Two New Colorado Laws Expand Hemp Market, Despite Federal Prohibition
DENVER, Colo. (Aug. 8, 2018) – Today, two laws that will further mainstream the state’s industrial hemp industry went into effect. Implementation of these new policies will likely pave the way for faster development of the state’s hemp market, and further nullify federal prohibition in practice and effect.
Mainstreaming Hemp as a Commodity
A bipartisan coalition of two senators and two representatives sponsored Senate Bill 205 (SB205). The new law includes unprocessed industrial seeds in the definition of “commodity” within the “Commodity Handler Act” and includes industrial hemp itself in the definition of “farm products” within the “Farm Products Act.” In effect, this will subject any person acting as a commodity handler of hemp seed and any farm products dealer of hemp to the licensing requirements already in place for commodities and farm product dealers.
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Currently, commodities include hard seeds or fruits such as wheat, corn, oats, barley, rye, sunflower seeds, soybeans, beans, grain sorghum and other seeds. Farm products include any “unprocessed product of the soil,” livestock, milk, honey, and hay. By adding hemp to these definitions, state law will treat industrial hemp more like other agricultural products, mainstreaming the industrial hemp industry. While it will mean more regulations for handlers, it will likely serve to instill confidence in the market and removes the impression that hemp is something “different.” In effect, the new law will move the state a step closer to “normalizing” hemp and treat it the same as any other farm product like corn or tomatoes.
The House passed SB205 by a 60-0 vote with some technical amendments. The Senate approved the measure 35-0 in March. After the Senate unanimously concurred with the House amendments on May 2, Hickenlooper signed SB205 into law on May 29 and it went into effect today.
Treating Hemp Like Any Other Food Ingredient
A bipartisan coalition of three legislators sponsored House Bill 1295 (HB1295). The new law establishes that food and cosmetics are not “adulterated” or “misbranded” by virtue of containing industrial hemp. According to the Denver Post, the law formalizes an 11-month old state policy that applies existing food manufacturing guidelines to products such as hemp oil-infused coffees and hemp-derived extracts rich in the non-psychoactive compound cannabidiol.
In effect, the new law “normalizes” hemp and treats it like any other food ingredient.
The law also goes a step further, prohibiting any company with an FDA-approved pharmaceutical on the market from initiating criminal, civil, or administrative proceedings in order to prevent the nonpharmaceutical production, sale, or distribution of naturally occurring cannabinoid or cannabinoid extracts or from restricting the nonpharmaceutical production, sale, or distribution of naturally occurring cannabinoid or cannabinoid extracts. In effect, this will prevent pharmaceutical companies from interfering with companies producing non-drug products that happen to contain cannabinoid.
Both the House and the Senate passed HB1295 unanimously. With Hickenlooper’s signature, it went into effect today
The Cannabist called passage of the law “a novel move to protect the state’s emerging industrial hemp industry as the plant’s legality is debated federally.”
Andrew Aamot co-founded Strava Craft Coffee, a Denver-based company that launched a line of hemp oil-infused beans and brews. He told The Cannabist the new law would put Colorado ahead of the curve as it further develops its hemp industry.
“Nationally, we simply don’t have any regulatory structure in place. As we progress toward greater acceptance on the national level, I think Colorado companies are uniquely positioned to do things right at the very beginning.”
By operating under the regulatory purview of the Colorado Department of Public Health and Environment, Aamot said Strava should be able to increase its transparency, safety and credibility with customers.
Passage of HB1295 will help further expand Colorado’s already thriving hemp market. According to The Cannabist, 94 businesses have registered as hemp manufacturers under Colorado’s industrial hemp food manufacturing policy implemented last July,
Under federal law, the commercial sale of hemp and hemp products remains illegal. Colorado’s willingness to develop a state hemp program without regard to federal law has made it the leader in U.S. hemp production.
FEDERAL FARM BILL
In 2014, Congress cracked the door open for hemp in the U.S. with an amendment to the 2014 Farm Bill. The law allows hemp cultivation for research purposes, but prohibits “commercial” production.
