California Hemp Industry in the Making

California Hemp Growth Registrations Skyrocketed in 2019

By Robert W. Selna, Califonia Ag Today Contributor

California hemp growth registrations skyrocketed in 2019 due to federal decriminalization and a nationwide demand for hemp-derived products. A full-fledged statewide hemp industry has not quite arrived however, due to new regulations and limitations placed on hemp-based CBD products.

Hemp is defined as cannabis with extremely low concentrations of THC (not more than 0.3 percent on a dry weight basis). The Food and Drug Administration (FDA) prohibits CBD in food, beverages and cosmetics, regardless of whether the CBD is derived from cannabis that includes THC (the psychoactive constituent of cannabis) or from hemp.

California Hemp Field

On Oct. 29, the U.S. Department of Agriculture (USDA) released its long-awaited interim rule for domestic hemp production, which is a key step in implementing the 2018 Farm Bill and allows the USDA to approve hemp production plans developed by individual states. California is in the process of creating such a plan, and once it is approved, the state’s hemp industry is expected to expand.

Federal and State Laws

During the past year, California’s fledgling hemp businesses have waited patiently for the federal interim rule and closely monitored two bills that state legislators introduced to take advantage of a vast new hemp business opportunity. As the legislative session came to a close, results on the bills were mixed.

In mid-October, Governor Gavin Newsom approved SB 153, which modified California hemp regulations so that they would align with the anticipated interim rule. In contrast, state lawmakers failed to decide on AB 228, which would have legalized the statewide manufacture and sale of food, beverages and cosmetics that include hemp-derived CBD. The bill died in the Senate Appropriations Committee without a vote.

Following the lead of a handful of other states, including Colorado and Oregon, California Assemblymember Cecilia Aguiar-Curry (D-Winters) tried to address the federal CBD disconnect through AB 228. AB 228 contradicted the FDA, which deems products with CBD as “adulterated,” and prohibits them from being introduced into interstate commerce.

The FDA’s position is based on its decision to approve CBD as an active ingredient in the pharmaceutical drug Epidiolex, which treats a rare form of epilepsy. In turn, the FDA deems CBD to be like all other active drug ingredients, which may not be added to food and dietary supplements. Aguiar-Curry vowed to bring back AB 228 in early 2020.

Thus far, the California Department of Public Health (CDPH) has followed the FDA’s restrictions on CBD. Meanwhile, one can find hemp-derived CBD wellness products in small health food stores, as well as large chain supermarkets, which has caused confusion among consumers statewide.

The FDA and CDPH prohibition is seen by many as inconsistent with the spirit of the 2018 Farm Bill, which generally approved the production and sale of hemp, as well as the interstate commercial transfers of hemp and hemp products, including hemp-derived CBD. The Farm Bill decriminalized hemp by removing it from the Controlled Substances Act, but the bill did not remove marijuana. The federal government has long described marijuana as cannabis that includes more than trace amounts of THC. California, however, regulates a commercial cannabis industry separate from hemp.

Representatives in Congress are starting to awaken to issues surrounding the FDA’s CBD prohibition. Senate Majority Leader Mitch McConnell has taken baby steps to resolve the problem. In mid-September, McConnell introduced a bill that could result in the FDA adopting a more lenient framework for hemp-derived CBD products. Specifically, the legislation directs the FDA to issue “an enforcement discretion policy” that would give the agency latitude and possibly lead to recognition that CBD products are safe.

Industry Growth

Legislative hiccups and regulatory confusion aside, the California hemp industry is gaining momentum. Q3 statistics from the California Department of Food and Agriculture show that the number of registered hemp growers in California increased from 74 in June 2019 to 292 as of August 26. In addition, there are now at least 629 registered hemp cultivation sites and 17,571 acres associated with growers and seed breeders.

Under the 2018 Farm Bill, counties may only allow limited cultivation pilot programs until the USDA confirms that their state’s hemp plan conforms with federal rules. However, until the USDA’s interim rule issuance on Oct. 29, there was a chicken-and-egg problem. California and other states have struggled to draft federally compliant hemp plans not knowing exactly what to expect in the interim rule. As a result, at least half of California countries have temporary bans or restrictions on hemp cultivation.

The federal interim rule clarifies states’ hemp regulation responsibilities, including practices for record keeping, methods for testing hemp to ensure that it is below the legal THC limit, and plans for the proper disposal of non-compliant hemp. In addition, the interim rule makes it clear that states and Native American tribes may not prohibit the interstate transport of hemp that has been legally grown under federal and state laws.

California is said to now be working on its hemp conformance plan. SB 153 aids that effort by adding testing, enforcement, and other administrative provisions and extending the state’s deadline for completing a federal hemp conformance plan from Jan. 31, 2020 to May 1, 2020.

Despite an evolving legal landscape, the California hemp industry is gearing up for a big 2020. The publication of the interim rule and support for legalizing hemp-derived CBD products should propel the California hemp industry closer to a wide-open market.

