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AUTHOR: William F. McDevitt, Esq.
PUBLISHER:  CANNABIS LAW REPORT

 

The 2018 U.S. Farm Bill has opened the gates to industrial hemp farming. Hemp, a crop that has been banned in the United States since 1937, now may be legally grown. While the most popular product of hemp oils containing cannabidiol (CBD) and other naturally occurring non-psychoactive cannabinoids are still subject to conflicting federal and state regulations, the plant itself may be grown across the United States.

 

On January 22, 2019, Pennsylvania Agriculture Secretary Russell Redding announced that Pennsylvania would reopen the application process for obtaining licenses to grow commercial hemp. Pennsylvania has submitted a plan to the United States Department of Agriculture (USDA) to allow for full production of industrial hemp. As of this date, only Kentucky and Pennsylvania have submitted such plans to the USDA. Unfortunately, none of these plans could be reviewed and approved by the USDA during the 2018−2019 government shutdown.

 

Pennsylvania’s embrace of hemp is not new. Following the 2014 U.S. Farm Bill, which allowed states to create pilot programs for hemp cultivation, Pennsylvania passed the 2016 Hemp Research Act. Initially, permit holders could cultivate up to five acres, which was later expanded to 100 acres. The Commonwealth had issued a total of 84 permits for the 2019 season, which is expected to increase as previously denied applicants are now free to reapply. The Pennsylvania Department of Agriculture hopes to issue an unlimited number of commercial licenses, which will be overseen by the Controlled Plant and Noxious Weed Committee.

 

Industry Reawakening

Hemp was a cash crop in Pennsylvania for more than 200 years, but its association with another member of the Cannabaceae family, marijuana, a plant that contains the psychoactive chemical tetrahydrocannabinol (THC), led to a complete ban in the United States. Under current laws, industrial hemp must contain less than 0.3 percent THC. In addition to the production of CBD, hemp seeds can be a source of protein and hemp fibers have potential uses in packaging, sneakers, furniture, automobile upholstery and a host of other products.

 

While the allowance of commercial hemp is a potential boon to the industry as a whole, it represents a potential loss to some early adopters. The 84 licensees who sought to pull ahead of the commercial cultivation pack now face increased competition. Each successful licensee spent time and money to win a slot awarded through a competitive process. While current licensees are still ahead of newcomers, they are no longer as far ahead as they were last month.

 

It is presently unclear whether a wider commercial hemp licensing program still will require participation from academic institutions. Under the 2014 Farm Bill, pilot programs were required to operate in conjunction with a college or university. The expansion of Pennsylvania’s program in 2017 allowed smaller hemp farmers to combine their output under the aegis of a participating university. Following the 2018 Farm Bill, the USDA is still required to issue a report analyzing the information collected form the state pilot programs, but the 2018 Farm Bill ends the pilot programs will expire within one year of the USDA’s approval of individual state (and tribal) plans for commercial hemp production.

 

University programs foster the sharing of expertise, research data and specialized machinery such as decorticators, which are required to separate hemp fibers from the plant pulp. Decorticators are not yet produced on a large scale in the United States, where the crop has been outlawed for 80 years, and can represent a significant expense for small farmers. While it is expected that schools such as Thomas Jefferson University and Lehigh University will continue to pursue industrial supply-chain research in Pennsylvania, the abandonment of the pilot program model threatens to diminish their role in the hemp industry.

 

The Hemp Family

Opening commercial hemp production in Pennsylvania less than three years after the establishment of pilot programs also should raise concerns about the crop. Hemp has another cousin, humulus lupulus or common hops, which was a significant crop in New York and Vermont and, to a lesser degree, Pennsylvania, from the 1600s until the early twentieth century. Hops production in the northeastern United States was decimated by competition from other states, prohibition and, most notably, hop downy mildew.

 

Downy mildew decimated the hops industry, which only now is recovering thanks to advances in anti-fungal agents and the cultivation of mold-resistant plants. While hemp is generally considered to have greater mold and fungal resistance than hops, commercial cultivators that fail to strictly monitor and maintain controls over their crops potentially can spread infection. In the absence of sufficient investment in monitoring, assessment and, when necessary, containment, a single grower could conceivably contaminate multiple producers. Thus, all hemp farmers have an interest in assuring that all licensed cultivators are significantly capitalized, knowledgeable and prepared to responsibly participate in the industry.

 

Large-scale commercial hemp production is coming to Pennsylvania sooner than expected, which has the potential to bring not only increased investment but also risks associated with the cultivation of a crop that has been denied to nearly four generations of farmers. Hopefully, licensees will avail themselves of the resources of Pennsylvania’s agricultural programs and ensure the continued viability of Pennsylvania hemp.

 

About the Author

William F. McDevitt is a partner in the Philadelphia office of national law firm Wilson Elser, where he is a member of the firm’s Cannabis Law practice. He can be reached at william.mcdevitt@wilsonelser.com.