[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]

AN EXAMINATION OF THE USDA HEMP
PRODUCTION PROGRAM

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HEARING

BEFORE THE

SUBCOMMITTEE ON
BIOTECHNOLOGY, HORTICULTURE, AND RESEARCH

OF THE

COMMITTEE ON AGRICULTURE
HOUSE OF REPRESENTATIVES

ONE HUNDRED SEVENTEENTH CONGRESS

SECOND SESSION

__________

JULY 28, 2022

__________

Serial No. 117-37

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

Printed for the use of the Committee on Agriculture
agriculture.house.gov

__________

U.S. GOVERNMENT PUBLISHING OFFICE
49-637 PDF WASHINGTON : 2022

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COMMITTEE ON AGRICULTURE

DAVID SCOTT, Georgia, Chairman

JIM COSTA, California GLENN THOMPSON, Pennsylvania,
JAMES P. McGOVERN, Massachusetts Ranking Minority Member
ALMA S. ADAMS, North Carolina, Vice AUSTIN SCOTT, Georgia
Chair ERIC A. ``RICK'' CRAWFORD,
ABIGAIL DAVIS SPANBERGER, Virginia Arkansas
JAHANA HAYES, Connecticut SCOTT DesJARLAIS, Tennessee
SHONTEL M. BROWN, Ohio VICKY HARTZLER, Missouri
BOBBY L. RUSH, Illinois DOUG LaMALFA, California
CHELLIE PINGREE, Maine RODNEY DAVIS, Illinois
GREGORIO KILILI CAMACHO SABLAN, RICK W. ALLEN, Georgia
Northern Mariana Islands DAVID ROUZER, North Carolina
ANN M. KUSTER, New Hampshire TRENT KELLY, Mississippi
CHERI BUSTOS, Illinois DON BACON, Nebraska
SEAN PATRICK MALONEY, New York DUSTY JOHNSON, South Dakota
STACEY E. PLASKETT, Virgin Islands JAMES R. BAIRD, Indiana
TOM O'HALLERAN, Arizona CHRIS JACOBS, New York
SALUD O. CARBAJAL, California TROY BALDERSON, Ohio
RO KHANNA, California MICHAEL CLOUD, Texas
AL LAWSON, Jr., Florida TRACEY MANN, Kansas
J. LUIS CORREA, California RANDY FEENSTRA, Iowa
ANGIE CRAIG, Minnesota MARY E. MILLER, Illinois
JOSH HARDER, California BARRY MOORE, Alabama
CYNTHIA AXNE, Iowa KAT CAMMACK, Florida
KIM SCHRIER, Washington MICHELLE FISCHBACH, Minnesota
JIMMY PANETTA, California MAYRA FLORES, Texas
SANFORD D. BISHOP, Jr., Georgia ------
MARCY KAPTUR, Ohio
SHARICE DAVIDS, Kansas

______

Anne Simmons, Staff Director

Parish Braden, Minority Staff Director

______

Subcommittee on Biotechnology, Horticulture, and Research

STACEY E. PLASKETT, Virgin Islands, Chair

SHONTEL M. BROWN, Ohio JAMES R. BAIRD, Indiana, Ranking
KIM SCHRIER, Washington Minority Member
JIMMY PANETTA, California AUSTIN SCOTT, Georgia
CHELLIE PINGREE, Maine ERIC A. ``RICK'' CRAWFORD,
SEAN PATRICK MALONEY, New York Arkansas
SALUD O. CARBAJAL, California RODNEY DAVIS, Illinois
AL LAWSON, Jr., Florida DON BACON, Nebraska
JOSH HARDER, California CHRIS JACOBS, New York
J. LUIS CORREA, California TROY BALDERSON, Ohio
------ MICHELLE FISCHBACH, Minnesota
MAYRA FLORES, Texas
------

Malikha Daniels, Subcommittee Staff Director

(ii)

C O N T E N T S

----------
Page
Baird, Hon. James R., a Representative in Congress from Indiana,
opening statement.............................................. 3
Submitted joint statement on behalf of Robert ``Bob'' Pearce,
Ph.D., Professor of Agronomy, Department of Plant and Soil
Sciences; and Tyler B. Mark, Ph.D., Assistant Professor,
Department of Agricultural Economics, University of
Kentucky................................................... 141
Brown, Hon. Shontel M., a Representative in Congress from Ohio,
prepared statement............................................. 4
Plaskett, Hon. Stacey E., a Delegate in Congress from Virgin
Islands, opening statement..................................... 1
Prepared statement........................................... 2
Thompson, Hon. Glenn, a Representative in Congress from
Pennsylvania, opening statement................................ 127

Witnesses

Phipps, Ph.D., Brandy E., Assistant Professor, Department of
Agricultural and Life Sciences, Central State University,
Wilberforce, OH................................................ 5
Prepared statement........................................... 6
Grignon, Marcus, Executive Director, Hempstead Project Heart,
Green Bay, WI.................................................. 11
Prepared statement........................................... 12
Supplementary material....................................... 144
Wang, Eric T., Chief Executive Officer and Managing Director,
Ecofibre, Ltd.; Vice President for Sustainability, U.S. Hemp
Roundtable, Lexington, KY...................................... 30
Prepared statement........................................... 32
Quarles, Ph.D., Hon., Ryan F., Commissioner, Kentucky Department
of Agriculture, Frankfort, KY.................................. 33
Prepared statement........................................... 34
Greenberg, Kate, Commissioner, Colorado Department of
Agriculture, Broomfield, CO.................................... 44
Prepared statement........................................... 46
Submitted questions.......................................... 146

AN EXAMINATION OF THE USDA HEMP PRODUCTION PROGRAM

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THURSDAY, JULY 28, 2022

House of Representatives,
Subcommittee on Biotechnology, Horticulture, and Research,
Committee on Agriculture,
Washington, D.C.
The Subcommittee met, pursuant to call, at 10:00 a.m., in
Room 1300 of the Longworth House Office Building, Hon. Stacey
E. Plaskett [Chair of the Subcommittee] presiding.
Members present: Representatives Plaskett, Brown, Schrier,
Pingree, Carbajal, Lawson, Harder, Baird, and Thompson (ex
officio).
Staff present: Lyron Blum-Evitts, Ellis Collier, Malikha
Daniels, Amar Nair, Ricki Schroeder, Patricia Straughn, Erin
Wilson, and Dana Sandman.

OPENING STATEMENT OF HON. STACEY E. PLASKETT, A DELEGATE IN
CONGRESS FROM VIRGIN ISLANDS

The Chair. This hearing of the Subcommittee on
Biotechnology, Horticulture, and Research entitled, An
Examination of the USDA Hemp Production Program, will come to
order.
Welcome, and thank you for joining today's hearing. After
brief opening remarks, Members will receive testimony from our
witnesses today, and then the hearing will open for
questioning. I want to thank my colleagues and our witnesses
for joining me today as we host this important discussion on
hemp and the USDA Hemp Production Program.
Today, we will hear from a panel of experts, including
producers, researchers, Tribal members, and State Agriculture
Commissioners, who will provide an overview of the hemp
industry and insights towards the 2023 Farm Bill.
Until recently, the hemp industry was outlawed due to
restrictions put in place in the Marijuana Tax Act of 1937
(Pub. L. 75-238). And hemp was treated no differently than
marijuana under the Controlled Substances Act (Pub. L. 91-513).
In 2014, the farm bill removed longstanding Federal
restrictions on the cultivation and production of hemp,
allowing more State Departments of Agriculture and institutions
of higher learning to produce this crop as part of a pilot
program for research purposes.
In the 2018 Farm Bill, Congress authorized commercial
production of hemp and directed USDA to establish the U.S.
Domestic Hemp Production Program, giving USDA the
responsibility of cultivating and approving plans submitted to
states, Territories, or Tribal authorities who wish to regulate
hemp production.
In January of 2021, USDA issued its final ruling on
regulating the production of hemp in the United States.
Feedback from public comments, as well as lessons learned from
previous growing seasons, helped influence regulations
established on the interim final rule published in October of
2019.
USDA continues to conduct research and outreach to help
support the burgeoning hemp sector. In my home district of the
U.S. Virgin Islands, small and local hemp producers have
already taken advantage of the program to provide a new source
of revenue for their farms and additional jobs to their
community. With the guidance of the USDA, the Virgin Islands
has the potential to begin a new economic era that will benefit
the government, local farmers, and local business
entrepreneurs.
The production of hemp has created value for producers and
consumers, over $800 million in 2021, with over 55,000 acres of
hemp planted. While markets for hemp products such as fiber,
grain, and flour are developing, they are still volatile and
uncertain. To support farmers and producers in the ongoing
development of this reemerging sector, it is crucial that USDA
continue to work to support and expand hemp production and the
hemp industry.
As we look towards the next farm bill, we can continue to
address ongoing issues and provide our farmers, producers,
processors, and agricultural researchers with the resources
they need. This hearing is an opportunity for us to hear what
we can do to ensure the continued growth and development of
this resurging crop.
[The prepared statement of Ms. Plaskett follows:]

Prepared Statement of Hon. Stacey E. Plaskett, a Delegate in Congress
from Virgin Islands
Good morning and thank you to my colleagues and our witnesses for
joining me today as we host this important discussion on hemp and the
USDA Hemp Production Program. Today, we will hear from a panel of
experts including producers, researchers, Tribal members, and State
Agriculture Directors and Commissioners who will provide an overview of
the hemp industry and insight toward the 2023 Farm Bill.
Until recently, the hemp industry was outlawed due to restrictions
put in place by the Marijuana Tax Act of 1937, and hemp was treated no
differently than marijuana under the Controlled Substances Act.
In 2014, the farm bill removed long-standing Federal restrictions
on the cultivation and production of hemp, allowing state departments
of agriculture and institutions of higher learning to produce this crop
as part of a pilot program for research purposes.
In the 2018 Farm Bill, Congress authorized commercial production of
hemp and directed USDA to establish the U.S. Domestic Hemp Production
Program, giving USDA the responsibility of evaluating and approving
plans submitted by states, Territories, or Tribal authorities who wish
to regulate hemp production.
In January of 2021, USDA issued its final ruling on regulating the
production of hemp in the United States. Feedback from public comments,
as well as lessons learned from previous growing seasons, helped
influence previous regulations established under the interim final rule
published in October 2019.
USDA continues to conduct education and outreach to help support
the burgeoning hemp sector. In my home district of the U.S. Virgin
Islands, small and local hemp producers have already taken advantage of
the program to provide a new source of revenue for their farms and
additional jobs to their community. With the guidance of the USDA, the
Virgin Islands has the potential to begin a new economic era that will
benefit the government, our local farmers, and local business
entrepreneurs through economic and growth opportunities.
The production of hemp has created value for producers and
consumers of over $800 million in 2021, with over 55,000 acres of hemp
planted. While markets for hemp products, such as fiber, grain, and
flower are developing, they are still volatile and uncertain. To
support farmers, producers, and the ongoing development of this re-
emerging sector, it is crucial that USDA continues its work to support
and expand hemp production and the hemp industry.
As we look toward the next farm bill, we can continue to address
ongoing issues and provide our farmers, producers, processors, and
agricultural researchers with the resources they need. This hearing is
an opportunity for us to hear what we can do to ensure the continued
growth and development of this resurging crop.

The Chair. I would now like to welcome the distinguished
Ranking Member, the gentleman from Indiana, Mr. Baird, for any
opening remarks he would like to give.

OPENING STATEMENT OF HON. JAMES R. BAIRD, A REPRESENTATIVE IN
CONGRESS FROM INDIANA

Mr. Baird. Well, good morning. And I want to thank you,
Chair Plaskett, for holding this session and this hearing, and
I really appreciate the witnesses that are here today and you
giving your time to really help us understand what is going on
in the hemp industry and to update us.
I also think it is noteworthy to mention that this is
really the first hearing that the House Committee on
Agriculture has held on hemp ever.
The Chair. Yes.
Mr. Baird. So, mind you, the 2014 Farm Bill authorized the
Hemp Research Pilot Program, and then the 2018 Farm Bill
subsequently legalized hemp production at the Federal level.
And to say this is important is an understatement. So I am
pleased we have a well-rounded stakeholder panel here today
with representatives from the hemp industry, including two
state regulators, a Tribal representative, a researcher, and a
company that manufactures hemp products.
That said, I do believe it is a missed opportunity that we
don't hear from the Federal agencies that we have tasked, and
they are tasked, with implementing provisions related to hemp
today. So, Madam Chair, I remain hopeful that we can have an
opportunity to hear from both the USDA and the FDA at one of
our future meetings.
As the hemp industry rapidly expanded following the passage
of the 2018 Farm Bill, a wave of innovation followed. And as
researchers and companies started identifying uses for hemp
fiber, including building materials, insulation, animal
bedding, concrete, and even car parts, this is one of my areas
of interest, and I look forward to hearing more about that
today.
This rapid expansion of the hemp industry also led to
increased interest and research around the use of hemp in
animal feed. Given my background in animal science and
monogastric nutrition, I look forward to hearing more about
this research, including whether it has been tested and what is
on the horizon for that kind of a product.
And even though the legalization of hemp has spurred
innovation in the use of hemp fiber and grain, we are seeing
much of the hemp grown in the United States used to manufacture
hemp-derived CBD. Since the passage of the 2018 Farm Bill,
there has been no regulatory framework from the Food and Drug
Administration for CBD products, leading to some uncertainty
for producers, for manufacturers, retailers and as well as
consumers.
While we are certain to hear about successes in the hemp
industry, it is important to note that we have many challenges,
leading to a significant decline in the number of hemp acres
planted since 2019. And as we discuss potential areas for
change in the 2023 Farm Bill, it is critical that we
comprehensively understand these challenges to ensure our
policies benefit producers and consumers alike.
Again, I would like to thank the witnesses for taking the
time to be with us here today, and I look forward to hearing
more about the work they are doing within the hemp industry.
And with that, I yield back.
The Chair. Thank you so much to the Ranking Member of the
Subcommittee for your tireless efforts to support farmers and
to be such an incredible colleague on this Subcommittee.
The chair would request that other Members submit their
opening statements for the record so witnesses may begin their
testimony and ensure that there is ample time for questioning.
[The prepared statement of Ms. Brown follows:]

Prepared Statement of Hon. Shontel M. Brown, a Representative in
Congress from Ohio
Thank you Chair Plaskett.
I am pleased we are joined today by Central State University
Assistant Professor Dr. Brandy E. Phipps, whose research in my home
State of Ohio has informed farmers and researchers on the benefits of
hemp cultivation.
Dr. Phipps is currently utilizing 20+ years of comprehensive
research experience to identify ways hemp might provide the aquaculture
industry with a cost-effective, sustainable alternative to fish oil and
meal.
We thank her for her time today and her work to better discern
industrial hemp cultivation.

The Chair. I am pleased to welcome five outstanding
witnesses to the Subcommittee today. Our witnesses bring to our
hearing a wide range of experience and expertise, and I thank
you for joining. Our first witness will be Dr. Brandy Phipps,
Ph.D., Assistant Professor, Department of Agricultural and Life
Sciences, Central State University, Cedarville, Ohio. Our
second witness today is Mr. Marcus Grignon, the Executive
Director of the Hempstead Project Heart in Green Bay,
Wisconsin. Third witness is Mr. Eric Wang, the Chief Executive
Officer of Ecofibre. He is testifying today on behalf of the
U.S. Hemp Roundtable. Also, Dr. Ryan F. Quarles, who is the
Commissioner of Kentucky Department of Agriculture. And our
fifth and final witness is Ms. Kate Greenberg, who is the
Commissioner of the Colorado Department of Agriculture.
Welcome to you all today. We will now proceed to hearing
your testimony. You will each will have 5 minutes, and the
timer should be visible to you and will count down to zero, at
which point your time has expired.
Dr. Phipps, please begin when you are ready.

STATEMENT OF BRANDY E. PHIPPS, Ph.D., ASSISTANT
PROFESSOR, DEPARTMENT OF AGRICULTURAL AND LIFE SCIENCES,
CENTRAL STATE UNIVERSITY, WILBERFORCE, OH

Dr. Phipps. Chair Plaskett, thank you for the invitation
and opportunity to speak to the Biotechnology, Horticulture,
and Research Subcommittee of the House Committee on
Agriculture.
Central State University, where I am faculty is in Ohio
District 10 represented by Congressperson Mike Turner. Central
State is a public historically Black college and university and
an 1890 land-grant institution. As such, I want to acknowledge
the two Ohio Representatives of this Subcommittee,
Representatives Brown and Balderson, and Chairperson Scott of
the House Committee on Agriculture, who has been a consistent
champion of the 1890 land-grant institutions.
Chair Plaskett and the Members of this Subcommittee, I want
to thank you for continuing to include the 1890 voice in the
work that you do in this Committee. And finally, I would like
to acknowledge the professional staff of this Committee who
have been excellent to work with this past week.
I am Brandy Phipps, Assistant Professor in the Department
of Agricultural and Life Sciences and a researcher in the Food,
Nutrition, and Health project of the Agriculture Research and
Development Program at Central State University. My background
is in biomedical and nutritional sciences, and my work is in
what others have coined sustainable nutrition science or the
intersection of food systems transformation, sustainability,
nutrition, and health equity. I tend to partner with other
researchers and community leaders across disciplines to find
holistic solutions to complex problems related to human health
and quality of life. For example, how do we equitably feed a
growing population in ways that protect natural resources and
contribute to a sustainable and a resilient economy?
To that end, my work with hemp fits nicely within those
goals, and I have focused primarily on its nutritional and
nutraceutical value for humans. This includes an ongoing $1.3
million contract with the U.S. Food and Drug Administration
with Dr. Craig Schluttenhofer, where we evaluate the chemical
constituents of smoked and vaped hemp products. I also serve as
project director for a $10 million, 5 year sustainable
agriculture systems project funded by the U.S. Department of
Agriculture's NIFA and referred to as the SUSHI Project.
With the continued rise of chronic diet-related conditions
like cardiovascular disease and type II diabetes in the United
States, strategies to produce and increase the intake of heart-
healthy foods such as hemp grain and fish are critical to slow
the rise of chronic disease in our country. Concurrently, in
order to become a stable component of the agricultural economy,
the nascent U.S. hemp market needs diversification and a robust
establishment of the grain sector. The SUSHI Project addresses
both needs as it investigates the use of hemp grain as a feed
ingredient for aquaculture systems.
Hemp grain has the potential to be an excellent domestic
feed ingredient for many types of livestock. It is nutrient-
dense, with seeds either consumed whole or dehulled as hearts.
Hemp hearts have a healthy balance of omega-6 to omega-3 fatty
acids, which are known as heart-healthy and easily digestible
protein, and it is one of the few plant protein sources with
sufficient levels of all the essential amino acids that humans
need.
In Europe, hemp grain is already approved for use in animal
feeds. And in the U.S., the hearts, protein, and seed oil have
been established as generally regarded as safe, or GRAS, for
human consumption. Exploring ways in which we can open up
additional markets in the hemp sector, including establishing
hemp as a safe feed ingredient, could provide new grain markets
for the hemp sector and sustainable feed. Importantly, studies
indicate that incorporation of hemp into feeds may provide key
improvements to the nutritional profile of those animal
products, thereby enhancing human health.
In addition to what I present here today and what has been
submitted in my written testimony, Dr. Schluttenhofer and I
recently published, Perspectives of Industrial Hemp
Cultivation, a chapter in the book, Industrial Hemp: Food and
Nutraceutical Applications, which overviews the status of the
hemp industry in the U.S. and across the globe.
Thank you again for the opportunity to participate in this
important discussion.
[The prepared statement of Dr. Phipps follows:]

Prepared Statement of Brandy E. Phipps, Ph.D., Assistant Professor,
Department of Agricultural and Life Sciences, Central State University,
Wilberforce, OH
Chair Plaskett, thank you for the invitation and opportunity to
speak to the Biotechnology, Horticulture, and Research Subcommittee of
the House Committee on Agriculture. Central State University (CSU),
where I am faculty, is in Ohio District 10, represented by
Congressperson Mike Turner. CSU is a public Historically Black College/
University (HBCU) and an 1890 Land-Grant Institution. I want to
acknowledge the two Ohio Representatives on this Subcommittee,
Representatives Brown and Balderson and Chairperson Scott of the House
Committee on Agriculture who has been a consistent champion for the
1890 Land-Grant Institutions.
I am an Assistant Professor in the Department of Agricultural and
Life Sciences and a researcher in the Food, Nutrition, and Health
project of the Agriculture Research and Development Program at Central
State University. My background is in Biomedical and Nutrition
Sciences, so my work with hemp has primarily focused on its nutritional
and nutraceutical value for humans. This includes an ongoing $1.3
million contract with the U.S. Food and Drug Administration (FDA) with
Dr. Craig Schluttenhofer evaluating the chemical constituents of smoked
and vaped hemp products and serving as Project Director for a $10
million, 5 year Sustainable Agricultural Systems project, funded by the
U.S. Department of Agriculture's National Institutes of Food and
Agriculture and referred to as the SUSHI project (Sustainable Use of a
Safe Hemp Ingredient). The SUSHI project investigates the use of hemp
as an animal feed ingredient to improve human health and economic
prosperity--promoting the production of sustainable, safe, affordable,
and accessible sources of high-value, nutrient-dense foods--focusing on
rural, low-income, and underrepresented minorities (URM). This project
has team members from all three types of Land-Grant Institutions:

Central State University, Lead Institution (1890 Land-Grant
Institution):

Brandy E. Phipps, Ph.D.--Biomedical and Nutrition
Sciences and Community-Centered Food Sovereignty

Craig Schluttenhofer, Ph.D.--Agronomy, Biochemistry,
Breeding, Genetics, and Processing of Hemp

KrishnaKumar Nedunuri, Ph.D.--Water Resources
Management and Environmental Engineering

Kentucky State University (1890 Land-Grant Institution):

Waldemar Rossi, Ph.D.--Fish Nutrition and Aquaculture

College of Menominee Nation (1994 Land-Grant Institution):

Brian Kowalkowski, M.S.--Community Data Analysis,
Cooperative Extension/Outreach, and Tribal Government
Liaison and Grant Management

University of Kentucky (1862 Land-Grant Institution):

Tyler Mark, Ph.D.--Agriculture Production Economics
and Hemp Economics

University of Delaware (1862 Land-Grant Institution):

Brandon McFadden, Ph.D.--Applied Economics and
Statistics and Consumer Demand and Preferences for Hemp

Mississippi State University (1862 Land-Grant Institution):

Seong Yun, Ph.D.--Resource and Environmental Economics
Figure 1. Project summary graphic representing inputs and long-term
outcomes
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]>

While currently in the early stages, the SUSHI project is expected
to (1) support the use of hemp as a safe feed ingredient, leading to
approval as an economically and environmentally sustainable fish
feedstuff; (2) expand domestic markets for hemp and trout; (3) increase
workforce diversity in agriculture; and (4) improve economics and
public health of Menominee Nation through increased local production of
fish and produce. The project's extension and education products will
serve as models enhancing intertribal research and extension
relationships and impacting the national health and economic stability
of Native Americans and other URM. Overall, the project outcomes will
contribute to the USDA goal of transforming the food and agricultural
system to increase domestic agricultural production by 50% and reduce
environmental footprint by 40% by 2050 while improving the lives of
rural, low-income, and URM.
The Scientific Report of the 2020 Dietary Guidelines Advisory
Committee (2020 Committee) reported that six in ten Americans have
diet-related chronic conditions (CC), with four in ten having two or
more CC.[1] In 2016, cardiovascular disease (CVD) and type 2
diabetes (T2D) cost America $555B and $327B, respectively, with costs
expected to more than double by 2035.[2, 3] Lower-income and
URM households are disproportionally affected by CC and food
insecurity,[4, 5] highlighting the importance of targeted
research and outreach. One strategy for decreasing the risk of CVD,
T2D, and some cancers includes replacing saturated fats with
polyunsaturated fatty acids (PUFA), often referred to as ``heart-
healthy fats''.[6-12] Strategies to increase the intake of
heart-healthy foods--such as hemp grain and fish--are critical to slow
the rise of chronic disease in the U.S. Furthermore, targeted nutrition
outreach is needed to ensure that the most vulnerable populations have
equitable access to healthy, nutrient-dense foods.
As you know, the passage of the Agriculture Improvement Act of 2018
removed hemp [Cannabis sativa with <0.3% D9-tetrahydrocannabinol (THC)]
from the list of controlled substances. Hemp is used for fiber, food,
and medicine.[13, 14] Hemp grain is an excellent source of
protein and PUFA [15] for human consumption. In 2019, 94% of
U.S. growers produced metabolite hemp; only 10% and 11% grew for grain
and fiber, respectively (values exceed 100% due to producers with
multiple crop types).[16] In 2020, there were 16,000 acres
of hemp grain production in the U.S.[17] To become a stable
component of the agricultural economy, the nascent U.S. hemp market
needs diversification and a robust establishment of the grain sector.
Hemp seed/grain has the potential to be an excellent domestic feed
ingredient for many types of livestock. It is nutrient-dense, with
roughly 25% protein, 35% oil, 25% carbohydrates, 10% moisture, and 5%
minerals.[15, 18] Seeds are consumed whole or dehulled
(hearts). Hearts have a healthy balance of omega-6 to omega-3 fatty
acids (2.5:1) [15, 19] and easily digestible protein
[19-23] with sufficient essential amino acid
levels.[15] In Europe, hemp grain is used in animal feeds. A
2011 European Food Safety Authority study evaluated the use of hemp
grain, seed cake, seed oil, and whole plant flour in animal
feeds.[24] Most THC localizes to the seed coat (hull), with
seeds containing less than 12 mg/kg [24] and hearts 0.5 mg/
kg.[25] Cannabidiol (CBD) and other cannabinoids are likely
restricted to the seed coat. Cleaning and removal of hulls provide a
product with low levels of cannabinoids. The committee concluded that
hemp seed products with 510mg THC/kg were safe based on risks. One
potential concern of hemp in feed is consumer ingestion of cannabinoid
residual in the animal tissues. Estimated daily tolerance intake for
THC is 0.0004 mg/kg body weight (0.024 mg for a 60kg
adult).[24] Other countries allow up to 0.0007 mg THC/kg
body weight (up to 0.042 mg for a 60 kg adult) per day. In 2018, the
Food and Drug Administration (FDA) approved hemp hearts (H.H.), hemp
seed oil (HSO), and hemp protein (H.P.) with 510 mg THC/kg as Generally
Recognized as Safe (GRAS).[26] Based on expected maximum
consumption, with a content of 0.3 mg/kg, 0.6 mg/kg, and 6 mg/kg of THC
in H.H., H.P., and HSO, respectively, the cumulative expected daily
intake was 62.3 mg of THC for persons aged 2 and older. Establishing
hemp as a safe feed ingredient could provide new grain markets for the
hemp sector and an economical and environmentally sustainable feed to
produce heart-healthy foods.
How much cannabinoid residue from hemp grain and derived products
(H.H., HSO, and H.P.) transfers to feeds and animals remains unclear.
Uncertainty leads to safety concerns and hinders the approval for use
in feeds. The SUSHI project is conducting (i) feeding trials using hemp
grain ingredients in trout and (ii) nutrient and cannabinoid analyses
of hemp grain, hemp feed ingredients, fish feed, and the edible
portions of fish fed hemp-containing feed to determine the safety and
efficacy of using hemp feed ingredients in a trout aquaculture system.
In addition, the SUSHI economics team is performing market research,
production economic assessments, and valuation of socio-environmental
net benefits for the sustainability of the suggested system. To
increase diversity in the agricultural workforce, our extension/
education team is (i) developing certificate programs in hemp
production and aquaponics, (ii) scholarships to Native Americans to
complete bachelor's degrees in Agri-STEM, and (iii) providing start-up
funds for new aquaponics producers. The project also provides outreach
and education about hemp, aquaponics, and nutrition to consumers to
increase consumption of healthy, nutrient-dense foods, including hemp
grain, fish, and produce.
The long-term objectives of the SUSHI project are to:

1. Provide a sustainable source of fish livestock with an enhanced
nutritional value--contributing to the nation's health,
especially URM.

2. Create niche markets for hemp and aquaculture, increase
production opportunities for farmers, create jobs, and
enhance the economy--increasing agriculture profitability
in economically and environmentally sustainable ways.

3. Develop a pipeline of Black and Indigenous and lay workforce with
the appropriate technical and professional skills to
fulfill employment needs in STEM, nutrition, water resource
management, and sustainable agriculture.

The SUSHI project is comprehensive, integrative, and
transdisciplinary in addressing concerns in the hemp, aquaculture,
nutrition, and agricultural workforce sectors. Strategic relationships
have been established across industries to ensure that the outputs are
relevant and adapt to changing needs. Continued efforts to impact the
hemp grain and fiber sectors should consider similar approaches to what
is described here to promote sustainable growth of the domestic hemp
market.
The SUSHI project has established partnerships with all stakeholder
groups impacted by our work. We meet regularly with an external
stakeholder advisory board. Their feedback and guidance ensure that our
work remains relevant to stakeholder needs. As a result of these
connections, we are aware of some of the significant concerns within
the hemp grain sector. The concerns listed here do not necessarily
reflect the views of me, the SUSHI team, or Central State University.
Expressed stakeholder concerns include but are not limited to:

Access to capital to build the supply chain. For example,
one entity that processes hemp grain into multiple food and
other products was unable to apply for the USDA Food Supply
Chain Guaranteed Loan Program because a percentage of the
products were used in applications in addition to the food
supply (e.g., oils are food and can be used in cosmetics;
sweeteners are food and used in industrial applications).
Narrow definitions for these programs currently hinder access
to capital for grain processors. This prevents the expansion of
infrastructure needed to increase the production of grain
products necessary to meet market demands. Strategies to
increase access to capital for grain and fiber processors are
required.

The burden of THC-testing for non-metabolite hemp crops.
Currently, the rules and regulations for THC-testing and
compliance treat fiber and grain (industrial hemp) the same way
as cannabinoid/floral/metabolite hemp. The hemp industry wants
hemp grain and fiber crops to be regulated like other
commodities (e.g., soy, corn, and wheat), as hemp will likely
be integrated into rotations with row crops. Hemp grain must be
tested for mycotoxins, heavy metals, allergens, etc., like all
grains used for food. Still, farmers have the additional burden
of testing the non-grain parts of hemp to ensure THC compliance
when it has little relevance to the GRAS-approved grain
product. A review of current THC-testing rules for grain and
fiber hemp crops is needed.

Cost and unwieldiness of the feed approval process.
Currently, each ingredient produced from hemp grain must be
individually approved for each animal species and class. For
example, if hemp grain protein is approved for use in Growing/
Starter Layers (chicken), another application must be submitted
for Finisher Layers, Laying Layers, and Breeder Layers. Hemp
seed oil or whole hemp hearts would need additional
applications for each group.[27] Industry
representatives have expressed that hemp grain for animal feed
should have been approved at the same time that it was approved
as GRAS for human consumption. Others have expressed that the
regulations are more burdensome for hemp grain products than
other feed ingredients because non-metabolite hemp is treated
as a drug unlike other grains. Approving hemp grain as a feed
ingredient would open new markets and expand current markets by
providing an outlet for hemp grain grown for human consumption
that does not meet food grade standards. An infusion of money
into the feed approval system (FDA-CVM, AAFCO) is needed to
improve the process for hemp grain feed approval.

Lack of consumer awareness regarding the nutrient benefits
of hemp grain and products. A long prohibition and association
with marijuana have instilled a deep and lasting confusion
about hemp within the mind of U.S. consumers. Engagement with
the public demonstrates that a portion of the U.S. population
still fails to understand the difference between hemp and
marijuana. Some of those familiar with the crop lack
information about the positive benefits of hemp grain and
products. Such association restricts market
opportunities.[28] U.S. consumers need supplemental
education about the nutritional benefits of hemp grain and
products.

Lack of incentives for hemp growers to partner with domestic
processors/producers. Hemp growers continue to struggle to find
buyers for their crops. While there are a limited number of
clearinghouses for hemp processors and growers, representatives
from both groups have noted that more work is needed in this
area. Developing systems to connect prospective growers with
processors would reduce this barrier.

Lack of incentives to develop hemp cultivars adapted to
production in the U.S. Based on U.S. variety trials conducted
across the U.S., only certain parts of the country can
successfully utilize high-yielding cultivars developed
internationally. For example, Canadian hemp varieties often
perform well in northern states but typically under-perform in
Midwest or South. The lack of varieties developed for various
regions hinders specific sectors of the country from expanding
the grain and fiber hemp industries. Crops adapted to produce
higher overall yields, and higher quantities of certain
nutrients (e.g., specific fatty acids or amino acids) would
further expand market options and lower overall production
costs. A challenge for breeding regionally adapted crops is THC
limits. THC levels of important lines may exceed legal limits
during the breeding scheme, thereby restricting the development
of those genetics. Being allowed to handle germplasm containing
higher levels of THC (e.g., 1%) would mitigate legal compliance
concerns while breeding to include new traits. The final
variety released could still be required to meet a lower THC
threshold (e.g., 0.3%) for sale to hemp growers. Allowing hemp
breeders to work with germplasm having higher THC levels would
enable the development of elite varieties adapted for specific
regions.

There is a need to stimulate the nascent domestic hemp production
to make it a sustainable part of the U.S. agricultural economy. An
increase in hemp grain production could positively impact various
sectors, including hemp, livestock, manufacturing, and human nutrition
and health.
Through personal experiences, research knowledge, and stakeholder
engagement, the SUSHI project team recognizes the complex challenges
facing the hemp industry and is confronting those challenges to provide
solutions to move the industry forward through this project and others
in which the team members hold positions. For this testimony, project
team members, Drs. Mark, McFadden, and Schluttenhofer provided valuable
insights into the U.S. hemp industry's challenges while identifying
robust and lasting solutions. Limitations faced by the hemp industry
can be reduced by (i) increasing access to capital for processors, (ii)
reviewing current THC-testing rules, (iii) infusing money into the feed
approval system, (iv) educating consumers about the nutritional
benefits of hemp grain and products, (v) developing systems to connect
current and potential growers with processors and (vi) allowing hemp
breeders to work with higher THC-containing germplasm. Considering and
implementing these proposed solutions would enhance the industry's
short- and long-term success. I, and my SUSHI team, look forward to
continuing to support this Committee with the information necessary to
make the hemp industry a lasting pillar of the U.S. agricultural
economy.

References

[1] Dietary Guidelines Advisory Committee. 2020. Scientific Report
of the 2020 Dietary Guidelines Advisory Committee: Advisory Report to
the Secretary of Agriculture and the Secretary of Health and Human
Services. U.S. Department of Agriculture.
[2] Olga Khavjou, Diana Phelps and Alyssa Leib. 2016. Projections of
Cardiovascular Disease Prevalence and Costs: 2015-2035. 1-54.
[3] Association American Diabetes. 2018. Economic Costs of Diabetes
in the U.S. in 2017. Diabetes Care 41:5 917-928. doi:10.2337/dci18-
0007.
[4] Centers for Disease Control And Prevention. 2020. National
Diabetes Statistics Report. Centers for Disease Control And Prevention.
Atlanta, GA. U.S. Dept of Health and Human Services.
[5] Yelena Bird, Mark Lemstra, Marla Rogers and John Moraros. 2015.
The Relationship between Socioeconomic Status/Income and Prevalence of
Diabetes and Associated Conditions: A Cross-Sectional Population-Based
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Health 14: 93-93. doi:10.1186/s12939-015-0237-0.
[6] Dietary Guidelines For Americans. 2020. Dietary Guidelines for
Americans, 2020-2025. U.S. Department of Agriculture and U.S.
Department of Health and Human Services.
[7] Haeun Jang and Kyong Park. 2020. Omega-3 and Omega-6
Polyunsaturated Fatty Acids and Metabolic Syndrome: A Systematic Review
and Meta-Analysis. Clinical Nutrition 39:3 765-773. doi:10.1016/
j.clnu.2019.03.032.
[8] Carol J. Fabian, Bruce F. Kimler and Stephen D. Hursting. 2015.
Omega-3 Fatty Acids for Breast Cancer Prevention and Survivorship.
Breast Cancer Research: BCR 17:1 62-62. doi:10.1186/s13058-015-0571-6.
[9] Kembra Albracht-Schulte, Nishan Sudheera Kalupahana, Latha
Ramalingam, Shu Wang, Shaikh Mizanoor Rahman, Jacalyn Robert-Mccomb and
Naima Moustaid-Moussa. 2018. Omega-3 Fatty Acids in Obesity and
Metabolic Syndrome: A Mechanistic Update. The Journal of Nutritional
Biochemistry 58: 1-16. doi:org/10.1016/j.jnutbio.2018.02.012.
[10] Artemis P. Simopoulos. 2016. An Increase in the Omega-6/Omega-3
Fatty Acid Ratio Increases the Risk for Obesity. Nutrients 8:3 128-128.
doi:10.3390/nu8030128.
[11] A.P. Simopoulos. 2002. The Importance of the Ratio of Omega-6/
Omega-3 Essential Fatty Acids. Biomedicine & Pharmacotherapy 56:8 365-
379. doi:org/10.1016/S0753-3322(02)00253-6.
[12] Artemis P. Simopoulos. 2008. The Importance of the Omega-6/
Omega-3 Fatty Acid Ratio in Cardiovascular Disease and Other Chronic
Diseases. Experimental Biology and Medicine 233:6 674-688. doi:10.3181/
0711-mr-311.
[13] Craig Schluttenhofer and Ling Yuan. 2017. Challenges Towards
Revitalizing Hemp: A Multifaceted Crop. Trends in Plant Science 22:11
917-929. doi:10.1016/j.tplants.2017.08.004.
[14] John Fike. 2017. Industrial Hemp: Renewed Opportunities for an
Ancient Crop. Critical Reviews in Plant Sciences 35: 5-6 406-424.
doi:10.1080/07352689.2016.1257842.
[15] J.C. Callaway. 2004. Hempseed as a Nutritional Resource: An
Overview. Euphytica 140:1 65-72. doi:10.1007/s10681-004-4811-6.
[16] Eli Mcvey, Maggie Cowee, Kristen Nichols, Laura Drotleff, Kevin
Huhn and Christa Madrid. 2019. Annual Hemp & CBD Industry Factbook.
Anne Holland Ventures Inc.
[17] U.S. Department Of Agriculture. 2020. Acreage Reports. Farm
Service Agency. U.S. Department of Agriculture.
[18] Incoronata Galasso, Roberto Russo, Sergio Mapelli, Elena
Ponzoni, Ida Melania Brambilla, Giovanna Battelli and Remo Reggiani.
2016. Variability in Seed Traits in a Collection of Cannabis Sativa L.
Genotypes. Frontiers in Plant Science 7:doi:10.3389/fpls.2016.00688.
[19] Virginie Dubois, Sylvie Breton, Michel Linder, Jacques Fanni
and Michel Parmentier. 2007. Fatty Acid Profiles of 80 Vegetable Oils
with Regard to Their Nutritional Potential. European Journal of Lipid
Science and Technology 109:7 710-732. doi:doi:10.1002/ejlt.200700040.
[20] James D. House, Jason Neufeld and Gero Leson. 2010. Evaluating
the Quality of Protein from Hemp Seed (Cannabis Sativa L.) Products
through the Use of the Protein Digestibility-Corrected Amino Acid Score
Method. Journal of Agricultural and Food Chemistry 58:22 11801-11807.
doi:10.1021/jf102636b.
[21] Xian-Sheng Wang, Chuan-He Tang, Xiao-Quan Yang and Wen-Rui Gao.
2008. Characterization, Amino Acid Composition and in Vitro
Digestibility of Hemp (Cannabis Sativa L.) Proteins. Food Chemistry
107:1 11-18. doi:org/10.1016/j.foodchem.2007.06.064.
[22] U. Kriese, E. Schumann, W.E. Weber, M. Beyer, L. Bruuhl and
Matthaus. 2004. Oil Content, Tocopherol Composition and Fatty Acid
Patterns of the Seeds of 51 Cannabis Sativa L. Genotypes. Euphytica
137:3 339-351. doi:10.1023/b:euph.0000040473.23941.76.
[23] Chuan-He Tang, Zi Ten, Xian-Sheng Wang and Xiao-Quan Yang.
2006. Physicochemical and Functional Properties of Hemp (Cannabis
Sativa L.) Protein Isolate. Journal of Agricultural and Food Chemistry
54:23 8945-8950. doi:10.1021/jf0619176.
[24] EFSA Panel On Additives and Products or Substances Used in
Animal Feed. 2011. Scientific Opinion on the Safety of Hemp (Cannabis
Genus) for Use as Animal Feed. EFSA Journal 9:3 2011.
[25] Samir A. Ross, Zlatko Mehmedic, Timothy P. Murphy and Mahmoud
A. Elsohly. 2000. GC-MS Analysis of the Total D9-Thc Content of Both
Drug- and Fiber-Type Cannabis Seeds. Journal of Analytical Toxicology
24:8 715-717.
[26] Marc Sanchez. 2018. The Safety and the Generally Recognized as
Safe (Gras) Status of the Proposed Use of Hulled Hemp Seeds in Human
Food. Food and Drug Administration.
[27] Association of American Feed Control Officers (2022). The
Official Publication.
[28] Hemp research: College of agriculture & natural resources:
University of Delaware. Hemp Research D College of Agriculture &
Natural Resources D University of Delaware. (n.d.). Retrieved July 25,
2022, from https://www.udel.edu/academics/colleges/canr/departments/
applied-economics-and-statistics/affiliated-centers/hemp-demand-
research/.

