The Planted Row: Hemp rules announced too late for 2019

Stan Wise
Farm Forum Editor

This year has just been one giant mess for the ag world.

Flooding, late-planted crops, extremely wet harvest conditions and a trade war have all conspired to make this year one that few growers will soon forget.

But there’s another sector of ag that is suffering from a different sort of problem. We haven’t heard about it much here in South Dakota because we’re one of just four states that haven’t legalized industrial hemp production.

According to the U.S. Department of Agriculture, industrial hemp production in the U.S. more than tripled this year after being broadly legalized in the 2018 Farm Bill.

That sounds good, right?

The problem is that a lot of that hemp (some estimates as high as $7.5 billion worth) may rot in the fields.

The reason? It seems that banks are somewhat reluctant to finance businesses that have the appearance of being related to the marijuana industry. That means there are too few hemp processors, and growers are having a difficult time securing buyers.

If only there was something that could have given the hemp industry some legitimacy before this growing season started … something like the federal hemp regulations that were finally announced in the past week.

The 2014 Farm Bill gave states permission to set up hemp pilot programs. That was the start of hemp legalization in this country. The USDA should have begun drafting hemp regulations and licensing rules then. That way, when the next Farm Bill legalized hemp, the rules would have been ready sooner, hopefully before the 2019 growing season began. States and lenders would’ve had federal guidance from the very beginning.

Also, as state legislators debated whether to legalize hemp in each state, they would have known what such a decision would entail. Based on this week’s announcement, they would know that hemp growers have access to certain safety net programs and that licenses, acreage and location reporting and THC testing would be required. Perhaps such knowledge could have made a difference in South Dakota’s efforts to pass hemp legislation.

Instead, growers in states that legalized hemp planted their crop without knowing whether their state programs would be approved by the USDA.

Meanwhile, South Dakota has failed to take the first steps to develop its hemp industry. Gov. Kristi Noem has concerns about the state’s ability to enforce anti-marijuana laws. Though legislatures in 46 other states seem to think that’s not a problem, South Dakota is going to hold off lest we have to make even a slight change to our drug enforcement procedures.

As it stands right now, it’s hard to know which option was worse — a risky, fumbling attempt to create a hemp industry or twiddling our thumbs while the rest of the states figure out the hemp business.

But it didn’t have to be merely a choice between two evils. Had the USDA been prepared to issue hemp regulations soon after the passage of the 2018 Farm Bill, legislators and the ag industry would have had a chance to develop a hemp infrastructure that could accommodate a rapid increase in production.

But that’s in the past now.

If hemp is to be a new source of revenue for farmers, the entire country must see it as a legitimate crop, backed by the USDA and supported by the states.

That means South Dakota and its governor need to stop conflating the crop with marijuana and start working to develop the hemp industry from field to market. Lenders will take their cues from the government, so we need to start sending them the right signals.