By Michael Maharrey

Yesterday, Oregon Gov. Kate Brown signed a bill into law that will pave the way for faster development of Oregon’s hemp market, and further nullify federal prohibition in effect.

Sen. Ted Ferrioli (R-John Day) introduced Senate Bill 1015 (SB1015) in March. The new law will give the Oregon Liquor Control Commission authority over the processing of industrial hemp. Under this regulatory scheme, the state’s hemp business will be treated equally to the recreational cannabis industry.

According to Corvallis Advocate, this could open up new possibilities for the hemp industry subject to certain limitations.

Currently only registered hemp handlers can grow, process, and sell industrial hemp products in Oregon. According to Seattle’s CannaLaw group, a legal firm providing support to several pot businesses in the Northwest, SB 1015 would create industrial hemp licensing for individuals already working in the legal weed business so that regular cannabis processors, handlers, and retailers could start to process and sell goods made out of hemp. The biggest advantage of the new law would be that CBD-exclusive products like extracts could be sold in recreational dispensaries, thus lending even more of an edge to Oregon’s booming cannabis economy.

A recreational marijuana producer would have to register with the OLCC before selling hemp products. The law will also expand some plant testing and record-keeping requirements.

Despite the additional requirements, the new law should serve to expand the hemp industry in Oregon.

SB1015 passed the House by a 45-0 vote. It initially passed the Senate 26-3 on June 12. Brown signed it yesterday.

The Oregon legislature initially legalized industrial hemp production in 2009. When the Oregon Department of Agriculture finally put its licensing and regulatory program in place early in 2014, some farmers began growing hemp, despite high barriers to entry. Legislation passed in 2016 relaxed licensing requirements to encourage further development of a hemp market within the state. The new law already shows signs of delivering on promises to further open up hemp production and processing in the state.

The federal government still prohibits the cultivation of industrial hemp in most cases, and it prohibits the commercial cultivation of hemp in all cases. Despite federal prohibition, Oregon’s current law sets the foundation for people to nullify the ban by encouraging hemp production in the state. By relaxing regulations and facilitating further development of the hemp industry with this new law, Oregon will ultimately expand this “illegal” market.

The evolution of the hemp program in Oregon also demonstrates a practical reality. Tenth Amendment Center executive director Michael Boldin pointed out when states pass bills that remove a layer of law, markets will inevitably begin to develop.

“As those markets take root, legislators start feeling the pressure to relax laws further,” he said. “Some critics complain that state licensing programs ‘restrict freedom.’ Still, state-restricted hemp farming is better than no hemp farming at all. That’s at least a little more freedom. And as we’re seeing in Oregon, it ultimately opens the door to even freer markets down the road. A little freedom begets more freedom.”

FEDERAL FARM BILL

Early in 2014, President Barack Obama signed a new farm bill into law, which included a provision allowing a handful of states to begin limited research programs growing hemp. The “hemp amendment”

…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 short, current federal law authorizes the farming of hemp – by research institutions, or within state pilot programs – for research only. Farming for commercial purposes by individuals and businesses remains prohibited. Oregon law ignores federal prohibition and authorizes commercial farming and production anyway.

OTHER STATES

By rejecting any need for federal approval, states like Oregon, and others including Colorado, Maine, Massachusetts, California and Vermont, set the stage to nullify the federal hemp ban in practice by simply ignoring federal prohibition and legalizing industrial hemp production within their state borders.

While prospective hemp growers still have to take federal law into consideration, by eliminating the state requirement for federal permission, these states clear away a major obstacle to widespread commercial hemp farming within the borders of the state. As more people engage in hemp production and the market grows within these states, more people will become emboldened creating an exponential wave, ultimately nullifying the federal ban in effect.

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

SB1050 goes into effect on October 9, 2017.