The Chair. Thank you very much for that.
Mr. Grignon, please begin when you are ready.

STATEMENT OF MARCUS GRIGNON, EXECUTIVE DIRECTOR, HEMPSTEAD
PROJECT HEART, GREEN BAY, WI

Mr. Grignon. Posoh mawaw Niwak, nekatow manawich kikitem.
Hello, everyone. I am going to speak. My name is Marcus
Grignon, and I am the Executive Director of Hempstead Project
Heart, a nonprofit organization dedicated to redeveloping
thriving hemp economies that connect Tribal, urban, and rural
communities throughout the United States. Hempstead Project
Heart is a member of the Rural Coalition, the Peace Development
Fund, and the National Hemp Association's Standing Committee of
Hemp Organizations. I have come before you today to testify on
the USDA Hemp Production Program. I am also here for the
American hemp pioneers who pushed our country towards
acceptance: Alex White Plume, Chris Boucher, Jack Herer,
Barbara Filippone, Lawrence Serbin, and Richard Rose.
Hemp has a conflicting past in our country. From the
founding of our nation and lead up to the passage of the
Controlled Substances Act, hemp was considered a cash crop and
useful for our military during World War II. After passage of
the Controlled Substances Act, hemp became defined as a drug
and non-useful, both of which is untrue. The best way I have
educated the American people over the last 6 years on the
difference between hemp and marijuana is an analogy of the
pepper family. With peppers, you have habanero, chipotle, ghost
pepper, jalapeno. These peppers are what I would call your high
grade marijuana, whereas green, yellow, and red bell peppers is
what I would call your hemp. Both peppers are part of the same
family but distinctly different.
The historical perspective of hemp played a large role in
building our country during the early years of our democracy.
Many states such as Pennsylvania, Kentucky, Virginia, and
Wisconsin, to name a few, have rich histories of hemp playing a
vital role in their economies. From 1902 to 1944, the USDA
studied hemp extensively as a solution to our country's fiber
shortage. Lyster Dewey led this research for USDA. Dewey, with
the help of Dr. Andrew Wright and Senator Alexander Wiley,
created the 20th century American hemp industry. Through their
research, they uncovered \3/4\ of the land in the United States
can grow hemp. Hemp grows well with crop rotations. Hemp's long
taproot penetrates the soil and loosens the undersoil layers.
Drying kilns for hemp fiber should not exceed 150 Fahrenheit.
There is a wealth of knowledge on how to produce and process
hemp from these records at the National Agricultural Library.
My path as an American hemp farmer is not linear. I began
my journey as a hemp researcher in 2015 for my Tribal nation,
the Menominee Indian Tribe of Wisconsin and the College of
Menominee Nation, an institution of higher education. We grew
hemp on our homelands for research purposes to spur economic
development for our people under section 7606 of the 2014 Farm
Bill and under the guidance of the Department of Justice's
Wilkensen memorandum. Unfortunately, we were unsuccessful due
to Federal overreach by the Drug Enforcement Agency's raid on
our hemp crop in October 2015. Under the auspices of a
marijuana raid on Tribal lands, the DEA took our hemp crop at
harvest time that had seed with a 1 year acclimation to the
Great Lakes region. Even our topsoil was seized by a bulldozer.
We never received the test results from DEA to prove our hemp
had tested over the legal limit.
After the 2015 growing season, I dedicated myself to be an
education advocate and push for hemp to be re-legalized in
Wisconsin and in the United States through Hempstead Project
Heart. As part of a coalition of Americans, we push hemp to be
legal again and were successful in Wisconsin in 2017. In 2018,
our coalition focused on the farm bill to revise section 7606,
making hemp fully legal in the United States and to uphold
Tribal sovereignty for the 574 Tribes within our country to
grow hemp without Federal interference. We were successful, and
for the Committee Members I testify before today I say
Waewaenen. Thank you for your support.
As the 2023 Farm Bill is upon us, I want to advocate to
strengthen the hemp production provisions from the 2018 Farm
Bill. There needs to be a separation between the definition and
regulation of industrial hemp from cannabinoid and floral hemp.
These crops are easily differentiated with a visual inspection.
The industry advocates for a grain and fiber exemption from
testing and background checks for producers. There is also
legislation that we will introduce soon called the Industrial
Hemp Exemption Act of 2022.
Bank regulations need revision to ease current restrictions
for hemp operations. It is difficult to find a bank that will
take business accounts connected to hemp production and
processing, not to mention insurance companies. There needs to
be a USDA stamp of approval for hemp being shipped between the
various jurisdictions in the United States. This will help with
any issues that arise with interstate commerce. While these
suggestions do not cover all the needed changes, these top
three will enhance the American hemp industry, ease burdensome
regulations for farmers, and create more demand for hemp-made
materials.
And I believe my time is up.
[The prepared statement of Mr. Grignon follows:]

Prepared Statement of Marcus Grignon, Executive Director, Hempstead
Project Heart, Green Bay, WI
Posoh mawaw Niwak, nekatow manawich kikitem (Hello everyone, I am
going to speak). My name is Marcus Grignon, and I am the Executive
Director of Hempstead Project Heart, a nonprofit organization dedicated
to redeveloping thriving hemp economies that connect Tribal, urban, and
rural communities throughout the United States. Hempstead Project Heart
is a member of the Rural Coalition, the Peace Development Fund, and the
National Hemp Association's Standing Committee of Hemp Organizations.
I've come before you today to testify on the USDA Hemp Production
Program. I am also here for the American pioneers who pushed our
country towards acceptance of hemp: Alex White Plume, Chris Boucher,
Jack Herer, Barbara Filippone, and Richard Rose.
Hemp has a conflicting past in our country. From the founding of
our nation and lead up to the passage of the Controlled Substances Act,
hemp was considered a cash crop and useful for our military during
World War II. After passage of the Controlled Substances Act, hemp
became defined as a drug and non-useful. Both of which is untrue. The
best way I've educated the American people over the last 6 years on the
difference between hemp and marijuana is an analogy of the pepper
family. With peppers you have habanero, chipotle, ghost pepper,
jalapeno--these peppers is what I would call your ``high-grade
marijuana.'' Whereas green, yellow, and red bell peppers is what I
would call your ``hemp.'' Both peppers are part of the same family, but
distinctly different.
The historical perspective of hemp played a large role in building
our country during the early years of our democracy. Many states such
as Pennsylvania, Kentucky, Virginia, and Wisconsin to name a few have
rich histories of hemp playing a vital role in their economies. From
1902 to 1944, the USDA studied hemp extensively as a solution to our
country's fiber shortage. Lyster Dewey led this research for USDA.
Dewey with the help of Dr. Andrew Wright and Senator Alexander Wiley
created the 20th century American hemp industry. Through their
research, they uncovered: (1) \3/4\ of the land in the United States
can grow hemp; (2) Hemp grows well with crop rotations; (3) Hemp's long
tap root penetrates the soil and loosens the undersoil layers; (4)
Drying kilns for hemp fiber should not exceed 150 Fahrenheit. There is
a wealth of knowledge on how to produce and process hemp from these
records at the National Agricultural Library.
My path as an American hemp farmer is not linear. I began my
journey as a hemp researcher in 2015 for my Tribal nation, the
Menominee Indian Tribe of Wisconsin, and the College of Menominee
Nation, an institution of higher education. We grew hemp on our
homelands for research purposes to spur economic development for our
people under section 7606 of the 2014 Farm Bill and under guidance of
the Department of Justice's Wilkensen Memorandum. Unfortunately, we
were unsuccessful due to Federal overreach by the Drug Enforcement
Agency's (DEA) raid on our hemp crop in October 2015. Under the
auspices of a marijuana raid on Tribal lands, the DEA took our hemp
crop at harvest time that had seed with 1 year acclimation to the Great
Lakes region. Even our topsoil was seized by a bulldozer. We never
received test results from DEA to prove our hemp had tested over the
legal limit.
After the 2015 growing season, I dedicated myself to be an
education advocate and push for hemp to be re-legalized in Wisconsin
and the United States through Hempstead Project Heart. As part of a
coalition of Americans, we pushed for hemp to be legal again and were
successful in Wisconsin in 2017. In 2018, our coalition focused on the
2018 Farm Bill to revise section 7606, make hemp fully legal in the
United States, and uphold Tribal sovereignty for the 574 Tribal nations
within our country to grow hemp without Federal interference. We were
successful and for the Committee Members I testify before today, I say
Waewaenen (thank you) for your support.
The summer of 2019, hemp came back to the Menominee Reservation.
Our research focused on integrated pest management in hemp production.
We were able to identify various pests and pollinators during the
growing season. It is truly amazing to observe the growing cycle of
hemp and watch the tree frogs, bees, aphids, lady bugs, and Japanese
beetles show up at different times. This research in 2019 laid the
groundwork for our current research on the effects of Japanese beetles
on hemp production through the USDA Sustainable Agriculture, Research,
and Education program.
In 2020, the Native American Agriculture Fund, a foundation created
by the Keepseagle settlement, awarded the College of Menominee Nation
and Hempstead Project Heart a grant to develop a hemp fiber feasibility
study and begin to acclimate a hemp fiber variety in the Great Lakes
region. We are in our third and final year of research for this grant.
The Chairman of the Menominee Indian Tribe of Wisconsin, Ron Corn Sr.,
supports Hempstead Project Heart's efforts to spur hemp research,
production, and product development on the Menominee Reservation.
As the 2023 Farm Bill is upon us, I want to advocate to strengthen
the hemp production provisions from the 2018 Farm Bill. (1) There needs
to be separation between the definition and regulation of industrial
hemp from cannabinoid or floral hemp. These crops are easily
differentiated with a visual inspection. The industry advocates for a
grain and fiber exemption from testing and background checks for the
producer; (2) bank regulations need revision to ease current
restrictions for hemp operations. It is difficult to find a bank that
will take business accounts connected to hemp production and
processing; (3) There needs to be a USDA stamp of approval for hemp
being shipped between the various jurisdictions in the United States.
This will help with any issues that arise with interstate commerce.
While these suggestions do not cover all the needed changes, these top
three will enhance the American hemp industry, ease burdensome
regulations for farmers, and create more demand for hemp made
materials.
The reemergence of the hemp industry is a renewal of our American
traditions. Our country prospered on the production of hemp, and we can
do it again. Today, many Americans from all walks of life are at the
forefront of rebuilding the American hemp industry. Barbara Filippone
and Summer Star Haeske of Envirotextiles, a successful USDA Bio-
Preferred company that works on various hemp fiber products and
supplies the fashion industry with high quality hemp textiles. Aaron
Rydell and Greg Wilson of HempWood, a hemp building materials company
that specializes in the first HempWood flooring. Mike McGuire of
Western Fiber, who built a hemp processing plant by retrofitting a
cotton gin. Ken Anderson and Colin Felton of Bast Fiber Products
created composite decking made from hemp fiber. All these innovative
American entrepreneurs need the support of Congress to grow the hemp
industry in our country. We look forward to stronger hemp provisions in
the 2023 Farm Bill.
As I wrap up my testimony today, I want to leave you all with a
historical perspective by Lyster Dewey. In 1939, Dewey wrote in a
report to the Chief of the Bureau of Plant Industry, ``The future of
the hemp industry in this country seems to depend largely on the
development of strains/varieties of hemp free from marijuana.'' Dewey
knew in 1939 America would need to develop their own hemp varieties to
grow the industry and not depend on international seed supplies. The
2023 Farm Bill is our opportunity to ease restrictions, spur economic
development in our communities, and innovate the products we need to
fill the gaps in our supply chains. I ask Congress to strengthen the
hemp provisions in the 2023 Farm Bill to open the door for creativity
and innovation to propel the American hemp industry into the 21st
century.
Waewaenen (Thank you) for your time and yield the floor.

Appendix A

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Proposal for Industrial Hemp Grain and Fiber Exemption
Cannabinoid Hemp Framework Maintained
www.HempExemption.com

Why are the current regulations problematic for grain and fiber
industrial hemp?

Unreasonable financial burden and risk to farmers

Unnecessary burden on Departments of Agriculture

Additional costs hinder industrial hemp's ability to compete
with other commodity crops

Confusion with industries including banking, transportation,
insurance, and advertising, discourages investment in critical
infrastructure

End-use products hold long-standing exemption under
Controlled Substances Act

What is the solution?

A separation between the definition and regulation of industrial
hemp from cannabinoid or floral hemp. These crops are easily
differentiated with a visual inspection.
Grain and Fiber Industrial Hemp--Exemption Framework
Field crop grown using standard agricultural practices and the
harvested material is only grain and/or fiber.

Maintain the current regulatory framework for cannabinoid hemp
production with the following new framework for industrial hemp:

2018 Farm Bill licensing with added designation for only
grain/fiber production & harvest (including GPS coordinates of
land on which hemp is produced)

Signed declaration that producer will only harvest grain/
fiber and will not harvest or sell floral material or extract
any resin from crop (Note: full use of hemp seed/grain
authorized)

No background check required

Required visual inspection (i.e., in-person, virtual, aerial
with drones, or unmanned aircraft)

No sampling or testing for uniform production consistent
with designation

If visual inspection reveals inconsistent crop production
with designation, documented verification required (i.e., seed/
variety receipts, sales contract, planting report), and the
Department of Agriculture reserves the right to require harvest
inspection

Intentional violations: crop destruction, fine/civil
penalty, restricted from program participation for 5 years

Why a grain and fiber exemption and not a universal certified seed
exemption?

Certified seed alone creates an inevitable loophole for
illegal cannabis cultivation with no verification of
cannabinoid crops

Existing certified varietals are not performance-tested for
every climate zone of the U.S.

Impedes a free-market approach and encourages monopolies

Courtney N. Moran. Morgan Tweet Erica Stark
LL.M.
Chief Legislative Chief Operating Officer Executive Director
Strategist
Agricultural Hemp IND HEMP National Hemp
Solutions Association
courtney@agriculturalhe morgan@indhemp.com erica@nationalhempasso
mosolutions.com ciation.org
888-388-4367 406-622-5680 202-706-3911

Appendix B
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]>

Appendix C
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]>

Appendix D
[3 o-of-a19]

[Copy revised in Fiber Plants and submitted for publication as
mimeograph circular Tuesday Nov. 28, 1923.]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

The Chair. Yes, it is. Thank you very much.
Mr. Wang, please begin when you are ready.

STATEMENT OF ERIC T. WANG, CHIEF EXECUTIVE OFFICER AND MANAGING
DIRECTOR, ECOFIBRE, LTD.; VICE
PRESIDENT FOR SUSTAINABILITY, U.S. HEMP ROUNDTABLE, LEXINGTON,
KY

Mr. Wang. Thank you. Madam Chair, Members of the Committee,
I am very grateful for the opportunity to testify to you today
about the emerging U.S. hemp industry, its challenges and its
many opportunities that can be achieved through your assistance
in the 2023 Farm Bill. Today, I am testifying as the CEO of
Ecofibre and also on behalf of the U.S. Hemp Roundtable, the
industry's leading national advocacy organization for which I
serve as the Vice President of Sustainability.
Ecofibre is a diversified industrial hemp company with
operations in Georgetown, Kentucky; Greensboro, North Carolina;
and Sydney, Australia. We have vertically integrated business
operations across three divisions, and these three divisions
include hemp grain for food, the use of the hemp flower for
CBD, and the use of the hemp stalk for high performance
industrial uses. We have been in operation in Australia since
1999 and in the U.S. since 2015, following the start of the
Hemp Pilot Program, which was in the 2014 Farm Bill.
Over the past 20 years, Ecofibre has developed one of the
largest and most diverse hemp genetics collections, and in the
United States for the 2022 and the upcoming 2023 growing
season, we will be providing hemp genetics to growers and
universities to support 24,000 acres of industrial hemp for
commercial and research purposes. This growing will take place
across 19 states in the U.S.
While Ecofibre is a publicly traded company on the
Australian Stock Exchange, most of our operations and, more
importantly, over 90 percent of our capital has been invested
in our operations in Kentucky and North Carolina. I have
disproportionately invested into the U.S. due to the tremendous
potential of the industrial hemp market, but more importantly,
the strong bipartisan support that I have seen for developing a
new highly sustainable agricultural crop for U.S. farmers.
Second, I have seen significant support for introducing new
U.S. manufacturing industries to take advantage of the
multitude of uses for industrial hemp.
And finally, there is an opportunity for a net-zero carbon
solution via industrial hemp, which is considered to be one of
the most carbon-negative agricultural or forestry crops
available. Given that most things we produce and do in the
world today are actually carbon-positive, industrial hemp
allows us in a good way to actually think negative.
While there is tremendous opportunity, there are some
challenges that the industry does face as it develops and
matures. In passing the 2018 Farm Bill, Congress made it very
clear of its intent to support production and sale of hemp and
hemp derivatives such as CBD. As a result of the 2018 Farm
Bill, thousands of U.S. growers planted hemp in response, with
farming for CBD actually representing most of all hemp acreage
at that time.
However, public statements by FDA officials stating that it
is unlawful to sell ingestible hemp-derived CBD products have
taken their toll on the industry. CBD commerce and investment
has been chilled due to continued inaction at the Federal
level, which has impaired economic opportunity for American
farmers and processors. However, farmers are not the only ones
who have been negatively impacted by this regulatory
uncertainty. Consumers have also been impacted. Bad actors sell
products without appropriate safeguards and mislead consumers
with false label claims. Furthermore, some struggling farmers
and businesses more recently have pivoted to market-
intoxicating products such as Delta-8 THC, which has rightfully
prompted the FDA and CDC warnings that they pose significant
consumer health and safety risks, particularly for minors.
A clear regulatory pathway for CBD would not only relieve
the economic pressure that is leading to this product shift,
but it will also help ensure that products do not contain
intoxicating hemp ingredients. At a recent May hearing, FDA
Commissioner Califf testified to his disappointment in the lack
of agency action on CBD and expressed his interest in
developing a regulatory path. But he stated the FDA's
authorities are limited under the current law.
As you develop 2023 Farm Bill, I ask you to provide the FDA
with that authority by including language such as that found in
H.R. 841, a bill that has 41 bipartisan cosponsors that would
regulate CBD and other intoxicating hemp derivatives such as
dietary supplements. I hope you will also consider including
provisions from Representative Chellie Pingree's Hemp
Advancement Act of 2022 (H.R. 6645), which, among other
important things, would take necessary steps to limit the hemp
product pathway to only non-intoxicating compounds.
So in closing, I would like to thank this Committee for its
time today, and I believe that regulatory clarity for CBD will
help create the positive momentum required to see the U.S. once
again become the international leader in industrial hemp. Thank
you.
[The prepared statement of Mr. Wang follows:]

Prepared Statement of Eric T. Wang, Chief Executive Officer and
Managing Director, Ecofibre, Ltd.; Vice President for Sustainability,
U.S. Hemp Roundtable, Lexington, KY
[Madam Chair], Members of the Committee, I am very grateful for the
opportunity to testify to you today about the emerging U.S. hemp
industry, its challenges, and its many opportunities that can be
achieved through your assistance with the 2023 U.S. Farm Bill. I am
testifying as the CEO of Ecofibre and on behalf of the U.S. Hemp
Roundtable, the hemp industry's national advocacy organization, for
which I serve as Vice President for Sustainability.
Ecofibre is a diversified industrial hemp company with operations
in Georgetown, KY, Greensboro, NC and Sydney, Australia. We have
vertically integrated operations across three business divisions that
include hemp grain for food, hemp flower for CBD and the hemp stalk for
high-performance industrial uses. We have been in operation in
Australia since 1999 and in the U.S. since 2015 following the start of
the hemp pilot program in the 2014 Farm Bill.
Over the past 20 years Ecofibre has developed one of the largest
and most diverse hemp genetics collections. In the United States for
the 2022-23 growing season, we are providing hemp genetics to growers
and Universities to support 24,000 acres of industrial hemp for
commercial and research purposes. This growing is taking place in 19
states.
While Ecofibre is publicly traded on the Australian Stock Exchange,
most of our operations and more importantly over 90% of our capital has
been invested in our U.S. operations in KY and NC.
I have disproportionally invested into the U.S. due to the
tremendous potential of the industrial hemp market but more importantly
the strong bipartisan support that I have seen for developing a new
highly-sustainable agricultural crop of U.S. farmers, introducing new
U.S. manufacturing industries to take advantage of the multitude of
uses for industrial hemp, and finally a net-zero carbon solution via
industrial hemp which is considered to be one of the most carbon-
negative agricultural or forestry crops available. Given most things
that we produce and do in the world today are carbon positive,
industrial hemp allows us, in a good way, to Think Negative.
While there is tremendous opportunity, there are some challenges
that the industry does face as it develops and matures. In passing the
2018 Farm Bill, Congress made clear its intent to support the
production and sale of hemp and hemp derivatives such as CBD. Thousands
of U.S. growers planted hemp in response, with farming for CBD
representing most of all hemp acreage. However, public statements by
FDA officials stating that it is unlawful to sell ingestible hemp-
derived CBD products have taken their toll on the industry. CBD
commerce and investment have been chilled due to continued inaction at
the Federal level, impairing economic opportunity for American farmers.
Farmers are not the only ones who are being negatively impacted by
this regulatory uncertainty. Consumers are also impacted. Bad actors
are selling products without appropriate safeguards and misleading
consumers with false label claims. Further, some struggling farmers and
businesses have pivoted to market intoxicating products such as Delta-8
THC, prompting FDA and CDC warnings that they pose significant consumer
health and safety risks, particularly for minors. A clear regulatory
pathway for CBD would not only relieve the economic pressure that is
leading to this product shift, but it would also help ensure products
do not contain intoxicating hemp ingredients.
At a May hearing, FDA Commissioner Robert Califf testified to his
disappointment in the lack of agency action on CBD, and expressed his
interest in developing a regulatory path, but stated that FDA's
authorities are limited under the current law. As you develop the 2023
Farm Bill, I ask you to provide FDA with that authority by including
language such as found in H.R. 841, a bill with 41 bipartisan
cosponsors that would regulate CBD and other non-intoxicating hemp
derivatives as dietary supplements.
I hope you will also consider including provisions from Rep.
Chellie Pingree's Hemp Advancement Act, which among other important
things, would take necessary steps to limit the hemp product pathway to
only non-intoxicating compounds.
I would like to thank this Committee for its time today and I
believe that regulatory clarity for CBD will help create the positive
momentum required to see the U.S. once again become the international
leader in industrial hemp.

Eric Wang,
CEO, Ecofibre,
VP for Sustainability, U.S. Hemp Roundtable.

The Chair. Thank you.
I would now invite Mr. Quarles to begin when you are ready.

STATEMENT OF HON. RYAN F. QUARLES, Ph.D.,
COMMISSIONER, KENTUCKY DEPARTMENT OF
AGRICULTURE, FRANKFORT, KY

Dr. Quarles. Thank you, Chair Plaskett and Ranking Member
Baird, for the opportunity to address you today. My name is
Ryan Quarles, and I serve as the Kentucky Commissioner of
Agriculture first elected in 2015 and reelected to this office
in 2019. It is an honor to serve our employees, our 76,000 farm
families, and the 200,000 Kentuckians that engage in
agriculture every day.
From 2020 to 2021, I also served as President of the
National Association of State Departments of Agriculture, which
gave me the opportunity to learn not just about hemp but other
agricultural issues that help benefit Kentucky and American
agriculture.
As you may know, Kentucky is one of the first states that
focused on bringing hemp back. Our history of hemp dates back
to a very famous Kentucky hemp farmer, Henry Clay, who went on
to serve as Speaker of the United States House of
Representatives. Hemp was first grown in Kentucky in 1775, and
to this day, many farm families have a deep personal connection
to hemp. My great grandfather grew hemp on the banks of the
Kentucky River, while my grandfather fought in World War II as
a Marine.
When taking office in 2016, we took full advantage of the
2014 Farm Bill's authorization for state departments of
agriculture to research this crop underneath section 7606. And
I am proud to say that we accomplished that goal. Kentucky's
legislative and regulatory framework is widely recognized today
as one of the best in the nation. We are grateful that
Kentucky's hemp licensing program and data collected through
the University of Kentucky and other colleges and universities
were frequently cited in the final rule that USDA promulgated
in January of 2021.
Today, Kentucky entered its ninth year of growing hemp,
again legally. And here are a few products that we make. Number
one, as cited earlier, Victory Hemp Foods, hemp hearts, which
are sold legally in grocery stores across America. We have
another company named HempWood that is selling hardwood floors
made out of hemp, as well as Ecofibre, who you just heard from
with Eric Wang. We also have floral products primarily centered
around CBD products that are being sold across the United
States in pharmacies and Tractor Supply Company. This is in
addition to dozens of small family-owned hemp companies
marketing CBD across the country.
Today, we are focused on challenging our hemp companies to
set up roots in Kentucky. Like many other states, we saw a
rapid expansion in the number of acreage grown through 2015
through 2019, which was followed by an equally rapid decline
beginning with the 2020 growth season. One reason for this
decline was that production increased after the 2018 Farm Bill
legalized hemp, and the amount of hemp grown far outpaced
demand. So here in 2022 we are still growing hemp in Kentucky,
but with smaller acreage. Some hemp-based companies in Kentucky
are doing quite well like Ecofibre. They are innovating and
continuing to create new ways to market their products.
Now, if you were to ask me what is the biggest issue facing
hemp today, it would be this: a lack of direction from the FDA.
Without clear direction from the FDA regarding products
containing hemp-derived CBD, large retailers will not carry CBD
products, and many business leaders are reluctant to move
forward with the development and manufacturing of these
products.
The FDA needs to provide regulatory pathways for products
containing CBD. The FDA needs to act now. If the FDA gave us
direction, more private-sector investment in hemp products
would occur, and many well-known consumer brands will have
tremendous interest in hemp products. We are waiting on the FDA
to do their job. It is worth noting that we are now almost a
decade into growing hemp legally again in the United States,
and we still don't have proper guidance from the FDA.
Meanwhile, we continue our research with the University of
Kentucky, Murray State University, Western Kentucky University
with over a dozen academic research projects going on right
now.
And look, I know we have a long way to go. I am proud of
the Hemp Licensing Program that we have built here in Kentucky.
We have laid the groundwork for the Commonwealth to be the
epicenter of hemp production in the United States like it once
was historically. I want to publicly thank our Members of the
Kentucky Congressional delegation and all those who helped get
hemp where it is at today. In particular, I would like to thank
Kentucky's own Doris Hamilton, probably the best known and the
best respected state hemp regulatory personnel in the United
States.
Thank you for the opportunity to testify before your
Committee today, and I will do my best to answer any questions
you may have. Thank you.
[The prepared statement of Dr. Quarles follows:]

Prepared Statement of Hon. Ryan F. Quarles, Ph.D., Commissioner,
Kentucky Department of Agriculture, Frankfort, KY
Good morning and thank you Chair Plaskett and Ranking Member Baird
for the opportunity to speak today. My name is Ryan Quarles and I serve
as Kentucky's Commissioner of Agriculture. I was elected to this office
in 2015 and re-elected in 2019. As Commissioner, it is my honor to lead
the 218 employees of the Kentucky Department of Agriculture in serving
the Commonwealth's 76,000 farm families and the tens of thousands of
Kentuckians who work in agriculture and agriculture-related industries.
From 2020 to 2021, I served as president of the National
Association of State Departments of Agriculture (NASDA). NASDA is a
nonpartisan, nonprofit association that represents the elected and
appointed commissioners, secretaries, and directors of the departments
of agriculture in all fifty states and four U.S. territories. NASDA
grows and enhances American agriculture through policy, partnerships,
and public engagement. My experience as a leader in NASDA gave me an
opportunity to collaborate with, and learn from, my counterparts in
other states in ways that I believe were beneficial to the people of
Kentucky.
Since Congress first authorized the states to conduct agricultural
pilot programs in the 2014 Farm Bill, Kentucky has been a leader. And
indeed, hemp is a crop that connects Kentucky's past to its future. My
great-grandfather grew hemp on the banks of the Kentucky River in
support of the Second World War effort while my grandfather was serving
as a Marine in the Pacific theater. When I took office in 2016, I
directed my staff to undertake a top-to-bottom review of Kentucky's
hemp program, which was then in its infancy, and to recommend reforms
that would enable Kentucky to become the epicenter for hemp production
in America. I wanted to take full advantage of the 2014 Farm Bill's
authorization for state departments of agriculture to conduct hemp
research pilot programs by designing a hemp program that would
encourage farmers to grow hemp, and encourage entrepreneurs to build
businesses to process hemp into marketable products, right here in the
Commonwealth. In short, my strategic objective was to use the 2014 Farm
Bill's ``research pilot program'' to position Kentucky's farmers and
processors to compete and win the race to build a robust hemp industry.
I'm proud to say that we accomplished that goal. By the time USDA
began its work to develop the administrative regulations that would be
necessary to implement the statutory changes in the 2018 Farm Bill,
Kentucky's legislative and regulatory framework was widely recognized
as one of the best in the nation. We were gratified to see Kentucky's
hemp licensing program, and data collected by our partners at the
University of Kentucky, cited frequently throughout the final rule that
USDA promulgated in January 2021. And the fact that USDA's final rule
in many ways conformed to the structure of Kentucky's existing hemp
program suggests that USDA's policy approach was built with Kentucky's
hemp licensing program in mind. That was gratifying to us, not least
because the Federal regulatory framework did not require us to
implement drastic changes that would have been disruptive to the
community of farmers and entrepreneurs who were already working here.
This summer Kentucky's hemp program is in its ninth year. Like
other states, we observed a rapid expansion of acreages from 2015
through 2019, followed by an equally rapid decline beginning with the
2020 growing season. One reason for this decline was that production in
the previous years, particularly the 2019 growing season, far outpaced
demand. Many farmers ended that year with a hemp harvest for which
there was no buyer, even those who started the year with a signed
contract. There remains a surplus of harvested hemp from that year.
Here is a table depicting Kentucky's experience, in numerical terms,
from 2014 to present:

Kentucky Department of Agriculture Hemp Program
Annual Overview
--------------------------------------------------------------------------------------------------------------------------------------------------------
KY
Production University Processor/ Growers Counties Approved Planted Harvested % Grain % Fiber % CBD/ % Grain % Seed &
Year Projects Handlers with Hemp Acres Acres Acres or Seeds Cannabinoids & CBD Fiber
--------------------------------------------------------------------------------------------------------------------------------------------------------
2014 7 9 20 14 -- 33 -- 47% 32% 21%
2015 8 29 99 41 1,742 922 500 47% 6% 47%
2016 17 45 137 60 4,600 2,300 2,000 34% 6% 60%
2017 17 49 204 71 12,800 3,200 2.300 36% 5% 27% 32%
2018 14 72 210 73 16,100 6,700 6,000 18% 4% 61.5% 14% 2.5%
2019 12 200 978 102 60,000 26,500 24,900 2% 4% 92% 0 2%
2020 12 178 970 113 32,000 5,000 4,500 4% 4% 92% 0 0
2021 17 140 450 99 11,500 1,800 1,700 2% 7% 91% 0 0
June 2022 13 93 240 90 5,530 TBD TBD TBD TBD TBD TBD TBD
--------------------------------------------------------------------------------------------------------------------------------------------------------

