LANSING, Mich. (Oct. 10, 2018) – Three bills passed by the Michigan House last week would expand the cultivation and sale of industrial hemp, and could potentially set the stage to nullify federal hemp prohibition in practice within the borders of the state.

Rep. Steve Johnson (R-72) introduced House Bill 6331 (HB6331) on Sept. 6. The legislation would clarify the definition of industrial hemp. On Oct. 4, it passed the house 106-0.

Two bills sponsored by Rep. Dan Lauwers (R-81) would create a licensing program for industrial hemp growers and hemp processor-handlers, and open the door to sell hemp products to patients in Michigan’s medical marijuana program.

House Bill 6330 (HB6330) would establish separate licensing frameworks for growers and processor-handlers. The program is written to remain federally compliant, but it does crack the door open for the commercial sale of industrial hemp. Under the proposed law, “a person shall not process, handle, broker, or market industrial hemp in this state unless the person is licensed as a processor-handler under this act.” [Emphasis added]

The statute defines “broker” as “engage or participate in the marketing of industrial hemp by acting as an intermediary or negotiator between prospective buyers and sellers.” Under the proposed law, “market” means “to promote or sell industrial hemp or an industrial hemp commodity or product. Market includes, but is not limited to, efforts to advertise and gather information about the needs or preferences of potential consumers or suppliers.”

House Bill 6380 (HB6380) would establish that industrial hemp is not included in the definition of marijuana. It would also authorize the Michigan Department of Agriculture and Rural Development to “establish standards, procedures, and requirements for the sale of industrial hemp from a provisioning center to a registered qualified patient.”

Last Thursday, HB6330 passed the House by a 105-1 vote. HB6380 also passed 105-1.

Despite the fact that the new law appears written to keep the Michigan hemp program federally compliant, it still opens to door open for the state to nullify federal prohibition of the plant in effect. In the first place, it’s nearly impossible to develop a hemp program within the confines of federal law if it allows for the sale or marketing of the plant or hemp products. Secondly, states that legalize hemp generally end up expanding the program down the road.

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.

The provisions in HB6330 and HB6380 that would allow the sale of hemp and hemp products mean the program would likely not conform to federal law, no matter what the intention. This would set the foundation to nullify federal hemp prohibition in effect and practice.

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.”

OTHER STATES

Other states, including Colorado, Oregon, Maine 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!”

WHAT’S NEXT

All three bills will now move to the Michigan Senate. At the time of this report, they had not received Senate committee assignments.