a year from this summer before the new rules are in place."

Among the new regs that Sinning and others will be dealing with (thanks to Hemp Industry Daily):

  • THC testing procedures, including inspections done at least annually, as hemp must contain no more than 0.3 percent THC on a dry-weight basis
  • Bookkeeping procedures to keep track of land approved for hemp cultivation
  • Plans for "effective disposal" of hemp plants with too much THC

"We hope we’re not in the business of fingerprinting senior property owners," Sinning jokes, as new rules to track land and crop use take effect.

Still, the game has changed. As Sinning surmises, hemp "is now just another agricultural crop." And U.S. farmers are really good at growing things. Product development will explode, not only in CBD but also in other consumer markets that turn to hemp. We'll see the end-to-end professionalization of the hemp supply chain, from farming to manufacturing to logistics and brand development.

And service. Cannabis companies have been able to work around the lack of banking, of insurance, of capital, of the expertise that resides in companies on the sidelines. But with a clear path to a legal marketplace, more service companies will be arriving on the scene, with increasingly capable offerings. 

But until the USDA approves Colorado's plan, and other states, a company's brand and reputation may pivot on how well-informed, or well-intentioned, local authorities are. The landscape is still confusing. Hemp and marijuana are both cannabis, but only one will be federally legal in the coming months. Sinning says Colorado officials are busy providing as much information as they can, like "giving law enforcement information on the location of particular crops," to help avoid uncomfortable confrontations. Dustups that might result in the kind of bad press that so many companies have been intent on avoiding.

We’ll provide updates to help inform industry and service along the way.

Bart Taylor is publisher of CompanyWeek. Reach him at btaylor@companyweek.com.

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