In addition to the overproduction I mentioned, the hemp industry
has been severely hampered by the slowness of the Federal Food and Drug
Administration to create a regulatory pathway for hemp-derived
cannabinoids, particularly cannabidiol (CBD). Without clear direction
from FDA regarding products containing hemp-derived CBD, large
retailers will not carry the products and many business leaders are
reluctant to move forward with the development and manufacture of CBD-
related products. That reluctance, in turn, has dampened industry
demand for harvested hemp material.
By contrast, we have been pleased with USDA's prompt and thoughtful
approach to hemp policy. As I mentioned previously, we were pleased
that USDA took such close interest in Kentucky's existing hemp program
while the Federal administrative regulation was being developed. Since
then, we have enjoyed a respectful and mutually supportive relationship
with the hemp staff at USDA.
We have observed some challenges that warrant continued attention.
Under the final rule, USDA's Farm Service Agency (FSA) is tasked with
the responsibility for assigning the unique lot numbers for each
contiguous planting of a single variety of hemp. We believe that FSA's
local staff members need more training to learn how to properly record
hemp plantings, especially when the need arises to assign unique sub-
field numbers to account for the different varieties of hemp being
planted within a single field. Additional training is also needed for
accurate reporting of indoor hemp production. Currently, we see that
when a producer plants multiple varieties in a single field or indoor
facility, the lot number is often assigned incorrectly. Moreover, once
a lot number has been assigned by FSA, those numbers are not reliably
transferring electronically to the USDA-AMS Hemp Program's software,
Hemp eManagement Platform (HeMP). Without the appropriate lot numbers
in the USDA HeMP system, states and laboratories are unable to properly
identify lots or report THC testing results back to USDA. In time, we
are confident that this problem will be resolved.
Looking ahead, we have some suggestions for improvements to hemp
policy at the Federal level that would improve matters in Kentucky and
other states. For one, we believe that laboratories need not be DEA-
registered, but they should be required to attain ISO 17025
accreditation, with total THC on a dry weight basis as part of their
scope, prior to offering THC testing services for compliance purposes.
Should Congress consider revising the Federal definition of hemp
plants, we urge it to raise the THC threshold from 0.3% to 1.0%. At the
same time, it would be appropriate for the new 1.0% limit to include
not only delta-9 THC, but every other THC isomer which could have an
intoxicating effect on consumers, including without limitation
synthetically created delta-8, delta-10, delta-7, HHC, and others.
Embracing a ``total THC'' standard instead of a ``delta-9 THC only''
standard will establish a threshold which better reflects the
material's true intoxicating potential.
In addition, Congress should consider adopting a separate
definition for consumer-ready hemp products. The current law's
definition is focused on the chemical compounds within the hemp plant
at the time of its harvest in the field or greenhouse; it is not a
useful yardstick for measuring the intoxicating potential of consumer
products that are intended for human consumption such as gummies,
liquids, vapes, or ``smokeables.'' For consumer products, we believe a
separate legal standard is needed. And that product standard needs to
focus on quantities, not percent concentration by weight.
To illustrate, a candy bar weighs about 1.76 ounces, which converts
to 50,000 milligrams (mg). If that same candy bar's THC concentration
was 0.3%, it would contain 150 mg of THC. By comparison, a typical
``adult-use'' THC candy bar made with marijuana contains only 100 mg of
THC and is recommended to be consumed in four or five time-separated
doses. Some literature recommends that chronic pain patients should
start with a 2.5 mg dose of THC and consume no more than 40 mg of THC
each day-considerably less than the 150-mg candy bar that could be made
from hemp-derived THC and yet remain below a 0.3% THC concentration
limit.
For this reason, if Congress's goal is to eliminate or at least
mitigate the intoxicating effects of consumable products made from
hemp, we believe that it makes little sense to regulate a consumer
product's THC content in percentage or concentration terms. The better
approach would be to limit THC content in terms of quantity, like
milligrams, with a numerical cap in milligrams that is sufficiently
modest as to eliminate or at least mitigate its intoxicating effects.
In Kentucky and other states, there is considerable confusion about
whether existing Federal law's definition of hemp serves to legalize
synthetic compounds that were made in a laboratory. I am referring to
delta-8 THC products as well as many other newer products, many of
which contain synthetic THC levels and byproducts in levels that are
harmful to consumers' health, but also other synthetic compounds such
as such as delta-10 THC, THC-O, HHC, and others which we expect to
proliferate in the coming months and years unless Congress draws a
clear line separating natural hemp products (containing only those
chemical compounds which were extracted from the hemp plant) from
synthetic products (which contain intoxicating chemicals created in a
laboratory). A good starting point would be a revised definition which
retains the word ``extracts'' but eliminates the word ``derivatives''--
because that word has been at the center of litigation in Kentucky and
other jurisdictions.
There has been some discussion about whether it would be advisable
to exclude fiber and grain hemp crops from the regulatory and testing
requirements of the Federal hemp production framework. It is true that
most certified grain and fiber seed varieties have proven to be THC-
compliant and stable, but there is no guarantee that every future fiber
and grain crop will be produced from compliant varieties. Indeed, there
are some fiber and grain varieties which are not compliant. Here in
Kentucky we have tested and subsequently prohibited some of those
varieties from our program due to excessive THC content. For that
reason we believe all hemp, regardless of its intended application,
must be subject to THC testing.
Looking to the future, we expect that in the coming years we will
see modest increases in the number of acres planted, at least until FDA
provides the regulatory pathways for products containing CBD and other
non-intoxicating cannabinoids. I remain proud of the hemp licensing
program we have built here in Kentucky and believe that we have laid
the groundwork for the Commonwealth to emerge as a lasting center of
hemp production in the United States. I want to thank the Members of
Kentucky's Congressional delegation for their sustained interest in
this crop and the steps they have taken to foster Kentucky's hemp
industries. Senator McConnell in particular has been a tremendous
partner during my tenure as Kentucky's Agriculture Commissioner, and I
want to thank him and his staff for their partnership in advancing
Federal hemp policy in a way that is beneficial to Kentucky and the
nation.
Thank you for the opportunity to appear today. I will do my best to
answer any questions you may have for me.
Attachment
Hemp, Kentucky, and the Law
KY. J. Equine, Agric., & Nat. Resources L. [Vol. 12 No. 2 2019-2020, p.
311-324]
Ryan Quarles *
---------------------------------------------------------------------------
* Ryan Quarles, Commissioner of Agriculture of Kentucky. Prior to
serving as Commissioner, he served as a State Representative and
studied at Harvard Law School and graduated from University of Kentucky
College of Law. He received his doctorate from Vanderbilt University.
---------------------------------------------------------------------------
Introduction
On March 26, 1810, fresh off of a bloody duel, Henry Clay,
Kentucky's native son, hemp farmer, and future Speaker of the United
States House of Representatives, stood on the floor of Congress for one
of his very first speeches.\1\ Clay vigorously advocated that the
United States Navy give preference to American made hemp sails and
rope.\2\ Threatened by foreign markets, Clay sought to boost domestic
hemp prices to provide a cash crop for the farmers of central
Kentucky.\3\ As fate would have it, precisely 208 years later to the
day United States Senate Majority Leader Mitch McConnell stood on the
grounds of the Kentucky Department of Agriculture (``KDA'') and made
international headlines by announcing his plans to legalize hemp for
the first time in over seventy years of dormancy.\4\ Like Clay, he too
sought to fight foreign hemp markets and give the farmers of his home
state an alternative cash crop that once thrived in Kentucky.\5\
---------------------------------------------------------------------------
\1\ Henry Clay, The Papers of Henry Clay, Volume 1: The Rising
Statesman, 1797-1814 459 (James F. Hopkins, et al. eds., 1959).
\2\ Id.
\3\ See id. at 460.
\4\ Mike Debonis, Mitch McConnell renews push to legalize
industrial hemp, The Wash. Post (March 26, 2018, 2:30 p.m.), https://
www.washingtonpost.com/news/powerpost/wp/2018/03/26/mitch-mcconnell-
renews-push-to-legalize-industrial-hemp/ [https://perma.cc/TLK3-FYCR].
\5\ See generally id. (discussing Mitch McConnell's desire to help
hemp cultivate in his home state of Kentucky).
---------------------------------------------------------------------------
Rarely do two leaders of each chamber of Congress intersect on
policy 2 centuries apart, much less on the exact same crop. But, that
is the story of hemp: a crop full of contradictions, complexities, and
myths which span from colonial times to the 21st century.\6\ Since
becoming a Commonwealth in 1792, Kentucky has been defined by its rich
farming heritage and is known throughout the world for its agricultural
products such as thoroughbred race horses, tobacco, Kentucky Fried
Chicken, bourbon, and yes, hemp.\7\
---------------------------------------------------------------------------
\6\ See generally James F. Hopkins, A History of the Hemp Industry
in Kentucky (1998) (examining the long history of hemp starting in the
colonial times up until the 21st century).
\7\ James C. Klotter & Freda C. Klotter, A Concise History of
Kentucky 1-2 (2008).
---------------------------------------------------------------------------
Kentucky's history is entwined with the history of hemp.\8\ When
Archibald McNeill first recorded growing the crop outside of Danville
in 1775, it was quickly determined that Kentucky's rich soil and
climate made for perfect growing conditions, just as it had for
tobacco.\9\ Many Kentucky farmers, including my great-grandfather, grew
hemp for rope during World War II.\10\ In fact, the U.S. Department of
Agriculture (``USDA'') produced a promotional video in 1942 encouraging
farmers to grow hemp.\11\ In it, a patriotic narrator describes how
``in Kentucky, much of the seed hemp acreage is on river bottom lands .
. . along the Kentucky River gorge.'' \12\ With more than 26,000 acres
of hemp harvested in Kentucky in 2019,\13\ it's clear that hemp is a
crop that connects our past to our future.\14\
---------------------------------------------------------------------------
\8\ See Hopkins, supra note 6.
\9\ Id. at 69.
\10\ See generally id. (discussing the need for rope during World
War II and how it was made from hemp grown by Kentucky farmers).
\11\ Hemp for Victory (U.S. Dep't. of Agric. 1942).
\12\ Id.
\13\ Katie Pratt, Despite trade concerns, Kentucky agricultural
receipts hold steady for third year, net incomes up, Northern Kentucky
Tribune (Dec. 8, 2019), https://www.nkytribune.com/2019/12/despite-
trade-concerns-kentucky-agricultural-receipts-hold-steady-for-third-
year-net-incomes-up/ [https://perma.cc/U7F5-3X6Y].
\14\ See Klotter & Klotter, supra note 7.
---------------------------------------------------------------------------
Hemp is frequently in the news, especially following the passage of
the 2018 Farm Bill, which included The Hemp Farming Act of 2018.\15\ As
one can imagine, ``legal issues abound when discussing the laws and
regulations governing cannabis cultivation and marketing in the United
States.'' \16\ To give an overview of the laws, history, and future of
Kentucky's hemp program, this Comment begins by legally defining hemp
in Section I. Section II examines the return of hemp to Kentucky
through the Kentucky Department of Agriculture's hemp program and the
Federal Government's regulatory oversight of the hemp industry. Section
III discusses the response to the obstacles that resulted from the
administrative transition in the Office of the Kentucky Agriculture
Commissioner. Section IV explores Kentucky's progress in expanding the
program to benefit farmers and businesses since 2016. Finally, Section
V concludes by exploring what the future entails for hemp.
---------------------------------------------------------------------------
\15\ Hemp Farming Act of 2018, H.R. 5485, 115th Cong. (2018).
\16\ Ryan Quarles, Hemp: Connecting Kentucky's Past with its
Future, 1 J. of Agric. Hemp Res. 1, 2 (2019).
---------------------------------------------------------------------------
I. Hemp's Legal Origin and Definition
Before diving into the laws and competing frameworks which guide
hemp production, one must first know the single most important law
concerning the crop: its definition. Unlike any other crop grown in the
United States, hemp is defined through an [A]ct of Congress rather than
by farmers, agronomists, crop researchers, or biologists.\17\ This was
not always the case. Hemp cultivation thrived in Kentucky from 1775
through 1937 untethered, untangled and unimpaired by Federal law until
the late 1930's.\18\ During this golden age, production surged in the
central Kentucky region for historical uses ranging from paper,
clothing, textiles, rope making, and even livestock feed.\19\ As
steamboats replaced traditional sailing ships and the invention of
competing fibers such as nylon, the demand for hemp waned during the
Great Depression to historic lows.\20\
---------------------------------------------------------------------------
\17\ Renee Johnson, Cong. Research Serv., Defining Hemp: A Fact
Sheet 1 (2019).
\18\ Hopkins, supra note 6.
\19\ Id.
\20\ Id. at 193.
---------------------------------------------------------------------------
On the heels of dozens of states adopting the Uniform State
Narcotics Act,\21\ and, for reasons not entirely clear and still
subject to cannabis folklore, Congress passed the Marihuana Tax Act of
1937,\22\ effectively ending hemp production in America.\23\ Without
distinguishing between hemp and marijuana, the new law's cost-
prohibitive tax not only rendered hemp cultivation unprofitable, but it
also gave Federal prosecutors a right of action to prosecute those
cultivating for illicit use.\24\ It was not until an acute demand for
rope by the United States Navy after the outbreak of World War II did
the need for hemp cultivation necessitate a brief carve out exemption
from the tax.\25\ Administered by the USDA and spurred by the ``Hemp
For Victory'' campaign, thousands of tax exempt licenses to grow hemp
were given to increase production.\26\ Many of these licenses went to
Kentucky farmers.\27\
---------------------------------------------------------------------------
\21\ Uniform State Narcotic Drug Act, 21 U.S.C. 1201-1204 (1934)
repealed by Anti-Drug Abuse Act of 1988, 102 Stat. 4181.
\22\ Marihuana Tax Act of 1937, Pub. L. No. 75-238, 50 Stat. 551,
overturned by Leary v. United States 395 U.S. 6 (1969) and repealed by
Comprehensive Drug Abuse Prevention and Control Act of 1970, Pub. L.
No. 91-513, 84 Stat. 1236, 1292 (1970).
\23\ Hopkins, supra note 6.
\24\ Marihuana Tax Act of 1937, Pub. L. No. 75-238, 4-6, 50
Stat. 551, overturned by Leary v. United States 395 U.S. 6 (1969) and
repealed by Comprehensive Drug Abuse Prevention and Control Act of
1970, Pub. L. No. 91-513, 84 Stat. 1236, 1292 (1970).
\25\ Hopkins, supra note 6.
\26\ Hemp History, Hemp Industries Ass'n., https://www.thehia.org/
hisotry [https://perma.cc/E4FJ-VBZZ].
\27\ Id.
---------------------------------------------------------------------------
Congress did not revisit the legal definition of hemp again until
1970, after the striking down of the Marihuana Tax Act of 1937 through
Leary v. United States.\28\ In response, Congress passed the
Comprehensive Drug Abuse Prevention and Control Act of 1970, which
officially classified hemp as a Schedule 1 narcotic, indistinguishable
from marijuana.\29\ However, hemp research did not cease
internationally and by August 1976, the first known modern definition
of hemp emerged as ``a concentration of 0.3 [percent] Delta-9-THC (dry
weight basis) in young, vigorous leaves of relatively mature plants as
a guide to discriminating two classes of plants.'' \30\ Admittedly an
arbitrary distinction, the 0.3 percent THC (Tetrahydrocannabinol, the
psychoactive compound found in cannabis) threshold soon became an
internationally adopted measurement separating hemp from its illicit
cousin.\31\ In the 2014 Farm Bill,\32\ Congress adopted a very similar
definition of hemp to mean ``the plant Cannabis sativa L. and any part
of such plant, whether growing or not, with a delta-9
tetrahydrocannabinol concentration of not more than 0.3 percent on a
dry weight basis.'' \33\ No other crop is known to have such a
complicated history and legally constructed definition, which both adds
to the lure and complexity of hemp's reintroduction.\34\
---------------------------------------------------------------------------
\28\ Leary v. United States, 395 U.S. 6 (1969).
\29\ Comprehensive Drug Abuse Prevention and Control Act of 1970,
21 U.S.C. 801 (1970).
\30\ Ernest Small & Arthur Cronquist, A Practical and Natural
Taxonomy for Cannabis, 25 Taxon 405, 408 (1976).
\31\ Johnson, supra note 17.
\32\ Agricultural Act of 2014, Pub. L. No. 113-79, 128 Stat. 649
(codified at 7 U.S.C. 5940).
\33\ Id. at 7606.
\34\ See Johnson, supra note 17.
---------------------------------------------------------------------------
II. The Hemp Comeback Begins: 2013-2014
A. Kentucky Senate Bill 50
The modern hemp revitalization journey began with various state
legislative bills which sought to reintroduce the crop through a state
regulatory framework, pending approval from the Federal Government.\35\
After several attempts, the 2013 General Assembly enacted KY Senate
Bill 50, the product of considerable negotiations between the two
legislative chambers.\36\ The Senate's initial version of the bill
would have vested primary responsibility for the hemp program's design
and development in the Kentucky Department of Agriculture with
oversight from the Commissioner of Agriculture.\37\
---------------------------------------------------------------------------
\35\ Rich Mundell & D.W. Williams, An Introduction to Industrial
Hemp & Hemp Agronomy, Ky. Coll. of Agric., Food, & Env't., July 2018),
at 1, http://www2.ca.uky.edu/agcomm/pubs/ID/ID250/ID250.pdf [https://
perma.cc/ZAN7-AA5D].
\36\ S.B. 50, 2013 Gen. Assemb., Reg. Sess. (Ky. 2013).
\37\ See S.B. 50, 2013 Gen. Assemb., Reg. Sess. (2013).
---------------------------------------------------------------------------
After securing Senate passage by a vote of 31-6 on February 14,
2013, the bill went to the House of Representatives.\38\ By means of a
House floor amendment, the House of Representatives changed S.B. 50 to
remove much of the Department of Agriculture's discretionary authority
envisioned in the Senate's version.\39\ Instead, greater powers were
placed in the hands of the Kentucky Industrial Hemp Commission and the
Kentucky State Police.\40\ The House's amendment placed the authority
to promulgate administrative regulations (i.e., to design the hemp
program's structure), and to issue grower's licenses, in the hands of
the Commission.\41\ Criminal background checks would be performed by
the Kentucky State Police; any applicant with a felony drug conviction
within the previous 10 years would not be eligible for licensure.\42\
The House floor amendment also created a state-law definition of
``hemp'' that was expressly pegged to whatever tetrahydrocannabinol
(``THC'') levels Congress relied upon in its definition of
``marijuana'' in the Federal Controlled Substances Act, 21 U.S.C. 801
et seq.\43\
---------------------------------------------------------------------------
\38\ Id.
\39\ See id.
\40\ See id.
\41\ See id.
\42\ See id.
\43\ See id.
---------------------------------------------------------------------------
On March 26, 2013 (203 years to the day after Henry Clay's speech),
S.B. 50, as amended by the House, was approved by a vote of 88 to 4,
including my vote of support as a former legislator.\44\ Twelve days
later, on April 7, 2013 the bill became law.\45\ In so doing, the
Kentucky Legislature had exercised the extent of its authority to
facilitate hemp farming experimentation.\46\ Without action from
Congress, however, the longstanding Federal prohibition against the
cultivation of cannabis would keep things at a standstill.
---------------------------------------------------------------------------
\44\ KY. General S.B. 50, 2013 Gen. Assemb., Regular Session (Reg.
Sess. (Ky. 2013).
\45\ Id.
\46\ Id.
---------------------------------------------------------------------------
B. Federal Oversight Issues
In early 2014, Congress included within the Agricultural
Improvement Act (the ``Farm Bill'') a two-page section that created an
opportunity for state-level ``agricultural pilot programs'' to study
the ``growth, cultivation, or marketing'' of hemp.\47\ Led by Senator
McConnell and Kentucky's Congressional delegation, the 2014 Farm Bill
allowed farmers to cultivate hemp, ``a crop whose history was as old as
the Commonwealth itself.'' \48\
---------------------------------------------------------------------------
\47\ See 7 U.S.C.S. 5940 (LexisNexis 2014).
\48\ Quarles, supra note 16, at 1.
---------------------------------------------------------------------------
The ``pilot program'' concept Congress adopted with the 2014 Farm
Bill had important implications for how Kentucky's hemp program would
develop.\49\ There were at least two notable components. The first was
Congress's new definition of hemp as ``the plant Cannabis sativa L. and
any part of such plant, whether growing or not, with a delta-9
tetrahydrocannabinol concentration of not more than 0.3 percent on a
dry weight basis.'' \50\
---------------------------------------------------------------------------
\49\ See 7 U.S.C.S. 5940. (LexisNexis 2014).
\50\ Id. at 5940(a)(2).
---------------------------------------------------------------------------
Second, unlike the ``program of licensure'' for individual farmers
that the 2013 General Assembly had authorized with S.B. 50, Congress
did not create a Federal system of licensure for private citizens.\51\
Indeed, Congress authorized only ``agricultural pilot programs''
conducted by a state department of agriculture and institutions of
higher education.\52\
---------------------------------------------------------------------------
\51\ See id. at 5940.
\52\ See id. at 5940(a)(1).
---------------------------------------------------------------------------
Soon after President Obama signed the 2014 Farm Bill into law, the
most urgent challenge was seed acquisition. Where would KDA and its
program participants obtain the planting materials they needed? In
early May, KDA learned that a quantity of hemp seeds were being
detained by U.S. Customs and Border Protection agents at the United
Parcel Service cargo facility in Louisville.\53\ With the planting
season already underway, KDA swiftly filed suit in U.S. District Court
for the Western District to obtain the seeds.\54\ The dispute ended
with an agreement that the hemp seeds would be allowed entry by a DEA
import permit.\55\
---------------------------------------------------------------------------
\53\ Press Release, Ky. Dep't. of Agric., Industrial Hemp Seeds
Arrive in Frankfort, Ready for Pilot Research Programs (May 23, 2014),
https://www.kyagr.com/Kentucky-AGNEWS/press-releases/Industrial-hemp-
seeds-arrive-in-Frankfort-ready-for-pilot-research-programs.html
[https://perma.cc/LB8R-YARJ].
\54\ See Janet Patton, Kentucky Agriculture Department, DEA reach
deal on Hemp Seeds; Planting Could Come hemp seeds; planting could come
soon, Herald Leader (May 21, 2014, 1:40 PM), https://www.kentucky.com/
news/business/article44489994.html [https://perma.cc/J538-QLP6].
\55\ See Press Release, Ky. Dep't. of Agric., State Ag. Department,
Federal Government Reach Accord on Importation of Hemp Seeds (Aug. 14,
2014), https://www.kyagr.com/Kentucky-AGNEWS/press-releases/State-ag-
department-federal-government-reach-accord-on-importation-of-hemp-
seeds.html [https://perma.cc/DDK6-94Y3].
---------------------------------------------------------------------------
By the end of May 2014, KDA had signed a ``memorandum of
understanding'' with a number of farmers wishing to grow hemp within a
principal-agent relationship with KDA. KDA also coordinated with
representatives of several public universities in Kentucky.
C. The Success of Hemp
The first planting season was limited in scope because of delays in
seed acquisition and the challenges inherent in working with a new
crop.\56\ Of the 33 acres that were planted in 2014, there was moderate
success.\57\
---------------------------------------------------------------------------
\56\ See Industrial Hemp Research Pilot Program Overview, KY.
Dep't. of Agric., https://www.kyagr.com/marketing/hemp-overview.html#
[https://perma.cc/73ZR-PVD4].
\57\ Id.
---------------------------------------------------------------------------
The second year saw more success. In 2015, 922 acres were planted,
with more than 500 acres harvested.\58\ One notable development from
the 2015 growing season was the emergence of a new application of the
plant--extracting certain chemical compounds, known as cannabinoids,
from the floral part of the plant--alongside the traditional components
of fiber and grain.\59\ One of those cannabinoids was cannabidiol
(``CBD''), a chemical compound that was said to hold great promise in
health and wellness products.\60\ To the surprise of many, almost half
of the acreage planted in 2015 was attributed to farmers growing hemp
for CBD rather than grain or fiber.\61\ Whether CBD and other
cannabinoids would prove commercially viable--and what CBD's legal
status was under Federal law--remained unclear.
---------------------------------------------------------------------------
\58\ Id.
\59\ See U. KY. C. Agric., UK Industrial Hemp Research Progressing
in Second Year, Ky. Dep't. of Agric., https://www.kyagr.com/Kentucky-
AGNEWS/2015/UK-industrial-hemp-research-progressing-in-second-year.html
[https://perma.cc/M4PU-SMCV].
\60\ Id.
\61\ Id.
---------------------------------------------------------------------------
III. Challenges at the Start of a New Administration
When I took office as Agriculture Commissioner in 2016, Kentucky's
hemp program remained in its infancy.\62\ Even then, it was evident
that changes were needed.\63\ Although S.B. 50 placed responsibility
for hemp program oversight and management on the Industrial Hemp
Commission, its 26-member board had not convened for a meeting since
May 2014.\64\ With no staff support, the Commission was unable to carry
out its duties, which meant that responsibility fell to KDA and its
employees to keep the program running throughout the latter half of
2014 and all of 2015.\65\
---------------------------------------------------------------------------
\62\ Quarles, supra note 16, at 2.
\63\ Id.
\64\ See 2013 Ky. Acts 14, 3.
\65\ See id.
---------------------------------------------------------------------------
Kentucky's hemp program needed change to operate effectively and to
better serve the growing number of farmers and entrepreneurs interested
in hemp.\66\ In 2016, the Kentucky Department of Agriculture reviewed
the hemp program and worked with staff to refine methods already in
place.\67\
---------------------------------------------------------------------------
\66\ Quarles, supra note 16, at 2.
\67\ Id.
---------------------------------------------------------------------------
As Commissioner of Agriculture, the goal was to create a healthy
and productive hemp program that would make Kentucky the center of hemp
production.\68\ While other states were reluctant to adopt hemp, the
KDA aimed to ``use the first-mover advantage'' to better serve farmers
and researchers in the state.\69\ The idea was to prepare the state for
future Federal approval of hemp, allowing Kentucky to be more
attractive to commercial investments around the world and give Kentucky
farmers a potential alternative crop.\70\
---------------------------------------------------------------------------
\68\ Id.
\69\ Id.
\70\ Id.
---------------------------------------------------------------------------
A. A Plan for Kentucky
Three principles guided the KDA team's work. First, it was
imperative to build a strong, trusting, and mutually supportive
relationship with the Kentucky State Police and other law enforcement
agencies. Second, the KDA needed to find ways to reduce the paperwork
and administrative burdens that were required of program participants
and KDA's own employees. Third, the KDA needed to empower our growers
and processors. Above all, I wanted the organization to commit to a
mindset of continuous process-improvement as we aspired to be the best
program in America.
The first step was to create a clear written document that farmers
and entrepreneurs could read to understand the ``rules of the road.''
Because S.B. 50 had vested authority to promulgate administrative
regulations in the now-dormant Industrial Hemp Commission, which had
not met in years, KDA itself could not promulgate regulations without
first seeking a change in law from the General Assembly.\71\ In
anticipation of that step, KDA's staff dedicated hundreds of hours to
hammering out a detailed policy guide that could fill the gap in the
meantime. The product of the deliberations was a 25-page 2017 Policy
Guide, which set the parameters for the upcoming year's growing season
and served as a transparent prototype for future administrative
regulations.\72\ For the first time, a member of the public could read,
in black-and-white text, what the rules of the road would be.\73\
---------------------------------------------------------------------------
\71\ See 2013 Ky. Acts 134.
\72\ 302 Ky. Admin. Regs. 50:030 (Ky. Dep't. of Agric., 2018)
(the 2017 Policy Guide was subsequently promulgated as a regulation).
\73\ See id.
---------------------------------------------------------------------------
The next step was to ask the General Assembly for some help in
revising Kentucky's legislative framework. Senate Bill 50 was not
working for at least three major reasons.\74\ The first reason was the
structural misalignment between state law and Federal law.\75\ While
the 2013 General Assembly had enacted S.B. 50 with the expectation that
Congress would adopt a system of individualized licensure of
farmers,\76\ the 2014 Farm Bill's ``agricultural pilot programs'' had
restricted participation to state departments of agriculture and
universities.\77\
---------------------------------------------------------------------------
\74\ See S.B. 50, 2013 Gen. Assemb., Reg. Sess. (Ky. 2013).
\75\ See id.; see also Quarles, supra note 16, at 2.
\76\ See S.B. 50, 2013 Gen. Assemb., Reg. Sess. (Ky. 2013).
\77\ 7 U.S.C.S. 5940 (LexisNexis 2014).
---------------------------------------------------------------------------
The second reason arose from structural deficiencies within Senate
Bill 50.\78\ For instance, that the Industrial Hemp Commission had not
held a meeting since May 2014, in part because it was a major
undertaking simply to achieve a simple-majority quorum of its 26
members.\79\ Additionally, because the Commission had no full-time
staff support, it had proven almost impossible for that body to
maintain any continuity of effort over time. Responsibilities that
should have been assigned to an executive-branch agency with full-time
employees, such as the promulgation of administrative regulations, had
instead been placed in the Commission's hands.\80\
---------------------------------------------------------------------------
\78\ See S.B. 50, 2013 Gen. Assemb., Reg. Sess. (Ky. 2013); see
also Quarles, supra note 16, at 2.
\79\ Quarles, supra note 16, at 2.
\80\ Id. at 2-3.
---------------------------------------------------------------------------
The third reason S.B. 50 was deficient was that it did not answer
important public-policy questions.\81\ These included concerns about
the handling of hemp after harvest, the retention of floral materials
by the public, and possession of products, especially live plants and
seeds, by those not included in the pilot program.\82\ None of these
questions were answered by S.B. 50.
---------------------------------------------------------------------------
\81\ See S.B. 50, 2013 Gen. Assemb., Reg. Sess. (Ky. 2013); see
also id. at 3.
\82\ Quarles, supra note 16, at 3.
---------------------------------------------------------------------------
IV. Legislative Changes Lead to Explosive Growth
At the KDA's request, the 2017 General Assembly passed Senate Bill
218 which resulted in widespread changes to the hemp program.\83\ The
enactment of S.B. 218 allowed the hemp program to grow in ways that
would not have been possible without legislative support.\84\ The bill
contained several important features that emerged from the 2016 review,
including the transfer of powers from the Industrial Hemp Commission to
the KDA.\85\ This change allowed the KDA to create administrative
regulations and brought about a new advisory board, the Industrial Hemp
Advisory Board.\86\ The board was purely advisory in nature and allowed
KDA to receive input from those in the industry.\87\ The bill created a
clear distinction between those needing licensing.\88\ This separates
those who grow, handle, or process the plants, seeds, leaf materials
and floral material from those that buy a finished product or own an
already harvested material.\89\
---------------------------------------------------------------------------
\83\ See 2017 Ky. Acts 45, 1-14.
\84\ Quarles, supra note 16, at 3.
\85\ See Ky. Rev. Stat. 260.862 (2017).
\86\ See id.; see Ky. Rev. Stat. 260.860 (2017).
\87\ See Ky. Rev. Stat. 260.860 (2017).
\88\ See Ky. Rev. Stat. 260.858(3) (2017).
\89\ Id.
---------------------------------------------------------------------------
Soon after the Governor signed S.B. 218 into law, KDA went to work
to formulate the administrative regulations that would give program
participants an even clearer view of how the licensure program would
work.\90\ This work culminated in the promulgation of a separate guide
for licensed growers, licensed processors, and affiliated university
researchers.\91\
---------------------------------------------------------------------------
\90\ See S.B. 218, Regular Session (2017 Gen. Assemb., Reg. Sess.
(Ky. 2017).
\91\ See 302 Ky. Admin. Regs. 50:020 (Ky. Dep't. of Agric.,
2018); 302 Ky. Admin. Regs. 50:030 (Ky. Dep't. of Agric., 2018); 302
Ky. Admin. Regs. 50:040 (Ky. Dep't. of Agric., 2018).
---------------------------------------------------------------------------
Thanks to the framework provided by statutory and regulatory
guidelines, the state successfully increased hemp production. In 2018,
Kentucky farmers planted 6,700 acres of hemp, more than double what was
previously planted.\92\ The number of licensed processors increased
from 210 in 2018 to almost 1,000 in 2019, with the number of planted
acreage also likely to double.\93\
---------------------------------------------------------------------------
\92\ Kentucky Hemp Industry's Economic Impact Showed Explosive hemp
industry's economic impact showed explosive growth in 2018, Sentinel-
Echo (Mar. 22, 2019), https://www.sentinel-echo.com/community/kentucky-
hemp-industry-s-economic-impact-showed-explosive-growth-in/
article_85ce450d-61e1-5c65-8d4a-fe3229362357.html [https://perma.cc/
BTQ3-RH99].
\93\ Id.
---------------------------------------------------------------------------
The resulting economic impact numbers spoke volumes.\94\ Gross
product sales grew from $16.7 million in 2017 to $57.7 million in
2018.\95\ Payments to farmers also increased to $17.5 million in 2018,
nearly double the $7.5 million recorded in 2017.\96\ Full time jobs
more than tripled in that time frame as well, growing from eighty-one
to 281 positions.\97\ More than $100 million has been invested by
Kentucky processors.\98\ Sales of Kentucky hemp products reached $193.4
million in 2019.\99\ Despite these economic numbers, there exists major
growing pains in the industry that could affect the stability of
emerging hemp markets in the coming years.
---------------------------------------------------------------------------
\94\ Quarles, supra note 16, at 3.
\95\ Sentinel-Echo, supra note 92.
\96\ Quarles, supra note 16, at 3.
\97\ Industrial Hemp Research Pilot Program Overview, supra note
56; Doris Hamilton, Industrial Hemp Research Pilot Program, Ky. Dep't.
of Agric. (Oct. 11, 2018), https://www.kyagr.com/marketing/program_id/
70/documents/HEMP_2019HempApplicantMeeting10-11-18_000.pdf [https://
perma.cc/GT2U-Z8HS].
\98\ See Kentucky Hemp Industry's Economic Impact, supra note 92;
see also Hemp processing in U.S. state of Kentucky sees flurry of
investment, Hemp Today (Aug. 1, 2019), https://hemptoday.net/kentucky-
hemp-investment/ [https://perma.cc/R6EL-M82T].
\99\ Grace Schneider, More than 150 Kentucky Farmers Holding Last
Year's Hemp Crop After Disastrous Last Season, Courier Journal (June 1,
2020 7:04 a.m.), https://www.courier-journal.com/story/news/local/2020/
06/01/kentucky-hemp-farmers-steer-clear-after-2019-tumult/5282812002/
[https://perma.cc/9JMG-8X5P].
---------------------------------------------------------------------------
V. Another Big Step Forward
In March 2018, Senate Majority Leader Mitch McConnell, in a joint
press conference with KDA, introduced the Hemp Farming Act of
2018.\100\ This bill was later included in the 2018 Farm Bill.\101\
---------------------------------------------------------------------------
\100\ See Senator McConnell and Commissioner Quarles Announce Hemp
Legislation, Ky. Dep't. of Agric. (Mar. 26, 2018), https://
www.kyagr.com/KYAg-News/2018/Senator-McConnell-and-Commissioner-
Quarles-Announce-Hemp-Legislation.html [https://perma.cc/67MA-NNCT].
\101\ Harold B. Hilborn, 2018 Farm Bill Legalizes Hemp, but
Obstacles to Sale of CBD Products Remain, Nat'l L. Rev. (Mar. 5, 2019),
https://www.natlawreview.com/article/2018-farm-bill-legalizes-hemp-
obstacles-to-sale-cbd-products-remain [https://perma.cc/PTR8-5XKG]
---------------------------------------------------------------------------
A. The 2018 Farm Bill
The 2018 Farm Bill, championed by Leader McConnell, allows
Kentucky's hemp industry to expand because it makes important changes
to Federal law.\102\ First, the bill removes hemp from the Controlled
Substances Act of 1970.\103\ Second, it allows hemp farmers to
participate in USDA research programs and to receive Federal crop
insurance.\104\ Third, states may not interfere with interstate
shipments.\105\
---------------------------------------------------------------------------
\102\ See Agriculture Improvement Act of 2018, Pub. L. No. 115-334
12619 (2018).
\103\ See id. 12619.
\104\ See id. 7129, 7501, 11102 at 4795, 4819, 4919-20.
\105\ See id. 10114 at 4920.
---------------------------------------------------------------------------
The farm bill took a ``cooperative federalism'' approach and
allowed individual state's departments of agriculture to regulate hemp
in their jurisdictions.\106\ States submitted a focused plan specially
focused on each state's needs.\107\ The state must meet a federally
mandated minimal criteria, including sampling and testing programs, but
can otherwise regulate hemp to serve the state's best interest.\108\
---------------------------------------------------------------------------
\106\ See id. 297(B), at 4909-12.
\107\ See id.
\108\ See id. 10113 at 4908 (creating a new Section 297B, ``State
and Tribal Plans'').
---------------------------------------------------------------------------
Conclusion
Fortunately for Kentucky's farmers and processors, the existing
hemp program already meets the Federal requirements, which means that
our program can continue without significant disruptions. It also meant
that I was able to attend the White House signing ceremony in December
2019 and present Kentucky's State Plan, the very first in the nation,
to USDA Secretary Sonny Perdue just moments after President Trump
signed the bill into law.\109\ To date, numerous states have modeled
their hemp programs on the framework we have built here in
Kentucky.\110\
---------------------------------------------------------------------------
\109\ Tom Latek, KY leaders join Trump at Farm Bill signing,
legalizing industrial hemp, Kentucky Today (Dec. 20, 2018, 6:19 p.m.),
http://kentuckytoday.com/stories/ky-leaders-join-trump-at-farm-bill-
signing-legalizing-industrial-hemp,16857 [https://perma.cc/ZNP6-4W9U].
\110\ Tanner Hesterberg, State officials burn nearly $20,000 in
hemp that failed standard, WKYT (Apr 133, 2017 3:20 p.m.) https://
www.wkyt.com/content/news/State-officials-to-burn-nearly-20000-in-hemp-
that-barely-failed-standard-419334524.html [https://perma.cc/D4VA-
PKSH].
---------------------------------------------------------------------------
Recently, even more legal complexities have emerged as the USDA
published an interim final rule (``IFR'') to guide the implementation
of the hemp provisions of the 2018 Farm Bill.\111\ As state departments
of agriculture navigate this rule, challenges still exist within the
hemp industry: inevitable FDA oversight, EPA crop technology approvals,
hesitation by banks to lend with legal hemp companies, variations in
THC testing protocols, and even confusion about interstate commerce of
hemp. It seems as though just as much work is left to be done now as
did the 70-year effort to legalize hemp. It is my vision that one day
hemp will be treated much the same way other agricultural commodities
are in the United States. Regardless, Kentucky will develop a long-term
hemp market once the dust settles on the legalese which has impeded its
growth for almost a century.
---------------------------------------------------------------------------
\111\ See 7 CFR 990 (2020).
---------------------------------------------------------------------------
Despite these growing pains, ``Kentucky continues to lead the way
with hemp, just as it did when my great-grandfather grew it generations
ago on the banks of the Kentucky River.'' \112\
---------------------------------------------------------------------------
\112\ Quarles, supra note 16, at 4.

The Chair. Thank you very much, Doctor.
And now for our final witness, Ms. Greenberg, please begin
when you are ready.

STATEMENT OF KATE GREENBERG, COMMISSIONER,
COLORADO DEPARTMENT OF AGRICULTURE, BROOMFIELD, CO

Ms. Greenberg. Thank you, Chair Plaskett, for the
invitation to testify before you today. My name is Kate
Greenberg. I serve as the Colorado Commissioner of Agriculture
and was appointed to this role by Governor Jared Polis in 2018.
As Commissioner, I have the privilege of leading the Colorado
Department of Ag and our more than 300 employees dedicated to
supporting the nearly 40,000 farm and ranch families and almost
200,000 workers across Colorado.
Agriculture is one of the top drivers of our economy and
workforce, and it is essential to who we are as a state. We
have bold goals at the Department of Ag to build the future of
agriculture, including building economic and supply chain
resilience, advancing voluntary stewardship, supporting future
generations, and furthering animal health and welfare. The hemp
industry plays an important role in all of these goals.
Colorado has been fostering the growth of the hemp industry
for the better part of a decade. These efforts are exemplified
through the Colorado Hemp Advancement and Management Plan, or
CHAMP for short. The CHAMP initiative, which we launched in
2019, was a collaborative effort involving more than 200
stakeholders, state agencies, local and Tribal governments, and
industry experts. The CHAMP report, which is provided in my
written testimony, contains key deliverables addressing the
regulation of hemp across the entire supply chain, from
research and development to manufacturing and banking and
insurance. It also informed the formation of the Colorado State
Hemp Plan, which was approved by USDA and implemented on
January 1st of this year.
Like most states, following the 2018 Farm Bill, registered
hemp acreage in Colorado increased sharply to 87,408 acres in
2019. This was a dramatic uptick from the 1,800 registered
acres in 2014. Since 2019, however, we have seen a dramatic
decrease, as many states have, down to just under 3,700
registered acres.
There are many factors contributing to the current drop in
acreage. Overproduction in 2019 led to a rapid saturation of
the market, a market at that point which was solely reliant on
CBD. In addition, while the 2018 Farm Bill and USDA Final Rule
opened up new opportunities for hemp production, they also
placed additional burdens on producers. These burdens,
including much higher sampling and testing fees, background
checks, and duplicative FSA acreage reporting may also be
contributing factors to this current decline. In a recent
survey, many producers also stated that increasing the hemp THC
limit to one percent would encourage further production.
Since the full implementation of our state plan in January
of this year, Colorado has also taken on additional
responsibilities. We have expanded our testing from 30 percent
to 100 percent of all hemp lots. We have approved 18
performance-based sampling plans, including research and
disposal plans. Additionally, we have also trained and
certified 16 authorized samplers throughout the state.
Currently in Colorado, as in many other states, 100 percent
of regulatory program costs are paid by producers through
registration fees. We are facing similar challenges as other
states that have turned their programs back to USDA and making
our program financially sustainable, particularly in a
fluctuating environment.
USDA staff have been very responsive to our concerns, as we
have requested greater flexibility from them through the
rulemaking process, and we very much value their partnership.
However, there are certain ways in which Congress can provide
support to Federal agencies to allow for greater flexibility
and improve our state-run hemp programs. Specifically, we have
five recommendations for this Committee to consider. The first
one is to remove the DEA requirements for testing labs. Our
state-of-the-art laboratory began the process of obtaining DEA
certification in 2019. However, as of this hearing, we still
await their approval. This unnecessary burden can be removed by
the help of Congress.
Number two, allow the use of certified seed as an
alternative to the strict testing requirement. We believe there
is much to learn in this regard, and Colorado is a willing
partner to explore what is possible.
Number three, remove background check requirements. Hemp
should be treated like the agricultural commodity it is, and
producers should not be treated as potential criminals for the
production of illegal hemp crop.
Number four, establish a Federal grant program to support
state hemp programs. A grant program would help states continue
to manage our own hemp programs while taking some of the burden
off of USDA.
And last, number five, support Federal agencies,
particularly the FDA, in accelerating the regulatory process to
allow the use of hemp as feed.
In Colorado, we commit every day to helping build a
vibrant, resilient future for Colorado agriculture, consumers,
and the natural world. I believe there is a promising future
for hemp within American agriculture's safe, diverse and
abundant production. In order to achieve that future, we need a
stable and sound regulatory environment that will foster
diverse market opportunities, sustainable growth, and
meaningful investments in natural resource stewardship for the
greater good of the industry and future generations.
Thank you for your time today.
[The prepared statement of Ms. Greenberg follows:]

Prepared Statement of Kate Greenberg, Commissioner, Colorado Department
of Agriculture, Broomfield, CO
In 2014, Colorado became the first state to administer a hemp
program. In 2021, after many years of leadership and development in
this space, Colorado continued our efforts to advance the hemp industry
with the culmination of the Colorado Hemp Advancement and Management
Plan (CHAMP). The CHAMP initiative, launched in 2019, was a
collaborative, multi-month effort involving more than 200 stakeholders
that included the Colorado Department of Agriculture (CDA), the
Governor's Office, Department of Public Health and Environment,
Department of Revenue, Department of Regulatory Agencies, Office of
Economic Development and International Trade (OEDIT), Department of
Public Safety, Colorado Commission of Indian Affairs, Department of
Higher Education, local governments and industry experts. The CHAMP
Report\1\ (see attachment) was published on March 26, 2021, and
contained 21 key deliverables addressing the regulation of hemp across
the entire supply chain, including research and development, seed
stock, cultivation, testing, transportation, processing, manufacturing,
marketing, and banking and insurance.
---------------------------------------------------------------------------
\1\ https://drive.google.com/file/d/1m2J4bNRcn9SPg0-2hZtJrcE6-
aBlBrKv/view?usp=sharing.
---------------------------------------------------------------------------
Additionally, the Colorado Hemp Program regularly engages
stakeholders regarding the State Hemp Plan and rulemaking, holding four
quarterly Hemp Advisory Committee \2\ (HAC) Meetings and two annual
Hemp Symposia.\3\ The HAC is a ten member committee composed of
stakeholders, which has helped build the regulatory program in
Colorado. The Hemp Program distributes quarterly newsletters, email
blasts, and website information to hemp registrants and industry,
including grant opportunities and industry and regulatory updates.
CDA's Markets Division has surveyed the industry and is regularly
connecting hemp-related businesses while promoting domestic and
international trade. The Markets Division also regularly communicates
with the Global Business Development team at OEDIT and the Governor's
Office regarding ongoing priorities related to progressing this up-and-
coming industry.
---------------------------------------------------------------------------
\2\ https://ag.colorado.gov/plants/hemp/general-information/hemp-
advisory-committees.
\3\ https://ag.colorado.gov/plants/industrial-hemp/general-
information/hemp-symposia.
---------------------------------------------------------------------------
The hemp industry plays an important role in advancing Colorado's
and CDA's goals of building economic and supply chain resilience,
advancing voluntary stewardship, supporting the next generation in
agriculture, and furthering animal health and welfare. Hemp has the
potential to create new economic opportunities for farmers who are
dealing with a changing climate and increasingly arid land. Our young
farmers and ranchers are constantly seeking new ways to support their
bottom line and the environment at the same time. The hemp industry has
the potential to advance CDA's priorities if we listen to our producers
and implement sensible regulations.
Following the 2018 Farm Bill, registered hemp acreage in Colorado
increased sharply to 87,408 acres in 2019 from 1,800 acres in 2014.
Beginning in 2020, hemp acreage dramatically decreased to the current
3,698 registered acres in 2022. The recent decline in acreage is
largely due to the 2019 surplus production that has not yet been
depleted. Other factors include the economic disruptions caused by
COVID-19, additional states producing hemp post-2018 Farm Bill, and the
fact that infrastructure for food and fiber production from hemp has
largely not been developed.
Seventy percent of the hemp grown in Colorado through 2019 was for
cannabinoid extraction, followed by 25% seed and grain, and 5% fiber
and other industrial uses. Following 2019, cannabinoid extraction has
decreased to 60%, with seed and grain remaining close to 25%, and fiber
and other industrial uses (paper, plastics, hemp wood, and hempcrete)
have risen to 15%. Surveyed hemp producers have cited the lack of a
hemp market outside of cannabinoid production and not having the
resources to convert to fiber production as primary barriers to
entering new markets.
Since full implementation of the State Plan on January 1, 2022, CDA
has had to adapt our program in numerous ways to meet the new
requirements in the USDA Final Rule. CDA has expanded from 30% to 100%
testing of all hemp lots, and approved 18 performance-based sampling
plans, including research and disposal plans. Additionally, CDA ensures
hemp producers register acreage with the USDA Farm Service Agency
(FSA); completes monthly Federal reporting requirements; and has
trained and certified 16 authorized samplers throughout the state to
achieve 100% sampling of all lots. As a result, the enforcement and
legal responsibilities for CDA have increased in order to provide
customer service to support registrants, certified labs, and sampling
agents with new requirements.
The 2018 Farm Bill placed many significant burdens on hemp
producers, including much higher sampling and testing fees, completing
required background checks, and FSA acreage reporting, which is
duplicative in nature because it is already reported to the USDA
through state reporting. Currently in Colorado, as in many other
states, 100% of regulatory program costs are paid by producers through
registration fees. Colorado is facing similar challenges as the states
that have turned their programs over to the USDA in terms of making our
program financially sustainable. This has included the challenges of
fixed minimum regulatory costs with highly fluctuating registration
numbers.
In July 2022, 74 hemp producers responded to a CDA Survey to assist
the CDA Hemp Program in better understanding and supporting Colorado's
hemp registrants. Some of the challenges identified by Colorado
producers include registration and other fees, over-regulation, and the
need to increase the allowable THC limit from 0.3% to 1.0%. Registrants
also responded that more regulatory flexibility should be given to
crops grown for fiber, seed, food, and feed.
In comments provided on the USDA's Interim Final Rule on January
29, 2020, and October 8, 2020, CDA requested that USDA provide
flexibility as well as remove some of the requirements from the Final
Rule. USDA staff have been very responsive to our concerns and requests
for flexibility when they have the authority to do so. We greatly
appreciate their partnership in this work. However, there are certain
statutory changes that would provide the USDA greater flexibility and
improve state-run hemp programs. Our recommended changes are:

1. Remove DEA requirements for testing labs.

The USDA's Final Rule requirement for hemp testing laboratories
to be DEA registered should be removed as it is time-
consuming, inefficient, and unnecessary. The requirement is
too cumbersome and takes too long to implement. As soon as
the IFR was promulgated in October 2019, CDA initiated the
process of obtaining DEA certification for its state-of-
the-art laboratory. Even though the CDA laboratory had been
performing testing and analysis of cannabis samples in
support of Colorado's cannabis-related regulatory programs
for many years, up until this hearing, CDA still awaits DEA
approval. Based on our experience in seeking approval at
the state laboratory, we worry it may take years for other
laboratories to obtain DEA certification, which will create
a testing capacity problem in Colorado.

