The Department of Agriculture released rules Tuesday that will govern how farmers grow industrial hemp, a crop that promises new revenue for financially struggling growers.
The USDA regulations will guide the production of hemp, including licensing farmers, testing and possible destruction of plants that don't meet THC requirements.
It's a big step for farmers hoping to tap into a rapidly growing market for hemp-derived cannabidiol, commonly called CBD, used in everything from pet food to wine and creams that help relieve minor aches and pains. The $5 billion market is expected to grow to nearly $24 billion by 2023.
With licensing expected to begin early next year, Iowa farmers should be able to plant their first hemp crop next spring, said Robin Pruisner, the state entomologist who is helping lead the Iowa Department of Agriculture's efforts to develop a hemp program.
Chicken sandwich war: Popeyes announces return date of its chicken sandwich and takes a dig at Chick-fil-A
The 2018 Farm Bill legalized the production of hemp, a strain of cannabis plant that contains low levels of THC, the compound in marijuana that gets people high. Iowa lawmakers followed suit this year, passing a hemp bill that Gov. Kim Reynolds signed into law in May.
Iowa officials, already developing a state hemp program, will review the federal rule to ensure their work complies with it. The state plan also must receive USDA approval before Iowa's program can become effective.
Although promising, Pruisner warns that the emerging market could be extremely risky for farmers. Not only are they growing a new crop, but they will also be selling it into a new market that can be tricky to navigate.
“I strongly, strongly, strongly promote the concept that no one should plant hemp unless they have a contract to sell it,” Pruisner said.
“This isn’t like corn, that you can sell to the elevator or the ethanol plant," she said. "You need to know where it’s going and what their requirements are," such as hitting certain levels for pesticides, heavy metals or other compounds.
“It needs to be sold before you plant it, so you know exactly how to raise it," Pruisner said.
Iowa's new law restricts farmers to growing only 40 acres of hemp.
Farmers also need to make sure they understand how hemp is priced. For example, some farmers told Pruisner they didn't get paid until their crops were processed, and the plant was backed up for a year.
Producers will need to closely manage hemp as it grows, testing it to make sure THC levels don't exceed 0.3%. Hemp with higher levels will be destroyed.
An average of 30% of the hemp grown in Minnesota ends up exceeding the THC limit, Pruisner said. That leaves farmers with the costs to become licensed, grow and test a crop, and no revenue.
USDA officials said no crop insurance will cover losses due to high THC levels.
"Farmers will really have to be on their game to manage this crop," she said. "It's not a crop you plant and walk away from."
Even before planting their first seeds, Iowa farmers will have to apply for a license, which requires them to submit their fingerprints for a background check.
Greg Ibach, USDA's under secretary for marketing and regulatory programs, said the number of hemp acres is expected to climb about 420% to 500,000 this year compared to 2018.
"The experience producers have this fall harvesting their crop, handling their crop and finding buyers for their crop will be instructive as to whether we see continued growth in the hemp industry or whether growers take a step back," Ibach said in a call with reporters.
And Pruisner said it's unclear if demand for hemp-derived CBDs and other products will keep pace with the growing supply.
"I don't know if prices will stay up," she said.
This article originally appeared on Des Moines Register: USDA rule for hemp moves farmers closer to growing the crop