Authored By:  William F. McDevitt, Esq.

This year, the Trump Administration has imposed tariffs on industrial machinery, consumer goods and raw materials originating from China, Europe and even Canada. When referencing China, the administration cites the need to protect intellectual property and American technological innovations. Unfortunately these tariffs also may hamper American companies that rely on (and seek to improve) foreign technology.

The 2018 Farm Bill currently under consideration in the U.S. Senate seeks to expand the cultivation of industrial hemp in the United States. Several state governments, including Pennsylvania, have taken advantage of provisions in the 2014 Farm Bill that allowed the establishment of pilot programs to explore regional hemp viability. Under Pennsylvania’s 2016 Hemp Research Act, growers can obtain permits to grow hemp, a variety of cannabis that under the law must contain less than 0.3 percent of the psychoactive chemical tetrahydrocannabinol (THC). Private growers can grow a limited amount of hemp – the 2018 limit is 100 acres each. Growers that contract with universities can grow larger amounts and the universities can aggregate their yield.

Unfortunately, America has fallen behind other countries in the development of hemp-harvesting technology. Hemp is valued for being more durable than other natural fibers, such as cotton, which also makes it difficult to harvest. Specialized machinery is required to separate the outer “bast” (fibers) from the inner “hurd” (pulp). Transforming hemp fibers and pulp into usable raw materials also requires processes that are specific to hemp. It has been more than 70 years since large-scale hemp processing has been done in the United States.

Almost all of the raw and processed hemp sold in America today has been harvested and processed in other countries. Hemp harvesting and processing technology in Canada, China, Australia, England, Israel, Holland, New Zealand and elsewhere is years, if not decades, ahead of that presently available in the United States. Pennsylvania universities, most notably Thomas Jefferson University and Lehigh University working in conjunction with the nonprofit Hemp Industry Council, are seeking to develop harvesting and processing processes in the Commonwealth, but large-scale projects will take years to develop.

Until America catches up with other hemp-producing nations, the burgeoning industrial hemp sector will rely on foreign technology and expertise. Current tariffs will likely increase the costs of establishing hemp production in the United States and also may affect the technologies that are ultimately employed in the industry; conceivably, tariffs could make a hemp decorticator from New Zealand cheaper than one from China or Holland.

Hemp represents a potential new “cash crop” for American farmers if it can be harvested and produced for a domestic market. The current administration’s efforts to protect American technology overseas may have the unintended consequence of making the agricultural and industrial development of American hemp more expensive. Hopefully, we can resolve these issues with our trading partners quickly so that our efforts to protect existing intellectual property do not impede our efforts to create a new agricultural commodity and innovative domestic industry.

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.