2. Allow the use of certified seed as an alternative to the strict
testing requirement.

Plant varieties are developed by plant breeders and are
protected by the Federal and State Plant Variety Protection
Act and Regulations. These varieties are known to have
Distinct, Uniform, and Stable characters and are multiplied
and marketed as certified seeds under the protection of the
Federal and State Seed Act. As hemp varieties are developed
with acceptable THC levels, the same system that has served
other plants should serve to protect and certify the
identity of hemp. A grower who uses certified hemp
varieties should not be regularly tested for THC since THC
compliance is certified with a seed certification system.
This will significantly reduce the cost of operations and
encourage farmers to adopt stable genetics that produce
consistency in the industry, helping several facets of the
industry simultaneously--both farmers and those engaged in
seed and genetic development.

3. Remove background check requirement.

The 2018 Farm Bill has paved the way for hemp to be grown as an
agricultural commodity. Farmers have the opportunity to
benefit from its multiple potential uses and enable
diversity in their choice of crop. Over the last 7 months
of implementing the USDA program, we received consistent
pushback from farmers and growers over the background
requirement. The requirement added cost, required time
until we receive results, and added an extra process of
notifications putting strain on already small program
resources. Additionally, the background provision prevents
those that have completed their rehabilitation from
participating in growing a legal agricultural commodity.

4. Establish a Federal grant program to support the state's hemp
program.

As a result of requirements in the 2018 Farm Bill and the
USDA's Final Rule, the hemp industry is highly regulated
with intensive data collection, background checks, land
registration, sampling, testing, inspection, enforcement,
and reporting requirements. A majority of state programs,
including CDA's program, are cash funded, meaning we depend
on the revenue collected from registration fees to provide
the services. Hemp registration is at its lowest level
since the program's creation, generating significantly less
revenue and making our ability to continue to run the
program into the future more tenuous. As of this hearing,
several states have closed their program. With the current
registration trends, more states are likely to close their
programs due to loss of revenue, putting more pressure on
USDA to take over the regulation in those states and
threatening the sustainability of the program. The USDA
should be charged with establishing a program to
financially support states that have implemented hemp
regulatory programs much the same way the USDA does for
other Federal requirements implemented by the states.
States like Colorado are implementing Federal requirements
and taking this regulatory burden off of the USDA without
financial compensation.

5. Accelerate the regulatory process to allow the use of Hemp as
feed.

Scientific research has shown hemp to have promising
nutritional benefits to livestock and pet animals. Studies
are still ongoing to demonstrate the safety and efficacy of
hemp as a feed ingredient. Colorado stakeholders have
worked for years to demonstrate safety and effectiveness
through collaborative research and numerous discussions on
how to develop a national path forward to safe and legal
approval. Providing Federal support for research is
necessary to ensure that the industry can demonstrate the
safety and effectiveness of hemp as quickly as possible
through the FDA's rigorous review process. FDA approval of
hemp as feed will immediately open significant new market
opportunities for hemp producers as well as provide a new,
sustainable source of animal feed to large feed and pet
food manufacturers.

Colorado is a leader in the hemp industry because our agricultural
producers are entrepreneurial, and those dedicated to supporting the
industry are driven to see it succeed. Stakeholders from across the
industry and state government came together to develop the key
deliverables in the CHAMP Report with the goal of promoting the health
and safety of the hemp industry for farmers, processors, and consumers.
The State of Colorado is doing everything we can to support our hemp
producers and invest in a vibrant, resilient future for Colorado
agriculture; however, Colorado's vision for our hemp industry cannot be
realized without changes in Federal statutes and regulations.
Attachment
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]>

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]>

Colorado Hemp Advancement & Management Plan C.H.A.M.P.
March 26, 2021

Colorado Governor Jared Polis, Department of Agriculture, Department of
Public Health & Environment, Department of Regulatory Agencies, Office
of Economic Development & International Trade

Prepared by: CHAMP Stakeholders, Colorado State University, MPG
Consulting, Roenbaugh Schwalb

Facilitated by: Government Performance Solutions
Table of Contents
Executive Summary

Objective Statement
Governance and Process
Industry Analysis
Key Stakeholders
Market-Level Principles and Policy Recommendations
Future Research and Policy Development

Section 1. Industry Analysis and Key Stakeholders

Introduction
Regulatory Context
Objective Statement
Governance and Process
Industry Analysis
Key Stakeholders

Governor's Office
Colorado Department of Agriculture
Colorado Department of Public Health & Environment
Office of Economic Development and International Trade
Office of the Attorney General
Colorado Department of Public Safety
Institutions of Higher Education
Colorado Department of Regulatory Agencies
Colorado Department of Natural Resources--Division of Water
Resources
Colorado Department of Revenue--Marijuana Enforcement
Division (MED)
Federally Recognized Indian Tribes
Local Government
Colorado Industry Associations and Other Nonprofits

Section 2. Stakeholder Recommendations

Recommendation Summary
Market-Level Principles Across the Supply Chain

Principle 1: Promote Economic Development Across the Supply
Chain
Principle 2: Chain of Custody & Information Sharing Systems
Will Drive an Expanding Hemp Industry
Principle 3: Focus on THC Control
Principle 4: Recognize the Importance of Federal
Compatibility While Also Advocating for Reasonable Regulations
Principle 5: Recognize the Importance of Intergovernmental
Coordination
Principle 6: Promote Access to Finance and Insurance Services
Across the Supply Chain
Principle 7: Promote Equity, Diversity, and Inclusion Across
the Supply Chain

Stakeholder Recommended Deliverables
R&D and Seed Recommendations

1. Certified Seed and Clone Program
2. Reduce Cross-Pollination Through Information Sharing
3. Expand Genetic Research and Establish Plant Breeding
Regulations

Cultivation Recommendations

4. Create an Innovative and Flexible Colorado State Hemp Plan
that Aligns with Federal Regulations
5. Verify Registrants Have Access to a Legal Water Supply
6. Establish a Center of Excellence
7. Non-Compliant Plant Material
8. Coordination of State and Local Regulatory Authority

Testing Recommendations

9. Field Sampling and Sampling Agent Certification
10. Hemp Laboratory Certification Program

Transportation Recommendations

11. Electronic Traceability System
12. Transportation Protocol

Processing Recommendations

13. Processor Registration and Inspection
14. Processor and Manufacturer Standards

Manufacturing Recommendations

15. Manufacturer Registration and Inspection

Marketing Recommendations

16. Glossary of Terms
17. Marketing and Labeling Guidance
18. Quality Assurance Certification Program
19. State Procurement of Industrial Hemp Products

Finance and Insurance

20. Develop Guidance & Best Practices
21. Expanded Data Availability

Future Research & Policy Development

Appendices

Appendix A. CHAMP Stakeholders and Participants
Appendix B. Detailed Industry Analysis

Background
Market Content
Hemp Cultivation in Colorado
Future Opportunities
Executive Summary
In response to Congress passing the Agriculture Improvement Act of
2018 (the 2018 Farm Bill), the anticipated publication by USDA of
enabling regulations for the cultivation of industrial hemp, and
Governor Jared Polis's stated priority for Colorado to remain a driving
force in hemp production, the Colorado Department of Agriculture formed
a statewide partnership known as the Colorado Hemp Advancement and
Management Plan (CHAMP) in June 2019.
The CHAMP initiative represents a broad stakeholder effort that
includes representatives from the Colorado Department of Agriculture
(CDA), the Governor's Office, Colorado Department of Public Health and
Environment (CDPHE), Department of Revenue (DOR), Department of
Regulatory Agencies (DORA), Office of Economic Development and
International Trade (OEDIT), Department of Public Safety (DPS), the
Department of Education (CDE), the Ute Mountain Ute Tribe, the Southern
Ute Indian Tribe, local governments, state institutions of higher
learning, and industry experts. A list of all CHAMP stakeholders and
participants is included in Appendix A.
Through the CHAMP process, stakeholders crafted economic
advancement principles for the entire hemp supply chain, including
research and development, seed, cultivation, testing, transportation,
processing, manufacturing, marketing, and finance and insurance. The
CHAMP initiative ensured that a wide range of stakeholders, including
members of the public, had the opportunity to comment on and
participate in shaping a variety of hemp-related policies the State of
Colorado should strive to implement.
The goals of this collaborative process were to develop a robust
and functional hemp supply chain; to create new, sustainable, and
inclusive employment and entrepreneurial opportunities; and to expand
markets for Colorado agricultural communities. At the time of this
report many questions and concerns remain on what the final Federal
regulations will look like. Moreover, the impact of COVID-19 is
currently a key factor in the development of the hemp industry as well
as the state's ability to implement the stakeholder recommendations. As
such, this report represents a snapshot in time, defining the general
direction stakeholders felt Colorado should pursue in the future.
Colorado will nevertheless continue to adjust to meet the challenges in
this new industry.
Figure 1. Hemp Supply Chain
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]>

Objective Statement
The CHAMP initiative aims to promote the health and safety of the
hemp industry for farmers, processors, and consumers. In doing so,
Colorado hopes to set a national example for how to establish an
advanced hemp industry. The state will achieve this objective through
balanced regulatory policies with a focus on economic and workforce
development, inclusion, education, R&D, finance, and entrepreneurship.
This report is created from the CHAMP stakeholder process, which
reflects a general consensus reached among stakeholders in the
industry, state and local government, federally recognized Indian
Tribes, and higher education institutions on the steps needed to
advance the hemp industry. Each recommendation was debated in an open
forum, providing an opportunity for all participants to voice support
or dissent and discuss as a group. In this way, the report provides a
blueprint for actions needed to create and sustain a thriving hemp
industry in Colorado.
Governance and Process
The CHAMP initiative is a collaborative endeavor that spans
multiple agencies, federally recognized Indian Tribes, local
governments, and industry representatives. A board of directors
provided high-level guidance for the initiative. Several other
governing groups, including an executive committee, provided targeted
guidance and reviewed draft materials.
Eight stakeholder groups, each representing a distinct link in the
hemp industry supply chain, met to discuss in greater detail the
challenges and opportunities facing the industry. In total, 202
stakeholders participated in the effort, meeting three times from July
through December 2019. Stakeholder groups included 25-30
representatives from each area of the hemp supply chain, together with
representatives from the legal, financial services, and insurance
industries. The eight stakeholder groups developed the policy
recommendations included in Section 2 of this report.
Industry Analysis
Hemp is an emerging specialty crop that has received considerable
attention from agricultural producers, consumers, manufacturing
businesses, and policymakers both internationally and in the State of
Colorado. Hemp cultivation may provide an alternative enterprise to
improve grower profitability and a potential engine of economic
development and business creation, all while contributing to the
sustainability of Colorado's natural resources as a substitute crop.
Hemp can be manufactured and processed into numerous industrial and
commercial goods for which there is national and international demand.
Hemp applications range from building materials and textiles to food
ingredients and wellness products.
About 13 percent of all hemp acres registered and planted in 2019
in the United States were in Colorado, the most of any U.S. state. Hemp
acreage increased substantially over the past 3 years in Colorado and
the U.S. in response to reformations to its legal status, creating an
increase in biomass supplies at the producer level. However, hemp
acreage decreased substantially in 2020 in Colorado and across the
country. CDA records provide information on the number of registrations
and the registered land area between 2014 and late July 2020. Between
2014 and 2019, the number of registrants and registrations grew each
year, resulting in about a ten-fold increase during that period. As of
late July 2020, however, the number of registrants and registrations
dropped between 40 and 45 percent below their comparable 2019 totals,
respectively.
Figure 2. Colorado Hemp Registrants and Registrations, 2014-July 2020
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]>

Source: Colorado Department of Agriculture.

Figure 3. Agency and Institution Summary
------------------------------------------------------------------------
Role in Hemp Advancement and
Agency or Organization Regulation
------------------------------------------------------------------------
Governor's Office Support, coalition building and
resource investment
Vision--providing a roadmap to an
agricultural and industrial
economic engine
Experience--Governor Polis offered
key hemp research provision in
the 2014 Farm Bill, while serving
in U.S. House of Representatives.
Department of Agriculture Registration--Cultivation
registration and management of
electronic registration system.
Field Sampling/Testing--Conduct
and certify field sampling and
THC testing.
Certification Support--Provide THC
testing in support of the seed
certification program.
Market Development--Provide
general support to expand the
growth of the hemp through the
Markets Division.
Department of Public Health and Lab Certification and testing for
Environment third-party THC testing labs.
Processor and manufacturer
licensing, inspection and process
validation.
Marketing and labeling standards,
including identity statement,
ingredient list, batch tracking
and other information.
Office of Economic Development and Promote hemp as a high-value
International Trade agricultural commodity and a next-
generation industry.
Employ economic development tools
and incentives where appropriate.
Office of the Attorney General Develop hemp policy in concert
with state agencies.
Address legal issues surrounding
hemp with Federal Government.
Department of Public Safety Enforce state hemp laws.
Facilitate and support CDA
implementing background checks.
Work with local municipal, Tribal,
and county law enforcement
agencies to meet public safety
needs.
Coordinate with other law
enforcement agencies to address
inter- and intrastate
transportation issues.
Higher Education Institutions Colorado State University,
University of Colorado, Adams
State University, Fort Lewis
College, CSU-Pueblo Institute of
Cannabis Research, and Colorado
Mesa University.
Education outreach initiative for
farmers, consumers, and the
public through CSU.
Cooperative extension service
provides expertise on
agriculture, water, business
management.
The Hemp Center of Excellence will
centralize and advance hemp
research, education, and grants.
Department of Regulatory Agencies Liaison to the insurance industry
to ensure proper coverages are
available to hemp businesses.
Financial services education for
proper debt and other financing
is available to the hemp
industry.
Assist financial institutions to
extend services to the hemp
industry.
Department of Natural Resources Monitor hemp cultivation and
processing operations to confirm
legal water source and ensure
proper water treatment prior to
release.
Department of Revenue Certain hemp products are sold at
regulated marijuana retail
stores.
Certain hemp products can be used
as an ingredient for regulated
marijuana products.
Ute Mountain and Southern Ute Tribes Tribes are actively monitoring the
hemp market and may develop a
management plan, and production
and/or processing enterprises.
Local Government Local governments may issue local
occupancy permits that will be a
condition of state permits where
applicable.
Zoning and land use ordinances for
locating indoor growing,
processing, and manufacturing
facilities.
Code enforcement, for fire safety,
odor control, building safety,
and other requirements.
Colorado Industry and Nonprofit COHIA propels the hemp industry
Organizations forward in Colorado through
information, public policy work,
and market development.
Hemp Feed Coalition's objective is
the Federal recognition of hemp
as an animal feed ingredient.
CSGA is the official seed
certification agency and
certifies hemp seed.
Rocky Mountain Farmers Union is an
advocate for family farmers and
ranchers, rural communities, and
consumers.
Colorado Farm Bureau provides
advocacy and various services to
the agriculture community in
Colorado.
Colorado Bankers Association
assist Colorado bankers
understand the hemp industry and
regulatory obstacles.
------------------------------------------------------------------------

Market-Level Principles and Policy Recommendations
There were several recurring principles that emerged from the
multiple stakeholder groups, documented below. These principles will
are noted throughout the recommendations, and a holistic approach to
each is essential in ensuring a successful hemp regulatory program.

Principle 1: Promote economic development across the supply
chain
Principle 2: Chain of custody and information sharing will
drive an expanding hemp industry
Principle 3: Focus on THC Control
Principle 4: Recognize the importance of Federal
compatibility while also advocating for reasonable regulations
Principle 5: Recognize the importance in intergovernmental
coordination
Principle 6: Promote access to finance and insurance services
across the supply chain
Principle 7: Promote equity, diversity and inclusion across
the supply chain

Identification of key recommended deliverables through the
stakeholder process was the driving focus of the CHAMP initiative. The
following stakeholder recommendations represent sensible and forward-
looking deliverables intended to bolster Colorado's hemp industry.
However, it is important to note that implementation is conditional on
the market need, Federal regulatory environment, procurement of
resources, including increased staff and funding, as well the passage
of legislation and production of rules and regulations. Dynamic changes
are still occurring for the hemp industry, particularly regarding
market conditions and Federal regulations. Moreover, the [COVID]-19
pandemic will most likely have an adverse impact on funding, staffing,
and other resources.
While these recommendations represent a general consensus of the
stakeholders, including the agencies that will implement the
deliverables, some of these recommendations may be difficult to
implement, require adjustments, or may be delayed based on the factors
mentioned above.

Figure 4. Recommendation Summary
------------------------------------------------------------------------
Supply Existing/New
No. Chain Area Title Program Agencies Summary
------------------------------------------------------------------------
1. R&D and Hemp Seed Existing CDA, CSU, Support
Seed & Clone program with CSGA, AOSCA research
Certific enhancement/ and
ation expansion developmen
Program t to
provide
stable
hemp
genetics
and
increased
availabili
ty of
varieties
that will
consistent
ly meet
THC
compliance
regulation
s.
Continue
to allow
the use of
open
source
seeds in
Colorado.
2. R&D and Cross- New program CDA, Center Allow CDA
Seed pollinat of to provide
ion Excellence, limited
Informat Colorado informatio
ion universitie n on the
s presence
of hemp
farms to
other
nearby
hemp
producers
to help
minimize
cross-
pollinatio
n.
Research
ways to
mitigate
cross-
pollinatio
n issues
(Center of
Excellence
and
educationa
l
institutio
ns).
3. R&D and Plant New program CDA, Establish a
Seed Breeding Colorado separate
and universitie registrati
Genetic s, Center on program
Research of specific
Regulati Excellence, to hemp
ons CSGA plant
breeding
and
genetic
research
to improve
the
quality
and
uniformity
of seed
genetics
and supply
for the
state's
producers.
4. Cultivatio USDA New program CDA, CDPHE Align state
n State hemp
Plan regulatory
Alignmen practice
t with USDA
requiremen
ts to
ensure
uninterrup
ted
operations
. Advocate
for
appropriat
e changes
to Federal
law as
needed to
promote
growth and
investment
in the
Colorado
hemp
industry.
5. Cultivatio Legal New program DNR, CDA Update CDA
n Water registrati
Supply on process
to develop
a
procedure
and
guidelines
to
collaborat
e with
DNR. DNR
will
ensure
registrant
s have
legal
access to
water for
cultivatio
n.
6. Cultivatio Center of New program CDA, CDPHE, Develop a
n Excellen Colorado public-
ce universitie private
s, OEDIT, partnershi
Tribal p between
governments academic
institutio
ns,
industry,
state
agencies,
and
private
stakeholde
rs to
establish
a Colorado
Hemp
Center of
Excellence
to
accelerate
developmen
t and
research
and
education
in hemp
cultivatio
n,
science,
and
technology
.
7. Cultivatio Non- Existing CDA, CDPHE, Follow USDA
n Complian program with Tribal rules for
t Plant enhancement/ governments sampling,
Material expansion testing,
and non-
compliant
plant
material
disposal.
Advocate
for ways
to test
and
dispose of
non-
compliant
plant
material
that
retain
value in
the supply
chain,
including
post-
harvest
testing,
industrial
uses, and
remediatio
n
procedures
. Ensure
disposal
regulation
s are
operable
and not
overly
burdensome
for the
state or
hemp
producers.
8. Cultivatio Coordinat Existing CDA, CDPHE, Provide
n ion of program with Tribal and hemp
State enhancement/ local registrati
and expansion governments on
Local , law informatio
Regulato enforcement n to other
ry agencies state and
Authorit local
y government
agencies,
under a
privacy
restrictio
n, to
facilitate
other
jurisdicti
ons'
inspection
s, permit
approvals
and
enforcemen
t actions
as
directed
by Federal
law.
9. Testing Field Existing CDA Review and
Sampling program with improve
and enhancement/ guidance
Sampling expansion on
Agent sampling
Certific and
ation testing
hemp grown
in
Colorado
for THC
content
according
to USDA
requiremen
ts and
establish
a
certificat
ion
program to
allow
third
parties to
collect
samples in
the field
for
regulatory
use.
10. Testing Hemp Lab Existing CDPHE, CDA Develop a
Certific program with certificat
ation enhancement/ ion
Program expansion program
that
provides
guidance
to private
analytical
laboratori
es on
certificat
ion
requiremen
ts,
appropriat
e
analytical
methods,
and
general
testing
procedures
.
11. Transporta Electroni New program CDA, CDPHE, Implement
tion c Tribal and an ETS to
Traceabi local support an
lity governments uninterrup
System , law ted chain
enforcement of custody
for hemp
products
from
harvest to
commercial
sale and
to provide
secure and
verifiable
informatio
n to
various
stakeholde
rs.
12. Transporta Transport Existing CDA, CDPHE, Develop
tion ation program with Tribal and guidance
Protocol enhancement/ local and best
expansion governments practices
, law for
enforcement transporti
ng hemp
and hemp
products
within
Colorado,
including
proper
documentat
ion and
recordkeep
ing.
13. Processing Processor Existing CDPHE, CDA Continue
Registra program the
tion and integratio
Inspecti n of hemp
on into the
current
Food and
Supplement
Manufactur
er
Program.
Further
define
licensed
activities
as needed
and
provide a
means for
the state
to
register
and
regulate
hemp
processors
and
manufactur
ers in
Colorado.
This is an
existing,
active
program.
14. Processing/ Processor Existing CDPHE, CDA Clarify and
Manufactu and program develop
ring Manufact state
urer regulatory
Standard requiremen
s ts and
appropriat
e policy
and
guidance
for
processing
and
manufactur
ing
practices
related to
hemp
products
for human
consumptio
n.
15. Manufactur Manufactu Existing CDPHE, CDA Continue
ing rer program the
Registra integratio
tion and n of hemp
Inspecti into the
on current
food and
dietary
supplement
manufactur
er
program.
Further
define
licensed
activities
as needed
and
provide a
means for
the state
to
register
and
regulate
hemp
processors
and
manufactur
ers in
Colorado.
This is an
existing,
active
program.
16. Marketing Glossary New program CDPHE, CDA Provide a
of Terms list of
terms and
definition
s for
different
stages in
the supply
chain to
create a
universal
understand
ing of the
terminolog
y used for
hemp
production
,
marketing,
and other
purposes.
17. Marketing Marketing Existing CDPHE, CDA Establish
and program guidance
Labeling for
Guidance retailer
and
manufactur
er
marketing
and
labeling
which
harmonize
with
national
and
internatio
nal
standards,
when
appropriat
e, for
consumable
hemp
products.
18. Marketing Quality New program CDA, CDPHE Form a
Assuranc quality
e assurance
Certific program
ation such as a
Program ``Good
Hemp
Program''
that
defines
that
establishe
s the
minimum
standards
which
Colorado
producers/
manufactur
ers must
meet to
qualify
for
special
certificat
ion/
designatio
n, the
fees from
which will
fund hemp
research
and
promotion.
19. Marketing State New program Statewide Encourage
Procurem state
ent of procuremen
Industri t of
al Hemp industrial
Products hemp
products.
20. Finance & Guidance Existing DORA Provide
Insurance & Best program guidance
Practice and best
s practices
to
financial
services
institutio
ns and
insurance
carriers
to
facilitate
increased
access to
financial
services
for
Colorado
hemp
businesses
.
21. All Expanded New program DORA, CDA, Provide
Data CDPHE, aggregated
Availabi OEDIT registrati
lity on and
other
informatio
n to
financial
institutio
ns and
insurance
carriers
to help
expedite
access to
services.
------------------------------------------------------------------------

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Future Research and Policy Development
The following regulatory issues were identified during the
stakeholder meetings and subsequent proceedings as issues or subjects
that required further research and policy development.

Feminized seed and clone certification. Convene a
stakeholder process to develop guidance and determine the
feasibility of a feminized seed certification program and for
the operational model and facilities for a clonal certification
program. This program will involve CSGA and CDA.

Cross-pollination. Research distance, pollen viability,
size, and other factors that determine risk for hemp cross-
pollination.

Retaining value in the supply chain. Use existing regulatory
avenues for non-compliant plant material including advocating
for exemption of mature stalks and seeds from destruction. In
addition, convene a stakeholder process to determine the rules
and procedures to develop secure supply channels that allow
non-compliant plant material to be processed for non-consumable
industrial uses; or to have the THC extracted and removed from
the stream of commerce.

Co-location of hemp and licensed marijuana businesses.
Prohibit the co-location of marijuana and hemp cultivation,
processing, and manufacturing businesses until Federal laws
allow. Explore an efficient regulatory structure to allow for
the co-location of all types of cannabis cultivation and/or
manufacturing facilities.

Electronic traceability system. Convene a process to develop
specifications, security, and documentation requirements for an
ETS that will ensure a secure chain of custody for hemp
products in Colorado.

Transport of concentrated intermediate products. As Federal
law allows, determine a transportation protocol for
intermediate hemp concentrates. These are business-to-business
transactions where products transported will be further
processed to bring THC levels into compliance before sale to
consumers.

Non-consumable industrial hemp manufacturing. Determine
whether additional regulatory oversight of industrial products
manufacturing operations is needed, and if so, establish the
lead regulatory agency and most advantageous regulatory
framework.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]>

Journal Communications Inc.,
FREELANCE' Shared Rights.

Inhalable and suppository hemp. Determine the best
regulatory treatment for inhalable and suppository hemp,
whether direct initial regulation by the state or by deferring
to the Federal Government timeline for hemp product regulation.

Quality assurance program. Determine the costs and benefits
of developing a quality assurance program that sets quality,
purity, and process standards and promotes a Colorado brand of
hemp products.

Retail Framework. Convene a stakeholder process to develop a
retail framework for hemp that integrates into an existing
retail framework for food or dietary supplements.

Financial services and insurance data. Determine data gaps
that exist for insurance and financial institutions and the
specific requirements and funding needed to expedite access to
services

The items listed above may require a task force or stakeholder
process to further develop the proper regulatory scope and
implementation action items[.]
Section 1. Industry Analysis and Key Stakeholders
Introduction
In response to passing the 2018 Farm Bill, the anticipated
publication of additional enabling regulations, and Governor Jared
Polis' stated priority for Colorado to remain a driving force in hemp
production, the Colorado Department of Agriculture (CDA) developed a
statewide partnership known as the Colorado Hemp Advancement and
Management Plan (CHAMP) in June 2019.
Even though Colorado has hosted a successful hemp industry since
2014, it was clear that Colorado would need to quickly establish a
regulatory framework to accommodate new producers and products entering
the market and to narrow regulatory gaps in the hemp supply chain not
considered by the 2018 Farm Bill. In addition, with new market
opportunities materializing, Colorado needed to implement initiatives
to advance the growth of the industry. CHAMP was formed to develop a
blueprint that would outline how the state could address the top issues
related to both the advancement and management of the state hemp
industry. Through the plan's development, Colorado aimed to build
consensus among the different stakeholder groups that represent the
industry, regulators and governmental agencies, and academic
institutions.
The CHAMP initiative and this report both represent a broad
stakeholder effort intended to achieve that consensus. The CHAMP
initiative includes representatives from CDA, the Governor's Office,
Department of Public Health and Environment (CDPHE), Department of
Revenue (DOR), Department of Regulatory Agencies (DORA), Office of
Economic Development and International Trade (OEDIT), Department of
Public Safety (DPS), the Southern Ute Indian Tribe, the Ute Mountain
Ute Tribe, Department of Education (CDE), local governments, state
institutions of higher learning, and industry experts. A list of all
CHAMP stakeholders is included in Appendix A.
Through the CHAMP initiative, stakeholders explored challenges and
opportunities facing the Colorado hemp supply chain, including research
and development, seed, cultivation, testing, transportation,
processing, manufacturing, marketing, and finance and insurance. CDA
created the CHAMP initiative to ensure that a wide range of
stakeholders, including members of the public, would have multiple
opportunities to comment on and participate in a variety of industrial
hemp topics.
The goals of this collaborative policy planning process are to (1)
develop a robust and functional hemp supply chain; (2) create new
sustainable employment and entrepreneurial opportunities; and (3)
establish a strong market for Colorado agricultural communities.
Ultimately, the resulting framework presented in this report
outlines challenges faced by the hemp industry and initiatives
suggested by stakeholders to maintain and build upon Colorado's
position as an industry leader, representing the largest gathering of
the hemp industry and government stakeholders held in any state to
date.
Regulatory Context
The 21 recommend deliverables outlined in this report represent a
consensus regarding hemp-related policy priorities for Colorado.
Implementation is conditioned on the regulatory environment; resources,
including increased staff and funding; as well as the passage of
legislation and corresponding regulatory action. While every effort
will be made to pursue these policies and programs, the Federal
Government may continue its strict regulatory posture and insufficient
resources may impede overall implementation; particularly with the
economic impact of COVID-19. But the market-level principles and
stakeholder recommendations in this report collectively represent a
broad guidance document for statewide policy for the hemp supply chain.
CHAMP is informed by the following laws, regulations, and policies.
State Law
Colorado citizens voted to pass Amendment 64 to the Colorado
Constitution in 2012, which in part directed the General Assembly to
enact legislation governing the cultivation, processing, and sale of
industrial hemp.\1\ Legislation adopted in 2013 delegated
responsibility for most hemp-related registration and inspection
oversight to CDA. Statutory authority for Colorado's Industrial Hemp
Program appears in Title 35 Article 61 of the Colorado Revised
Statutes. In the following years, CDA promulgated a comprehensive set
of rules to administer and enforce the Colorado Industrial Hemp
Regulatory Program Act, which is enabled by the regulations in 8 CCR
1203-23. Under Colorado's program, interested producers and product
manufacturers must register with CDA or CDPHE to produce or manufacture
hemp or hemp products.
---------------------------------------------------------------------------
\1\ As defined in the Colorado Revised Statutes, and in the 2018
Farm Bill, the term ``industrial hemp'' means the plant species
Cannabis sativa L. and any part of that plant, including the seeds
thereof and all derivatives, extracts, cannabinoids, isomers, acids,
salts, and salts of isomers, whether growing or not, with a D-9-
tetrahydrocannabinol concentration of not more than 0.3 percent on a
dry weight basis.
---------------------------------------------------------------------------
2018 Federal Farm Bill
The 2018 Farm Bill clarified that both hemp and hemp products are
legal in the U.S., amended the Controlled Substances Act (CSA) to
remove hemp from the definition of marijuana, and revised language in
the 2014 Farm Bill to expressly include products derived from hemp in
the legal definition of industrial hemp. The legislation also allowed
commercial cultivation and manufacture of hemp outside of 2014 Farm
Bill pilot projects. Under the 2018 Farm Bill, each state must submit a
plan to the USDA for approval that includes a framework for regulation
and monitoring of production. The 2018 Farm Bill also instructs the
USDA to promulgate Federal rules for commercial hemp production.
Importantly, the 2018 Farm Bill does not address regulations for
processing and manufacturing of hemp products into food, drugs, and
cosmetics, which are still forthcoming from the Food and Drug
Administration (FDA) as of the date of this report.
USDA Interim and Final Rule
The USDA issued its first set of hemp regulations in October of
2019, the Interim Final Rule (IFR), which formally addressed hemp
cultivation, harvest, and testing. The IFR established a regulatory
framework for USDA oversight of domestic hemp production under the 2018
Farm Bill. The IFR established requirements for approval of state or
Tribal plans regulating the production of hemp in their territories.
Rules addressed the production, sampling, testing, and disposal of hemp
plants, and set thresholds for acceptable amounts of THC. In comments
submitted to USDA, the State of Colorado twice urged USDA to modify the
IFR and adopt a more flexible regulatory structure to advance the
development of a robust, nationwide hemp industry.\2\ In January of
2021, the USDA published a Final Rule which made several changes from
the IFR. Many of the changes aligned with the comments submitted by the
State of Colorado. Specifically, the USDA cited the comments from
Colorado as one of the reasons for increasing the time to sample from
15 to 30 days before harvest, and to allow remediation of non-compliant
plants into complaint plant biomass to help farmers mitigate against
financial loss.
---------------------------------------------------------------------------
\2\ See comments submitted to USDA on the IFR, https://
www.colorado.gov/pacific/sites/default/files/
FinalIFRComments2020_0.pdf; https://drive.google.com/file/d/
1kUpA86y7oJ3tNEs
VQR26oIDoRdoLHrAu/view.
---------------------------------------------------------------------------
State Hemp Plan Submitted to USDA
The 2018 Farm Bill and the IFR require each state that desires to
have primary regulatory authority over the production of hemp within
its jurisdiction to submit a management plan to USDA that outlines the
regulation of various aspects of hemp cultivation. The State of
Colorado submitted its plan for USDA review on June 16, 2020. Many
details of this plan were derived or adapted from stakeholder
involvement in the CHAMP process and from the existing Colorado
industrial hemp regulatory framework, which was established after the
adoption of Senate Bill 13-241 in 2013. The state plan submitted to
USDA pushed for several policies reflected in CHAMP that are designed
to protect and advance the industry. Some of these policies were
revised to address the specific requirements laid out by USDA in the
IFR. Due to the changes made by the USDA from the Interim to Final
Rule, Colorado will be submitting a revised plan by October 2021. CDA
will continue to advocate for policies that best work for Colorado and
its hemp producers while staying within Federal guidelines as adopted
in Senate Bill 20-197, which aligns state and Federal hemp policy and
regulation.
DEA Interim Final Rule
In response to the 2018 Farm Bill and the USDA IFR, the U.S. Drug
Enforcement Administration (DEA) adjusted some of its rules regarding
hemp and marijuana in August 2020. These changes are stated by the DEA
to ``merely conform'' certain definitions to the 2018 Farm Bill,
although there has been immediate opposition and lawsuits filed from
hemp industry groups. On the surface, the IFR completes three
revisions: (1) Revising the definition of ``tetrahydrocannabinols'' to
exclude naturally occurring tetrahydrocannabinols in hemp; (2) Revising
the definition of marijuana extract (a controlled substance) to include
any cannabis (i.e., marijuana or hemp) extracts with a concentration of
more than 0.3 percent D9-THC on a dry weight basis; and (3) Removing
FDA approved drugs that contain CBD from the controlled substances
list. The rules, if implemented as written, would limit certain hemp-
derived cannabinoid production and require all hemp extracts to be kept
below 0.3 percent THC for transport. These rules add further regulatory
complexity and risk to hemp production and processing.
Objective Statement
The CHAMP initiative aims to promote the health and safety of the
hemp industry for farmers, processors, and consumers. In doing so,
Colorado hopes to set a national example for how to establish an
advanced hemp industry. The state will achieve this objective through
balanced regulatory policies with a focus on economic and workforce
development, inclusion, education, R&D, finance, and entrepreneurship.
The strength of this report is that it reflects a consensus view among
stakeholders on how to advance the hemp industry in Colorado. The
consensus was achieved through inclusive dialogue involving
stakeholders in the industry, state and local government, federally
recognized Indian Tribes, and higher education institutions. In
addition, the report functions as a blueprint for building and
sustaining a thriving hemp industry in Colorado by providing a
comprehensive set of recommendations for developing and implementing
policies in support of each link in the hemp supply chain.
Governance and Process
The CHAMP Board of Directors provides high-level guidance for the
initiative. The CHAMP executive committee provides more targeted
guidance and review of draft materials. The governing structure of the
project is depicted in Figure 5.
Figure 5. CHAMP Governance
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The executive committee met in July 2019 to develop the scope of
work and discussion topics for each stakeholder group. There were eight
stakeholder groups that met from July through December 2019. The
stakeholder groups developed the CHAMP policy recommendations included
in Section 2 of this report. The eight stakeholder groups each
consisted of 25-30 specific state, Tribal, and local officials, and
industry experts in each area of the hemp supply chain. Stakeholder
groups also included representatives from the legal, finance, and
insurance industries. There were 202 total stakeholders across eight
stakeholder groups. Figure 6 shows a description of the supply chain
and stakeholder groups.
Figure 6. Hemp Supply Chain
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]>

Each stakeholder group met three times and developed a number of
individual recommended deliverables.
The project team compiled and combined stakeholder group work into
21 key recommendations spanning eight distinct links in the hemp
industry supply chain.
Additional engagement completed as part of the CHAMP initiative
includes several public meetings held across the state to solicit
public input; a stakeholder meeting to discuss and solicit comment on
the USDA IFR document; and submission of the state hemp plan to USDA.
Throughout the process, members of the project team provided support
and research on regulatory best practices, economic and market
opportunity and characteristics, and a synthesis of proceedings into
the recommendations contained in this report.
Industry Analysis
The following is a brief summary analysis of Colorado's hemp
industry; a more detailed analytical review can be found in Appendix B.
Hemp is an emerging specialty crop that has received considerable
attention from agricultural producers, consumers, manufacturing
businesses, and policymakers both internationally and in the State of
Colorado. Hemp cultivation may provide an alternative enterprise to
improve grower profitability and a potential engine of economic
development and business creation while also contributing to the
sustainability of Colorado's natural resources as a substitute crop.
Hemp can be manufactured and processed into numerous industrial and
commercial goods for which there is national and international demand.
Hemp applications range from building materials and textiles to food
ingredients and wellness products.
While hemp may hold great promise for Colorado, the convergence of
the hemp supply chain with the broader agricultural and economic
landscape creates uncertainty and challenges. Historically, hemp has
been a more regulated crop than others due to its cousin, marijuana.
Other challenges include a lack of Federal regulation of post-farm hemp
products by the FDA and a general lack of awareness regarding the uses
of hemp derivatives in consumer and industrial applications.
Nonetheless, Colorado has been a leader in virtually all measures
of hemp activity. In 2019, about 13 percent of all hemp acres
registered and planted in the United States were in Colorado, the most
of any state in the U.S. Over the past 3 years, hemp acreage has
increased substantially in Colorado and the U.S. in response to
reformations to its legal status, creating an increase in biomass
supplies at the producer level. However, hemp acreage decreased
substantially in 2020 in Colorado. CDA records provide information on
the number of registrations and registered land area between 2014 and
late July 2020. Between 2014 and 2019, the number of registrants and
registrations grew each year, resulting in about a ten-fold increase
during that period. As of late July 2020, however, the number of
registrants and registrations dropped between 40 and 45 percent below
their comparable 2019 totals, respectively.
Figure 7. Colorado Hemp Registrants and Registrations, 2014-July 2020
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]>

Source: Colorado Department of Agriculture.

Many growers enjoyed solid returns in the 2014-2018 period of pilot
programs organized under the Agricultural Act of 2014 (2014 Farm Bill).
A relative scarcity of raw material and domestically produced flower
available to supply the rapidly expanding CBD market helped to maintain
wholesale prices for hemp and hemp products well above break-even
levels. Starting in 2019, however, there was a sharp increase in
production accompanied by a price collapse in the commodity market
driven by both supply and demand. On the supply side, expansion of hemp
production to new states and a dramatic expansion of planted acreage
over a short period of time made hemp biomass relatively more abundant
than it had been before. A lack of extraction and processing capacity,
coupled with slower-than-expected consumer demand for CBD and other
hemp products, yielded an environment in which hemp supply exceeded
2019 processing capacity or demand.
With producers facing oversupply due to a fragmented market, the
long-term outlook suggests that consumers will continue to look for new
food and dietary supplement alternatives, while businesses will
continue to seek more sustainable and renewable sources of materials.
So, despite recent challenges, there is undeniable potential for growth
in demand for industrial and consumer hemp products in the U.S.
As the supply chain grows and matures, Colorado is poised to
benefit. For this growth in demand to occur, however, the industry must
be proactive about early-stage issues like standardization, unproven
use cases and efficacy, and the accuracy of dosing for consumable
products. Moreover, it is imperative that Colorado explores all
potential opportunities and supports a supply chain that relies upon
industrial hemp for use in textiles, polymers, and construction inputs.
Overall, there is a lack of consumer education around cannabinoids,
which is exacerbated by the lack of Federal regulations related to
cannabinoids in consumer products. On the industrial side, there is
currently little applied research or proven cost-effective use cases
for different hemp applications.
Colorado can continue to lead the industry in hemp innovation by
facilitating and maintaining a favorable regulatory environment for
research and development. The recommendations outlined in this CHAMP
document demonstrate that the Colorado hemp industry continues to
position itself as a production and manufacturing leader.
To achieve leading status, research and development will be needed
in several areas including (1) genetics; (2) effective uses for a
variety of hemp industrial applications; (3) consumer uses and
preferences for cannabinoid products; and (4) scalable and safe
manufacturing practices.
Key Stakeholders
Many agencies and organizations have played key roles in the
overall establishment of the hemp industry in Colorado. The CHAMP
initiative brought together these agencies and industry organizations
to develop the blueprint for further advancement and management of
hemp. What follows below describes a cross-section of the
constituencies and highlights the key functions and services provided
toward developing Colorado's hemp industry.
Governor's Office
Colorado became a leader in national hemp production with the
passage of the 2014 Farm Bill and the subsequent roll-out of Colorado's
hemp pilot program. With the changes in the 2018 Farm Bill, the
Governor's Office prioritized Colorado's status as an innovative force
in promoting the production of hemp as a high-value agricultural
product.
The Governor's Office dedicated significant resources to the CHAMP
initiative, ensuring early on that the project involved principals from
key state departments. Governor Polis twice filed a joint response to
the USDA's Interim Final Rule and Request for Comments, the first
printed on Colorado-grown hemp paper and filed in partnership with the
Department of Agriculture and Attorney General Weiser. More recently,
the Governor issued a proclamation on June 11, 2020, also printed on
Colorado-grown hemp, declaring June 6-June 13 as Hemp Week and ordered
an American flag made from industrial hemp flown over the Colorado
State Capitol. And on June 18, 2020, with support from the Governor's
Office, the CDA filed its hemp management plan with the USDA.

