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Hemp Set to Be Next Big Cash Crop Following USDA Ruling

The U.S. Department of Agriculture (USDA) released its long-awaited ruling mandated by the 2018 Farm Bill on how to produce hemp, considered a potentially important new raw material for natural fibers and CBD products.

The ruling includes provisions for information on the land where hemp is produced, testing the levels of THC, disposing of plants not meeting necessary requirements, licensing requirements and ensuring compliance.

U.S. Secretary of Agriculture Sonny Perdue said the establishment of the U.S. Domestic Hemp Production Program creates a consistent regulatory framework around hemp production throughout the U.S.

“At USDA, we are always excited when there are new economic opportunities for our farmers, and we hope the ability to grow hemp will pave the way for new products and markets,” Perdue said. “We have had teams operating with all hands-on-deck to develop a regulatory framework that meets Congressional intent, while seeking to provide a fair, consistent and science-based process for states, tribes and individual producers who want to participate in this program.”

USDA noted that an interim final rule formalizing the program will be published in the Federal Register this week that will allow hemp to be grown under federally approved plans and make hemp producers eligible for a number of agricultural programs.

Once state and tribal plans are in place, hemp producers will be eligible for several USDA programs, including insurance coverage through Whole-Farm Revenue Protection.

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According to data from Grand View Research, the industrial hemp market is expected to reach $10.6 billion by 2025. Italian experimental brand Opera Campi recently launched two garments—a jacket dubbed “H-Jacket” and a pant called “H-Pant”—made of a new, innovative fabric called “H-EMP.”

Developed over 10 years of research, “H-EMP” is a patented Italian “biotech” fabric composed of 92 percent natural premium hemp and an 8 percent blend of Lycra spandex and bioplastic material.

The 2019 South Carolina Industrial Hemp Pilot Program doubled in size for a second year to see if it could be the state’s new cash crop, as programs get going in states across the country. The South Carolina project has 40 farmers selected for permits to grow up to 40 acres of hemp next year.

Bruce Perlowin, CEO of Hemp Inc., a large industrial hemp processing center, said growers, especially small farmers, will benefit from the expansion of crop insurance, standards and infrastructure that can be built out based on the sheer certainty that comes with uniform regulations.

Dr. Stuart Titus, CEO of Medical Marijuana Inc., the first publicly traded cannabis company in the U.S., said, “These new regulations…will soon become the fire that will ignite hemp to again become the crucial cash crop it once was when our country was founded.”

In its establishing document for the U.S. Domestic Hemp Production Program, USDA said hemp is a commodity that can be used for numerous industrial and horticultural purposes, including fabric, paper, construction materials, food products, cosmetics and production of cannabinoids, such as cannabidiol or CBD.

The agency noted that while hemp was produced previously in the U.S. for hundreds of years, its usage diminished in favor of alternatives. For example, hemp fiber, which had been used to make rope and clothing, was replaced by less expensive jute and abaca imported from Asia. The cotton gin eased the harvesting of cotton, which replaced hemp in the manufacture of textiles.

But USDA said, “Hemp production in the U.S. has seen a resurgence in the last five years. However, it remains unclear whether consumer demand will meet the supply. High prices for hemp, driven primarily by demand for use in producing CBD, relative to other crops, have driven increases in planting.  Producer interest in hemp production is largely driven by the potential for high returns from sales of hemp flowers to be processed into CBD oil.”

USDA said the 2018 Farm Bill allows for the interstate transportation and shipment of hemp, but does not affect the exportation of hemp. The agency said, “Should there be sufficient interest in exporting hemp in the future, USDA will work with industry and other federal agencies to help facilitate this process.”

To produce hemp under the USDA plan, producers must apply for and be issued a license from USDA. Once producers have been issued a USDA license, they must report their hemp crop acreage, including the specific location where hemp is produced.

All hemp production must be sampled and tested for THC concentration levels. If a licensed producer is notified that they have produced cannabis exceeding the acceptable hemp THC level, the cannabis must be disposed of, as such product is marijuana and not hemp.