The “hemp amendment” included in the 2014 farm bill —
…allows State Agriculture Departments, colleges and universities to grow hemp, defined as the non-drug oil-seed and fiber varieties of Cannabis, for academic or agricultural research purposes, but it applies only to states where industrial hemp farming is already legal under state law.
In 2016, the U.S. Department of Agriculture and Drug Enforcement Agency released a “statement of principles” to guide interpretation of the hemp section in the Farm Bill. It states, “The growth and cultivation of industrial hemp may only take place in accordance with an agricultural pilot program to study the growth, cultivation, or marketing of industrial hemp established by a State department of agriculture or State agency responsible for agriculture in a State where the production of industrial hemp is otherwise legal under State law.”
In short, the current federal law authorizes farming of hemp – by research institutions, or within state pilot programs – for research only. Farming for commercial purposes by individuals and businesses remains prohibited.
The definition of “commercial” and the extent to which sales and marketing are allowed under the rubric of “research” remains murky. This has created significant confusion.
The statement of principles also asserted that industrial hemp programs are limited to fiber and seed. It didn’t mention the CBD oil or other edible hemp products. The DEA has interpreted that to mean they remain illegal. The agency has flat-out said CBD cannot be sold under any circumstances. An Indiana TV station interviewed DEA spokesman Rusty Payne who said, “It’s not legal. It’s just not.” Another DEA spokesman told the Louisville Courier-Journal, “All hemp products that can be consumed are illegal.”
Several other states with federally-compliant hemp programs, such as Kentucky, North Dakota, Minnesota and New York, have grown significant acreage under federally-approved research programs. This takes the first step, but with federal shackles in place, these states are not legally allowed to develop any kind of commercial market. Ironically, many of these “federally compliant” programs are not actually federally compliant.
Recognizing its limited research program was hindering the development of the industry, West Virginia dumped its federally compliant hemp program during the 2017 legislative session and will now issue federally non-compliant commercial licenses to growers. West Virginia Public Broadcasting confirmed limits imposed by the old program due to its conformity with federal law were holding back the development of a viable hemp industry and everyday farmers cannot benefit.
“But because of the strict requirements under the 2014 bill, growers are not able to sell their plants and cannot transport them across state lines to be turned into those usable products. That’s limited the ability to create a real hemp industry in the state.”
Along with Colorado, other states, including Oregon, Maine, California and Vermont have simply ignored federal prohibition and legalized industrial hemp production within their state borders.
Colorado was the first state with widespread commercial hemp production. Farmers began growing hemp in southeast Colorado back in 2013 and the industry is beginning to mature. The amount of acreage used to grow industrial hemp in the state doubled in 2016 to nearly 5,000 acres, and nearly doubled again in 2017.
The Oregon legislature initially legalized industrial hemp production in 2009. While it was technically legal to grow hemp in the state, farmers didn’t take advantage of the opportunity for nearly five years. When the Oregon Department of Agriculture finally put a licensing and regulatory program in place early in 2014, farmers began growing hemp. The initial regulatory structure placed significant limits on hemp farming and effectively locked small growers out of the market. In 2016, Gov. Kate Brown signed House Bill 4060 into law. It relaxed state laws regulating hemp already on the books and made the crop more like other agricultural products. Within months, the Oregon Department of Agriculture had already promulgated new rules under the reformed law. According to Oregon’s Cannabis Connection, the rules set the stage to creates a “massive” medical hemp market. The state produced 3,469 acres of hemp in 2017.
Both Colorado and Oregon demonstrate how loosening rules at the state level encourage the market and allow hemp a legitimate commercial hemp industry to develop.
HUGE MARKET FOR HEMP
According to a 2005 Congressional Research Service report, the U.S. is the only developed nation that hasn’t developed an industrial hemp crop for economic purposes.
Experts suggest that the U.S. market for hemp is around $600 million per year. They count as many as 25,000 uses for industrial hemp, including food, cosmetics, plastics and bio-fuel. The U.S. is currently the world’s #1 importer of hemp fiber for various products, with China and Canada acting as the top two exporters in the world.
During World War II, the United States military relied heavily on hemp products, which resulted in the famous campaign and government-produced film, Hemp for Victory!