Vision

Since 2014, Colorado's hemp program has grown to include over
87,000 acres of hemp and 2,600 registrations. Moving forward, the
Governor's Office hopes to help the Colorado hemp industry grow and
innovate while increasing good jobs and keeping Colorado as a top state
for production through appropriate regulation.
What's more, the Governor's Office has sought to ensure that hemp
producers and hemp-related business obtain access to banking, financial
services, finance, and insurance in a manner similar to other parts of
the agriculture value chain, initially throughthe joint publication of
the Roadmap to Cannabis Banking & Financial Services with DORA.

Experience

In five terms as a Member of the U.S. Congress, Governor Polis
advanced various bipartisan bills promoting the development of hemp in
Colorado. He, along with other Congressional Members, added the hemp
research amendment to the 2014 Farm Bill that allowed state agriculture
departments, colleges, and universities to grow hemp for academic and
agricultural research purposes.\3\ In 2017, then-Congressman Polis also
helped to launch the Cannabis Caucus, intended to promote and protect
hemp and marijuana. In that year, Polis hosted ``Hemp on the Hill''
with the Cannabis Caucus, which was the first event of its kind.
---------------------------------------------------------------------------
\3\ H. Amdt. 208, 113th Congress (2013-2014).
---------------------------------------------------------------------------
Colorado Department of Agriculture
The CDA oversees and promotes agriculture in partnership with other
state departments and local governments and through specific programs
authorized by the General Assembly. The Commissioner of Agriculture
serves as the head of the CDA, working with members of the Colorado
Agricultural Commission and other boards or bodies to formulate policy
for the state.
In 2015, the CDA became the primary agency responsible for
regulating hemp cultivation in Colorado with the creation of the
state's pilot industrial hemp program, principally through the Plant
Industry and Laboratory Services Divisions. Through those two
divisions, CDA regulates producers, provides testing services, and
administers a certified seed program, but does not have jurisdiction
over the processing, sale, or distribution of the crop. Further, CDA
serves as the lead agency regarding the development and administration
of the state's industrial hemp plan submitted to USDA under the 2018
Farm Bill and the IFR.

Registration

The CDA registers applicants under the 2014 Farm Bill pilot hemp
program and will remain the main regulatory agency for hemp cultivation
registration. When the 2018 Farm Bill produced a sharp increase in the
number of registration applications, the CDA developed a secure online
registration system.

Field Sampling and Testing

The CDA Laboratory Services Division conducts accurate, timely, and
legally defensible analysis of various agricultural samples, including
industrial hemp, on a random selection basis. The division has
established standard operating procedures to handle hemp samples for
THC analysis. CDA will continue in this role in sampling and testing
hemp for compliant levels of THC and will coordinate and certify third-
party field sampling agents to expand sampling coverage.

Seed Certification Support

The CDA Plant Industry Division created the first certified hemp
seed program in the nation and helped to develop an industry-leading
hemp program. The Colorado Seed Growers Association (CSGA) is the lead
certifying agency in Colorado; CDA will continue to support CSGA by
providing THC verification as part of the seed certification process.
Colorado Department of Public Health & Environment
CDPHE seeks to advance the health of Coloradans, protecting the
places where they live through health and environmental protection
programs and activities. CDPHE has overseen the inclusion of hemp in
consumable products since 2017, whether as a food ingredient or as a
nutritional supplement, through a combination of regulations, policy,
and licensing regimes. It is expected that CDPHE will continue to play
a role in the Colorado hemp industry under the CHAMP initiative in the
manner described below.

Lab Certification and Testing

CDPHE helps manage lab certification for most analytical
laboratories in the state for food and environmental testing. CDPHE
will serve as the main certifying agency for private labs that test for
compliant THC levels in hemp. Approved and certified labs will be
required to meet ongoing inspection, testing, and compliance protocols
for maintaining certification.
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Processors and Manufacturers

Colorado permits the inclusion of industrial hemp in food and
dietary supplements, subject to compliance with CDPHE requirements.
CDPHE has adopted applicable FDA regulations, specifically 21 CFR 111
(dietary supplements) and 117 (food), for hemp manufacturers and
processors. In addition to these requirements, CDPHE requires that all
parts of hemp used in consumable products must come from a hemp
producer registered and in good standing with the laws of the
jurisdiction where such producer grows hemp, THC must not be above
allowable limits, finished products are required to be tested, and the
product must meet state labeling requirements.

Marketing and Labeling

CDPHE sets standards for hemp-related product labeling. Hemp
products must include certain standard language, including an identity
statement, net weight statement, a list of ingredients, and the company
name with address. Labels of these products must also clearly identify
that hemp is an ingredient; list any CBD content; not make
unsubstantiated health, benefit, or disease claims; and include the
statement that the ``FDA has not evaluated this product for safety or
efficacy.''
Office of Economic Development and International Trade
OEDIT works with partners to create a positive business climate
that encourages dynamic economic development and sustainable job
growth. OEDIT strives to advance Colorado's economy through financial
and technical assistance that fosters local and regional economic
development activities throughout the state. OEDIT's various divisions
offer a host of programs and services designed to support the state's
business recruitment efforts for domestic and foreign companies
evaluating Colorado for relocation or expansion, existing Colorado
companies pursuing growth and expansion opportunities, and companies
requiring other retention services.
OEDIT's Global Business Development (GBD) division seeks to elevate
Colorado businesses and communities by using a data-driven approach to
recruit, support, and retain companies and businesses that contribute
to a robust and diversified economy. The GBD division has played an
integral role within the CHAMP initiative and will continue to promote
the Colorado hemp industry.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]>

Economic Development Tools and Programs
OEDIT's financing and incentive programs are comprised of cash
incentives, business grants, tax credits, debt, and equity financing
among other programs. Past funding and grants have been awarded to
companies within the hemp industry. Examples of various OEDIT programs
that can support and promote the hemp industry include Enterprise Zone
Tax Credits, Opportunity Zone Initiatives, Small Business Initiatives,
and other funding programs.
Office of the Attorney General
The Attorney General (AG) and the Department of Law represent and
defend the legal interests of the people of the State of Colorado and
its sovereignty. The AG exercises the responsibilities given to the
office by the Colorado Constitution, statutes enacted by the Colorado
General Assembly, and the common law. The AG is the chief legal counsel
and advisor to the executive branch of state government, including the
Governor, all the departments of state government, and to the many
state agencies, boards, and commissions. Both the 2018 Farm Bill and
the IFR both contemplate a role for the AG within the state plan; the
CDA must consult with the Attorney General in formulating the plan
submitted to the USDA, the AG must be notified of intentional
violations of the state plan, and the AG has access to real-time data
from the USDA.\4\
---------------------------------------------------------------------------
\4\ IFR at 58532.
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Colorado Department of Public Safety
The DPS has six divisions that provide public safety services for
Colorado communities: Colorado Bureau of Investigation, State Patrol,
Division of Criminal Justice, Division of Fire Prevention & Control,
Division of Homeland Security and Emergency Management, and the
Executive Director's Office. Similar to the Department of Law, the 2018
Farm Bill and the IFR contemplate a role for DPS within the framework
for hemp.

Law Enforcement & Public Safety

DPS will have several areas of focus within the state hemp plan.
Already, DPS coordinates with local municipal, Tribal, and county law
enforcement agencies to meet public safety needs, and that coordination
will extend to a variety of hemp concerns, including registration and
certification, fire safety, zoning, transportation, and compliance. As
part of the requirements in the IFR, obtaining a hemp production
license will require the completion of certain background checks, as
well as enforcement of state plan elements. It is therefore expected
that DPS will continue to foster interagency coordination within
statewide law enforcement efforts.

Transportation

The Motor Carrier Safety section will continue to handle various
aspects of hemp-related transport activity regarding commercial motor
vehicles, including those related to crashes, hazardous materials
handling, or any criminal violations. Further, DPS coordinates with law
enforcement outside of Colorado to address interstate transportation
issues.
Institutions of Higher Education
Colorado State University (CSU) is part of the CHAMP initiative and
is actively involved with the collaboration of agencies, academic
institutions, and other industry stakeholders in developing the hemp
industry in Colorado. Further, CSU staff served with the CDA as lead
authors of this report and its findings. In addition to CSU, other
Colorado academic institutions will be actively involved in hemp
research and workforce development, including the University of
Colorado, Adams State University, CSU-Pueblo Institute of Cannabis
Research, Fort Lewis College, Colorado Mesa University, Western
Colorado University, and the University of Northern Colorado.

Extension Service

CSU Extension works within Colorado communities to provide
education, data, and research-based information to the public.
Expertise includes agriculture, water, business management, and other
topics useful for understanding and building the hemp industry. CSU
Extension Service has been instrumental in developing education
materials to support hemp production, identifying both the risks and
opportunities associated with hemp production, while also performing
research intended to close knowledge gaps caused by the decades-long
prohibition against hemp production in the United States.
Colorado Department of Regulatory Agencies
DORA announced, along with Governor Polis, the Roadmap to Cannabis
Banking & Financial Services.\5\ The Roadmap stated Colorado's goal,
vision, and strategies for improving access to banking, insurance, and
other financial services to those in the hemp industry.
---------------------------------------------------------------------------
\5\ Polis Administration Unveils `Roadmap to Cannabis Banking &
Financial Services' (https://drive.google.com/file/d/
1VJSROIpmW9NJkxETlECy0DQw1kCqgcXm/view).
---------------------------------------------------------------------------
With the passage of the 2018 Farm Bill and the submission to the
USDA of Colorado's proposed hemp plan, DORA seeks to create a
regulatory environment where financial services and insurance are
offered to hemp companies on par with other industries, to provide
clarity on how state hemp laws and regulations apply to service
providers within the financial services and insurance industry, and
encourage innovation for emerging technologies and business models that
better meet the needs of Colorado's hemp industry stakeholders.

Insurance

DORA's Division of Insurance regulates Colorado insurance companies
and serves as a liaison to the National Association of Insurance
Commissioners and industry stakeholders. Lack of clarity and
understanding of the issues surrounding insurance for hemp companies
has led many insurance companies to avoid providing coverage to the
industry. It is expected that the Division of Insurance will focus on
two key areas under the CHAMP: educating insurance companies on
providing coverage for hemp producers and other users of manufactured
hemp products; and encouraging underwriters to design products tailored
to the industry.

Banking and Financial Services

The Division of Banking regulates state-chartered commercial banks
and trust companies, state-licensed money transmitters, and enforces
the Public Deposit Protection Act. The Division of Financial Services
regulates state-licensed credit unions and savings and loan
associations. The Division of Banking and the Division of Financial
Services are working with the Federal Reserve System, Federal Deposit
Insurance Corporation, and the National Credit Union Administration to
offer clarity on how to protect banks and credit unions while building
a regulatory environment where state-chartered and licensed financial
institutions, money transmitters, and insurance companies can expand
services to those in the hemp industry. It is expected that these
divisions will seek to partner with CDA, CDPHE, and the Colorado AG's
office to ensure continued compliance with state hemp rules and
regulations, as well as the continued safety and soundness of
institutions that opt to offer financial services to hemp companies.
Colorado Department of Natural Resources--Division of Water Resources
The Division of Water Resources (DWR) administers water rights,
issues well permits, represents the state in interstate water compact
proceedings, monitors streamflow and water use, issues licenses for
well drillers, assures the safe and proper construction of water wells,
and maintains numerous databases of Colorado water information. This
division ensures Colorado hemp producers obtain a legal water supply
for all cultivation activities.
Colorado Department of Revenue--Marijuana Enforcement Division (MED)
The MED of the Colorado DOR regulates the cultivation, production,
and sale of marijuana (medical and retail) in Colorado. Representatives
from the division participated in the stakeholder meetings that
occurred in connection with the development of this report. While hemp
producers may not transfer plant material to MED-licensed businesses,
manufacturers of hemp-derived products such as extracted cannabinoids
can sell inputs to food and storage facilities registered with CDPHE.
Such CDPHE-registered businesses may then in turn sell finished
products containing hemp derivatives to MED-licensed dispensaries,
subject to satisfaction of certain testing and product tracking
criteria.
Federally Recognized Indian Tribes
Reservations of the Ute Mountain Ute Tribe (UMUT) and of the
Southern Ute Indian Tribe (SUIT) adjoin one another in Southwest
Colorado near Mesa Verde National Park. The portion of the UMUT
reservation that overlaps with Colorado spans 575,000 contiguous acres
extending into New Mexico and Utah, including the 7,700 acre UMUT Farm
& Ranch Enterprise at the base of Sleeping Ute Mountain. The 1,064\2\
mile SUIT reservation includes high-mountain timberlands in its eastern
portion and mesas to the west (closer to UMUT), but no tribally-owned
farm and ranch; rather, the Agriculture Division of the SUIT Natural
Resources Department works to foster economic opportunities for SUIT
members and the Tribe itself on Tribal and allotted lands.
Under the 2014 Farm Bill, Tribes could form arrangements with state
higher education and agriculture departments that would permit the
production of hemp. The 2018 Farm Bill, by contrast, empowered
federally recognized Indian Tribes to assume primary regulatory
authority over cultivation, processing, production, and marketing of
industrial hemp on Tribal lands. With regards to growers seeking to
produce hemp on lands within reservation boundaries, the regulator to
whom a grower or manufacturer is subject will depend (much like oil and
gas extraction) upon whether such lands are held in fee, owned by the
Tribe, or allottees.\6\
---------------------------------------------------------------------------
\6\ See, e.g., Erin M. Erhardt, States Versus Tribes: The Problem
of Multiple Taxation of Non-Indian Oil and Gas Leases on Indian
Reservations (https://digitalcommons.law.ou.edu/cgi/
viewcontent.cgi?article=1032&context=ailr), 38 Am. Indian L. Rev. 533
(2014).
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Local Government
In 2019, the Colorado General Assembly clarified that local
governments have the authority to regulate businesses engaged in the
processing, extraction, or manufacturing of hemp. Local governments can
regulate businesses involved in the sale of industrial or food products
containing hemp, so long as those regulations do not conflict with
state law. Local governments continue to play a critical role in the
evolution and growth of the Colorado hemp economy. For example, local
governments have the opportunity to address zoning, building & fire
safety, and other areas that fall within their purview.
The Colorado Municipal League (CML) and Colorado Counties, Inc.
(CCI) are nonprofit, nonpartisan organizations providing advocacy,
information, and training to Colorado's municipalities and counties,
respectively. These local government agencies seek to ensure that the
perspectives of municipalities and counties are included in major
statewide decisions, including the evolution and growth of the Colorado
hemp industry. CML and CCI are actively engaged with the primary goals
of maintaining local government authority to regulate businesses and
gaining more coordination with the state on issues such as permitting
locations for hemp cultivation.
As noted elsewhere in this report, the first step for many
cultivators and manufacturers of hemp is to properly register their
crop with state agencies. Such businesses must also ensure compliance
with local ordinances and zoning laws, and obtain necessary local
licenses, where applicable.

Zoning, Fire Code, and Building Safety

Land use codes are implemented at the local level. Local
governments can control the production of hemp through local zoning and
land use ordinances in the same way they do businesses and other
agricultural products. Local governments can designate where hemp may
be grown within their jurisdictions through land use and/or zoning
authority. Local noise and odor regulations may also apply to the
cultivation, production, and storage of hemp products. Given the
evolving nature of both the hemp industry and land use laws in
Colorado, local governments may seek additional tools in the future to
address issues uniquely associated with hemp and/or impacts on adjacent
property owners.
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Fire safety is of primary concern in the processing and production
of hemp products, especially with indoor extraction of CBD oil
(considered high risk due to the nature of the materials used in the
process). Local governments may develop permit and inspection
requirements for these operations to address fire and other safety
concerns, which may impose additional requirements not currently
required by state law.
Colorado Industry Associations and Other Nonprofits
Industry organizations have proven critical to the thoughtful
evolution of policy and regulations enacted by Federal, state, and
local agencies and the reemergence of industrial hemp as a nascent
industry within Colorado. Such organizations represent the concerns and
interests of the stakeholder members to ensure that laws meet both the
goals of various governments and the practical needs of the farmers,
producers, manufacturers, and ancillary businesses within the industry,
while also providing critical resources surrounding the certified seed.
The following are key associations that took part in the stakeholder
process, listed in alphabetical order.

Colorado Bankers Association

The Colorado Bankers Association (CBA) strives to provide banks
with clarity on how to treat hemp-related businesses through ongoing
education and advocacy. Banks have been left ensnared in a conflict
between state and Federal laws regarding their ability to serve these
customers--something CBA continues to work to remedy.
Bankers associations, including CBA, recently called for changes to
the USDA IFR that would help facilitate banks offering services to hemp
growers and related businesses. The changes include increased ability
to verify would-be borrowers legitimacy as well as more flexibility in
potency testing for hemp for growers whose crops inadvertently exceed
the 0.3 percent threshold, which if not changed could lead to increased
financial loss for borrowers and lenders alike. Most recently, CBA
advised bankers that they must tailor their anti-money laundering
programs to monitor their hemp-growing customers more effectively.
CBA hosts regular forums and educational opportunities to keep its
members and, in turn, their customers apprised about ongoing efforts to
help them more easily serve hemp businesses, while complying with all
state and Federal laws.

Colorado Farm Bureau

The mission of the Colorado Farm Bureau (CFB) is ``to advance the
interest of the Colorado farm and ranch community'' through ``research
and inquiry into the fields of agriculture, industry, commerce,
transportation, economics and political relations.'' It advances the
interests of its members by promoting farming and ranching, providing
member resources, and developing school farm programs. Membership
representation includes farming, ranching, education, produce, retail,
medical, and scientific industries. CFB is actively involved in policy
development and advocacy in legislation. CFB announced that it is
looking forward to working with the Governor's Office in supporting
hemp production and took an active role in CHAMP stakeholder
discussions.

Colorado Hemp Industries Association

The Colorado Hemp Industries Association (COHIA) ``is a member-
driven organization propelling the hemp industry in Colorado through
reliable information, public policy work, and agriculture and market
development.'' COHIA has a list of stated goals that include providing
grassroots representation, education to the public, and various
advocacy and support functions for the hemp industry. COHIA is an
active member of the CHAMP initiative and provided comments to the IFR
on January 9, 2020, expressing concerns and recommendations for changes
that largely mirrored those of the state. The organization provides
updates and industry news, conferences and education events, and other
tools for supporting hemp businesses, researchers, and supporters.

Colorado Seed Growers Association

Colorado Seed Growers Association (CSGA), located on the campus of
Colorado State University, is a nonprofit educational and service
organization operated in partnership with CSU Cooperative Extension.
CSGA, a member of the Association of Seed Certifying Agencies (AOSCA),
is the official seed certifying agency in Colorado and works closely
with CDA on the CDA Approved Certified Seed program. Certification is
expected to continue through CSGA by following standards set by the
AOSCA which comply with the Federal Seed Act and Colorado Seed Act.

Hemp Feed Coalition

The Hemp Feed Coalition (HFC) emerged from the 2018 Hemp in Animal
Feed Report completed by CDA. After completion of the report, the
Coalition was created by multiple industry stakeholders including the
hemp industry, Feed Processors and formulators, animal producers, feed
regulators, and animal experts. The HFC is working to gain Federal
regulatory approval for hemp as an animal feed ingredient through
education, research, and completion of applications submitted to the
FDA and Association of American Feed Control Officials. The secondary
goals of the HFC are to: establish new markets for hemp and its
products and the creation of a secure supply chain; and support
research into the safety and efficacy of hemp which is necessary to
secure a position for hemp as an ingredient in feed, both for
production animals and pets.

Rocky Mountain Farmers Union

Rocky Mountain Farmers Union (RMFU) is a cooperative enterprise
described as a grassroots organization that advocates for family
farmers and ranchers, communities, and consumers in Colorado, New
Mexico, and Wyoming. RMFU focuses on educational, legislative, and
cooperation programs, and also participates in developing legislative
proposals to support member interests. RMFU was active in supporting
Amendment X, a Colorado state constitutional amendment that changed the
definition of industrial hemp to match Federal law. In 2019, RMFU
policies included support for removal of hemp from the CSA, an end to
restrictions surrounding the transportation and importation of hemp
seeds and live hemp plants across both state and Federal boundaries,
recognition of hemp as a specialty agricultural crop, research into the
various potential uses of hemp, the formation of hemp cooperatives, and
other legislative support in the development of the hemp industry. RMFU
continues to emphasize hemp as an important topic at educational
workshops and symposiums and is also actively involved in advocacy,
educational outreach, and promotion of hemp as an agricultural
commodity.
Section 2. Stakeholder Recommendations
Recommendation Summary
The CHAMP stakeholder process resulted in 21 recommendations that
span eight links in the hemp industry supply chain. A list of the
recommendations is included below. Each recommendation in this section
includes the legal basis and purpose for the policy recommendation;
information on existing regulatory and supportive practices and on new
regulatory programs; and guidance on implementation, including needs
for new legislation, rulemaking, programs and procedures.\7\
---------------------------------------------------------------------------
\7\ At the conclusion of the stakeholder discussions the groups
produced 45 draft deliverables that function as policy recommendations.
These were combined to form 21 core regulatory objectives highlighted
in Figure 8.
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The recommendations result from an initial identification of
important topics by the CHAMP executive committee, and then three
meetings for each stakeholder group where stakeholders further
identified and specified key regulatory topics and practices.
Each recommendation was then further refined to include the policy
or position; education or research required; action items; and key
resources required for implementation. Figure 8 shows the stakeholder
groups and recommended deliverables.
Figure 8. Stakeholder Recommendation
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Market-Level Principles Across the Supply Chain
There were several recurring regulatory principles that emerged
from the stakeholder groups, documented below. These principles will be
noted throughout the recommendations, and a holistic approach to each
is essential to creating a successful hemp regulatory program.
Principle 1: Promote Economic Development Across the Supply Chain
Colorado State Government, primarily through OEDIT, continuously
seeks to establish, recruit, support, and retain businesses that
provide the right jobs for Colorado and that contribute to a robust and
diversified economy. In keeping with that mission, OEDIT offers a
variety of programs that seek to draw, maintain, and expand the
presence of employers in Colorado.
Several of Governor Polis's ``Wildly Important'' Goals for Fiscal
Year 2021 focus on the advancement of the hemp industry, including
goals to increase Colorado hemp production space; increase business
startups in rural Colorado; initiate a hemp working group with industry
stakeholders to explore additional ways to support the growth of the
industry in rural areas; and increase Colorado hemp producers'
commodity market share through increased business partnerships. OEDIT
has also sought to actively integrate hemp into its existing toolbox of
incentives, technical support, and investment. Several programs could
be available to hemp cultivators, processors, and manufacturers.
Hemp companies may fit into OEDIT's classification of advanced
manufacturing, or may be considered a target industry that provides
desirable employment opportunities, and could be eligible for many
OEDIT programs. Hemp production operations may also be located in areas
eligible for rural economic development incentives. OEDIT programs
appropriate for hemp businesses may include (but are not limited to):

Skill advance Colorado. Grants for the training or
retraining of employees of businesses relocating to or
expanding in Colorado; or for established companies to reinvest
in their workforce to remain competitive. Awarded for net new
job creation.

Colorado microloans. Grants for nonprofit lenders to make
loans to businesses not otherwise served by traditional credit
markets.

Job growth incentive tax credit. Tax credit for businesses
pursuing competitive expansion initiatives that provide at
least 20 new jobs.

Enterprise zone. State income tax credits for businesses to
locate and expand in economically disadvantaged areas.

Opportunity zone (Federal). Tax credit for investors in low-
income communities throughout the state that offers tax
forgiveness on capital gains and favorable treatment of
reinvested capital gains.

Strategic fund incentive. An incentive program that offers
an even cash match for businesses that create and maintain
permanent net new jobs.

Advanced industries incentive/accelerator program. Grants,
tax credits, seed funding and job training programs for
advanced manufacturing, aerospace, bioscience, electronics,
energy and natural resources, infrastructure engineering, and
technology/information businesses.

Small business development center. Fifteen technical
assistance centers across the state that offer a network of
mentors and consultants provide no-cost consulting and low-cost
training and workshops to entrepreneurs and small businesses.

Venture capital authority. Publicly supported investment
funds that provide equity and debt investments in early-stage
companies.

Promotion. OEDIT seeks to elevate the profile of Colorado
businesses and communities throughout the world. OEDIT will
continue to promote the Colorado hemp industry under its
mission.

The programs above may require that businesses meet several
criteria, whether through a competitive application process, new job
creation metrics, or locating inside specific zones targeted for
economic development. Hemp companies are encouraged to participate
alongside all other current or prospective Colorado companies, and all
hemp companies are eligible for technical assistance and for programs
designed to support new job creation, especially in disadvantaged zones
targeted for economic development.
The CHAMP industry analysis (Appendix B) and stakeholder discussion
underlined the need for a broad initiative to increase research and
awareness of the industrial and consumer uses of hemp products and
extracts. Research and development of new uses and the reinvigoration
of traditional uses will drive future investment in scalable processing
facilities that could locate in Colorado as national demand for hemp
products increases.
Advanced manufacturing facilities can serve a national or
international market and would require a reliable source of raw hemp
fiber or grain as inputs, thus benefiting local agricultural
communities. Intellectual property that will drive the industry through
new varietals, products, and manufacturing processes is of equal
importance as a key industry value component.
As a result, research and development and processing capacity are
all vital for the advancement of Colorado hemp. A coordinated public
economic development effort like the CHAMP often will signal and
incentivize further private investment in hemp production, processing,
and manufacturing.
Principle 2: Chain of Custody & Information Sharing Systems Will Drive
an Expanding Hemp Industry
One key item considered for registered hemp industry participants
is a traceability system that creates a chain of custody beginning at
harvest and continuing to the final end-product, including
documentation for all transactions and transport. A traceability system
that provides an uninterrupted chain of custody between registered
entities could assist in Federal regulatory compliance, food safety,
and interstate commerce; and could allow for unencumbered interstate
transportation in the future. It could also bolster consumer confidence
in hemp end-products.
It is expected that chain of custody entries and documents will
allow for seamless trade and transportation of hemp across the state
and multiple jurisdictions, and for law enforcement to distinguish
registered, compliant hemp from other cargo in transport. The
traceability system would also support potential future development of
the Colorado regulatory scheme which, depending on the Federal
regulatory environment, could include post-harvest testing, a THC
remediation program, and food safety functions like foodborne pathogen
identification or product recalls.
Principle 3: Focus on THC Control
Controlling THC in hemp plants and products is important to ensure
compliance with Federal regulations. Colorado is experienced in
regulating THC as one of the first states to develop a regulated
commercial cannabis framework in 2014. CDA officially regulates the
control of THC for hemp products up to the farm gate to conform to the
state and Federal definition of hemp. In addition, Colorado has also
pioneered the use of certified seed to provide farmers the choice to
use known genetics with low THC level. Looking toward the future,
Colorado is interested in exploring the remediation of THC (as soon as
federally permissible) to produce safe and efficient options for non-
compliant plant material to meet the 0.3 percent THC requirement.
Principle 4: Recognize the Importance of Federal Compatibility While
Also Advocating for Reasonable Regulations
The Colorado hemp program must comply with Federal laws and
regulations, including any forthcoming Federal laws and USDA, FDA, DEA,
the Federal Trade Commission (FTC) and other agency rules; at the same
time, stakeholders in Colorado will continue to advocate for the rules
and policies developed as part of the CHAMP initiative. Some policies
included in this report are long term objectives and are more forward-
looking than current Federal law and will need to be implemented as
Federal law and rules evolve. While Federal compatibility is important
to establish national standards, Colorado should continue to advocate
for appropriate and reasonable Federal regulations that allow for
advancement of the industry, while at the same time, maintaining a
level of public safety.
Principle 5: Recognize the Importance of Intergovernmental Coordination
Close coordination with state, Tribal, and local governments and
law enforcement agencies will ensure that compliant cultivation and
manufacturing businesses can operate efficiently and transport hemp
without unnecessary delay. Interstate and Tribal government
communications will be crucial for transport across Tribal/state
boundaries. Tribal and local government and law enforcement will be
granted access to state electronic registration and other records, for
any regulatory activity, through the establishment of a Memorandum of
Understanding (MOU) that private or proprietary information will be
kept confidential.
Principle 6: Promote Access to Finance and Insurance Services Across
the Supply Chain
All businesses require stable access to standard finance and
insurance products. Ensuring comparable access to financial services
and insurance for hemp is essential for industry development and will
help businesses achieve stability in its early years, where markets are
often fragmented and volatile. Colorado can be a leader for guidance
and outreach to institutions seeking to serve the evolving marketplace
and facilitate the provision of services in a manner similar to other
agricultural products.
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A corollary issue arising out of stakeholder meetings may require
state involvement or public-private partnerships; namely, that Federal
crop insurance does not cover non-compliant material like other
agricultural products that banks look to for underwriting and risk
management purposes. The state should deepen partnerships to resolve
this issue in a manner intended to eliminate coverage shortfalls.
Forward progress is expected to require multi-department coordination
with support from the Governor's Office, DORA, state, and Federal
legislators, and as Members of the Colorado Congressional Delegation
and Tribal leaders.
Principle 7: Promote Equity, Diversity, and Inclusion Across the Supply
Chain
As the industry continues to grow, Colorado should commit to making
the Colorado hemp industry a model for equity, diversity, and
inclusions (EDI). Direct initiatives should be made to promote the
diversity and inclusion of emerging businesses in farming,
manufacturing, and retail sectors. Any large initiatives to advance the
industry should be examined through an EDI lens to promote the
inclusion of those who have historically been underrepresented.
Colorado should focus on increasing hiring, access to funding,
promoting a diverse culture, stakeholder outreach and education.
Stakeholder Recommended Deliverables
Identification of key recommended deliverables through the
stakeholder process was the driving focus of the CHAMP initiative. The
following stakeholder recommendations represent a general consensus
among stakeholders regarding sensible and forward-looking deliverables
intended to bolster Colorado's hemp industry. Alternative viewpoints
for certain deliverables are noted where appropriate. However, it is
important to note that implementation is conditional on the market
need, Federal regulatory environment, procurement of resources,
including increased staff and funding, as well the passage of
legislation and production of rules and regulations. Dynamic changes
are still occurring for the hemp industry, particularly regarding
market conditions and Federal regulations. Moreover, the impact of the
COVID-19 pandemic will most likely have an adverse impact on funding,
staffing, and other resources.
Consequently, while these recommendations represent a general
consensus of the stakeholders, including the agencies that will
implement the deliverables, some of these recommendations may be
difficult to implement, require adjustments, or may be delayed based on
the factors mentioned above.
Each recommendation is organized as follows:

A short concept summary

The basis and purpose of the recommendation

The regulatory program:

current program--describes a current program that will
be expanded or replaced

existing program--describes a program that will
largely remain the same

recommended enhancement--describes a new, expanded, or
enhanced program

Implementation steps

Key government, institutional and industry stakeholders

Recommendations are further organized by the supply chain area and
follow the product from seed to market. The following comprise the 21
final recommendations derived from the CHAMP stakeholder proceedings
and from public input taken at state events held in 2019 and 2020.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]>

R&D and Seed Recommendations

1. Certified Seed and Clone Program
Stakeholder Recommendation

Support research and development to provide stable genetics and
increase the availability of varieties that will consistently meet THC
compliance regulations. Continue to allow the use of open source seeds
in Colorado.
Expand the current hemp seed certification program to include
standard and feminized seed, encourage national adoption of THC
verification as part of hemp seed and clone certification. Encourage
private industry and institutions of higher education to develop state
hemp varieties. While currently allowed, stakeholders recommend
Colorado continue to allow the use of open source seeds.

Basis & Purpose of Recommendation

The statutory basis for this recommendation is CRS 35-27-102
(Colorado Seed Act). The Colorado Seed Act is implemented by 8 CCR
1203-6.
A certification program provides a path to verify identity and
protect traits in the seed. Seed certification is one method used to
distinguish identity, along with Plant Variety Protection certificates,
patents, and utility patents. The U.S. seed certification program is
part of the Federal Seed Act but is carried out by individual state
agencies, state departments of agriculture or crop improvement
associations. These agencies are coordinated through the AOSCA. In
Colorado, the CSGA is the official seed certifying agency and an AOSCA
member.
Certified seed and clones assure the buyer (and end-user) of the
genetic identity and characteristics of the products being purchased. A
robust certification program protects producers against inaccurate or
misleading labeling, which can cause severe economic hardship due to
low crop yields, high THC concentrations, poor crop quality, and the
spread of noxious weed seed. Under current market conditions, Colorado
producers have experienced a shortage in reliable hemp seed sources,
inflated seed prices, and a concerning amount of seed sold by predatory
sellers using false information.

Regulatory Program

Current Program. The hemp seed certification program is operated by
CSGA. CDA provides THC testing for the program. To certify seed, a CSGA
hemp varietal review board must deem the entrant to be a genetically
distinct, uniform, and stable plant variety. Then, the CSU Experiment
Station plants the variety in several locations across the state in
trials to prove the applicant claims in varying soil, altitude, and
general environment. CDA then tests for THC content and the CSU seed
laboratory tests to verify all other applicant claims (i.e., purity,
yield, noxious weed presence, etc.) for variety stability. The initial
single-season trial occurs at four experiment station locations
throughout Colorado. Each subsequent year a variety is certified and
labeled under the CDA Approved Certified Seed program, CSGA inspects
every seed production field prior to harvest. THC verification,
completed by CDA, will also occur annually for producers of certified
seed.
Recommended Enhancement. The features of an enhanced hemp seed
certification program, including the certification process and
certifying agencies, will largely remain the same. Stakeholders
recommended that CSGA evaluate the expansion of the certification
program to include a clonal certification program (pilot starting in
2020) and a feminized seed certification program (in process). Key
features of the hemp certified seed program would include:

Certifying agencies and general process. Tax Hemp
certification should continue to be administered by CSGA and
will follow generally accepted AOSCA standards and comply with
the Federal Seed Act and the Colorado Seed Act. The current
process for seed certification will remain the same, including
the varietal review, testing, and labeling procedures described
above.

THC verification. CDA and designated state-certified THC
testing labs should provide THC verification and testing for
the seed certification program.

Feminized seed. CSGA and AOSCA certified agencies expand
existing hemp certification standards to include feminized seed
for accepted varietals. CSGA should work with stakeholder
groups to develop and adopt standards for feminized hemp seed
breeding and production, including the use of chemical
applications to produce female pollen and feminized seed.
Feminized seed will be certified only if it has gone through a
standard AOSCA certification process for genetic identity and
purity, and the additional requirements needed to verify proper
feminization procedures. CSGA should harmonize their procedures
with AOSCA once there are international guidelines for
feminized seed.

Certified clone program. CSGA should work with AOSCA
certified agencies to evaluate the feasibility and enterprise
structure to establish a certified clone program. A genetic
certification process for clones would be similar to seed
certification, where plants enter a varietal review and are
grown full term, in multiple conditions over multiple seasons
to verify identity, purity and select traits. Definitions for
foundation, registered and certified genetic stock would be
developed by CSGA.

Open source hemp genetics. CDA should continue to allow hemp
genetics from any source to be grown and harvested in Colorado
if it meets the definitions described in 8 CCR 1203-23. Open
source genetics mean any seed or clone produced by the plant
Cannabis sativa L. that possesses a THC content less than or
equal to 0.3 percent tested according to CDA regulations; and
is not patented, certified, or otherwise protected. Any open
source seed can be entered to become certified if it can pass
the required trial process.

Implementation

The following action items are needed to implement this
recommendation:

THC verification program--pending any expected AOSCA
action--standards development, testing and trial procedures,
labeling standards;

Feminized seed certification program--pending AOSCA action--
testing and trial procedures, labeling standards;

Clone certification program--pending AOSCA action--standards
development, testing and trial procedures, labeling standards;
and

Develop task force to determine need, feasibility, operating
model, and funding.

Key Stakeholders

CDA, CSU, CSGA, AOSCA, other seed certification agencies, Colorado
hemp farming and seed breeding industry and associations.
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2. Reduce Cross-Pollination Through Information Sharing
Stakeholder Recommendation

Allow CDA to provide limited information on the presence of hemp
farms to other nearby hemp producers to help minimize cross-pollination
between different varieties of hemp, and between hemp and marijuana
plants, that may lead to unwanted traits or non-compliant crops. On a
long-term basis, stakeholders recommend that researchers, including the
Center the Excellence, explore ways to mitigate cross-pollination
issues.

Basis & Purpose of Recommendation

The statutory basis for these recommendations is found in CRS 35-
61-104 and implemented by CCR 1203-23. Such laws and regulations define
and describe the registration process for hemp producers, including
registration requirements, information collection, and reporting
requirements.
Developing cross-pollination reporting provides information to hemp
producers who might be susceptible to cross-pollination from other
nearby hemp fields, so they can make informed decisions about
registering their lots and protecting their crops.
Seed, fiber, and cannabinoid producers choose their crop location
without the ability to understand the local cross-pollination risk
factors, i.e., other nearby hemp crops that may produce pollen. An
information program, where producers are notified of how many hemp
crops are located nearby (i.e., within a certain radius in miles) may
help in risk mitigation, where pollination can significantly reduce the
value of certain hemp crops.
The impact of cross-pollination will continue to be an obstacle
that hemp growers face. The stakeholders determined this specific issue
should be a prioritized area a Center of Excellence (described in
recommendation 6) should research.

Regulatory Program

Current Program. There is no current program directly addressing
information sharing to minimize cross-pollination. Anonymized
information on the presence of nearby hemp registrants is provided to
other registrants on an as-requested basis. CDA does not restrict or
prohibit registered locations if they comply with all state and Federal
hemp laws.
Recommended Enhancement. The hemp producer registration program
administered by CDA collects information on location, variety, and
intended end use of each hemp crop. This information could be combined
with GPS data to create a notification to producers whether their
proposed dioecious or feminized crop is within a predetermined distance
of another registered hemp lot.
Stakeholders recommended CDA establish a service to inform hemp
farmers if other registered hemp fields are within a certain defined
distance, thus potentially posing a cross-pollination threat. The
producer could request a report during registration to see if other
hemp lots are registered nearby and an update notification if another
hemp lot is registered after the producer's initial registration. To
maintain confidentiality requirements, the CDA would simply report to
affected producers whether (and how many) other hemp fields exist
within the defined distance. When possible, the stakeholders' visioned
the system would be automated based on technological capabilities of
the CDA database.
In the longer-term, the stakeholders recommended Colorado research
institutions, including the Center of Excellence, focus on research
factors that affect cross-pollination risks, such as proximity,
geography, climate, pollen viability, presence of hemp genetic research
facilities, and other factors to develop cross-pollination risk
standards.
The consensus from the stakeholders indicated that Colorado should
continue to not restrict or prohibit registered locations if they
comply with all state and Federal hemp laws.

Implementation

The following action items are needed to implement this
recommendation. Items include responsible agencies, estimates of
required budget and funding sources, and additional staff where
applicable:

New procedures establishing the by-request information
program while protecting producers' confidential information;

Adopt research-determined definitions for physical distances
at which cross-pollination poses a risk; and

Evaluate the feasibility of an automated notification system
for cross-pollination.

Key Stakeholders

CDA, Colorado higher education institutions, Center of Excellence,
Cooperative Extension Service, and other research institutions.
3. Expand Genetic Research and Establish Plant Breeding Regulations
Stakeholder Recommendation

Establish regulations and a registration program specific to hemp
plant breeding and genetic research. This program would allow and
encourage research to improve the quality and uniformity of seed
genetics and supply for the state's producers, without restrictive THC
content rules that would otherwise place them in violation of the
broader hemp production regulations.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]>

Basis & Purpose of Recommendation

The purpose of developing separate regulations specific to seed and
clone R&D is to allow plant breeders and researchers to conduct
research activities that are conducive to atypical production models
and processes such as continuous planting and culling, as well as
generation of plant material in possible violation of the THC
requirements. Because plant breeding requires trial and error across
multiple generations before genetics are stabilized and predictable, a
separate set of regulations for these registrants is necessary to allow
them the flexibility to conduct this research in good faith without the
threat of penalties.
Current Federal rules under the IFR include no special provisions
for genetic research & development or for plant breeding. To implement
this recommendation, the Federal rules would need to allow for this to
occur. CDA would implement this recommendation to the extent feasible
and after consultation with the USDA.