Rob Selna an attorney for Wendel Rosen, with offices in Oakland an Modesto. He  is  an active member of the firm’s Land Use, Real Estate, and Cannabis practices, and represents clients in a wide range of transactional and regulatory matters. He chairs the firm’s Cannabis practice group and frequently writes and speaks on related legal issues.

Early UC Hemp Research Already Yielding Results

Understanding the Best Cultural Practices for Industrial Hemp

For the first time ever, UC Agriculture and Natural Resources (UC ANR) researchers harvested an industrial hemp crop at one of its nine research and extension centers this fall.

“It’s an interesting crop,” said UC Cooperative Extension specialist Bob Hutmacher. “We don’t have a lot of experience in UC ANR with hemp at this time. There is a tremendous amount of research that can be done to understand its growth and best cultural practices, optimal planting dates either by seed or transplants, irrigation and fertilization management, and, particularly, to address pest and disease management.”

Bob Hutmacher

Industrial hemp can be produced for grain and fiber, however, many growers currently consider the most profitable component of the crop to be cannabidiol, or CBD, and related compounds. CBD is valued for its purported health benefits. It is said to reduce inflammation, pain, nausea, depression and anxiety, among other conditions.

Hutmacher said he and colleagues around the state are interested in learning about industrial hemp production opportunities, and feel there is a place for UC ANR research to support the fledgling industry. Already, there are some observations coming out of these small trials.

“Some people believe that hemp is a pest- and disease-free plant. That’s not what we found,” Hutmacher said. “In the absence of suitable measures for control, corn ear worms seemed to thrive in hemp, and did an astounding amount of damage to cultivars in our small plots.”

The scientists were forced to use a pesticide to control the pest and reduce damage to developing buds. The hemp produced in the trial will be destroyed after harvest data has been collected. The experience with corn ear worm and other pest issues demonstrate that pest control will require significant study, particularly if a goal is to produce the crop organically.

“Markets for some industrial hemp products may require low pesticide residues. If hemp is produced organically, some preliminary observations this year suggest farmers will have to put a big effort into pest and disease control,” he said.

Plant breeding can be another area of UC research. Hemp’s natural genetic variations produce plants that vary widely in growth habit, size, response to day length, and time to maturity. There are hemp cultivars that mature when the plant is 18 inches tall and others that shoot up 12 feet high at maturity. Hemp grown for CBD production from seed or as transplants can vary greatly in size and other characteristics, such as amount of branching and the number of fruiting forms per plant. Multiple plant and production system factors also will influence options for mechanical versus hand harvesting.

Another breeding concern for growers is producing a crop with economic levels of CBD or other compounds of commercial interest, while staying within regulatory limits for THC (tetrahydrocannabinol), the psychoactive compound found in marijuana, a related plant. According to the California Department of Food and Agriculture, an industrial hemp crop grown in the state may have no more than 0.3% THC when plant samples are analyzed.

“You don’t want to risk too high a THC level,” Hutmacher said. “Farmers must test to make sure THC is at a level to meet regulations. If it’s too high, CDFA regulations would require the crop be destroyed.”

Working with UC breeders, integrated pest management scientists, agronomists, irrigation specialists and agricultural engineers, there should be good opportunities to finesse hemp production at UC ANR’s network of research and extension center system across California.

Research center locations stretch from Holtville, in the low desert at the California-Mexico border, to Tulelake, just south of the Oregon border. Other centers ideal to answer hemp research questions include the UC Davis campus, the Hopland REC in Mendocino County, the Hansen REC in Ventura County, and the South Coast REC in Orange County.

Imperial County Hemp Summit & Expo to be Held September 2019

Topic is the  Local Business Opportunities for Industrial Hemp

The County of Imperial in coordination with Imperial Valley Economic Development Corporation will host the inaugural Imperial County Hemp Summit & Expo (IC Hemp 2019) on September 27-28 at the Imperial Valley Fairgrounds.

The event is being organized by Imperial Regional Alliance, Inc. IC Hemp 2019 will be the largest gathering for the hemp industry in Imperial County, bringing together industry leaders, growers, legislators, manufacturers, vendors and more from across the nation to discuss the wide range of business opportunities for industrial hemp in the Imperial Valley. Attendees will hear from speakers of leading organizations, global corporations and regional stakeholders related to the hemp industry.

Throughout the Summit, guest speakers and panelists will cover pressing issues over a range of topics including best farming practices, local resources and opportunities, incentives, legislation and compliance, banking, financing, insurance, processing and manufacturing. The Summit will be dedicated to providing an all-encompassing educational experience of the hemp industry for its audience.

IC Hemp 2019 will be a two-day event, starting with a full day of expert panels, expo with local and visiting vendors, luncheon and networking reception. Summit participants will also embark on regional tours of local growing and processing operations the following day. On Saturday afternoon, the expo will be open to the public free of charge with networking, shopping and entertainment.

To register for the Imperial County Hemp Summit & Expo, please visit ICHemp.org. Follow along on social media at #ICHemp2019. For more information on sponsorship opportunities, exhibit packages and registration, please contact Alessandra Muse at (760) 353-8332 or alessandra@ivedc.com.

If you would like more information about this topic, please contact Timothy Kelley at (760) 353-8332