By Daniel E. Tranen and Neil M. Willner
There is a great deal of interest in Missouri regarding the opportunities the state offers in the commercial hemp farming business. Hemp is a burgeoning new cash crop with scores of applications from fabric to “hempcrete” to drywall to biofuel. Of course, hemp also is the source of CBD, which is sweeping the country as a health and wellness ingredient added to a huge variety of consumer products.
The 2018 Farm Bill granted authority to the United States Department of Agriculture (USDA) to issue rules regulating hemp farming, and on October 31, 2019, the USDA issued its interim final rules. Those rules provide the framework for states interested in permitting commercial hemp farming pursuant to state-issued licenses to be allotted under state plans, which plans must be approved by the USDA. Currently only three states, Ohio, Louisiana and New Jersey, have approval.
In the wake of the 2018 Farm Bill’s passage, the Missouri Department of Agriculture (MDA) issued a series of regulations that would allow farmers to begin obtaining licenses to commercially grow hemp. The application process opened on January 2, 2020, requiring a clean background check, a plot of land and a fee of $750. Registrations may be widely available in the state of Missouri, which will grant licenses during the 2020 growing season that permit a licensee to grow hemp for three years before requiring a license renewal.
Although the MDA regulations seem to follow closely the requirements in the 2018 Farm Bill, for the 2020 grow season, effectively any approved commercial hemp license would be pursuant to federal authority provided under the 2014 Farm Bill. This is because Missouri has not yet had a plan approved under the 2018 Farm Bill, and according to the USDA website, there is no indication that Missouri is even working on a plan for approval under the 2018 Farm Bill.
This is significant because the opportunity to grow commercial hemp pursuant to the 2014 Farm Bill will end on November 1, 2020, one year after the USDA issued its final rules. As a result, if Missouri fails to submit a plan that is approved by the November 1, 2020, sunset deadline, then the three-year licenses to be issued by the MDA may not be valid beyond the end of the 2020 growing season. Moreover, Missouri farmers who have not yet harvested their crop by the November 1, 2020, expiration deadline could face added uncertainty because if the USDA rejects Missouri’s plan before the 2014 Farm Bill expires, hemp farmers effectively would be growing illegal marijuana.
Several states, including New Mexico, Minnesota and Wisconsin, have brought this issue to the attention of the USDA, asking the agency to permit states to extend their pilot programs to the end of 2020.
Six states already have had their plans rejected by the USDA, apparently based on these states having created their plans before the USDA issued its final rule. These rejections tell us that the USDA is looking closely at the state plans and is not afraid to force a state to go back to the drawing board if the state plan is deficient.
Given that Missouri is not even identified in the USDA website as a state that is working on a plan, the possibility exists that farmers who have invested in growing commercial hemp in Missouri for the 2020 growing season may have to seek a federal license (available under the 2018 Farm Bill) in order to continue commercial hemp farming after the 2020 growing season. Ultimately, while the 2018 Farm Bill has alleviated a lot of national confusion in this area of the law, potentially Missouri hemp farmers still face a lot of uncertainty even though Missouri purports to be “open for business” for commercial hemp farming.
About the Authors
Daniel Tranen is a partner in the Wilson Elser Missouri and Southern Illinois offices. He is a co-chair of the firm’s Life Sciences practice team and a member of the Cannabis law practice team as well. He is licensed to practice law in Missouri, Illinois, Massachusetts and Georgia and he is a graduate of the University of Pennsylvania and University of Illinois College of Law. Tranen is a frequent author and presenter on a variety of subjects including life sciences, insurance coverage and cannabis law.