Regulatory Program

Current Program. CDA has allowed genetic research under the rules
established in the 2014 Farm Bill and by rule in 8 CCR 1203-23. This
program will be impacted in the near term given the omission of
specific research and development rules in the current IFR. Colorado
Senate Bill 20-197 amends CRS 35-61-104 to include a separate
research and development registration and regulations ``except as
otherwise prohibited by law.'' CDA should develop specific rules for
genetic research and development once compatible with Federal law and
USDA rules.
Recommended Enhancement. Stakeholders recommended the CDA develop
an industrial hemp research and development regulatory program, once it
is federally permissible, where the purpose of the research may include
growing industrial hemp to provide varieties to aid Colorado's
industrial hemp program.
The new program would build upon the established research and
development program rules to further advance an operational regulatory
framework specifically allowing for effective and innovative seed
production and genetic research.

Policy Formation. CDA should convene a multidisciplinary
panel, which includes regulatory agents, industry experts, and
research professionals, that will work with CDA to establish a
set of regulations for the new hemp R&D and plant breeding
program.

Operation and Enforcement. CDA should integrate the new
program into its operations and staff and enforce the new
regulations as they do all other hemp production rules.

The program would feature tailored regulations and qualifications
that allow plant breeders and genetic researchers to retain plants with
non-compliant THC levels for further breeding and research if they show
other desirable traits, assuming THC will be bred lower in further
generations.

Implementation

The following action items are needed to implement this
recommendation. Items include:

Rules and definitions specific to seed research and
development operations, including eligibility and regulatory
requirements;

Genetic research and plant breeding registration
application, inspection, enforcement, and disposal program; and

Integration with seed/clone certification program.

Key Stakeholders

CDA, Colorado higher education and other research institutions,
Center of Excellence, seed breeding and genetic research industry,
CSGA.
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Cultivation Recommendations

4. Create an Innovative and Flexible Colorado State Hemp Plan that
Aligns with Federal Regulations
Stakeholder Recommendation

Stakeholders recommend Colorado align state hemp regulatory
practice with USDA requirements to the extent that it ensures a
properly functioning regulatory system for the Colorado hemp industry.
However, stakeholders overwhelmingly recommend that Colorado continue
to advocate for appropriate changes to Federal law.

Basis & Purpose of Recommendation

During the 2019 legislative session, Colorado's General Assembly
amended the Industrial Hemp Regulatory Program Act to authorize the
Commissioner of Agriculture to consult with any stakeholders and to
mandate the Commissioner of Agriculture to consult with private
industry in drafting a hemp management plan to be submitted to USDA.
(CRS 35-61-104(6), (Colo. Session Laws 2019, ch. 350 (enacting SB19-
220))).
The 2018 Farm Bill and the IFR require each state that desires to
have primary regulatory authority over the production of hemp within
its state to submit a management plan to USDA that outlines how the
state will regulate various aspects of hemp cultivation. After the
enactment of the 2018 Farm Bill, USDA published nine requirements for
states that intend to develop an industrial hemp regulatory program. In
October 2019, USDA issued the IFR to further specify the requirements
for state hemp plans. USDA has indicated the IFR will likely be revised
to create more flexibility for hemp cultivation when it issues a final
rule in 2021.
The Colorado state plan describes how the State of Colorado intends
to implement USDA's regulatory requirements through existing and
updated statutory authorities, rules, and procedures. All authorities
described in the plan are in effect or are intended to take effect
after USDA approval, and are intended to govern Colorado's industrial
hemp industry.

Regulatory Program

Current Program. CDA currently operates a regulatory framework for
industrial hemp cultivation under CRS 35-61-101 et. seq. and 8 CCR
1203-23.
Recommended Enhancement. Colorado Senate Bill 20-197 aligns state
statute with Federal Law and Colorado's state plan aligns with the IFR.
However, based on stakeholder comments, Colorado submitted comments to
the USDA in January and October 2020 and a draft state plan in June
2020 that outlined regulations that requested to depart from the IFR
requirements in several key areas. Colorado will continue to advocate
for changes in the Federal rules so that hemp growers have the
flexibility they need to succeed in growing their businesses.
CDA submitted the state plan to USDA on June 18, 2020 and expects
Federal policy will become clearer in 2021.

Implementation

The following action items are needed to implement this
recommendation. Items include:

Legislation and rules to allow, create, and implement post-
harvest sampling; remediation program (when federally legal),
and third-party lab certification; and

Procedures for post-harvest sampling, third-party field
sampling, and remediation program.

Key Stakeholders

CDA, CDPHE, analytical labs, and Colorado hemp cultivators[.]
5. Verify Registrants Have Access to a Legal Water Supply
Stakeholder Recommendation

Stakeholders recommended an update to the CDA registration process
to check if hemp registrants have, or will obtain, a legal water source
before planting hemp. In a coordinated and separate process between
agencies, CDA could provide DWR with specific information from the
registrant's application so that DWR might review the proposed water
supply and provide a letter with their findings to the registrant that
indicates whether the proposed water supply is legal for planned
irrigation use.

Basis & Purpose of Recommendation

The basis for the hemp registration program is found in CRS 35-
61-104 and detailed in 8 CCR 1203-23-2. These statutes define and
describe the registration process for hemp producers including
registration requirements, information collection, and reporting
requirements. DWR's exclusive authority for administering and
distributing the waters of the state are described in CRS 37-92-
301(1) and 37-92-501(1). Stakeholders recommended that CDA should
provide DWR information on hemp registrants under a MOU to facilitate
compliance with DWR statute.
The purpose of developing this procedure is to notify registrants
to have a legal water supply and to ensure that registrants may operate
without potential shutdown because of orders from DWR. This new
procedure will help inform new producers to secure a legal water supply
before planting.

Regulatory Program

Current Program. The current registration application process does
not include language or guidance regarding the legal water supply for
hemp production.
Recommended Enhancement. CDA should explore ways to incorporate a
process of referral to DWR during the registration application process.
Stakeholders recommend that the application could specifically request
the registrant state which of four types of water supplies will be used
in the operation, and the registrant would provide additional
information based on the water supply type selected:

Municipal supply (Provider)

Surface Water Right (water right and share or percent of
ownership)

Well (Permit #)

Hauled Water (Provider)

DWR could evaluate water supplies according to their procedure and
notify the registrant whether the proposed water supply is legal for
industrial hemp production. DWR's comments on the registrant's water
supply will not prevent CDA from issuing a registration to the
producer.

Implementation

The following action items are needed to implement this
recommendation. Items include:

Discussion between CDA and DWR on legal aspects of
developing collaborative approach to gather and share
information across agencies;

Water supply data fields added to the registration
application for applicants to submit their proposed water
supply plans; and

Information exchange MOU to confidentially send data from
CDA to DWR.\8\
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\8\ CRS 24-2-108--For the convenience of the citizens of this
state and to promote economy in state government, it is the intent of
the general assembly that all principal departments, when feasible and
not contrary to Federal or state law, shall share as much information
as possible and, when reasonably feasible to do so, shall coordinate
forms, both Federal and state, and shall eliminate multiple mailings to
addressees.

---------------------------------------------------------------------------
Key Stakeholders

CDA, DNR-DWR, Colorado hemp cultivators[.]
6. Establish a Center of Excellence
Stakeholder Recommendation

The state should facilitate a public-private partnership between
academic institutions, industry, state agencies, and stakeholders to
establish a Colorado Hemp Center of Excellence to accelerate education,
research and development in hemp science and technology.
A Center of Excellence refers to a collaboration of numerous
academic, private, and government institutions that combine their
skills and resources to guide the industry on innovation, best
practices, novel research, market-ready applications, funding support,
and educational training programs.
The mission of the Center of Excellence will be to serve as a
statewide liaison for the Colorado hemp industry by fostering
collaboration, resource-sharing, and communication among its
regulatory, academic, and industry partners in the research development
efforts. In addition, stakeholders suggested the Center will also serve
as an ``Educational Hub'' that will provide technical assistance and
educational resources for hemp growers. The Center should also share
updates on the industry and findings from its research activities
through a publicly accessible website that can provide links to
verifiable resources and regulatory information.

Basis & Purpose of Recommendation

The basis for this recommendation follows from the recommendations
of the industrial hemp advisory committee created under CRS 35-61-
103; the task force created under Senate Bill 18-235; and the consensus
that emerged from the CHAMP stakeholder process.
A collaborative governing body between CDA, institutions of higher
education, CSU Extension, OEDIT, the Governor's Office, and other local
governmental, nonprofits, private organizations, or individuals, will
identify important research areas, conduct relevant studies, and
develop educational resources unique to the Colorado hemp industry.

Regulatory Program

Current Program. There is no current coordinated, dedicated
research institution for industrial hemp in Colorado. However, research
and development activities currently occur in private corporations, and
in universities across the state.
Recommended Enhancement. Stakeholders suggested the Center of
Excellence represent a flagship institution for the industry, formed as
a collaboration between Colorado Government, academic institutions, and
private organizations to leverage their combined research capabilities
and resources. The Center will serve as a statewide liaison for hemp
industry stakeholders, striving to support economic vitality and
advocating for industry advancement.
Government agencies that could play a major role in the foundation
and operation of the Center of Excellence include CDA, OEDIT, and the
Governor's Office. Other state and local government agencies may also
be engaged where their expertise is appropriate.
Among Colorado's academic institutions, stakeholders believe that
CSU will play a large role in the establishment and operation of the
Center of Excellence; however, other universities and departments will
be heavily involved in leveraging funding, research capacity, and
efficiencies. Additional potential academic partners include, but are
not limited to, the University of Colorado-Boulder, Colorado Mesa
University, CSU-Pueblo, Fort Lewis College, Western Colorado
University, Northeastern Junior College, and Adams State University.
This collaborative academic model has been effective in renewable
energy research in Colorado.
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Journal Communications Inc.,
FREELANCE' Shared Rights.

Hemp industry organizations, businesses, and individuals with a
focus on research and development should also be selected as Center of
Excellence partners as determined through the Center's governance
structure.
A primary responsibility of the Center of Excellence would be to
apply for Federal funding and distribute matching state funds for
developmental projects. Funding from the Center of Excellence could be
provided for private businesses, institutions of higher learning,
government agencies, Tribal governments, and other qualified research
organizations for qualified research programs. A research agenda could
include regulatory compliance, genetic research, industrial
applications, and best practices relating to the cultivation of
industrial hemp fiber, seed, and cannabinoid crops.

Implementation

The following action items are needed to implement this
recommendation. Items include:

Define a governance structure for the Center of Excellence
partners. An emphasis will be placed on those with significant
experience providing educational information and programs in an
agricultural context.

Define organizational structure and positions for startup
and operations.

Establish funding structure for administration, research,
and educational programs; determine Federal and other funding
sources available

Key Stakeholders

CDA, CDPHE, Colorado universities, OEDIT, Tribal governments,
Colorado hemp industry, other industries[.]
7. Non-Compliant Plant Material
Stakeholder Recommendation

Follow USDA rules for non-compliant plant material disposal to
ensure it is properly destroyed and does not enter the market. However,
advocate for and adopt rules to test and dispose of non-compliant plant
material that preserves value in the supply chain, including post-
harvest testing, exemption of non-THC containing stalks and seeds from
destruction, and explore the feasibility of further remediation
procedures.
It is important to note that there were some stakeholders who were
opposed to developing a process in which non-compliant plant material
could become compliant and enter the market. Their concern was this
option would unfairly reward producers who produce non-compliant plant
material; thus, creating a disincentive for producers to ensure their
crops are compliant prior to harvesting. Should the state continue to
explore this recommendation, additional discussion with stakeholders is
warranted.

Basis & Purpose of Recommendation

The statutory basis for this recommendation is 8 CCR 1203-23-5,
which indicates that non-compliant plant material must be ``destroyed
or utilized on-site in a manner approved of and verified by the
Commissioner'' to avoid revocation or suspension of a registration.
The purpose of the state's non-compliant plant material disposal
regulations is to ensure that crops that are not compliant with all
state and Federal rules do not enter the chain of commerce and are
disposed of under Federal and state requirements. CDA should review and
adopt enhanced procedures via rulemaking requiring producers to report,
document, and produce evidence of any non-compliant plant material
destruction as required by Federal rules.
In lots that conclusively test higher than 0.3 percent THC, ``non-
compliant plant material'' refers to the parts of the plant that are
officially considered ``marijuana'' according to the CSA.\9\ Non-
compliant plant material does not refer to the parts of cannabis plants
that fall outside of the Federal definition of marijuana, which
includes the sterilized seeds and mature stalks of the plant and any
products or derivatives produced from those parts of the plant. These
parts of the cannabis plant are always compliant according to the CSA,
regardless of other plant characteristics. Stakeholders recommended
that Colorado take a leading role and explore an exemption of seeds and
stalks from the destruction of any hemp crop that exceeds the 0.3
percent THC limit.
---------------------------------------------------------------------------
\9\ 21 U.S.C. 802(16).
---------------------------------------------------------------------------
If federally permissible, the state should consider creating a
post-harvest sampling and testing program to protect producers against
the unnecessary destruction of valuable plant material and associated
economic loss. This program will be available only to qualifying
producers with certified or pre-approved varieties with in-field pre-
harvest test results indicating non-compliant THC content. This
secondary testing program provides producers an opportunity to re-test
a homogenized and representative sample of their plant material. Post-
harvest sampling and testing would serve as the final determination as
to whether a crop has a compliant THC content below 0.3 percent.
In addition, if USDA rules permit, CDA and CDPHE should consider
establishing a program to provide effective and safe industrial
processing of stalks and seeds and/or removal and remediation of THC
from hemp plants that test non-compliant. This ``Hemp Value Retention
Program'' will bring needed certainty and predictability to the
industry while hemp genetics improve and stabilize. It will drastically
reduce the amount of product destruction and improve investment in all
facets of the hemp industry.

Regulatory Program

Current Program. Under Colorado's rules, if an in-field pre-harvest
sample tests non-compliant with THC greater than 0.3 percent, CDA
issues notice to affected producers describing their permissible
disposal options. Communication to registrants with hemp lots that
exceed the maximum THC threshold explicitly notes that under CDA rules,
the crop is prohibited from:

Leaving the registered land area;

Entering the stream of commerce; and

Being used for human or animal consumption.

The rules provide that all crops with non-compliant THC levels must
be ``destroyed or utilized onsite in a manner approved of and verified
by the Commissioner.'' (8 CCR 1203-23, (Rule 5.2)) Approved disposal/
utilization methods include disking the crop into the ground, mulching,
composting, burning, and burying. These destruction methods are aligned
with 21 CFR 1317.15 and 1317.90, which require that controlled
substances be rendered non-recognizable and irretrievable, while also
keeping environmental considerations in mind.
Recommended Enhancement. Colorado should continue to ensure legal
disposal remains in compliance with Federal law and appropriate
enforcement action is taken. While remaining federally compliant,
Colorado should advocate for alternative disposal methods that provide
farmers means of economic recovery, like clarifying exemptions of
mature stalks and seeds of hemp plants from destruction; and having
restricted and monitored THC remediation programs. These programs will
mitigate financial risk for hemp producers while ensuring that non-
compliant plant material does not enter the market for human and animal
consumption. While the state intends to comply with Federal law,
Colorado should advocate for the policies below to be federally
permissible.\10\
---------------------------------------------------------------------------
\10\ Under the current regulations published by the USDA under the
IFR, all plant material testing higher than 0.3 percent THC must be
destroyed. Producers with plant material testing higher than 0.5
percent THC will also receive a ``negligent violation''. The policies
contained in the recommendations do not include negligence at 0.5
percent, but at 1.0 percent, and are thus not compliant with current
proposed Federal rules.

---------------------------------------------------------------------------
Allowance for Post-Harvest Testing

If Federal laws permit, CDA should update its rules to allow for
post-harvest sampling as the conclusive determination as to whether the
plant material is compliant, contingent upon the use of certified or
pre-approved varieties.
CDA would create a post-harvest sampling and testing program to
conclusively determine if a full representation of the plant material
intended for the stream of commerce is non-compliant. If this post-
harvest sample tests less than 0.3 percent THC, the result would be
considered official and the crop will be considered compliant and
allowed to enter the stream of commerce.
If a crop conclusively tests higher than the acceptable hemp THC
level via in-field and post-harvest sampling, but below 1.0 percent
THC, CDA would issue an ``Options Letter'' to the producer that
describes the nature of the failure, informs the producer that CDA will
notify the USDA of non-compliant plant material, and guides the
producer on how to dispose of their non-compliant crop. Test results
above 1.0 percent would result in a negligent violation. Producers will
be responsible for all post-harvest sampling costs.

Development of a Hemp Value Retention Program

If Federal laws permit, CDA should explore the feasibility of
establishing a Hemp Value Retention program. The program could offer
various options for farmers to sell their non-compliant plant material
to licensed processors, which will allow them to retain more value in
the crops that test conclusively above 0.3 percent THC at post-harvest,
such as, but not limited to: (1) an industrial processing channel,
where the mature stalks and seeds, or other plant material is used to
produce non-consumable goods; and/or (2) a THC remediation channel,
where THC is removed from hemp flowers during the extraction process
and destroyed. Any hemp testing above 1.0 percent THC after post-
harvest testing will require disposal.

Implementation

The following action items are needed to implement this
recommendation. Items include:

Advocacy by Colorado leadership to approve disposal
alternatives on a national level;

New rules and definitions for post-harvest testing
qualifications and implementation;

Updated rules and definitions for allowable disposal methods
and reporting requirements;

New rules and definitions for hemp value retention program
qualifications and implementation, when Federal law permits;

New standard operating procedures for collecting,
transporting, processing, and testing homogenized post-harvest
hemp samples;

Secure designation for CDA as a DEA Reverse Distributor to
be eligible to conduct or oversee non-compliant plant material
disposal;

New standard operating procedures for collecting,
transporting, recycling, and properly disposing of non-
compliant plant material; and

New standard operating procedures for qualifying,
collecting, transporting, and processing hemp for THC
remediation or for industrial processing, when Federal law
permits.

Key Stakeholders

CDA, CDPHE, Colorado hemp cultivators, Tribal governments,
processors[.]
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8. Coordination of State and Local Regulatory Authority
Stakeholder Recommendation

Provide limited hemp registration information to other state and
local government agencies, under a privacy restriction, to facilitate
other jurisdictions' inspections, permit approvals, and enforcement
actions. This generally applies to cultivation and processing/
manufacturing sites within municipalities, unincorporated areas, or
indoor cultivation facilities in cities or counties.

Basis & Purpose of Recommendation

The statutory basis for this recommendation is 8 CCR 1203-23-2,
which indicates that ``any information provided to the Department may
be . . . provided to (local) law enforcement agencies (for maintaining
public order and enforcing the law)''.
The purpose of coordinating state and local regulatory authority is
to optimize resources, agency abilities, and regulatory experience to
ensure that hemp production complies with all state requirements and
local zoning and land use rules.

Regulatory Program

Current Program. CDA and CDPHE share limited information with
Federal, Tribal, state, and local government agencies, including law
enforcement agencies, as requested, or on an ongoing basis subject to
privacy restrictions under a MOU. CDA and CDPHE have MOUs with several
agencies in place already to facilitate other governmental permitting
functions.
Recommended Enhancement. The need for collaboration between state
and local government is necessary to ensure hemp producers comply with
all state and local laws and requirements. While CDA and CDPHE regulate
for production compliance, registrants are also subject to local
government regulation for zoning, water use, public health and all
other local laws as enforced by local law enforcement agencies.
Stakeholders recommended CDA and CDPHE develop a communication
protocol with local governments and law enforcement, under a MOU, and
assist localities to facilitate compliance with all local rules and
regulations. Stakeholders also visioned the development of a hemp
electronic traceability system (see recommendation 11). CDA and CDPHE
will provide local governments and law enforcement with limited access
specific to support local government regulatory functions, while
maintaining compliance with all state and local confidentiality
requirements. CDA and CDPHE should work with local governments through
MOU to share necessary information.

Implementation

The following action items are needed to implement this
recommendation:

State and Local MOUs to coordinate information sharing;

Local rule changes pertaining to the agencies responsible
for establishing and enforcing local cultivation requirements;
and

Continued communication between the state and local agencies
on compliance issues.

Key Stakeholders

CDA, CDPHE, Tribal, municipal and county governments, law
enforcement agencies, Colorado hemp industry[.]
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Testing Recommendations

9. Field Sampling and Sampling Agent Certification
Stakeholder Recommendation

The CDA Hemp Program should develop guidance on sampling hemp grown
in Colorado for testing THC content according to USDA requirements, and
establish a certification program to allow third parties to collect
samples in the field for regulatory use.

Basis & Purpose of Recommendation

The statutory basis for this recommendation is CRS 35-61-104 and
35-61-105. These statutes are specified for raw hemp sampling and
testing in 8 CCR 1203-23-4 and should be further specified in rule
during implementation.
The purpose of establishing a field sampling program is to: (1)
comply with Federal regulations that require sampling of all hemp; and
(2) to test hemp for THC content to ensure that crops meet the
definition of industrial hemp according to CRS 35-61-101.

Regulatory Program

Current Program. CDA has historically conducted random sampling
across all registered lots each year to test for THC compliance. CDA
anticipates they will increase sampling coverage from 25-30 percent of
hemp lots to 100 percent to comply with the Federal rule. Beginning in
2021, CDA will develop and implement a third-party sampling
certification program to allow private, certified sampling agents to
collect samples and deliver them to certified labs. Recently, CDA has
updated its Hemp Sampling Guidelines to materially align with sampling
guidance from the USDA.
Recommended Enhancement. CDA should continue to conduct sampling
with its own staff, consistent with its current practices and
procedures, to ensure continuity of CDA's practice of accurate,
efficient, and effective sampling. In addition, CDA should also
implement the following certification program.

Third-party Sampling Program

Stakeholders recommended CDA develop a certification program for
individuals and businesses to become official sampling agents. To
acquire certification, an applicant would register with CDA and
complete a certification training under CDA's Hemp Sampling Guidelines.
The certification training would permit CDA to ensure that every
certified sampler follows CDA's sampling guidelines when collecting
hemp samples, including sample collection, transportation, and
documentation. Third-party samplers will also receive training and be
required to comply with special chain of custody procedures for the
collection and transfer of hemp samples to eligible laboratories. The
sampler certification program would be offered to qualified
agricultural service providers or to other eligible and qualified
entities and individuals.

Implementation

The following action items are needed to implement this
recommendation:

New field sampling standards and procedures that include
post-harvest sampling for secondary testing

New curriculum and administrative procedures for obtaining
and maintaining certification as a field sampling agent

Key Stakeholders

CDA, Third-party field sampling agents, Colorado hemp
cultivators[.]
10. Hemp Laboratory Certification Program
Stakeholder Recommendation

Develop a certification program that provides guidance to private
analytical laboratories on certification requirements, appropriate
analytical methods, and general testing procedures.

Basis & Purpose of Recommendation

The statutory basis for this recommendation lies in CRS 35-61-
105, 35-61-105.5, 25-1.5-101, 25-1.5-104 and 25-5-426. These
statutes inform regulations for raw hemp testing in 8 CCR 1203-23-4 and
should be further specified in rule during implementation.
Establishing a Hemp Testing Laboratory Certification Program would
comply with the USDA rules to guarantee potency testing of all hemp
lots grown in Colorado, and to protect public safety by ensuring
consumable products meet standards for safety and purity. Further,
Colorado should provide an initial testing framework for food and
supplement products absent Federal guidelines from the FDA. Once a
Federal framework is in place, the Colorado testing framework would be
adjusted.
Testing information from certified labs is crucial for:

Maintaining compliance with the USDA;

Implementing an important part of the hemp electronic
traceability system;

Assuring potency and purity to consumers and businesses
purchasing hemp products; and

Protecting businesses and the public against inaccurate or
misleading product claims, product impurities, and foodborne
illnesses.

Regulatory Program

Current Program. The hemp and hemp products testing program
includes a random hemp testing program administered by CDA and
completed by the CDA laboratory. The CDA samples about 25 percent to 30
percent of hemp program registrants per year and tests hemp growing in
the field for THC content. Testing for consumable hemp products is
currently completed by CDPHE-certified labs. Hemp manufacturers selling
consumable products must register with CDPHE to sell into the
commercial food and supplement supply.
Recommended Enhancement. The new lab certification program would
include the certification process, requirements for testing methods,
and a framework for when testing is required by the state. The program
is expected to be a minimum framework intended to supplement rigorous
voluntary testing practices that will accompany products in most
transactions. Key features of certified laboratory and testing program
include:

Certifying process and criteria

CDPHE will serve as the certifying agency for labs that test
consumable hemp and hemp products. CDPHE will adapt its process for
certifying all other clinical, food, and environmental labs to hemp
testing labs. At a minimum, CDPHE will inspect and certify labs to test
hemp plant material and hemp products for:

Cannabinoids (THC and other).

Microbials;

Residual solvents;

Pesticides;

Mycotoxins; and

Heavy metals.

Each of the above would require a separate certification from the
CDPHE. CDPHE certification requires that each laboratory obtain
accreditation, including but not limited to ISO 17025, from an ILAC-MRA
signatory accreditation body. The laboratory would then be required to
apply and submit corporate and operational documentation and go through
on-site inspection and auditing for approval. An annual fee would be
required for certification.
CDPHE will require these documents at a minimum:

Proof of ISO 17025 accreditation;

An application that specifies which methods/analytes the lab
is applying for certification;

Organizational reporting structure;

Acknowledgment that the laboratory will comply with policies
established for all certified laboratories;

Key staff qualification information; and

Standard operating procedures and other essential laboratory
documentation.

The CDPHE should incorporate all CDA and USDA requirements into the
certification program. The USDA will require labs that test hemp to
obtain a DEA certification. The program could offer two tiers of
approval for hemp THC testing laboratories in Colorado:

Certified Laboratories have met all specific state
requirements, including ISO 17025 accreditation and
registration with DEA, and

Conditionally Certified Laboratories are ISO 17025
accredited and have met all CDPHE certification requirements
but are not registered by the DEA.

Testing methods

All Colorado hemp testing labs must use analytical methods approved
by CDPHE to ensure consistency of results across all laboratories. The
CDPHE will consult rules established for other analytical labs, USDA,
and FDA rules, as well as standards available from Association of
Official Agricultural Chemists, American Society for Testing Materials
(ASTM), the Association of Public Health Laboratories, and other
relevant institutions.
Accepted methods may include gas chromatography, gas chromatography
mass spectrometry, high-performance liquid chromatography, and other
validated testing methodology. Official test results reportable to the
USDA must provide the percentage of total THC content.\11\
---------------------------------------------------------------------------
\11\ Calculating total THC is achieved either using a post-
decarboxylation analytical method (i.e., gas chromatography) or by
adding 87.7 percent of the THCA weight to the THC weight determined by
a pre-decarboxylation (liquid chromatography) analytical method.

---------------------------------------------------------------------------
Testing framework

All raw hemp is subject to mandatory field THC testing to enter the
stream of commerce as required by the USDA. Field sampling will be
conducted by the CDA and by CDA-certified sampling agents. For hemp
entering the industrial supply chain, no further testing is required.
For hemp destined for further processing for human or animal
consumption, hemp products either need to be processed or manufactured
in facilities that have their processes validated by CDPHE; or subject
to a mandatory testing program that includes pathogens and microbials,
pesticides, heavy metals, residual solvents, and cannabinoid content.
All state-mandated \12\ testing of hemp and hemp products will be
conducted by CDPHE-certified labs or the CDA. The CDPHE will require
mandatory testing of production batches of all finished consumable
products for ingestion and topical applications, for cannabinoid
content, heavy metals, pesticides, microbials, mycotoxins and residual
solvents. Processing and manufacturing registrants that opt to have
their processes validated \13\ through consistent purity and potency
tests can reduce or bypass potency and contaminant testing of every
production batch. Process validation is obtained through submitting
information to CDPHE on procedures and passing multiple consecutive
contaminant and potency tests within a specified period. Renewal and
re-inspection are required upon a process change or according to CDPHE
recommended interval.\14\ All testing expenses are the responsibility
of the business selling hemp or hemp products.
---------------------------------------------------------------------------
\12\ Most market participants exchanging product require a
certificate of analysis that provides information on intermediate
product potency, purity, and the presence of contaminants (if any). For
general or R&D purposes, use of CDPHE-certified labs is not required.
\13\ CDPHE process validation for hemp will be the same for other
food and supplement manufacturers. It is modeled after FDA process
validation guidelines and unique to each facility and process
introduced. Each applicant must present its procedures and
certifications to CDPHE, which inspects, approves, and re-inspects on
risk-based parameters. Companies with detailed safety plans in place,
such as a HACCP or CAPA plan, and with an audit for compliance with
cGMP standards are viewed favorably in the CDPHE assessment.
\14\ CDPHE renews either bi-annually, annually, semi-annually, or
quarterly based on risk profile.

---------------------------------------------------------------------------
Disposal protocol

Compliant hemp samples do not need any special disposal procedures.
If necessary, certified labs should comply with DEA and/or state
guidelines for marijuana disposal, i.e., excess samples that test above
0.3 percent THC is only disposed of after being ``rendered
unrecognizable'' by mixing with dirt, compost, or similar material.
Excess sample that tests below 0.3 percent THC may be disposed of as
is. Hazardous waste created during cultivation, laboratory testing, and
the manufacturing process will need to be disposed of per Federal,
state, and local laws, regulations, rules, and/or other requirements.
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Implementation

The following action items are needed to implement this
recommendation. Items include:

Obtain statutory authority to promulgate rules related to
certification of hemp labs (CDPHE)

Adopt rules for certification requirements, testing
framework, based on existing programs (CDPHE)

Adopt rules for accepted lab procedures and inspections,
based on existing programs (CDPHE)

Obtain statutory authority to collect inspection fees; to
direct where the funding goes; and to and periodically adjust
fee collection and disbursement procedure (CDPHE)

Implement lab certification program, inspection procedures
and system to verify field testing and finished product testing

Key Stakeholders

CDPHE, CDA, Analytical labs, Colorado hemp cultivators and
processors[.]
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Transportation Recommendations

11. Electronic Traceability System
Stakeholder Recommendation

Implement an Electronic Traceability System (ETS) to support an
uninterrupted chain of custody for hemp products from harvest to
commercial sale and to provide secure and verifiable information to
various stakeholders.

Basis & Purpose of Recommendation

The statutory basis for this recommendation is the 2018 Farm Bill
Section 12619 and Colorado Senate Bill 17-090.
The purpose of an ETS would be to collect information throughout
the hemp supply chain that can be accessed and reviewed in a single
application by multiple stakeholders. The ETS would create a
standardized electronic database system for all required documentation
such as the manifest for verification while transporting hemp; a
confirmation of laboratory testing of products; and a transaction
history.
Stakeholders envisioned the ETS would allow for the coordination
among the many agencies that regulate hemp and intrastate and
interstate commerce including but not limited to; CDOT, CDA, CDPHE, The
Office of the Governor, The Office of the Attorney General, Colorado
State Patrol, and local and Tribal governments. The ETS will interface
with databases across all involved industry businesses and agencies to
create a secure and verifiable ledger for tracing hemp across the
supply chain and protect the integrity of the hemp industry. It is
important to note that stakeholders felt that since hemp is a legal
commodity the ETS should not be used to provide unnecessary over-
regulation. Rather, the ETS should utilize an appropriate block-chain
technology to help the industry comply with existing regulations and
provide verifiable importation of the products related to compliance
and quality standards.
Key users such as producers, processors, law enforcement, and
government officials could use the system for a variety of purposes
including, but not limited to:

Providing hemp transporters and law enforcement a tool for
real-time verification of the legality of a shipment;

Providing banking and insurance sectors with data that
allows verification of a licensed hemp grower or an ancillary
business in good standing;

Supplying compliance information, such as passed or failed,
at all stages of production such as cultivation and
manufacturing;

Verifying certifications such as using certified seed or
organic designation;

Distributing information accessible to all relevant agencies
including names and contact information of parties in the chain
of custody; and

Allowing consumers the ability to confirm the source of the
products they are purchasing as originating within the Colorado
regulated hemp system.

Regulatory Program

Current Program. There is no current ETS in Colorado for hemp. The
state registration system and detailed product documentation, including
manifests and certificates of analysis, are used to determine product
authenticity.
Recommended Enhancement.

Intrastate transport

The creation of a new communication protocol through an ETS for
tracking hemp could be modeled on existing protocols for the shipment
of agricultural and non-hazardous manufactured products. CDA and CDPHE
should have the final say in the provision of documents for product
verification.
Required documents will likely follow those outlined for the
protocol, but the standardized protocol should be expanded to provide
enhanced communication and tracking across the hemp supply chain. For
this to occur, the selection and development of a single platform will
be essential. The following should be considered in developing the
protocol:

A process for verification when in remote areas without
reliable internet access;

Standardization anti-tampering requirements;

Flexibility for the future implementation of distributed
ledgers and associated technologies for enhanced traceability
and fraud protection;

Use of batch level tracking (not per plant) will be
imperative for recall and verification purposes; and

Creation of training materials on the protocol.

The ETS will allow any user to distinguish whether hemp or hemp
products encountered in the field, in facilities, or in transit can be
verified as hemp and can be traced to its origin. Without reliable and
affordable mobile testing procedures, it is impossible to distinguish
legal hemp from legal or illegal marijuana. In place of physically
testing the product a standardized protocol, along with education, will
reduce the risk of costly miscommunications.

Interstate transport

Additional documents may be required when transporting across state
borders and the electronic system must provide flexibility for this.
Colorado will comply with all Federal documentation requirements for
interstate hemp shipments. Interstate communication and coordination
will be essential for the success of the Colorado hemp industry.
Colorado should share the lessons learned from developing its
intrastate communication protocol with other states, and work to build
partnerships with other states and the USDA in developing a nationwide
traceability system and serve as a leader absent Federal guidelines.

System development

The ETS should be developed through an interagency workgroup to
ensure buy-in and input from relevant agencies. It is recommended that
this task force include representatives from the Office of the Colorado
Attorney General, Colorado State Patrol, CDA, CDPHE, Office of
Information Technology, Colorado Bureau of Investigation, a local
government, Tribal government and industry.
The duties of the task force should be to:

Develop requirements for the protocol;

Secure funding;

Select the company to develop the system through a
competitive request for proposal process;

Determine required documents;

Specify the interstate interface;

Establish protocol for questions and verification process
for the documents;
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Monitor implementation of new protocol and needed
adaptations;

Select the agency(s) responsible for the ongoing management
of the system and facilitate the transition from the task
force; and

Appoint a liaison from the State of Colorado to coordinate
with other states this person should work alongside the
tracking systems contracted vendors to help other states
develop their own tracking systems.

Implementation

The following action items are needed to implement this
recommendation:

Collaboration with the Hemp Advisory Committee and the hemp
industry to confirm the direction and implementation of a
tracking system is appropriate;

Development of a taskforce among key stakeholders to
evaluate options and develop implementation plan;

Legislation to establish the creation of an ETS; a protocol
to provide information to legitimate users and to protect data
confidentiality of participants; and

Creation of a funding mechanism for agency or task force to
develop technical specifications and solicitation process to
develop and implement the electronic tracking system.

Key Stakeholders

CDA, CDPHE, Tribal and local governments, Colorado hemp cultivators
and manufacturers, transportation industry, law enforcement[.]
12. Transportation Protocol
Stakeholder Recommendation

Develop guidance and best practices for transporting hemp and hemp
products within Colorado including proper documentation and
recordkeeping.

Basis & Purpose of Recommendation

The statutory basis for this recommendation is CRS 35-61-108(3),
which states that CDA ``may promulgate rules to require approved
shipping documentation for the transportation of hemp.''
The purpose of the establishment of a protocol and industry best
practices for the transportation of hemp is to develop a clear set of
rules around the intrastate and interstate transportation of hemp and
transportation across Tribal and international boundaries. The creation
of guidance will build on existing CDA rules and regulations and
establish standards around the appropriate documentation, communication
procedures, best practices and training protocols surrounding the
transportation of hemp in Colorado.

Regulatory Program

Current Program. Transporters currently carry a manifest and a
Certificate of Analysis (COA), but local law enforcement often is
unclear how to verify the shipments. A successful Colorado hemp
industry requires standardization of processes and documentation.
Developing a coordinated protocol will take time. It is recommended
that in the intermediate time frame transporters should have the
following documents on-hand so that law enforcement can verify by the
issuing agencies if needed:

Travel Manifest;

COA matching travel manifest;

CDA Registration Number;

Manufactured Food or Storage Facility Registration Number;
and

Commodity Handler or Farm Producer Dealer License from CDA
(if applicable).

Recommended Enhancement. Develop guidance and best practices for
the transportation of hemp and hemp products utilizing existing CDA
rules. Due to the nature of hemp, specific protocols will need to be
developed with input from numerous state agencies and hemp businesses.
The regulatory protocol will develop the following standards:

Required transportation documentation;

Rules for the storage, packing and transportation of hemp;

Development of interstate compacts;

A unified communication protocol;

Insurance company documentation to insure hemp loads and
bond drivers;

Protocol for the transportation of hemp products (such as
intermediate products or products bound for destruction) that
are over 0.3 percent THC, as allowed in Federal rule; and

Protocol and procedure for a coordinated response by state
law enforcement regulatory authorities.

Transportation best practices

The CHAMP process identified these best practices to include in the
transportation regulatory protocol:

Ensure shipping documents are fraud-resistant and display
information such as the CDA or CDPHE registration numbers;

Provide guidance on paper and digital records and ensure
that the records match;

Communication from all involved government agencies and
local law enforcement;

Require adherence to all state and local regulations,
including storage and odor control;

Develop a database of all key law enforcement and regulatory
authorities available for contact.

Interstate considerations

One of the key aspects of the transportation protocol will be the
creation of interstate compacts which should include:

Development of a reciprocity agreement for states and Tribal
governments that states approved hemp and hemp products in one
state will be recognized in all;

Development of an agreement on a common set of shipping
documentation to verify compliance with hemp regulations in the
state of origin;

Agreement on hemp tracing systems to assist law enforcement;

Protocol for third-party entities transporting hemp;

Interstate weighing requirements; and

Appointment of a liaison to serve as the key contact for
coordination with other states.

Implementation

The following action items are needed to implement this
recommendation:

Develop transportation rules and requirements for
documentation, including rules to transport intermediate
products;

Develop interstate compacts for hemp transport as needed;

CDA, CDPHE, and Tribal governments should each focus on
education and outreach to:

Assist the state in developing rules and standards for
transporting hemp and hemp products;

Educate industry practitioners and law enforcement
about hemp documentation and labeling requirements;

Evaluate the need for requirements to maintain
registrations and for the creation of a `fit for commerce'
certification program for transporters and producers; and

Secure appropriation and allocation of funds to develop and
implement protocols.

Key Stakeholders

CDA, CDPHE, Tribal and local governments, Colorado hemp cultivators
and manufacturers, transportation industry, law enforcement[.]
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Processing Recommendations

13. Processor Registration and Inspection
Stakeholder Recommendation

Continue the integration of hemp into the CDPHE food and dietary
supplement processor and manufacturer program. Further define licensed
activities as needed and provide a means for the state to register and
regulate hemp processors and manufacturers in Colorado. This is an
existing, active program.

Basis & Purpose of Recommendation

The statutory basis for this recommendation is CRS 35-61-108,
35-1-104, 25-1.5-104, 25-4-1603, and 25-5-426. These statutes
authorize CDA and CDPHE to regulate and inspect food processing
facilities generally and hemp processing facilities specifically. These
statutes are further specified in 6 CCR 1010-2 and 1010-21 Colorado
Retail and Wholesale Food Regulations.
Maintaining a proper processing licensing system for hemp products
is necessary to protect public safety and to ensure that only properly
trained and supervised professionals using current good manufacturing
practices create products that enter the commercial food, dietary
supplement, and cosmetic supply chain. A licensing system ensures
safety and accountability in processing procedures for ingredients and
products that ultimately end up as food, dietary supplements, or
industrial products.

Regulatory Program

Existing Program.

Hemp Processor Definition

Licensed hemp processors fall into three categories depending on
their processing methods and intended market. A key distinction in
processor licensing and regulation is whether the processor produces
products intended for human consumption through topical, ingestible, or
inhalable delivery methods:

Industrial processor. Industrial processors use raw hemp
inputs to make intermediate and final industrial products out
of hemp bast, fiber, cellulose, hurd, and lignin. These
materials are processed to make fuel, textiles, paper,
plastics, building materials, and other industrial products.

Extraction and post-processing (consumable). Hemp extractors
and post-processors use a variety of chemical and mechanical
processes to extract and separate cannabinoids, terpenes,
flavinoids, and other compounds from plant fibers and waxes.
CDPHE is the lead state agency for licensing and regulating
hemp extractors and post-processors. Hemp extractors and post-
processors must follow all state and local laws and
regulations, including local fire, building, and zoning codes.

