Revitalization: Hemp’s Long-Awaited Return to the Bluegrass State

By William Lloyd, Former Associate Editor

Historical Background

Before 1937, hemp was deeply rooted in Kentucky’s social and economic identification. The state was a world leader in hemp production and its hemp was used to produce everything from textile production to Naval ships’ rigging during wars.[1] However, it began to be seriously regulated in the country following the Marihuana Tax Act of 1937. This Act placed a tax on the sale of cannabis, though those close to the hemp industry argued that it was a plot to reduce the size of the hemp industry altogether because it posed as a threat to the timber industry in paper production.[2] Although the 1937 Act made no distinction between low-THC hemp and high THC marijuana, the 1970 Controlled Substance Act legally classified hemp as a Schedule I drug.[3] Thus, hemp was designated as (1) a drug or other substance with a high potential use for abuse, (2) a drug with no currently accepted medical treatment use in the United States, or (3) a drug that lack the accepted safety for use under medical supervision.[4]

The rigid regulation of hemp and its by-products remained in place throughout the country until 1998, when the United States began to import food-grade hemp seed and oil.[5]. In 2007, the first hemp licenses in over 50 years were granted to two North Dakota farmers and in 2014, President Obama signed the Farm Bill, allowing state and federal research institutions to begin hemp farming for research purposes.[6] The 2014 Bill eased some federal regulations on hemp extraction production, especially CBD oil.[7]

The 2018 Farm Bill and a Departure from 1933

In December, President Trump signed the 2018 Farm Bill. The Farm Bill has typically been renewed every five years since 1933. Originally introduced by President Franklin Roosevelt, the Bill is recognized as the food policy and agricultural regulations tool of the federal government.[8] The new changes, championed by Kentucky Senator Mitch McConnell, included the next step for hemp advocates and farmers. This opened the door for legalized industrial hemp production, including hemp plants used to produce legally approved CBD oil. [9]   CBD oil is a popular product of hemp used for its alleged therapeutic properties. For the first time in history, farmers will be allowed to buy crop insurance on their plants and hemp futures can be traded, locking in prices for farmers.[10]

Perhaps the biggest effect of the 2018 Farm Bill is that it devolves regulatory powers to the states given there is a state plan in place “to monitor and regulate the production of hemp.”[11] Under the new laws, hemp will be managed as a crop by the Department of Agriculture (in consultation with the Food and Drug Administration) instead of an illegal substance by the Justice Department.[12] Even more, the 2018 Bill removes industrial hemp and its extracts that contain no more than .3% THC concentration on a dry weight basis from the list of controlled substances by the Food and Drug Administration.[13] The 2018 Bill presented a substantial victory for the hemp industry and Kentucky.

After the 2018 Bill was passed, FDA Commissioner Scott Gotlieb restated the FDA’s stance that “CBD is a drug ingredient and therefore illegal to add to food or health products without approval” from the agency. [14] The FDA allows some products to be sold without prior approval, such as hulled hemp seeds, hemp seed protein, and hemp seed oil.[15] However, the FDA still requires pre-approval if the marketers claim that the extracts can be used to treat diseases, like CBD oil.[16] Gotlieb’s statement exists to outline the future of hemp extracts and to assert the FDA’s governance over the products.

The 2018 Bill allowed states to provide a plan to the United States Department of Agriculture in order to outline specific procedures in place ensuring four facts.[17] The 2018 Bill required states to have a record of where hemp is produced in the state, outline procedures to ensure hemp produced had a THC level of less than 0.3%, had procedures for disposing of materials with a THC level of greater than 0.3%, and had procedures for handling violations of the 2018 Farm Bill and proposed state plan.[18] The 2018 Farm Bill still requires FDA approval to market products for human consumption or use.[19]

A New, Uncertain Direction for Kentucky

Though Kentucky was once the world leader in hemp production, the federal government closed all opportunity to the market in the state with the 1937 Marihuana Act.[20] Following the Act, the state was required to comply with federal standards, but there have been several efforts by Kentucky legislators to overturn the Act because reports concluded that there are a number of specialty or niche markets for hemp products, and that the economic impact for Kentucky would be greatest if the state becomes the main source for certified hempseed in the USA.[21]

The same day the 2018 Farm Bill was passed, State Agriculture Commissioner Ryan Quarles submitted the state’s regulatory plan to the U.S. Department of Agriculture. Further, the proposed law requires any person wishing to grow hemp in the state to submit an annual Grower License Application, pay a fee for the application, and present a research plan that includes the “proposed acreage or greenhouse or indoor square footage to be painted.”[22] The plan also requires specific business information such as the principal location, the full name of the applicant having signing authority, contact information, and more.[23] The plan also includes information for denied applications, a requirement for criminal background checks, orientation sessions for those approved to grow hemp, and a required seed acquisition from hemp within the Commonwealth of Kentucky.[24]

