Insights

Articles

USDA Review and Approval of State and Tribal Government Hemp Plans Gaining Momentum

Authored by

On December 27, 2019, the U.S. Department of Agriculture (USDA) approved the first plans for the domestic production of hemp under the U.S. Domestic Hemp Production Program submitted by the states of Louisiana, New Jersey and Ohio and the Flandreau Santee Sioux, Santa Rosa Cahuilla and La Jolla Band of Luiseno Indian tribes. Since then, three more state plan submissions – Delaware, Nebraska and Texas – have been approved, and four more tribal nation plans have received the thumbs up.

Collectively, there are an additional 11 state plans currently under review by the feds, four pending resubmission and seven states still actively drafting their plans for submission soon, which include California, Florida, Hawaii, Illinois, South Carolina, U.S. Virgin Islands and Utah. Several other states have elected to continue operating under their 2014 pilot program plans which provides for licensing of growers registered under the states’ existing hemp research programs. Those states include Arkansas, Colorado, Kentucky, Maryland, Minnesota, Missouri, New Mexico and Vermont.

On the tribal front, 18 Indian nations have plans under review or are currently in active drafting mode of their plans.

So, what does all this planning activity mean for growers, processors and the domestic hemp industry, at large? From our point of view, it is demonstrating that legislative momentum is building and gaining notable strength as the new 2020 hemp planting season fast approaches; and shows notable legislative support and enthusiasm for reestablishing industrial hemp as a robust U.S. commercial crop staple and ultimate boon for our nation’s economy.

However, while establishing the nation’s overall regulatory framework is essential to the success of the industry – and AgEagle plans to work in close concert with federal, state and tribal administrators, alike, to achieve this aim; there is much more work that must be done and realities that must be acknowledged by industry stakeholders before U.S. hemp cultivation can realize its full and most promising growth potential.

In a 2019 New York study by Cornell University, researchers estimated that that total costs of industrial hemp production in that state averaged $546 per acre when harvesting for fiber only, $486 for seed (grain) only and $491 for both fiber and seed. These costs include variable expenses such as labor and seed and fixed costs like equipment, tractors and family management. Estimated returns above total costs for 2019 averaged $248 per acre for acre for fiber, $624 for seed (grain) and $867 for both fiber and seed. It is important to note that the report excluded estimates for harvesting biomass for CBD oil, which subject growers to higher labor costs and potentially higher returns above costs, depending on the prevailing market price for CBD-rich biomass, which has seen its wholesale price negatively impacted over the past six months due to a lack of infrastructure and transparency in the emerging hemp-derived CBD industry.

Last year when hemp CBD was touted by industry research group Brightfield Group (among other bullish market prognosticators) as capable of generating over $40,000 per acre, as opposed to an average of less than $1,000 for corn, the frenzy to plant hemp for CBD became priority one for many growers – big and small. However, few continue to take the time to understand the steep learning curve and the need for a high risk tolerance associated with the multiple challenges in growing the plant for use in CBD products. Consider the following:

  • There continues to be great difficulty in acquiring reliable, certified feminized seeds and clones — unpollinated female plants yield the highest levels of CBD. Moreover, though extensive testing has proven that planting female clones ensures all female hemp plants, clones come at a high cost and are also not widely available. With the shortage of certified feminized seeds and clones, many farmers have purchased alleged feminized seeds without guarantees that they will be male-free or high in CBD content, resulting in disappointing and costly outcomes.

  • Pollen drift and cross-pollination of male plants (grown for fiber and grain) and female plants (grown for CBD) can occur if they are planted too close together, leading to lower CBD yields and/or unacceptably high THC levels that would require the crop to be destroyed.

  • There has yet to be material innovation in CBD hemp harvesting equipment by farm equipment manufacturers, causing many growers to retrofit their existing machinery to harvest hemp for floral material, where the CBD content is the highest

  • There is no legitimized market or platform for the organized buying and selling of CBD hemp to assure growers full price transparency, much less proven credibility, reliability and accountability of buyers.

So, while the positive progress being seen at the legislative level of the industrial hemp revolution is cause for excitement, much more forward-thinking planning, innovation and execution must be brought to the fore on multiple fronts if the United States is to ascend to material prominence as the world’s leading industrial and CBD hemp producer. At AgEagle, we are very proud to be playing such an important, trusted role in helping to define standards of excellence for the U.S. hemp cultivation industry through adoption of HempOverview; and look forward to working with many more like-minded stakeholders and technology innovators who share our commitment to bring enduring economic prosperity to U.S. hemp farmers, processors, states and tribal nations.