Finished products (consumable). Finished products
registrants include all processors that manufacture hemp
products for sale to retailers and directly to consumers. CDPHE
licenses and regulates Colorado food and supplement
manufacturers and maintains a list of all registrants. This
list includes hemp finished product manufacturers. CDPHE
inspects these operations under 6 CCR 1010-21 to ensure
compliance with product and process standards. Local
governments inspect facilities for conformance with local fire,
building, and zoning codes and ordinances. All hemp finished
products are subject to safety and potency testing according to
CDPHE rule (6 CCR 1010-21).

State and Local Authority

A combination of state and local governments regulates hemp
processors. CDPHE regulates consumables processors for safety and
technical procedures. CDA regulates farm processors for safety. All
processing facilities are subject to local government regulation for
zoning, fire safety and public health, and all local laws as enforced
by local law enforcement agencies. CDA and CDPHE provide hemp
registration information under MOU to local governments and law
enforcement and have developed a communication protocol to facilitate
local enforcement and regulatory activities.

Licensing and Inspection

Licensing and inspections are already completed by CDPHE and local
governments for consumable product processors. CDPHE already requires
new applicants to submit documentation of occupancy permits which
includes local government regulatory compliance. CDPHE uses procedural
guidelines for food production in accordance with Federal regulations
and has incorporated the use of hemp as an ingredient in food
processing. Consumable processors are expected to follow all local,
state, and Federal guidelines for safe and sanitary food production.
License and inspection fees are required for local occupancy permits
and by CDPHE. Facility inspections occur at the discretion of CDPHE and
local government agencies, usually at the time of license, certificate
of occupancy issuance, upon renewal, as part of a corrective action
plan, or at random.
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Industrial processors do not require a specific state license,
other than compliance with all state and local safety regulations, and
ordinances to obtain a local occupancy permit.

Implementation

Colorado state and local governments already have procedures and
programs in place to regulate hemp processors or to integrate hemp into
existing regulatory programs. The following action items are needed to
implement this recommendation:

Harmonize registration, statute, and regulation with
definitions of terms and types of processors above;

Develop (or renew as needed) MOU for information sharing
with local governments and law enforcement; and

Consult with ISO, ASTM, NSF, U.S. Hemp Authority (USHA),
American Herbal Products Association (AHPA), and other groups
developing hemp-specific processing standards.

Key Stakeholders

CDPHE, CDA, Colorado hemp processors, national processor certifying
agencies[.]
14. Processor and Manufacturer Standards
Stakeholder Recommendation

Clarify and develop state regulatory requirements for processing
and manufacturing practices related to hemp products. Current Good
Manufacturing Practice (cGMP) should be administered through the CDPHE
Manufactured Food Program. This program is largely an existing program
in CDPHE with some specific adaptations for hemp products.

Basis & Purpose of Recommendation

The statutory basis for this recommendation is CRS 25-5-426. This
statute authorizes CDPHE to promulgate standards for food and other
consumable products made by hemp processing and manufacturing
operations. These statutes are further specified in 6 CCR 1010-2 and
1010-21 Colorado Retail and Wholesale Food Regulations.
CDPHE is the state licensing, certification, and food protection
agency. The department is tasked with establishing minimum standards
and rules for wholesale and retail food establishments to protect
public health and safety. Hemp and hemp extracts are processed into
food, dietary supplements, cosmetics, and other consumable products and
come under CDPHE regulatory authority. CDPHE requirements for
processing and manufacturing standards ensure that products are
unadulterated and safe for consumption. Hemp and hemp products are
already integrated into CDPHE programs for wholesale and retail food,
which also includes dietary supplements. CDA provides regulatory
oversight for products for animal consumption.

Regulatory Program

Existing Program. CDPHE incorporates by reference into its
regulations the majority of the Code of Federal Regulations for food
and dietary supplements established under the authority of the FDA.
cGMP regulations require a quality approach to manufacturing,
enabling companies to minimize or eliminate instances of contamination
and errors. This protects the consumer from purchasing a product that
is not effective or potentially dangerous. CDPHE verifies compliance
with cGMP through random inspections and through the licensing process
by review of operating procedures, acceptance of 3rd party
verification, and initial inspection.

Consumable Food, Dietary Supplements, and Cosmetics

All hemp processors and manufacturers defined as producing
cosmetics and consumable products should follow the adopted regulations
modeled after standards set by appropriate regulatory authorities,
including CDPHE and FDA, and industry standards organizations such as
ASTM, AHPA, Organic & Natural Health Association, NSF, and ISO. These
rules include the existing CDPHE rules for wholesale and retail food
producers cited above and these Federal rules, included in CDPHE rule
by reference or CDA authority:

FDA cGMP for:

Food (and 21 CFR 117)

Dietary supplements (21 CFR 111)

Animal products (21 CFR 507)

The U.S. Food, Drug, and Cosmetics Act, and the Fair
Packaging and Labeling Program, for cosmetics and topicals (21
U.S.C. 361-363, 15 U.S.C. 1451-1461).

The above Federal and state regulations address issues including
recordkeeping, personnel qualifications, sanitation, cleanliness,
equipment verification, process validation, and complaint handling, and
generally allow each manufacturer to decide individually how to best
implement the necessary controls in their business. In developing
additional hemp-specific rules, CDPHE shall consider the inclusion of
both a hazard analysis and critical control point (HACCP) assessment;
and corrective action--preventive action systems (CAPA, required),
which identify, evaluate, and control for safety hazards and pathogens
in production facilities. These plans require batch coding, contaminant
controls, pathogen mitigation and other preventive and corrective
measures.

Inhalable Products

There are no state guidelines for hemp products sold for
inhalation, including smokable hemp flower and oils intended for
vaporization and inhalation. A statutory change will need to be
initiated to provide CDPHE or another state agency the authority to
adopt cGMP for these products to ensure purity and consumer safety to
the greatest extent possible. For smokable flower, CDPHE could examine
FDA tobacco rules (21 CFR 1140) or potentially the Colorado MED
marijuana rules (1 CCR 212-3) for information on purity and safety
requirements if deemed applicable. Similarly, for vaporized oils, CDPHE
can refer to the FDA rules for dietary supplements (21 CFR 111) and to
MED marijuana rules for infused concentrate products (1 CCR 212-3 Rule
3-335) if deemed applicable. Producers of these products are subject to
CDPHE licensing and testing protocols.

Process Validation and Testing

CDPHE should incorporate hemp processors and manufacturers into
existing process validation practices for food and supplement
producers. Considerations should be made in the regulations that
registrants that opt to have their processes validated may reduce or
bypass potency and contaminant testing of every production batch.
Process validation should be renewed upon a process change or other
approved interval \15\ and is obtained through passing multiple
consecutive contaminant and potency tests within a specified period.
---------------------------------------------------------------------------
\15\ Most renewal intervals are either biannual, annual, or
quarterly, although specific to each facility and process.

---------------------------------------------------------------------------
Implementation

Colorado state and local governments already have procedures and
programs in place to regulate hemp processors and manufacturers. The
following action items are needed to implement this recommendation.

Legislation to extend CDPHE regulatory authority to hemp
products and for proper hemp integration as needed;

Consult with FDA, other states, and other groups developing
hemp-specific processing and manufacturing standards; and

Develop education program for CDPHE to hold sessions for new
and existing manufacturers for how to comply with cGMP (and
other) hemp regulations.

Key Stakeholders

CDPHE, Colorado hemp processors, national processor certifying
agencies[.]
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Manufacturing Recommendations

15. Manufacturer Registration and Inspection
Stakeholder Recommendation

Continue the integration of hemp into the food and dietary
supplement manufacturer program. Further, define licensed activities as
needed and provide a means for the state to register and regulate hemp
processors and manufacturers in Colorado. This is an existing, active
program.

Basis & Purpose of Recommendation

The statutory basis for this recommendation is HB 18-1295 which
established that hemp food and cosmetic products shall be treated like
other similar product types. Other relevant Federal statutes:

Food (21 CFR 110 and 21 CFR 117)

Dietary supplements (21 CFR 111)

Animal products (21 CFR 507)

The infrastructure for the creation of registration procedures for
hemp manufacturers is already in place with the food manufacturing
registration procedures of the CDPHE, but slight modifications will be
needed, including the development of a hemp-specific registration form.

Regulatory Program

Existing Program.

Hemp Manufacturer Definition

A hemp manufacturer is defined as an industrial hemp processor or
producer making hemp-derived products and is divided into two subtypes:

Consumable Manufacturer. An industrial hemp manufacturer
making hemp-derived products intended for human use or
consumption, either as a finished good or as an ingredient/
component of a finished good. This definition includes (but is
not limited to) foods, beverages, tinctures, topicals, and
transdermals. Inhaled products and suppositories are not
covered under the registration program, a legislative change
would be required for their inclusion.

Industrial Manufacturer. An industrial hemp manufacturer
making industrial hemp products (including but not limited to
textiles, construction materials, fibers, animal/pet feed or
treats) not intended for human use or consumption.

Registration Procedure

Registration of hemp manufacturers is already occurring and builds
on the already existing protocols set out by the CDPHE for all food and
dietary supplement manufacturers. CDPHE already has a procedure for
registering manufacturers and consumable hemp product manufacturers
that can fall under this existing registration process. CDPHE also has
existing packaging and labeling requirements in place that can be
adapted to hemp.
Considerations for potential modifications of existing procedures
for hemp manufacturing regulation:

Procedures for regulating waste processors, the potential
need for registration with CDA.

Determination on whether additional oversight of non-
consumable industrial hemp manufacturers is needed, and the
appropriate state and/or local government agencies to lead.

More review and discussion to determine if there is a need
to include cosmetics and topicals in the consumables procedure
(currently exempt from the CDPHE procedure).
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More review and discussion to determine the procedure for
vaping (currently exempt from the CDPHE procedure).

Adherence to all local jurisdiction and Tribal authority
requirements will be necessary for license approval.

Consideration of options to utilize non-compliant hemp
products (but not for human consumption).

Non-consumable Industrial Manufacturers

CHAMP stakeholders determined more discussion is needed to
determine whether there is the need for additional regulatory oversight
for non-consumable industrial hemp production and manufacturing, and
the appropriate state agency if needed. Local and Tribal jurisdictions
will continue to be involved in health inspections, business licenses,
building permits, occupancy, and zoning regulations. CDPHE is the lead
state regulatory agency for manufacturing consumable hemp products in
Colorado.

Implementation

The following action items are needed to implement this
recommendation:

Continue to integrate hemp manufacturers in CDPHE licensing,
inspection, and regulatory rules--legislation will be needed to
provide CDPHE with the authority to regulate inhalable
products;

Clarify the point in the hemp supply chain where regulatory
authority over industrial hemp is transferred to the CDPHE when
hemp-related products are intended for human consumption;

Clarify whether there is additional regulatory oversight
required of non-consumable industrial hemp[.]

Key Stakeholders

CDPHE, CDA, Colorado hemp manufacturers, national manufacturer
certifying agencies[.]
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Marketing Recommendations

16. Glossary of Terms
Stakeholder Recommendation

Provide a list of terms and definitions for different stages in the
supply chain to create a universal understanding of the hemp industry
terminology.

Basis & Purpose of Recommendation

Every profession, industry, or sector has technical nomenclature.
The hemp industry is no exception to this principle and uses many terms
that may be misconstrued or confusing to people not directly involved
in the sector. This has implications for communications, transparency,
and information flows across the supply chain, where buyers, sellers,
and consumers must know what they are purchasing and using.
Given the nascent status of the industry, Stakeholders suggested
that a glossary of terms would be useful as a starting point to
standardize how products are defined along the supply chain.

Glossary by Stage in Supply Chain

Disclaimer. The following are conceptual definitions that were
developed by participants during meetings in the R&D and seed,
cultivation, testing, processing, manufacturing, and marketing
stakeholder groups. Official Federal, state, and local regulatory terms
may differ from the definitions contained herein.
Stakeholders should ultimately rely on Federal definitions of hemp
and marijuana, and on definitions published in the Colorado Revised
Statutes or Code of Colorado Regulations for reference.
State agencies should strive to adopt standardized definitions when
developing official regulatory definitions, and the following can
provide a basis.

Biology and Chemistry of Plant Compounds

Bioavailability--This term refers to the degree and rate at
which a drug is absorbed by the body's circulatory system. It's
an important measurement tool because it determines the correct
dosage for drugs, supplements, and herbs administered non-
intravenously, such as through consumption, inhalation, or
topical application. Bioavailability measurements denote the
fraction of the ingested dose that gets absorbed by the body.
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Cannabinoid(s)--(also ``phytocannabinoid(s)'') A group of
compounds that can be found in cannabis, other food-producing
plants, and in the human endocannabinoid system. There are many
different cannabinoids, and they are often written in their
abbreviated form.\16\ Below is a (non-exhaustive) list of
cannabinoids.
---------------------------------------------------------------------------
\16\ Note: Every cannabinoid has an ``acid'' precursor form. These
acid precursors are produced by the plant and are converted into their
non-acid form in a process known as decarboxylation, which we will
describe later. Acid precursors have their abbreviation appended with
an ``-A'' or ``A.'' (i.e.: THCA/THC-A, CBDA/CBD-A)

Delta-9 Tetrahydrocannabinol (Abbrev: THC): THC is the
---------------------------------------------------------------------------
primary psychoactive compound in cannabis

Cannabidiol (Abbrev: CBD) CBD is valued for several
medical properties and is non-psychoactive

Cannabinol (Abbrev: CBN)

Cannabigerol (Abbrev: CBG)

Cannabichromene (Abbrev: CBC)

Cannabicyclol (Abbrev: CBL)

Cannabivarin (Abbrev: CBV)

Cannabielsoin (Abbrev: CBE)

Cannabicitran (Abbrev: CBT)

Tetrahydrocannabivarin (Abbrev: THCV)

CB1/CB2 Receptors--The CB1 and CB2 receptors are
endocannabinoid receptors found in the human body that are
responsible for interacting with different cannabinoids. CBD
and THC often interact directly with these receptors.

Decarboxylation/Decarb--Decarboxylation is a chemical
process that relies on heat (often from combustion or cooking)
to eliminate a carboxylic acid group from the cannabinoid.
Decarboxylation is how the acid forms of cannabinoids are
converted into their non-acid forms. For example, THCA is
converted to THC by decarboxylation.

Delta-9 tetrahydrocannabinol (THC)--This is the primary
cannabinoid responsible for psychoactive effects. It interacts
with endocannabinoid receptors in the brain to release
dopamine.

Endocannabinoid System--The endocannabinoid system is a
signaling system responsible for regulating a variety of
hormones and chemical signals. In humans and most animals,
constituents of cannabis act upon the endocannabinoid system
and may affect some functions of the body and/or how sensations
such as pain are experienced.

Industrial Hemp--Federal Definition \17\--(also ``hemp'') Is
the plant Cannabis sativa L. and any part of that plant,
including the seeds thereof and all derivatives, extracts,
cannabinoids, isomers, acids, salts, and salts of isomers,
whether growing or not, with a delta-9 tetrahydrocannabinol
(THC) concentration of not more than \3/10\ of one percent
(0.3%) on a dry weight basis.
---------------------------------------------------------------------------
\17\ 7 U.S.C. 1639o(1).

Marijuana--Federal Definition \18\--All parts of the plant
Cannabis sativa L., whether growing or not; the seeds thereof;
the resin extracted from any part of such plant; and every
compound, manufacture, salt, derivative, mixture, or
preparation of such plant, its seeds or resin. Marijuana does
not include--hemp, as defined above; or the mature stalks of
Cannabis sativa L., fiber produced from such stalks, oil or
cake made from the seeds of such plant, any other compound,
manufacture, salt, derivative, mixture, or preparation of such
mature stalks (except the resin extracted therefrom), fiber,
oil, or cake, or the sterilized seed of such plant which is
incapable of germination.
---------------------------------------------------------------------------
\18\ 21 U.S.C. 802(16).

Terpene(s)--Terpenes occur naturally in many plant families
and create the wide variety of smells and flavors associated
---------------------------------------------------------------------------
with cannabis and other botanicals.

Seed Testing and Certification

Certified seed--Certified seed designation validates a
variety's genetic purity, weed absence, uniformity for harvest,
and yield standards for each crop. The seed certification
process includes specific varietal review, testing and labeling
procedures.

THC verification--A CDA-approved trial process (separate
from AOSCA certification) that occurs alongside the seed
certification process to test THC level in mature hemp plants
entered for seed certification. This process will be harmonized
with AOSCA once there are international standards for THC
verification.

Feminized seed--Feminized seeds are seeds with a very high
likelihood to produce female hemp plants. Feminized seeds are
specially bred or separated from male seeds using genetic
testing. Cannabis as a plant is dioecious, which means plants
can be male, female, or a hermaphrodite (showing traits of both
sexes). Female plants are most desirable for cannabinoid and
oilseed production. Feminized seeds are made by essentially
crossing one female with another. Breeders use techniques to
force female plants to produce ``female'' pollen. They then
fertilize another female; whose flowers produce a generation of
feminized seeds.

Certified clone program--A genetic certification program for
plants used for cloning, similar to seed certification. Under a
certified clone program, plants enter a varietal review and are
grown full term, in multiple conditions over multiple seasons
to verify identity, purity and select traits. Definitions for
foundation, registered and certified genetic stock will be
developed by CSGA.

Open source hemp genetics--Any seed or clone used for
breeding, produced by the plant Cannabis sativa L. that
possesses a THC content less than or equal to 0.3 percent
tested according to CDA regulations; and is not patented,
certified or otherwise protected.

Plant and Cultivation Terminology

Aeroponics--A hydroponic cultivation method where the
plant's roots are suspended in air and sprayed regularly with a
fine mist of nutrient solution. Unlike other hydroponic
methods, aeroponically grown plants do not have their roots
suspended in water.

Bud/Nugget/Flower--Terms that refer to the flower of female
cannabis plants. Unlike other flowering plants, cannabis
flowers are dense and concentrated.

Dry weight--The weight of plant material with no greater
than 13 percent moisture content.

Flowering--A late stage in the life cycle of cannabis where
buds become dense, trichomes appear with greater frequency, and
the cannabis plant prepares for reproduction. After flowering,
cannabis plants will die.

Hydroponics--A growing method that does not rely upon
traditional soil. Plants can be grown in a variety of media and
fed nutrients dissolved in water using different methods,
including ebb-and-flow, aeroponics, and deep-water culture.

Integrated Pest Management--A pest control strategy that
focuses on preventive and proactive techniques, rather than
reactive pest control.

Medium--A substance in which plants are rooted if not in
soil in the ground. This can be traditional soil, coco coir,
rockwool, clay, sand, pebbles, or other material.

Mother Plants--Also known as stock plants, cannabis plants
kept permanently in a vegetative state for growers to take
cuttings or clones from them. Mother plants serve as the
genetic basis for clones in a growing facility.

Propagation--Early plant life cycle phase in which plants
are cloned or grown from seed. This is the most delicate phase
of growth.

Vegetative State--The period in-between propagation and
flowering. It is a period where the cannabis plants have a
sturdy root system and focus photosynthetic energy on growth.

Processing and Manufacturing

Acceptable Potency Level--A hemp crop or product with a
delta-9 THC concentration of 0.3 percent or less by weight.

Broad Spectrum Extract/Product--Extracts and products from
hemp which contain multiple cannabinoids but have THC
effectively removed. Broad spectrum products have a non-
detectable level of THC & have detectable levels of other
cannabinoids & terpenes.

CBD Isolate--The purest form of CBD, which is produced by
removing all other compounds found in the plant including,
terpenes, flavonoids, plant parts, and other cannabinoids. CBD
isolate comes in a granular or powder form and is odorless and
tasteless. The end-product contains no (or nondetectable)
levels of THC or other compounds. No specific identity
threshold currently exists to define purity required to use the
term `isolate'.

CO2 extraction--The carbon dioxide extraction
process uses changes in temperature and pressure to create
phase changes in carbon dioxide, gently drawing out the plant's
beneficial components. The result is clean, pure oil with a
long shelf life.

Concentrates/Distillates/Extracts/Isolates--These terms
describe compounds made by extraction, concentration,
distillation, and isolation processes that separate compounds
that are recognized as useful and beneficial from other plant
compounds.

Ethanol extraction--Extraction using cold or hot, high-grade
alcohol that detaches all the active compounds from the
cannabis plant's cellulose material, resulting in pure, full
spectrum hemp oil. Oils extracted using this method are further
refined via centrifugal chromatography to remove all remaining
traces of ethanol.

Full Spectrum Extract/Product--Extracts and products from
hemp that contain the full cannabinoid profile and all other
compounds including terpenes, flavonoids, proteins, phenols,
sterols, and esters, naturally occurring in the cultivar from
which it was produced.

Non-detectable THC--Term used to describe a hemp product,
usually a broad-spectrum product, with THC removed and reduced
to levels undetectable by common testing methods. A specific
detection threshold needs to be established. This term can be
used on any hemp product with THC removed.

Potency--A measure of drug activity expressed in terms of
the amount required to produce an effect of given intensity in
the body. A high-potency drug evokes a larger response even at
a low dose, while a low-potency drug evokes a small response at
low concentrations and requires higher doses for a similar
effect.

THC Free Extract/Product--An intermediary or final product
that when tested, shows no or a non-detectable level of THC.
This term should only describe cannabinoid (usually CBD)
isolate or isolate products. Lab results must show the presence
of terpenes, CBD, & other minor cannabinoids. A specific
detection threshold definition needs to be established to
determine a product as free of THC.

Whole Plant Extract/Product--This is a term used for extract
or products using the entire plant, stems, leaves, roots, and
flowers in the extraction process, and is also commonly called
a botanical extraction. Full spectrum is implied if a product
is a whole plant extract. The product retains the terpenes,
cannabinoids, vitamins, minerals, fatty acids, phytonutrients,
and any other materials naturally occurring in the cultivar
from which it was produced.

Figure 9. Primary Hemp Crops: Fiber, Seeds, and Flowers
------------------------------------------------------------------------
Characteristic Fiber Seed/Grains Flower/Cannabinoids
------------------------------------------------------------------------
Desired Plant Material Stalks (bast Dried (high Dried and cut
fibers and in oil and (flower bud and
hurd/core protein) floral material)
fibers)
Planting Density Dense Dense spacing Well-spaced
spacing to to (typically planted
discourage discourage 3-4 apart on a 3-5
branching branching center)
and and
flowering flowering
(35-50 (35-50
plants/ plants/
ft\2\) ft\2\)
Physical Tall plants Plants with Bushy plant with
Characteristics with small small stalks wide branching to
stalks and and less promote flowers/
less leafy leafy buds (selecting
material material female plants is
ideal)
Harvest Height 10-15 6-9 4-8
Harvesting Typically Must be Harvesting is
Considerations using hay harvested highly labor
equipment within a intensive, in part
(mow, field short window given possible
retting 2-3 due to seed degradation of
weeks, then scatter plant material
roll issues related to efforts
balling) to preserve the
chemical
properties of the
plant's flowering
heads; also
requires drying
down to ten
percent moisture
------------------------------------------------------------------------
Source: Congressional Research Service: https://fas.org/sgp/crs/misc/
R44742.pdf.

Regulated Marketing Claims and Medicinal Foods

Regulated Marketing Claim--There are four major categories
of marketing claims regulated by the Federal Government (FDA
and FTC) including:

Authorized Health Claim. Food ingredients for which
there is significant scientific agreement on specific
health benefits may receive formal approval from the FDA to
make claims that consuming a certain amount of the
ingredient may improve certain health conditions (such as
eating rolled oats to reduce heart disease).\19\
---------------------------------------------------------------------------
\19\ There are only a handful of Authorized Health Claims for food
ingredients with health benefits. Many of these claims required
extensive clinical trials and lawsuits to secure. FDA Guidance[.]

Drug Claim. Any product that claims to diagnose,
prevent, mitigate, treat, or cure a disease is a drug.
Typically, any mention of a disease on labels or marketing
materials (print or digital) triggers the product's status
as a drug. Drugs must be approved by the FDA prior to being
marketed.\20\
---------------------------------------------------------------------------
\20\ Drug approvals and claims require FDA approval, extensive
research, clinical trials, and safety reviews.

Health Benefit Claim. The Federal standard for making
a health benefit claim requires the marketer to have
``competent and reliable scientific evidence'' produced by
``qualified professionals'' using ``procedures generally
accepted in the profession to yield accurate and reliable
results.'' \21\
---------------------------------------------------------------------------
\21\ See further FTC guidance.

Structure/Function Claims. Structure and function
claims may describe the role of a nutrient or dietary
ingredient intended to affect the normal structure or
function of the human body, for example, ``calcium builds
strong bones.'' In addition, these claims may characterize
the means by which a nutrient or dietary ingredient acts to
maintain such structure or function, e.g., ``fiber
maintains bowel regularity,'' or ``antioxidants maintain
cell integrity.'' \22\
---------------------------------------------------------------------------
\22\ See further FDA structure/function claims guidance.

Medicinal Foods--There are two types of medicinal foods
---------------------------------------------------------------------------
regulated by the FDA including:

Functional Foods and Nutraceuticals. These terms are
used often in the marketplace, but there is no statutory
definition. The FDA regulates functional foods (e.g.,
oatmeal) and nutraceuticals (e.g., milk with added vitamin
D) like any other food: if it contains a drug ingredient,
makes a disease claim, or makes a health benefit claim
without proper substantiation, the agency will act
accordingly.\23\
---------------------------------------------------------------------------
\23\ FDA perspective on functional food from the American Journal
of Clinical Nutrition.

Medical Foods. A food which is formulated to be
consumed or administered enterally under the supervision of
a physician and which is intended for the specific dietary
management of a disease or condition for which distinctive
nutritional requirements, based on recognized scientific
principles, are established by medical evaluation.\24\
Medical foods must be administered under the supervision of
a physician.
---------------------------------------------------------------------------
\24\ 21 U.S.C. 360ee(b)(3)[.]
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End-User and Retail

Edibles--Edibles are a large variety of different foods
created using cannabis concentrates including infused sugar,
infused oil, or infused butter. Common products include:

Gummies/lollipops/taffy/candy

Brownies/baked goods

Sodas/drinks

Infused oil or butter mixed in with other food items
such as popcorn or salad dressing

Hemp Seed Oil--Non-psychoactive oil obtained by pressing
hemp seeds. Cold-pressed, unrefined hemp oil is dark to clear
light green in color, with a nutty flavor.

Inclusion Rate--A measure, expressed as a percentage by
weight or volume, that quantifies the concentration of hemp
extract or cannabinoids in a food product or dietary
supplement. An inclusion rate allows for the creation of
recommended daily intake values for humans and animals in food
and supplement products.

Tincture--Tincture is a term used to refer to cannabis
extracts/concentrates typically delivered under the tongue
(sublingually) or in a mucous membrane via an eyedropper.
Tinctures are intended to be a fast delivery method without
smoking or swallowing.

Topicals/Transdermals--Topicals and transdermals are
consumption methods that use a lotion or patch to apply the
cannabinoids to your skin.

Vape/Vaporizer/Vape Pen/Vape Cartridge--A consumption method
that uses heat to vaporize concentrated oil, which is then
inhaled.
17. Marketing and Labeling Guidance Stakeholder Recommendation
Continue to establish guidance for retailer and manufacturer
marketing and labeling which harmonize with national and international
standards, when appropriate, for consumable hemp products.

Basis & Purpose of Recommendation

The FDA maintains oversight of hemp-derived consumer products under
the Federal Food, Drug, and Cosmetic Act.\25\ FDA jurisdiction includes
hemp and hemp-derived products as a food and food ingredients, and an
ingredient for body products, cosmetics, dietary supplements, and
therapeutic products. Analogous guidance made for other supplements and
products provides the basis for the guidance presented here.
---------------------------------------------------------------------------
\25\ 21 U.S.C. 301 et seq.
---------------------------------------------------------------------------
Although hemp-derived products are relatively new to the
marketplace, there are several precedents for other products with
unique ingredients. Guidance on marketing and labeling requirements has
evolved to assure that consumers and buyers are not misled. This
Federal guidance will apply to consumable hemp products.

Regulatory Program

Existing Program.

The Role of the FDA

FDA is a Federal agency within the Department of Health and Human
Services charged with protecting and promoting public health through
oversight of a broad range of products. The farm bill, by preserving
FDA authority while removing other restrictions under the CSA, made FDA
much more practically relevant to many hemp stakeholder, including
those who may not have experience dealing with the FDA.
The FDA has discovered many hemp products (including CBD products)
being marketed with claims of therapeutic benefit, or other drug
claims, without having gone through the drug approval process. These
include CBD products marketed for serious diseases and conditions like
cancer, Alzheimer's disease, opioid use disorder, and pain. In
response, the FDA actively oversees the sector and sends warning
letters to companies unlawfully marketing such products.

Guidance for the Manufacturing Sector

Unlike drugs approved by FDA, the manufacturing processes of hemp-
derived products is not subject to FDA review as part of the drug
approval process, and FDA has not evaluated whether these products are
effective for their intended use, proper dosages, interactions with
other FDA approved drugs, or potentially dangerous side effects or
other safety concerns.
Outside the drug space, enterprises are also marketing hemp
products, including human and animal foods, as well as dietary
supplements and cosmetics: each has a different regulatory framework.
Unlike drugs, foods, dietary supplements, and cosmetics rarely need to
be approved by FDA before they can be marketed in interstate commerce.
One exception is food additives, which the FDA must determine to be
safe for specified conditions before they can be added to foods unless
the substance is ``generally recognized as safe'' (GRAS) by qualified
experts.
Similarly, for production and companion animal feed, the process
for approval is overseen by the FDA Center for Veterinary Medicine.
Animal byproducts or animals fed unapproved ingredients may not enter
the stream of commerce and it is not legal to feed unapproved animal
feed ingredients. For dietary supplements, if the product contains a
new dietary ingredient--meaning a dietary ingredient that was not
marketed in the United States before October 1994--the manufacturer
generally must notify FDA before coming to market.
Approved food additives can be found on the FDA list of GRAS
ingredients. Most recently added to this list (effective December 20,
2018) are hulled hemp seeds, hemp seed protein, and hemp seed oil. The
GRAS recognition also included a statement that Cannabis sativa L. oil
seeds do not naturally produce cannabinoids. These items can now be
included in human foods provided they comply with all other
requirements and do not make disease treatment claims.

Guidance on Broader Cannabinoid Products

Two statutory provisions have relevance for cannabinoid products:

1. Under the Federal Food, Drug & Cosmetic Act, it's prohibited to
add a substance into food if that substance has been
approved as a drug, or if that substance has been the
subject of public clinical investigations; and

2. A product that includes such a substance is excluded from the
definition of a dietary supplement.

These provisions have an exception for substances in foods
(including supplements) before they were ever approved or studied as
drugs. So, for example, substances like caffeine and baking soda have
this type of grandfathering in foods and beverages. For cannabinoids
and CBD, the FDA has concluded this exception does not apply.

Guidance for the Retail Sector

The top FDA regulatory priority is to protect public health. This
priority includes alerting consumers when products pose health and
safety risks, such as when product manufacturers make claims to
prevent, diagnose, treat, mitigate, or cure serious diseases.
For example, the agency has warned companies to stop selling CBD
products claimed to prevent, diagnose, treat, mitigate, or cure serious
diseases such as cancer, Alzheimer's disease, psychiatric disorders,
and diabetes. Misleading, unproven, or false claims associated with CBD
products may lead consumers to put off getting important medical care
or to ignore symptoms associated with serious diseases.
Unapproved CBD products, which could include cosmetics, foods,
products marketed as dietary supplements, and any other product making
therapeutic claims, generally have not been subject to FDA evaluation
for:

Indication and efficacy for treating a specified disease or
medical condition;

Proper dosage;

Interactions with other drugs or foods; or

Presence of dangerous side effects or other safety concerns.

Besides safety risks and unproven claims, the quality of many CBD
products may also be in question due to a current lack of processing
controls and practices. For example, the FDA has tested some products,
and many were found to not contain the levels of CBD claimed on the
label. There are also reports of CBD potentially containing unsafe
levels of contaminants (e.g., pesticides, heavy metals, THC).
FDA has not approved CBD for any use in animals and the concerns
regarding CBD products with unproven medical claims and of unknown
quality equally apply to CBD products marketed for animals. In
addition, hemp seeds and other hemp byproducts are not currently
approved by the FDA for use with animals. The FDA recommends pet owners
talk with their veterinarians about treatment options with CBD for
their pets.

Implementation

In general, CDPHE already has a framework in place that adopts
related FDA policies. The following action items are needed to
implement this recommendation.

Continue to guide packaging and labeling for hemp products
that extend FDA guidance where appropriate; and

Develop programs as needed to support public health and
consumer safety related to hemp products.

Key Stakeholders

CDPHE, CDA, FDA, Colorado hemp manufacturers and retailers[.]
18. Quality Assurance Certification Program
Stakeholder Recommendation

Develop a quality assurance program, such as a ``Good Hemp
Program'', that establishes minimum standards for Colorado producers/
manufacturers to qualify for special certification/designation. The
program will collect fees to fund hemp research and promotion.

Basis & Purpose of Recommendation

Certification provides a marketing alternative to commodity and
unbranded markets that allows individual producers to be included under
an established umbrella program and label, organized, and overseen by a
third-party. The program establishes criteria to promote a set of
differentiated characteristics. Third-party certification provides
independent verification of product or production claims. Securing a
reputable third-party certifier is a way to differentiate Colorado
grown hemp products from others on the market.
Another potential motivation for having a state certification
program is that it allows for Colorado to maintain control over its
standards for product integrity. For example, the USDA organic program
has an integrity database,\26\ that consumers and buyers can use to
identify reputable suppliers. A similar system could support the
Colorado hemp industry.
---------------------------------------------------------------------------
\26\ https://organic.ams.usda.gov/Integrity/Default.aspx.

---------------------------------------------------------------------------
Regulatory Program

Current Program. There is no current state-level certification and
promotion specific to hemp products. Hemp and hemp products can
currently qualify for any other similar agricultural or locally
produced product initiative.
Recommended Enhancement. Certification programs and labels depend
on establishing a set of production processes and quality standards
that verify whether the certified product have certain qualities or
attributes valued by consumers.
A certification process offered by the USHA covers several stages
of production including cultivation, processing, and manufacturing.\27\
This program offers a sensible starting point for to examine key
features of a quality assurance program.
---------------------------------------------------------------------------
\27\ https://ushempauthority.org/assets/uploads/USHA-Guidance-
Procedures-Version-2.0-WEB-VERSION-Rev-3-25-20_200504_141204.pdf.
---------------------------------------------------------------------------
Relevant components include:

Cultivators

Registration, personnel guidance, sampling and
handling practices, contaminant testing and hemp
cannabinoid quantification (pre-harvest and post-harvest),
transportation and storage guidance, and checklists for
best practices

Processors, Manufacturers and Brand Owners

Similar guidance topics as those for cultivators
(employee and facility guidance),

Post-harvest material handling under process controls
and testing to maintain potency and assure purity.

Quality Management Systems including clear direction
on any point, step, or stage in the manufacturing process
where control is necessary to ensure the quality of the
hemp product, very similar to HACCP in food products.

Guidance on product packaging, labeling, and storage
that aligns closely with other third-party certification
programs, such as the U.S. organic program.

Importance of recordkeeping, supplier specifications,
know your supplier practices, and packaging and labeling
best practices.

Retailers

There is no current USHA guidance for retailers.

Retailers in organic foods often become certified by
USDA as a branding resource and to demonstrate their
commitment to delivering organic foods to their customers.

License or accreditation for retailers to assure hemp
products have been correctly handled from production
through delivery to the customer.

Implementation

The following action items are required to implement this
recommendation:

New rules and definitions for a Colorado hemp quality
assurance program; and

Procedures for audit services to verify compliance at
several stages of the supply chain.

Key Stakeholders

CDA, Colorado hemp cultivators, processors, manufacturers,
retailers[.]
19. State Procurement of Industrial Hemp Products
Stakeholder Recommendation

Encourage state procurement and use of industrial hemp products.

Basis & Purpose of Recommendation

With industrial hemp, there are concerns among Colorado hemp
industry stakeholders there may be less than optimal investment in the
processing and manufacturing of hemp industrial products until the
market is ``proven.'' Yet, the market may not grow if there continues
to be a few industrial hemp product options to purchase. This is an
expected challenge for a sector prohibited for so long, and where there
is little historical market data or supply chain expertise to support
an emerging product market.
The State of Colorado can support the Colorado hemp industry
through encouraging procurement and use of hemp products by state
agencies and institutions.

Regulatory Program

Current Program.

Colorado Procurement Overview

Procurement in Colorado is decentralized--most state agencies
conduct their own solicitations. Businesses wanting to sell goods or
services to the state government must promote themselves to individual
state agencies and actively search for opportunities on the state
procurement website. Colorado currently has a preferred purchasing
program for recycled products that can serve as a model for a hemp
product preference.\28\
---------------------------------------------------------------------------
\28\ CO Procurement Code & Rules 24-103-903(5): When purchasing any
product with public funds, any procurement agent may purchase products
or materials with recycled content, that have been source reduced, that
are reusable, or that have been composted[.]

---------------------------------------------------------------------------
Reciprocity Considerations

Colorado law mandates that resident bidders be given preference
over non-resident bidders equal to the preference given by the state in
which the nonresident bidder is a resident, i.e., if a non-resident
bidder is four percent lower than the resident bidder but the state of
residence of the non-resident bidder awards a five percent preference
to in-state bidders, then the Colorado bidder becomes the lowest bidder
by one percent.

Sustainability Considerations

Purchasing agencies may utilize life cycle costing and/or value
analysis in determining the lowest responsible bidder. In bids where
life cycle costing or value analysis is to be used, the specifications
shall indicate the procedure and evaluative factors to be considered.
When appropriate, specifications issued and/or used by the Federal
Government, other public procurement units, or professional
organizations may be referenced by the State of Colorado. Bidders may
have to certify these standardized specifications have been met.

Recommended Enhancement.

State Preferential Practices

Stakeholders recommended the state could include hemp as part of a
preferred product program. A range of ``price preferences'' from 3-10
percent across states for products that would fall under other policy-
driven ``preferred'' categories. Among sectors, agriculture, forestry,
and fishery products are commonly mentioned, for sustainability
outcomes, local site preferences, recyclables, and other sustainable
products as evaluated by life cycle analyses, renewable fuels, corn-
based plastics, and printing were common across states.

Implementation

The following action items are needed to implement this
deliverable. Items include:

Modify the Procurement Code through legislative action and
rulemaking process;

Encourage the State Purchasing and Contracts Office (SPCO)
to include hemp-based products on the state pricing agreement
list;

Integration of industrial hemp products into current
initiatives:

Colorado Procurement Technical Assistance Center
(PTAC)

The purpose of the Colorado PTAC is to generate
employment and improve
the general economic condition of the state by assisting
Colorado companies
in obtaining local, state, and Federal Government
contracts.

PTAC provides procurement technical assistance to help
in selling products
or services to government agencies.

HUBZone Small Business Administration Empowerment
Contracting Program

The HUBZone Empowerment Contracting program provides
Federal con-
tracting opportunities for qualified small businesses in
federally designated
distressed areas.

Key Stakeholders

Department of Personnel and Administration, SPCO, Colorado hemp
industry[.]
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Finance and Insurance

20. Develop Guidance & Best Practices
Stakeholder Recommendation

Provide guidance and best practices to financial services
institutions and insurance carriers to encourage them to provide
services to Colorado hemp businesses. Colorado can be the bellwether
for guidance and outreach to institutions seeking to serve the
industrial hemp marketplace. Guidance can include written materials and
direct stakeholder engagement, rulemaking, or general outreach.

Basis & Purpose of Recommendation

This recommendation seeks to destigmatize opening and holding
accounts for hemp and hemp-related businesses. With enhanced guidance
and stakeholder engagement, it is hoped that providers will serve the
industrial hemp industry similar to other agricultural industries.
Regulatory entities and associated authorizing statutes involved
with this recommendation are:

CRS 10-1-101, et seq. (Insurance)

Division of Insurance Protocol for Engaging Stakeholders in
Rulemaking

CRS 11-101-101, et seq. (Banks)

CRS 11-110-101, et seq. (Money Transmitters)

CRS 11-30-101, et seq. (Credit Unions)

CRS 11-40-101, et. seq. (Savings and Loan Associations)

Regulatory Program

Current Program.