The goal of Kentucky’s Hemp industry is to “emerge as an epicenter for the American rapidly-growing hemp industry.”[25]. In 2018, the state had doubled the number of acres planted in 2017. Even before the Farm Bill was passed, the Kentucky Department of Agriculture was holding hemp applicant meetings to “provide a seminar and a networking session for growers and processors.”[26] The 2018 Bill has given farmers the ability to buy crop insurance on hemp and has allowed processors and manufacturers to expand to provide a reliable supply of hemp to industrial buyers.[27]

After the 2014 Farm Bill was passed, the Kentucky Department of Agriculture implemented an Industrial Hemp Research Pilot Program, which was authorized by KRS 260.850-260.869.[28] The goal of the program was to “position the Commonwealth’s growers and processors to ultimately prevail as national leaders in industrial hemp production.”[29] In 2014, farmers had planted only 33 acres, but that number grew to 3,200 acres planted by 2017.[30] Kentucky currently has 210 approved growers in 73 counties with more than 16,000 acres approved to continue hemp’s continued growth in the state.[31] The continued growth and excitement surrounding the hemp industry in Kentucky is a good indication that the Commonwealth may have found another steady export along with its bourbon, coal, and horses.

[1] Talbot, First Hemp Crop, Kentucky History, https://explorekyhistory.ky.gov/items/show/108.

[2] Michael Chang, The Paper Industry’s Silent War on Hemp, Mass Roots, (April 27, 2016), https://www.massroots.com/news/the-paper-industrys-silent-war-on-hemp/.

[3] Comprehensive Drug Abuse Prevention and Control Act of 1970, 21 U.S.C. 801 (1970).

[4] Drug Scheduling https://www.dea.gov/drug-scheduling

[5] History of Hemp, Ministry of Hemp (Jan. 2, 2019, 1:15 PM), https://ministryofhemp.com/hemp/history/.

[6] Id.

[7] Agricultural Act of 2014, H.R. 2642, 113th Cong. (as passed by House, February 7, 2014).

[8] Farm Bill Policy, American Society of Agronomy, (Jan. 2019), https://www.agronomy.org/science-policy/farm-bill-policy.

[9] Statement from FDA Commissioner Scott Gotlieb, M.D., on signing of the Agriculture Improvement Act and the Agency’s Regulation of Products Containing Cannabis and Cannabis-Derived Products, Dec. 20, 2018, https://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm628988.htm.

[10]Julie Weed, US Farm Bill Will Make CBD Production Legal and Cheaper, (Jan. 4, 2019 8:46 AM) https://www.google.com/amp/s/www.forbes.com/sites/julieweed/2018/12/19/us-farm-bill-will-make-cbd-production-legal-and-cheaper/amp/.

[11]Kentucky Industrial Hemp Research Pilot Program, Kentucky Department of Agriculture, (Dec. 2018), http://www.kyagr.com/marketing/hemp-pilot.html.

[12]Weed, supra.

[13] 2018 Farm Bill and What It Means for Hemp in Kentucky, Kentucky Agriculture, (Dec. 27, 2018), http://www.kyagr.com/marketing/program_id/70/documents/HEMP_OV_2018FarmBillandKentuckyHemp.pdf.

[14] Gotlieb, Supra.

[15] Id.

[16] Id.

[17] 2018 Farm Bill and What It Means for Hemp in Kentucky, supra.

[18] Id.

[19] Id.

[20] Marihuana Tax Act, 26 U.S.C.S. § 4751-4753 (LexisNexis 2019).

[21] Jerome H. Cherney and Ernest Small, Industrial Hemp in North America: Production, Politics, and Potential 18 (citing Pinfold Consulting. A Maritime Industrial Hemp Product Marketing Study. Prepared for Nova Scotia Agriculture and Marketing (Marketing and Food Industry Development), and New Brunswick Agriculture & Rural Development (Marketing and Business Development). G. Pinfold Consulting Economists Ltd. and J. White, InfoResults Ltd. Irregularly Paginated. 1998. Available online: https://www.mdpi.com/2073-4395/6/4/58/htm (Jan. 13, 2019).

[22] 302 KAR 50: 020-030 (2018).

[23] Id.

[24] Id.

[25] Id.

[26] Kentucky Industrial Hemp Research Pilot Program, supra.

[27] Mark Vanderhoff, Farm Bill Plants Bright Future for Kentucky Hemp, (Dec. 28, 2018 6:53 PM) https://www.wlky.com/article/farm-bill-plants-bright-future-for-kentucky-hemp/25657985.

[28] Industrial Hemp Research Pilot Program Overview, Kentucky Department of Agriculture, (Dec. 2018), http://www.kyagr.com/marketing/hemp-overview.html.

[29] Id.

[30] Id.

[31] Id.