January 31, 2024

Cannabis + Hemp Cultivation License = You CAN’T have them both

The USDA says you can’t have a hemp cultivation license and a cannabis cultivation license.

USDA’s New Policy

So, the USDA has a new policy that they’ve just started enforcing in the last year which I find a little bit crap. We’ve talked about before how the 2014 Farm Bill and 2018 Farm Bill work together to create a hemp program across the United States. The USDA, the US Department of Agriculture, oversees the federal hemp program and then it oversees hemp programs in several states that have opted not to have one of their own and instead have the USDA run the program. It’s only eight states: Hawaii, Mississippi, Missouri, New Hampshire, North Carolina, Utah, Vermont, and Wisconsin.

So, everybody else, every other state that wants to have a hemp program has to have a state-approved program. They have to submit their plan to the USDA and it must be approved. However, the USDA does not run that program. They do not implement any licenses. They do not do anything with those programs. Those are owned and run by the state. However, in these eight states, the USDA gives out the licenses, conducts all the sampling, answers all the questions from all the people who apply, deals with any of the remediation or bad behavior, anything like that in these states.

Conflicting Regulations: USDA vs. State Cannabis Programs

In the past year, several license holders of hemp cultivation licenses, so they’ve gone through the process, they have obtained their hemp cultivation license through the USDA, have then attempted to or have in fact joined or become a cultivator under a state-regulated cannabis program, whether it’s medical cannabis or recreational cannabis. And when they did that, the USDA yanked their hemp license or they refused—they either rescinded it or they refused to renew it.

Understanding USDA’s Position

Why? The USDA, in an article by Hemp Today, says that there is a statute that says hemp and cannabis cannot be grown on the same land or in the same facility. Okay, duh, we all know that. But that does not, therefore, extend to say that one cannot have a license under the USDA and a license under a state cannabis program. That statute doesn’t exist anywhere, and in fact, some states like Colorado and Oregon specifically allow you to do that as long as you keep the facilities separate.

State-by-State Differences

Here’s the other kicker: seven out of eight of the states that the USDA runs the program have state cannabis programs. The only one that doesn’t, North Carolina, where I’m sitting right now, has a bill hoping to create a medical cannabis program. So, it’s going to be eight out of eight soon, hopefully. We’ve all been holding our breath.

So, if North Carolina passes the Medical Cannabis Act and actually has a medical cannabis program and cultivators in the state of North Carolina are allowed to participate and get a license and they also have a hemp license, the USDA is basically saying you’re going to lose your hemp license even though you may have had it for years, even though you may not have had any issue whatsoever, even though we recognize federally that all of these state programs are completely legitimate and are fine with them in various different agency publications. We’re not going to allow you to have both.

Legal Implications and Industry Concerns

And that’s what I think is crap – because do they do this to every other commodity? If I’m a wheat farmer and I have a license to grow wheat from the USDA, do they prevent me from growing soy? No. And if we recognize that hemp is federally legal and that states are allowed to decide to have a state program and therefore cannabis is legal in that state, then what is the Poss justification for treating only this industry that way? I think it’s a poor choice by the USDA and I think it’s potentially actionable in a lawsuit. We’ll see what happens with that.

But what I would say is if you are a North Carolina hemp license holder and you are hoping that one day you’re going to get yourself a cannabis license and maybe you’re going to hold on to your hemp license currently, the USDA’s position is we don’t care how long you’ve had it, how much you’ve paid for it, or how much you’ve invested in it. If you choose to get a cannabis license, you are going to lose your hemp license. And I think that’s wrong, but you should be aware of that.

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