North Carolina Hemp Program to be Regulated by the Feds
The North Carolina General Assembly (NCGA) has officially missed an opportunity to promote hemp production in the state. Its pilot program, which was created by statute in 2015 and amended in 2016 following passage of the federal Agricultural Act of 2014 (2014 Farm Bill), will conclude at the end of this year. Starting in 2022, NC hemp producers will apply for licenses from, and be regulated by, the US Department of Agriculture (USDA) pursuant to the Agriculture Improvement Act of 2018 (2018 Farm Bill). In a recent press release, the NC Department of Agriculture and Consumer Services (NCDACS) announced the wrap-up of the state’s pilot program and indicated that it will be issuing license extension to producers who will need to renew between now and Jan. 1, 2022 to ensure there is no lapse in them having a valid license. Additionally, the NCDACS indicated that “[g]rowers wanting to continue production can go ahead and begin the application process now through USDA’s online hemp application.”
As we have previously discussed in this blog, the 2018 Farm Bill established a national hemp program, but authorized individual states and tribes to opt-out of the federal scheme and regulate hemp production within their jurisdictions by submitting a plan to the USDA for approval. NC has not proposed a plan to the USDA. Under the 2018 Farm Bill, hemp production in states that do not submit plans which are approved will be regulated by the USDA.
There is nothing particularly wrong with being regulated by the USDA. In fact, the federal guidelines are more liberal and favorable to hemp producers than the approved plans of many states. However, given that NC was an early hemp adopter and its hemp producers are some of the strongest in the country, it is disappointing to see that the NCGA failed to take this opportunity to self-regulate and create a regulatory regime that is tailor-made for the success of its committed hemp producers. This is not the first time that the NCGA has let down NC hemp producers. Readers of this blog may recall that the NCGA nearly enacted a law in 2019 that would have banned “smokable hemp”. It was only due to the diligent effort of the NC hemp community that the ban eventually failed. (As an aside, a Texas court just ruled that the smokable hemp ban in Texas violates that state’s constitution.)
Hopefully, this “sunset” of the NC hemp program will turn out to be opportunity for hemp producers in the state since they will not have to deal with local politics and the short-sightedness that the NCGA has demonstrated. However, given that the NCDACS has operated a well-run program dedicated to helping NC hemp producers succeed, it is difficult to imagine the Feds being more helpful to hemp growers in the state than the local regulators in NC. This is disappointing. According to the NCDACS, “As of July 30, there are 1,500 licensed hemp growers in the state. Crop production numbers includes 6.8 million licensed square feet of greenhouse production and 14,016 licensed acres. In addition, there are 1,295 registered processors.”
Finally, I note that the 2014 Industrial Hemp pilot programs of other states without plans that have been approved by the USDA will also sunset. As of the date of this article, only 25 of the 50 states have hemp plans that have been approved by the USDA. The status of state plans can be found by clicking here. Hemp producers in states without approved plans, including NC, will need to apply directly to the USDA for their 2022 licenses. Information on applying to the USDA can be found by clicking here.
August 24, 2021
Rod Kight is an international cannabis lawyer based in North Carolina. He represents businesses throughout the cannabis industry. Additionally, Rod speaks at hemp and cannabis conferences, drafts and presents legislation to foreign governments, is regularly quoted on hemp and cannabis matters in the media, and is the editor of the Kight on Cannabis legal blog, which discusses legal issues affecting the hemp and cannabis industry. You can contact him by clicking here.
What does this mean for processors in NC, Rod?
Good question, Zach. As of this time the USDA does not appear to issue licenses to hemp processors or handlers. For individuals and businesses who will be governed by the USDA, rather than their respective states (such as NC), and who will work with hemp but not grow it, I am not aware of any license that will be available or necessary. I have reached out directly to the USDA on this issue and will update this comment if I hear differently. -Rod
Zach- Below is the response I received from the USDA. -Rod
Good morning Rod and thank you for your inquiry.
The USDA Hemp Production team issues production licenses only. USDA issues licenses in states and on tribal reservations where hemp is legal but where resources are not available or approved hemp plans are not in place and officials have asked USDA to license their producers. You can find a list of those states and tribes here. You will find that NC has not yet been added to that list but will be added once we begin officially processing applications in order to avoid confusion.
Specifically in NC, officials there have informed us that producers seeking a processing license should continue to work with the NC Food and Drug Administration to obtain such licensing.
We hope this information is helpful.
Thank you,
The US Hemp Production Team