New federal hemp program expected to help growing Maine industry

The U.S. Department of Agriculture announced the creation of a federal hemp growing program Tuesday, offering some new protection for Maine’s rapidly expanding hemp industry.

The new federal regulatory framework will establish national standards for the production of hemp, which federal lawmakers legalized in the latest farm bill, and make qualified growers eligible for such key federal agriculture programs as farm loans and crop insurance.

“At USDA, we are always excited when there are new economic opportunities for our farmers, and we hope the ability to grow hemp will pave the way for new products and markets,” said U.S. Secretary of Agriculture Sonny Perdue said in a statement Tuesday.

An interim final rule that will be published in the Federal Register this week formalizes the program, spelling out federal growing, testing, disposal and licensing standards. The rule will allow farmers to grow hemp under the federal program or under state and tribal programs approved by the USDA.

Maine farmers have been able to grow hemp under a state research program since 2016.

Three years ago, the state had two approved farmers growing less than a quarter acre of hemp. As demand for wellness products containing CBD, or cannabidiol, the active ingredient in hemp, surged, however, the program has taken off. The state licensed 167 farmers that produced 2,700 acres of hemp in 2019.

National industry analysts estimate the U.S. CBD market hit $591 million in 2018, and, with new federal legislation making it distinct from marijuana, its cannabis cousin, the hemp-fueled CBD market could hit $22 billion by 2022, according to the Brightfield Group.

Maine could adopt the federal program standards or submit its own program to the USDA for review. The rule promises federal action on state and tribal program submissions within 60 days in hopes of making it possible for farmers to grow under federally approved state programs in 2020.

It is unclear whether Maine’s state hemp program will meet new federal standards. State Agriculture Commissioner Amanda Beal said Monday that Maine was pleased the USDA had finally released its highly anticipated hemp guidance for states.

“States like Maine and farmers across the country have been in limbo as we awaited this important guidance outlining how states would implement commercial hemp production,” Beal said in a statement. “We will continue to work with stakeholders across Maine, including the congressional delegation and the USDA, in making sure that this guidance makes sense for Maine farmers and business owners.”

Over the last year, Maine and other states with hemp programs have struggled to remain compliant with developing federal rules on hemp and CBD in the wake of its declassification under the 2018 Farm Bill.

Maine hemp farmers have faced uncertainty when it comes to the allowable uses of CBD, which is hemp’s most lucrative end market. After the 2018 Farm Bill was passed, interest in hemp farming grew, but then the U.S. Food and Drug Administration issued a statement saying CBD couldn’t be added to food.

That led Maine health and agriculture inspectors to urge state CBD retailers to pull the items off shelves. State lawmakers passed emergency legislation to allow CBD derived from locally grown hemp back into foods sold in Maine, then had to tweak the fix when retailers said they needed out-of-state CBD, too.

The federal rule is a first step that allows agencies that administer federal farm programs, like the Farm Service Agency, Natural Resources Conservation Service, and Risk Management Agency, to advise hemp farmers on eligibility for additional farm programs, like crop insurance and federally backed farm loans.

Some of Maine’s hemp farmers have struggled to get access to the banking and insurance needed to grow their newest crop. This month, Ben and Taryn Marcus were dropped by their bank and insurer after they harvested a 7,000-plant hemp crop on their 180-acre Whitefield farm.

The couple opened their fields to the public, much like they do with their strawberries, for Maine’s first pick-your-own hemp operation. But their bank and insurance company closed their accounts, saying the state-licensed hemp operation was too risky without federal regulations behind it.

The couple is now banking with cPort Credit Union, a financial institution that openly accepts cannabis-related deposits, but they can’t find a company willing to insure their farm for a reasonable price while it’s growing hemp. One broker they talked to compared hemp to tobacco, saying it carried too many unknown risks.

“Though we think it’s a step in the right direction, we think banks and insurers and thus farmers and the public are ultimately at the mercy of the underwriters,” Taryn Marcus said Monday. “They said, ‘The risks with hemp is not yet understood and that we should have a better idea in a couple years.’ It’s absurd.”

High insurance premiums will force the Marcuses to sell their hemp wholesale rather than directly to consumers.

The couple’s plight attracted the attention of U.S. Reps. Chellie Pingree and Jared Golden of Maine.

“For months, I’ve urged the USDA to establish rules clarifying legal pathways for hemp growers,” Pingree said. “When the 2018 Farm Bill legalized hemp, the industry should have flourished, but their success was hindered by a lack of federal regulations.”

Pingree said she will work with USDA to make sure the final rule works for Maine hemp growers.

Whole-farm revenue protection will be available for a 2020 hemp crop grown for fiber, flower or seeds. The program allows coverage of all revenue for commodities produced on an eligible hemp farm up to a total insured revenue of $8.5 million.

Eligible hemp growers will be able to buy coverage if they have a contract for the purchase of the insured hemp and meet all state, tribal and federal regulations. But testing “hot,” or having too much THC in the cannabis to be considered hemp, will not constitute an insurable loss.

Under the new rules, the crop will be sampled two weeks before harvest and tested at a federally approved lab to make sure the THC levels are below 0.3 percent, with some margin for error allowed in cultivation, which would qualify the crop as hemp rather than marijuana. If it tests hot, it must be destroyed.

That test would also factor in THCA, a cannabis compound often converted to THC during processing.

This strict testing standard worries the Marcuses. Under the state program, the hemp seeds they bought from Oregon tested well below the 0.3 percent THC limit used to define hemp, but Maine doesn’t factor THCA levels into its THC measurements. Their crop would have failed the new federal test.

The couple will have to start over with new strains, unable to use the ones they spent the year perfecting.