As the nation’s hemp industry continues to mature, the U.S. Department of Agriculture (USDA) is making what it calls “improvements” to a federal hemp crop insurance program. The changes, which take effect next year, ease certain crop-rotation requirements and remove smoke damage as a cause of covered loss.
The revision to crop-rotation rules, announced recently by USDA’s Risk Management Agency (RMA), will effectively “allow hemp to be insurable if planted following soybeans,” the agency said. It applies in 14 states: Colorado, Illinois, Indiana, Maine, Michigan, Minnesota, Montana, Nevada, New York, North Dakota, Oregon, Pennsylvania, South Dakota and Wisconsin.
“This policy change will give producers more options when it comes to their crop rotation,” Brian Frieden, director of RMA’s regional office for Illinois, Indiana and Michigan, said in a statement about the changes, adding that RMA “is continuing to work with hemp producers to improve coverage options.”
The regional announcement notes that sales closing dates for the revised insurance policies vary by county and that producers should contact their crop insurance agent to determine local deadlines.
As for smoke damage, the rule changes add smoke to a list of reasons the program will not cover losses. (Fire, however, remains a covered cause of loss, as does volcanic eruption.) Other causes of loss that aren’t covered by the program include THC levels that exceed the federal 0.3 percent limit on hemp as well as harvested production that’s infested with mold, yeast or fungus.
The regional midwest announcement said of the change that “RMA is clarifying that smoke damage is not a covered cause of loss, as hemp coverage does not allow for quality adjustment.”
Research has found that smoke damage can cause significant economic losses to the cannabis industry, though there’s been less study around smoke and hemp specifically.
Nationwide, hemp operators insured $750,000 in “covered liabilities” on 2,600 acres of production in crop year 2024, according to the USDA regional office’s new announcement.
The new RMA changes apply to USDA’s Hemp Crop Insurance Standards Handbook and Hemp Loss Adjustment Standards Handbook for 2025 and succeeding crop years.
USDA has been working to bolster the hemp industry, including by appointing a number of industry stakeholders this summer to a federal trade advisory committee meant to support efforts to promote U.S.-grown cannabis around the world.
Meanwhile, the department recently announced it is delaying enforcement of a rule requiring hemp growers to test their crops exclusively at labs registered with the Drug Enforcement Administration (DEA), citing “setbacks” at the agency that have led to “inadequate” access to such facilities.
This is the third year in a row that USDA has delayed enforcement of the lab testing policy for hemp required under the 2018 Farm Bill that federally legalized the crop.
In August, USDA also advised stakeholders of a policy change in China to impose tighter regulations on hemp-derived CBD, though it said the new rules were expected to benefit the industry.
Two years after hemp and its derivatives were federally legalized in the U.S. under the 2018 Farm Bill, China agreed to a trade deal that required it to buy significantly more of the non-intoxicating cannabis crop from U.S. sources. That agreement expired in 2022, however.
USDA also awarded $745,000 to the National Industrial Hemp Council (NIHC) to support efforts to promote the industry internationally in emerging markets across the world. In 2020, USDA awarded NIHC $200,000 as part of a different grant program.
The latest grant round was distributed during a precarious time for the hemp industry. While a USDA report found that the market started to rebound in 2023 after suffering significant losses the prior year, it’s still facing uncertainties as congressional lawmakers have advanced bills that would effectively ban most consumable hemp-based cannabinoid products—a major sector of the cannabis economy.
The Congressional Research Service (CRS) said in a report in June that hemp provisions included in one spending bill that moved through committee could also “create confusion” for the industry due to a lack of clarity around the type of allowable products.
Senate Democrats recently released the long-awaited draft of 2024 Farm Bill that contained several proposed changes to federal hemp laws—including provisions to amend how the legal limit of THC is measured and reducing regulatory barriers for farmers who grow the crop for grain or fiber. But certain stakeholders are concerned that part of the intent of the legislation is to “eliminate a whole range of products” that are now sold in the market.
One key component of the legislation concerns the definition of hemp. As currently enacted, a crop is considered federally legal hemp if it contains no more than 0.3 percent delta-9 THC by dry weight. That would be revised under the new bill, making it so hemp would have to be tested for “total THC” content, including cannabinoids such as delta-8 THC and THC-A, and not just delta-9.
That could theoretically lead to a significant upheaval of the hemp industry as it has evolved since the crop was federally legalized under the 2018 Farm Bill, restricting not only the varieties of plants that could be cultivated but also the products that would be permitted in the marketplace. Lawmakers have been increasingly targeting intoxicating cannabinoid products that have proliferated in recent years.
The new draft bill would also create a specific definition for “industrial hemp,” which includes fiber, stalks, grain, oil, seeds and other components of the plant that “will not be used in the manufacturing or synthesis of natural or synthetic cannabinoid products.”
Recent USDA data showed a slight rebound in the hemp economy in 2023—the result of a survey that the department mailed to thousands of farmers across the U.S. in January. The first version of the department’s hemp report was released in early 2022, setting a “benchmark” to compare to as the industry matures.
Bipartisan lawmakers and industry stakeholders have sharply criticized FDA for declining to enact regulations for hemp-derived CBD, which they say is largely responsible for the economic stagnation.
To that end, FDA Commissioner Robert Califf testified before the House Oversight and Accountability Committee in April, where he faced questions about the agency’s position that it needed additional congressional authorization to regulate the non-intoxicating cannabinoid.
USDA is also reportedly revoking hemp licenses for farmers who are simultaneously growing marijuana under state-approved programs, underscoring yet another policy conflict stemming from the ongoing federal prohibition of some forms of the cannabis plant.
For the time being, the hemp industry continues to face unique regulatory hurdles that stakeholders blame for the crop’s value plummeting in the short years since its legalization. Despite the economic conditions, however, a recent report found that the hemp market in 2022 was larger than all state marijuana markets, and it roughly equaled sales for craft beer nationally.
Meanwhile, internally at USDA, food safety workers are being encouraged to exercise caution and avoid cannabis products, including federally legal CBD, as the agency observes an “uptick” in positive THC tests amid “confusion” as more states enact legalization.
Photo courtesy of Pixabay.
As the nation’s hemp industry continues to mature, the U.S. Department of Agriculture (USDA) is making what it calls “improvements” to a federal hemp crop insurance program. The changes, which take effect next year, ease certain crop-rotation requirements and remove smoke damage as a cause of covered loss. The revision to crop-rotation rules, announced recently Read More
