For centuries, hemp has been cultivated in North America for its fibers used in the manufacture of ropes and textiles. But, despite its long history, hemp was made illegal in the United States due to its association with marijuana, a victim of the War on Drugs. While the War on Drugs may seem distant from the advances being made through federal hemp policy and state marijuana laws, federal marijuana prohibition continues to this day. Under section 10113 of the Farm Bill, hemp cannot contain more than 0.3 percent THC.
This rule has provided much-needed clarity to the banking sector on the legal and regulatory landscape surrounding funding in the hemp sector. In order for a state's plan to license and regulate hemp to begin, it must first be approved by the USDA Secretary. The regulations also make it easier for farmers to obtain reliable agricultural labor and protect interstate transportation of the crop from states that have not legalized hemp. Hemp is now considered a conventional crop, but law enforcement agencies still fear that cannabis plants used to obtain marijuana will be mixed with hemp plants.
With this legislation in place, it is hoped that the banking industry will develop appropriate guidance that will allow farmers to obtain funding and use other financial services if they produce hemp. The Farm Bill also does not provide more information or clarity on crop insurance, but having a standard is essential for hemp producers who want to manage their risk through crop insurance. In order to produce hemp, farmers must first have a license or authorization under a state or tribal hemp program or the USDA hemp program. They must also certify the area with the FSA and identify each field, subfield or lot where hemp is cultivated in order to participate in crop insurance.
The Farm Bill legalizes hemp, but it doesn't create a system where people can grow it as freely as other crops like tomatoes or basil. If a farmer negligently violates a state or tribal plan three times in a five-year period, they won't be able to produce hemp for the next five years. The standard also establishes a USDA plan to regulate hemp production in states or areas where hemp production has been legalized, but there is no approved state plan. Many advocates applaud Leader McConnell for incorporating these hemp provisions into the Farm Bill and his leadership in legislation in general.