Since the passage of Colorado Amendment 64, Federal and state
regulators published cannabis-related guidelines for banks, credit
unions, and money services businesses. More recently, Colorado
regulators published a variety of guidance on marijuana and hemp that
includes:

Division of Financial Services, April 4, 2019, ``BSA
Expectations for Industrial Hemp''

DORA, January 2020 ``Roadmap to Cannabis Banking & Financial
Services''

Division of Banking, January 31, 2020 ``Hemp Industry
Guidance''

Similarly, the National Association of Insurance Commissioners
maintains a cannabis insurance working group, of which the Colorado
Insurance Commissioner is a member. As most insurance is not a single-
state enterprise, Colorado works with regulators across the country to
encourage the introduction of innovative products, particularly in the
admitted market (as opposed to surplus lines), to cover industrial hemp
and to remove any barriers to the offering of such products.
Despite more recent changes to industrial hemp laws at the Federal
level, providers of financial services and insurance remain uncertain
about the degree to which they can serve hemp-related companies and the
compliance and reporting practices that such relationships require.
Some Federal banking regulators have issued helpful clarifications
regarding hemp accounts, but banks remain subject to a complex set of
Federal legal requirements and regulatory expectations, requiring
specific guidance to ensure they act appropriately. Representatives
from the American Bankers Association have thus encouraged banks to
wait until more guidance is set forth before providing financial
products to hemp-related businesses.
In response to the need for additional guidance, on June 29, 2020,
the Financial Crimes Enforcement Network (FinCEN), a division of the
United States Treasury, released FIN-2020-G001, Guidance Regarding Due
Diligence Requirements Under the Bank Secrecy Act for Hemp-Related
Business Customers, will help clarify a bank's regulatory requirements
if it provides banking services. In addition, on July 6, 2020, the
Conference of State Bank Supervisors (CSBS), released the CSBS Cannabis
Job Aid, a resource for both bankers and bank examiners, that provides
information and risk assessment guidance for banks that wish to provide
banking services to the hemp industry.

Recommended Enhancement.

Developing a guidance program informs and destigmatizes industrial
hemp, hemp products, and hemp-related businesses through facilitated
sessions for state and local regulators; state-chartered financial
institutions, domestic insurers; and the general public, whether for
producers, vendors, or other stakeholders, as determined necessary.
The proposed enhanced outreach program builds upon existing efforts
of DORA and the work of cross-functional groups like the cannabis
insurance working group of the National Association of Insurance
Commissioners. Such efforts would focus on three constituencies:
regulators, industry, and the public. Regarding the Division of
Insurance, guidance and education may also focus on the need for multi-
state admitted lines specifically focused on coverage thresholds built
into the 2018 Farm Bill for industrial hemp; that is, the division may
wish to engage in further discussions with regulatory colleagues in
other states and industry stakeholders regarding insurance products
that would cover industrial hemp with THC levels over statutory limits.

Implementation

The following action items are needed to implement this
recommendation. Items include:

Development of targeted meetings with Federal and state
banking, financial services, and insurance regulators

Development of targeted meetings with banking & financial
services institutions and their respective trade associations

Key Stakeholders

DORA (Divisions of Insurance, Banking, and Financial Services),
banking and insurance trade groups, and other key identified groups[.]
21. Expanded Data Availability
Stakeholder Recommendation

Make available aggregated industry registration data and other
information to financial institutions and insurance carriers to
expedite access to account services.
Stakeholders recommended CDA and CDPHE provide aggregated
registration information in structured formats, subject to development
of key standards and norms, to the finance and insurance industry to
help these institutions expand services to all qualified participants
in the hemp supply chain. Moreover, stakeholders recommended that
Colorado should allow CDA and CDPHE to release or verify specific
application information to a financial or insurance institution upon
the written request of the registrant to facilitate and expedite
account servicing.

Basis & Purpose of Recommendation

Accurate de-identified information and standardized figures are key
for risk management, insurance industry actuaries, underwriting, and
pricing, whether in the hemp industry or otherwise. Data points of
significant interest included registration, testing, and regulatory
compliance information. Making such data available would encourage
coverage of commercial risks in the same manner as other industries and
emphasize that providing coverage to hemp businesses requires the same
application of general commercial insurance principles as other
agricultural concerns. Access to such information can also serve as one
tool among others in a holistic underwriting process, much like other
sources of public data relied upon to understand a specific business'
overall efficiency and competency compared to similarly situated
businesses.
Making a limited set of registration data available serves two
goals. First, financial institutions and insurance carriers can more
easily determine whether a registrant complies with state and Federal
law when opening and maintaining an account on their behalf. Second, if
registrants opt to provide more detailed information, account holders
and service providers can use that data to reduce costs associated with
ongoing servicing of hemp-related accounts. Transitioning toward access
to structured data is also expected to facilitate better understanding
and analysis of data in the aggregate.

Regulatory Program

Current Program.

CDA and CDPHE periodically publish information that shows active
registrations. CDA periodically updates the list but does not include
underlying information regarding changes in license status (if any) nor
any other data. CDPHE updates their information regarding the number of
processors registered. Regularly published aggregated statistical data
on hemp is currently lacking in Colorado.

Recommended Enhancement.

Initially, Colorado should develop uniform standards for hemp-
related data so information can be accurately collected and provided
both to the USDA under the IFR, and through a public application
platform. With the foregoing, CDA should make aggregated de-identified
data available both in terms of structured information and in an
analysis performed and provided through partnerships among CDA, CDPHE,
CSU, and OEDIT.

Implementation

The following action items are needed to implement this
recommendation:

Establish a platform to provide aggregated data under
Colorado Open Records Act and standards in which the date will
be collected and provided;

Modification to CDA rules to provide for platform-specific
disclosures and opt-in that allows CDA to verify registration
information as the request of the registrant

Convene a stakeholder group if needed to define the data
requirements, privacy concerns, and program operational
characteristics

Key Stakeholders

CDA, CD[PH]E, DORA, CSU, Office of the Attorney General, hemp
industry associations, banking, and insurance trade[.]
Future Research & Policy Development
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The following regulatory issues were identified during the
stakeholder meetings and subsequent proceedings as issues or subjects
that needed further research and policy development.

Cross-pollination. Research the distance, pollen viability,
size, and other factors that determine risk for hemp cross-
pollination and recommend thresholds for notification.

Retaining value in the supply chain. Convene a stakeholder
process to determine the rules and procedures to develop secure
supply channels that allow non-compliant plant material to be
processed for non-consumable industrial uses; or to have the
THC extracted and removed from the stream of commerce. In
addition, use existing regulatory avenues for non-compliant
plant material including advocating for exemption of mature
stalks and seeds from destruction.

Electronic Traceability System. Convene a process to develop
specifications, security, and documentation requirements for an
ETS that will ensure a secure chain of custody for hemp
products in Colorado.

Transport of concentrated intermediate products. Determine a
transportation protocol for hemp concentrates with THC over
statutory limits. These are business-to-business transactions
where products transported will be further processed to bring
THC levels into compliance before sale to consumers.

Non-consumable industrial hemp manufacturing. Determine
whether additional regulatory oversight of industrial products
manufacturing operations is needed and if so the lead
regulatory agency and most advantageous regulatory framework.

Emerging cannabinoid analytes, inhalable and suppository
hemp. Monitor and address new cannabinoid analytes, such as
Delta-8 THC, as they are identified and be prepared to address
in policy and regulation. Assure Colorado's approach aligns
with Federal hemp/cannabis laws and state marijuana laws.
Determine the best regulatory treatment for inhalable and
suppository hemp, whether direct initial regulation by the
state or by deferring to the Federal Government timeline for
hemp product regulation.

Quality assurance program. Determine the costs and benefits
of developing a quality assurance program that sets quality,
purity, and process standards and promotes a Colorado brand of
hemp products.

Retail Framework. Convene a stakeholder process to develop a
retail framework for hemp that integrates into an existing
retail framework for food or dietary supplements.

Financial services and insurance data. Determine data gaps
that exist for insurance and financial institutions and the
specific requirements and funding needed to expedite access to
services[.]

The items listed above may require a task force or stakeholder
process to further develop the proper regulatory scope and
implementation action items.
Appendices
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Appendix A. CHAMP Stakeholders and Participants
Board of Directors

Gwen Carr, Commission of Indian Karin McGowan, Department of Public
Affairs Health and Environment
Mishawn Cook, City of Boulder James Pritchett, Colorado State
University
Kate Greenberg, Department of Patty Salazar, Department of
Agriculture Regulatory Agencies
Stan Hilkey, Department of Public Ean Seeb, Governor's Office
Safety
Ed Lehrburger, Hemp Advisory Billy Seiber, Office of the
Committee Attorney General
Betsy Markey, Office of Economic John Swartout, Colorado Counties
Development and International Inc
Trade

Executive Committee

Anshul Bagga, City and County of Courtney Krause, Governor's Office
Denver
Eric Bergman, Colorado Counties, Heather Krug, Department of Public
Inc. Health and Environment
Ken Boldt, Department of Regulatory Nick Levendofsky, Rocky Mountain
Agencies Farmers Union
Mara Brosy-Wiwchar, Department of Alan Lewis, Natural Grocers
Public Health and Environment Dominque Mendiola, Department of
Revenue
Peg Brown, Department of Regulatory Brian Morrow, Office of the
Agencies Attorney General
Hunter Buffington, Hemp Feed Peter Ortego, Ute Mountain Ute
Coalition Tribe
Sean Callan, Ellipses Laboratory Grant Orvis, BoCo Farms
Michael Coury, Department of Public Donald Schneider, Sedgwick County
Safety
Morgan Ferris, Commission of Indian Dave Smith, Southern Ute Tribe
Affairs
Wondirad Gebru, Department of Ashley Stokes, CSU Extension
Agriculture
Tim Gordan, Functional Remedies Luke Teater, Office of State
Planning and Budget
Michelle Hadwiger, Office of Beauclarine Thomas, Colorado
Economic Development and Municipal League
International Trade Thuy Vu, Hammer Enterprises
Lelia Al-Hamoodah, Office of State Jenifer Waller, Colorado Bankers
Planning and Budget Association
Emily Ibach, Farm Bureau Brent Young, CSU Extension
Eugene Kely, Colorado State Roger Zalneraitis, Southern Ute
University Tribe
Andrew Kline, National Cannabis
Industry Association

Stakeholders--R&D and Seed

William Althouse, Fat Pig Society Wendy Mosher, New West Genetics
Michael Bowman, First Crop, Inc. Rick Novak, Colorado State
University
Veronica Carpio, Grow Hemp Colorado Robin Peterson, City of Aurora
Judy Daniels, Soil Sage, LLC Laura Pottorff, Department of
Agriculture
Mike Davis, Atkinson, Andelson, K. Bear Reel, Charlotte's Web
Loya, Ruud & Romo
Wondirad Gebru, Department of Robert Roscow, Canopy Growth
Agriculture Company
Tim Gordon, Functional Remedies Donald Schoderbek, Pawnee Buttes
Seed, Inc.
John Harloe, Balanced Health Duane Stjernholm, Colorado Hemp
Botanicals Processing Cooperative
Shawn Hauser, Vicente Sederberg Ian Terry, Cannaissance Creative
Chris LaPlante, System Processing Matthew Wallenstein, Colorado State
University
Ed Lehrburger, PureHemp Technology Preston Whitfield, Flex Mod
LLC
Terry Moran, Bija Hemp

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Stakeholders--Cultivation

Lance Allen, Colorado Bureau of Margaret MacKenzie, Salt Creek Hemp
Investigation Company
Marley Bordovsky, Denver City Kevin Mallow, Southern Ute Indian
Attorney's Office Tribe
Alex Buscher, Buscher Law LLC Jeff Markley, C-Beyond Health Inc.
David Coker, Paradox Ventures Inc Scott Meining, Wildcat Grow, LLC
Vaughn Cook, Ute Mountain Ute Tribe Brian Mitchell, Colorado State
University
Jason Cranford, Flowering Hope Darcie Moran, Joy Organics
Brandy DeLange, Colorado Municipal Grant Orvis, BoCo Farms, LLC
League
Jessica Feingold, Stem Holdings, Scott Perez, Perez Agricultural
Inc.
Wondirad Gebru, Department of Josh Raderman, Raderman Holdings
Agriculture
Garrett Graff, Hoban Law Group Kathleen Russell, Colorado State
University
Chris Grimes, Department of Natural Chris Schaefer, Colorado Bureau of
Resources Investigation
Nick Hice, Denver Relief Consulting Hazen Schlachter, Colekehr Farms,
LLC
Timothy Hunsinger, Gold Standard Billy Seiber, Office of the
Hemp LLC Attorney General
Emily Ibach, Colorado Farm Bureau Bob Sievers, Sievers Infinity
Andrew Kamolvathin, Wholesome Katrina Skinner, Safe Harbor
Nutrients LLC Services
Brian Koontz, Colorado Department Patrick Vo, BioTrackTHC
of Agriculture
Kristen Kunau, Freida Farms, LLC Dan Volz, Colorado Bureau of
Investigation
Jim Lenderts, City of Fort Collins Chris Wiseman, Pueblo County
Nick Levendofsky, Rocky Mountain Brent Young, CSU Extension
Farmers Union

Stakeholders--Testing

Jaclyn Bowen, Clean Label Project Brian Morrow, Office of the
Attorney General
Hunter Buffington, Hemp Feed Wendy Mosher, New West Genetics
Coalition
Tatiana Calvo, TGS Global (The Rick Novak, Colorado State
Green Solution) University
Amy Charkowski, Colorado State Claire Ohman, Agriscience Labs
University
Germaine Ewing, Southern Ute Indian Jon Person, Gobi Hemp
Tribe
Charles Ferris, OnSite Tests, Inc. Eric Petty, Department of
Agriculture
Wondirad Gebru, Department of Abraham Rahmanizadeh, Leafwell
Agriculture Botanicals, Inc.
Liz Geisleman, 710 Spirits by Rocky Jason Schimschal, Denver Police
Mountain Reagents Department
Anna Hatch, LivWell Enlightened Hansen Scott, Botanacor
Health Laboratories
Andrew Kline, The National Cannabis Sean, Ellipse Analytics
Industry Association
Heather Krug, Department of Public Dana Shierstone, Vapor Distilled
Health and Environment
Kara Lavaux, Denver Dept. of Public Thuy Vu, Hammer Enterprises
Health & Env.
Kevin Liebrock, Bluebird Botanicals Jordan Wellington, VS Strategies
Daya Mitchell, Department of Seth Wong, Industrial Laboratories
Agriculture
Brian Moore, bioMerieux, Inc. Wendi Young, Mile High Labs

Stakeholders--Transportation

Moe Afaneh, BioTrack THC Tim Martinez, Colorado Bureau of
Investigation
Angela Agnew, Green Cherry Organics Doug McDonald, South Ute Tribe
Courtney Barnes, Vicente Sederberg Dan McMahon, BioTrack THC
Barry Bratt, Colorado Bureau of Brandon Mills, Independent
Investigation
Hunter Buffington, Hemp Feed Arman Motiwalla, ADM Labs
Coalition
David Bernard Bush, Hoban Law Group Antonio Negroni, Independent
Rodney A. Dean, SafeTivi Ltd. Laura Pottorff, Department of
Agriculture
John DeLue, Invicta Solutions James Reil, WOH Consulting
Mark Gallegos, Department of Mark Savage, Colorado State Patrol
Agriculture
Wondirad Gebru, Department of Chris Schaefer, Colorado Bureau of
Agriculture Investigation
Talisa Gula-Yeast, City of Fort Cheryl J. Smith, Department of
Collins Agriculture
Tom Hewson, Sentinel Mountain Cindy Sovine, Sovine Consulting
Rebecca Hill, Colorado State Herman Stockinger, CDOT
University
Andrew Howard, Colorado Bureau of Dan Voltz, Colorado Bureau of
Investigation Investigation
Brian Koontz, Department of Philip von Mecklenburg, Mile High
Agriculture Labs
Ed Lehrburger, PureHemp Technology Shawn West, Colorado Bureau of
LLC Investigation
Margaret MacKenzie, Salt Creek Hemp Laurel Witt, Colorado Municipal
Company League

Stakeholders--Processing

Jessica Alizadeh, Fairfield and Antonio Negroni, Independent
Wood
Pamela Baxter, Charlotte's Web, Patrick Neil, Botanex Technologies
Inc.
Michael Bowman, First Crop, Inc. Grant Orvis, BoCo Farms, LLC
Sean Callan, Ellipse Analytics Scott Perez, Perez Agricultural
Amy Charkowski, Colorado State Josh Raderman, Raderman Holdings
University
Steve Clark, Marijuana Enforcement James Reil, WOH Consulting
Division
DeLange, Colorado Municipal League Alyssa Rosenblum, Extract Labs
Francis DellaVecchia, King Pharma Kathleen Russell, Colorado State
and 7Hands University
Tim Gordon, Functional Remedies Priyanka Sharma, Kazmira LLC
Mattie Gullixson, City of Colorado Dana Shierstone, Vapor Distilled
Springs
Jimmy Haberer, 1287 Enterprises Bob Sievers, Sievers Infinity
Jeff Hays, Resinosa LLC Steven Stinson, Stinson LLP
Kasey Irwin, Bluebird Botanicals Jon Strauss, CDPHE-DEHS
Brian Koontz, Department of Kipp Stroden, 7Hands
Agriculture
Kim Kreimeyer, Marijuana Kimberly A. Stuck, Allay Consulting
Enforcement Division LLC
Nick Levendofsky, Rocky Mountain Kaitlin Urso, Department of Public
Farmers Union Health and Environment
Brian Lukas, City and County of Shawn West, Colorado Bureau of
Denver/Fire Department Investigation
Jeff Markley, C-Beyond Health Preston Whitfield, Flex Mod
Jessica McStravick, IHP Refinery Roger Zalneraitis, Southern Ute
Indian Tribe
Brian Morrow, Office of the
Attorney General

Stakeholders--Manufacturing

Jamie Baumgartner, Panacea Life Kevin Liebrock, Bluebird Botanicals
Sciences
Chris Bedrosian, Flora's Mercantile Sommer Martinez, Balanced Health
& Hemp Emporium Botanicals
Steve Cape, Next Frontier Arnold Matthew, Salad Ground
Biosciences Kitchens
Veronica Carpio, GrowHempColorado George Rhoades, Pure Water, LLC
Abby Davidson, Denver Department of Erica Rogers, Denver's Department
Public Health and Environment of Excise and Licenses
Justin Singer, Caliper Foods
Robert Dimarco, Boulder Botanicals Cindy Sovine, Sovine Consulting
& Bioscience Laboratories, Inc. Erin Spies, Native Roots Dispensary
Wondirad Gebru, Department of Steven Stinson, Stinson LLP
Agriculture
Nathan Gerhardt, Charlotte's Web, Jon Strauss, CDPHE-DEHS
Inc.
Garrett Graff, Hoban Law Group Eric Thayer, Southern Ute Indian
Tribe
Joshua Jetton, Sacred Body Jackson Tine, HOPE manufacturing
Jerell Klaver, WholeMade, Inc. Laurel Witt, Colorado Municipal
League
Kim Kreimeyer, City of Aurora Thuy Vu, Hammer Enterprisesis
Ed Lehrburger, PureHemp Technology Chris Wiseman, Pueblo County
LLC
Alan Lewis, Natural Grocers Ken Woodlin, Canopy Growth
Corporation

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Stakeholders--Marketing

Morris Beegle, We Are For Better Jean Lotus, Haepenny Hemp
Alternatives; Noco Hemp Expo Scott Meining, Wildcat Grow, LLC
Jaclyn Bowen, Clean Label Project Corry Mihm, Colorado Agritourism
Association
Romy Campbell, VivaOil, LLC Brandon Mills, Independent
Larry Carstensen, The Data Hub Lynette Myers, Department of Public
Health and Environment
Lily Colley, LC Management Erica Rogers, Denver's Department
Consulting of Excise and Licenses
Jason Cranford, Flowering Hope Kathleen Russell, Colorado State
University
Nick French, Frangiosa Farms Ben Snow, City of Greeley
Pierce Grogan, Front Range Hemp Eric Thayer, Southern Ute Tribe
Harvesting Services
Talisa Gula-Yeast, City of Fort Lindsay Topping, GRIT
Collins
Anna Hatch, LivWell Enlightened Samantha Walsh, Colorado Hemp
Health Industries Association
Steven Hoffman, Compass Natural Wendy White, Department of
Agriculture
Alan Lewis, Natural Grocers Chris Znerold, Native Roots
Colorado
Tom Lipetzky, Department of
Agriculture

Stakeholders--Finance & Insurance

John Ball, Colorado Financial Jeff Markley, C-Beyond Health
Holdings LLC
Joy Beckerman, Elixinol LLC Leah Marvin-Riley, Department of
Treasury
Abdel Berrada, Mesa Verde Ag Michael O'Neill, Safe Harbor
Solutions Private Banking
Ken Boldt, Colorado Department of Robin Peterson, City of Aurora
Regulatory Agencies
Peg Brown, Department of Regulatory John Podvin Jr., Shapiro Bieging
Agencies Barber Otteson
Brad Collins, American AgCredit Mark Robey, Mountain West Credit
Union Association
Thomas Dermody, Bija Hemp, LLC Eric Rothaus, Department of
Treasury
Kelly Fletcher, Travelers Insurance Rochonne Sanchez, Bank of the West
Gary Hahn, Colorado Farm Bureau Shauna Sansotta, Sooper Credit
Insurance Union
Kathy Hays, Resinosa LLC Ray Sitorius, Charlotte's Web, Inc.
Chris Hill, Banker's Bank of the Katrina Skinner, Safe Harbor
West Services
Michael Holland, FirstBank Mike Steenson, Farmers Mutual
Brian Koontz, Department of Joe Tassano, Denver Community
Agriculture Credit Union
Daniel Larsen, Southern Ute Indian Mark Valente, Colorado Dept of
Tribe Regulatory Agencies
Rebecca Laurie, Department of Jenifer Waller, Colorado Bankers
Regulatory Agencies Assoc.
Nick Levendofsky, Rocky Mountain Brent Young, CSU Extension
Farmers Union
Jason Lopez, Xodiak

Project Staff
Project Directors

Hollis Glenn, Department of Jeff Lawrence, Department of Public
Agriculture Health and Environment
Leslie Hylton, Office of Economic Max Nathanson, Office of Economic
Development and International Development and International
Trade Trade
Rebecca Laurie, Department of Laura Pottorff, Department of
Regulatory Agencies Agriculture

Facilitation and Support

Tracy Garceau, Department of Courtney Roberts, Department of
Regulatory Agencies Regulatory Agencies
Lisa Hall, Office of Information Cary Ruble, Department of Public
Technology Health and Environment
Scott Leach, Department of Public Heather Weir, Department of Public
Health and Environment Health and Environment
Joe Lomeli, Department of Public Ashley Young, Department of
Health and Environment Regulatory Agencies
Lindsay Nelson, Department of Brian Young, Department of Public
Agriculture Health and Environment
Corey Niemeyer, Department of
Public Safety

Consultant Team

Sal Barnes, MPG Consulting Daniel Mooney, Colorado State
University
Greg Bellomo, Government Adam Orens, MPG Consulting
Performance Solutions
Davide Fortin, MPG Consulting Brian Pool, Government Performance
Solutions
Regan Gilmore, Colorado State Clinton Saloga, MPG Consulting
University
Rebecca Hill, Colorado State Micah Schwalb, Roenbaugh Schwalb
University
Lauren Mangus, Colorado State Dawn Thilmany, Colorado State
University University
Malea McKeown, Roenbaugh Schwalb

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Appendix B. Detailed Industry Analysis
Hemp is an emerging specialty crop, both nationally and in
Colorado, that has received considerable attention from producers,
consumers, private businesses, and policymakers. Cultivation of the
crop may serve as an alternative cropping enterprise that improves
grower profitability and as an engine of economic development. Hemp can
be manufactured and processed into numerous industrial and commercial
goods for which there is a national and international demand.
Industrial applications range from building materials and textiles to
food ingredients and wellness products. However, given limited research
and development examining domestic uses, there is potential for many
other applications to emerge.
While hemp may hold promise for Colorado, integrating this sector
into the state's agricultural and economic landscape also creates
challenges. The CHAMP initiative is one step that Colorado has taken to
identify and address potential obstacles. This section provides context
for understanding hemp markets, cultivation, and processing in Colorado
and nationally, and discusses possible future directions for the
industry.
Background
The terms ``industrial hemp'' and ``hemp'' both refer to a plant of
the Cannabis sativa L. species and any part of that plant (including
the seeds, stalks, leaves, and flowers whether growing or not) and all
extracts and compounds derived from the plant (such as cannabinoids,
terpenes, isomers, or acids) with a delta-9 tetrahydrocannabinol, or
THC, concentration of 0.3 percent or less on a dry weight basis. THC is
the primary intoxicating component of cannabis. Cannabis plants, plant
parts, and derivatives with THC levels that exceed 0.3 percent are
considered marijuana, which remains a Schedule I controlled substance
and is regulated by the DEA.
Hemp is not a new crop for Colorado or U.S. producers. Before and
during World War II, the U.S. grew hundreds of thousands of acres,
reaching 220,000 acres in 1943.\29\ Such production was largely for
manufacturing rope and sailing cordage and was highly incentivized via
Federal Government price supports such as the war-era Hemp for Victory
campaign. Removal of price supports following the war led to a sharp
decline in prices and widespread closure of processing mills followed.
That, coupled with increased domestic taxes for hemp production under
the Marijuana Tax Act and imports from parts of Latin America,
Caribbean, and Asia, made growing and processing hemp unprofitable.
Production remained largely negligible thereafter until it was
officially prohibited in 1970 under the CSA due to its' similarity to
marijuana.
---------------------------------------------------------------------------
\29\ Johnson, N. 2019. American Weed: A History of Cannabis
Cultivation in the United States. (https://www.researchgate.net/
publication/334452841_American_Weed_A_History_of_Canna
bis_Cultivation_in_the_United_States) EchoGeo 48.
---------------------------------------------------------------------------
Following over 4 decades of prohibition, hemp was reintroduced as a
legal crop in the United States under the 2014 Farm Bill.\30\ The 2014
Farm Bill allowed for the establishment of state, Tribal, or territory
hemp pilot programs and did not require state production plans to be
approved at a national level by the USDA. Colorado was an early mover,
being among the first states to establish a hemp program, and one of
only four states to report acreage in 2014. The 2018 Farm Bill \31\
allowed for hemp production in all states, Tribal entities, and
territories on the condition these programs obtain approval from the
USDA and meet requirements in the IFR.\32\
---------------------------------------------------------------------------
\30\ Agricultural Act of 2014, (https://www.govinfo.gov/content/
pkg/PLAW-113publ79/pdf/PLAW-113publ79.pdf) Public Law 113-79.
\31\ Agricultural Improvement Act of 2018 (https://
www.ers.usda.gov/agriculture-improvement-act-of-2018-highlights-and-
implications/).
\32\ Federal Register, Vol. 84, No. 211.
---------------------------------------------------------------------------
Market Context
Hemp in the United States is, and will likely remain, highly
regulated compared to other commodity crops. This stems from the finely
drawn distinction that separates hemp from marijuana based on THC
level, combined with the inability to visually distinguish between
these variants of the cannabis plant. Producers or entities intending
to grow, handle, or process hemp must generally obtain a license, or
other types of registration permit, for these purposes. The licensing
requirements are necessary for inspection and enforcement purposes, but
also have the added benefit of making available some market-related
information on cultivation and processing at the national and state
levels.
In 2019, U.S. land area registered for industrial hemp cultivation
surpassed 500,000 acres, with Colorado accounting for over 13 percent
of the total.\33\ While this more than doubles previous peak production
in 1943, not all registered acres are planted. To put this distinction
in context, one recent hemp production study put 2019 U.S. planted
acres closer in line with that previous peak at 200,000 acres (Hubbard,
2020). It furthermore estimated that most acres (>90 percent) were
planted to produce hemp flower for cannabinoid extraction. Just under
80% of the total area was intended primarily for CBD extraction and
another 14 percent was intended primarily for CBG extraction, another
cannabinoid compound that has formed some traction among consumers.
Hemp intended for oil seed and fiber accounted for much smaller areas,
representing 3.6 percent and 2.5 percent of total planted area,
respectively. As the market for CBD and other cannabinoids stabilizes,
acreage planted for oil seed, fiber, and other uses is expected to
increase.
---------------------------------------------------------------------------
\33\ Drotleff, Laura. 2020 Outlook: Licensed U.S. hemp acreages
fall 9% from 2019 but grower numbers increased 27%. June 19, 2020. Hemp
Industry Daily, https://hempindustrydaily.com/2020-outlook-licensed-u-
s-hemp-acreage-falls-9-from-2019-but-grower-numbers-increase-27/ (last
visited July 22, 2020).
---------------------------------------------------------------------------
Many growers received healthy profits in the early years of the
hemp pilot programs. A relative scarcity of raw hemp material and
domestically produced hemp flower to supply an expanding CBD market
helped to maintain wholesale prices for hemp and hemp products well
above break-even levels. Production budgets for hemp floral material in
2019 showed variable costs exceeding $10,000 per acre, with clones or
transplant plugs alone representing 70-80 percent of this total.\34\ In
mid-2019, however, industry benchmark reports showed a steep decline in
national wholesale prices for raw and processed hemp products of up to
80 percent,\35\ resulting in reduced to negative profitability for many
growers.
---------------------------------------------------------------------------
\34\ Mark and Shepard. 2019. Industrial Hemp Budgets 2019.
University of Kentucky Extension, Lexington, KY, https://
agecon.ca.uky.edu/budgets#Specialty_Crops (last visited July 7, 2020).
\35\ Hemp Benchmarks. 2020a. U.S. Hemp Extraction Survey May 2020,
https://www.hempbenchmarks.com/special-reports/ (last visited July 20,
2020). Hemp Benchmarks. 2020b. Price Commentary. April 2020 Hemp Spot
Price Index Report, https://www.hempbenchmarks.com/special-reports/
(last visited May 21, 2020).
---------------------------------------------------------------------------
The decline in wholesale prices was due to both supply and demand
factors. On the supply side, expansion of hemp production to new states
and dramatic growth in planted acreage over a short period in pilot
program states made hemp biomass relatively more abundant than it had
been earlier. Total U.S. hemp production had been only 1,866 acres in
2014,\36\ as compared to the 200,000 acres estimated for 2019.
---------------------------------------------------------------------------
\36\ Mark, Tyler, Jonathan Shepherd, David Olson, William Snell,
Susan Proper, and Suzanne Thornsbury. February 2020. Economic Viability
of Industrial Hemp in the United States: A Review of State Pilot
Programs, EIB-217, U.S. Department of Agriculture, Economic Research
Service.
---------------------------------------------------------------------------
At the same time, extraction and processing plants faced hurdles in
keeping up with the supply of raw hemp material. In a 2020 study of
over 200 hemp cannabinoid extraction facilities, over 70 percent of
respondents had a daily input capacity of 1,000 pounds of hemp floral
material or less, including about \1/3\ with a capacity under 100
pounds per day. For reference, a generous estimate of national yield
per acre for hemp floral material in 2019 is 1,520 pounds per acre.\37\
Consumer demand for CBD and other hemp-based products grew at a slower
pace than anticipated in early 2020 due to COVID-19 related disruptions
and the stagnating economy that followed.
---------------------------------------------------------------------------
\37\ Hubbard, Chase. 2020 Hemp Crop Production Survey Results. The
Jacobsen Publishing, https://thejacobsen.com/wp-content/uploads/2020/
05/2020-Hemp-Survey-Results.pdf (last visited July 22, 2020).
---------------------------------------------------------------------------
Growers produced more hemp in 2019 than could be processed or sold.
As of mid-2020, there are many reports of unsold raw and processed hemp
products remaining in storage from the 2019 production year. National
hemp acreage in 2020 is estimated to decrease, with one study
estimating a nine percent overall decline as compared to 2019.\38\
While hemp commodity prices declined sharply, downward price movement
for inputs like clones and transplant plugs was slower to follow.
Nevertheless, some producers have reported lower costs for these items
in 2020 and wholesale prices appear to be stabilizing from their recent
drop for the time being.
---------------------------------------------------------------------------
\38\ Drotleff, Laura. 2020 Outlook: Licensed U.S. hemp acreages
fall 9% from 2019 but grower numbers increased 27%. June 19, 2020. Hemp
Industry Daily, https://hempindustrydaily.com/2020-outlook-licensed-u-
s-hemp-acreage-falls-9-from-2019-but-grower-numbers-increase-27/ (last
visited July 22, 2020).
---------------------------------------------------------------------------
A further consideration is a global market for hemp-based
industrial and commercial processed goods besides produced raw hemp
materials. There is a large and established global market for around
25,000 hemp-based products including textiles, recycling, automotive,
furniture, food and beverages, paper, construction materials, and
personal care and wellness products including cosmetics. While there is
little information on U.S. retail sales of hemp products, reports
estimate that as early as 2016 hemp product sales amounted to almost
$700 million.\39\ Domestic retail sales were concentrated in a variety
of categories such as CBD and supplements, personal care products,
textiles, foods, and other applications and consumer products.
---------------------------------------------------------------------------
\39\ Johnson, Renee. Hemp as an Agricultural Commodity. June 22,
2018. Congressional Research Service Report. 7-5700. RL32725, https://
fas.org/sgp/crs/misc/RL32725.pdf (last visited July 22, 2020).
---------------------------------------------------------------------------
Hemp production is permitted in around 30 countries with an
estimated aggregate acreage of around 225,000 acres as of 2016. In
2017, the U.S. imported $67.3 million worth of hemp material. Trade
data is not available for finished products (such as textiles,
construction materials, and paper products), thus the $67.3 million
consists only of hemp seeds, oil, solids, and fibers used as inputs in
further manufacturing.\40\ In 2018, the largest supplier of U.S. hemp
imports is Canada which accounts for 90 percent of the value of
imports, followed by China and Romania.
---------------------------------------------------------------------------
\40\ Johnson, Renee. Hemp as an Agricultural Commodity. June 22,
2018. Congressional Research Service Report. 7-5700. RL32725, https://
fas.org/sgp/crs/misc/RL32725.pdf (last visited July 22, 2020).
---------------------------------------------------------------------------
Growth in global hemp production and relative costs of production
across countries is expected to be a significant determinant of U.S.
hemp land area expansion, especially for hemp fiber which is already
widely traded in international markets \41\ and used primarily for
industrial applications rather than consumed as a food ingredient or
supplement.
---------------------------------------------------------------------------
\41\ OED. 2020. Hemp Fibers Profile. Organization for Economic
Complexity, https://oec.world/en/profile/hs92/hemp-fibers (last visited
July 30, 2020).
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Hemp Cultivation in Colorado
This section provides further context on hemp cultivation in
Colorado. Despite being an early mover, the sector is yet to mature and
there are numerous market information gaps. In this section, we
summarize the available data to provide a picture of the industry and
characterize some recent trends within the sector. All hemp growers
must register with the CDA. Annual registration costs are $500 plus an
additional $5 per acre and an additional $0.30 per hundred square feet
of hoop house, greenhouse, or other indoor space. If the registered
land area (in acres) includes the hoop house, greenhouse, or other
indoor space within its boundaries, then both the outdoor acreage and
indoor square footage can be filed under a single registration.
CDA records provide information on the number of registrations and
registered land area between 2014 and late July 2020. Between 2014 and
2019, the number of registrants and registrations grew each year (solid
lines), resulting in about a ten-fold increase during that period
(Figure B1). As of late July 2020 (dashed lines), the number of
registrants and registrations were 40 percent and 45 percent below
their comparable 2019 totals, respectively. The numbers shown represent
lower bounds on the number of registrants and registrations for 2020,
however, because some registrations that are set to expire in fall 2020
will be renewed. The final numbers will depend on the registration
renewal rate in the coming months. An analysis of 2019 records
indicated that 54 percent of registrations included outdoor area only,
15 percent included hoop house, greenhouse, or other indoor areas only,
and 31 percent included both outdoor and indoor areas.
Figure B1. Colorado Hemp Registrants and Registrations, 2014-July 2020
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Source: Colorado Department of Agriculture.

The total registered land area also increased annually between 2014
and 2019, but at a more rapid pace than registrations (Figure B2),
indicating operations increasing in size. In terms of both registered
acres and indoor square footage Colorado saw a forty-fold increase.
Records for 2019 show a median land area of around 20 acres for
registrations with an outdoor area only. Indoor only registrations had
a median area of about 3,600\2\. Registrations with both indoor and
outdoor areas had median land areas of 7 acres and 3,000\2\,
respectively. As of late July 2020, registered acres were down over 50
percent as compared to 2019. Registered square feet were similarly down
about 41 percent. The number of registered acres is unlikely to change
substantially given that the main outdoor planting window has passed.
Square footage is more likely to rise given that indoor cultivation can
occur later into fall and winter to produce clones, transplants, or
seeds, or potentially other off-season or niche production.
Figure B2. Registered Hemp Cultivation Space, 2014-July 2020
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Source: Colorado Department of Agriculture.

Actual acres and indoor square footage planted and harvested is
consistently lower than the registered acres (Figure B3). There are
many reasons that producers may register for hemp production but not
actually plant such as grower inexperience, a lack of financing, or the
inability to secure inputs like seed or clones. There are even fewer
acres harvested than are planted but statewide data on acres harvested
are not available. As shown in Figure B4, the majority of Colorado
counties had some registered hemp acreage in 2019. Hemp production
appears to be relatively well-distributed across the state, with some
regional concentrations and a few counties with no registered acreage.
Figure B3. Colorado Hemp Acreage, Registered and Planted, 2017-2019
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Source: Colorado Department of Agriculture.
Figure B4. Colorado Registered Hemp Acres by County, 2019
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Source: Colorado Department of Agriculture.

Many of the hemp registrations are for small parcels (Figure B5);
over 60 percent of hemp registrations were for less than 25 acres
whereas just over two percent were for 200 or more acres. Since the
launch of Colorado's pilot program, hemp acreage in Colorado has also
heavily tilted toward production for floral material to the same, or
perhaps an even higher, degree as compared to the national picture.
Figure B5. Hemp Registration Size (Acres), 2019
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Source: Colorado Department of Agriculture.

One way to understand the relative footprint of hemp cultivation
within Colorado's agricultural sector is to compare its planted acreage
with other crops (Figure B6). While planted hemp acres in 2019 (50,000)
were well below those for Colorado's top field crops such as corn
(1,550,000 acres) and wheat (2,150,000 acres), they were comparable to
other specialty crops within the state. Planted hemp acreage was very
similar to sunflower, barley, and potatoes, and nearly double that for
sugar beets. This illustrates that, at its 2019 planted acreage level,
hemp has grown to become an important specialty crop for Colorado.
Figure B6. Colorado Planted Acres by Crop, 2019
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Source: National Agricultural Statistics Service, 2019.

Colorado's hemp sector extends beyond cultivation and handling to
include processing and manufacturing. The number of processors and
manufacturers using hemp or its derivatives (oils, extracts,
concentrates, isolates, resins, seed meal, flour, etc.) as a food
ingredient or nutritional supplement has grown rapidly in recent years.
This includes existing businesses that have expanded their product
lines to include hemp-based ingredients and new business creation.
Using hemp in food and supplement manufacturing is allowed in Colorado
under state statutes and is regulated by the CDPHE. The hemp
ingredients used in the manufacturing process must come from an
approved source, remain below allowable THC thresholds, and be
appropriately labeled.
CDPHE maintains a list of registered hemp food and supplement
manufacturers and approved storage facilities, such as warehouses and
packing facilities, from which hemp may be sourced. Figure B7 gives
more insights into new hemp business registrations by year and survival
rates as of May 2020. Starting in 2017, when records first became
available, the total registered by CDPHE rose from just under 90 to
over 640 by the spring of 2020. Before 2020, these numbers
approximately doubled year over year. In 2020, the number appears
lower, however, it represents only a partial year through May of 2020.
The number of new hemp processing and manufacturing business starts is
expected to continue to slow, as these measures usually start high
after a new Federal or state business regulatory program is announced
as entrants rush to a new market and then slow as the market becomes
saturated.
As of spring 2020, about \3/4\ of all businesses registered
continued to handle hemp materials. This represents just over \1/2\ of
the businesses first registering in 2017, \2/3\ of the businesses first
registering in 2018, and well above \3/4\ of businesses first
registering in 2019. Overall, the number of food and supplement
manufacturing businesses continued to grow in the first few years of
Colorado's pilot program with more new businesses registering each year
than closed or discontinued hemp processing.
Figure B7. Colorado Hemp Extraction, Processing, and Consumable
Manufacturing Business Growth, 2017-May 2020
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Note: Includes all businesses that process and manufacture
hemp for human or animal consumption.
Source: Colorado Department of Public Health and Environment.
Figure B8. Colorado Hemp Extraction, Processing, and Manufacturing
Business Summary, 2017-May 2020
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]>

Note: Includes all businesses that process and manufacture
hemp for human or animal consumption.
Source: Colorado Department of Public Health and Environment.

As of May 2020, the number of active CDPHE hemp registrants were
relatively evenly distributed across extraction, food processing, and
supplement manufacturing activities (Figure B8). Nearly 40 percent of
the 392 active registrants were involved in extraction. About 60
percent of these extraction businesses were specialized within that
processing activity alone whereas 40 percent were also involved in food
processing, supplement manufacturing, or both. Additionally, businesses
specialized in hemp food processing or supplement manufacturing
activities, respectively, also represented large shares of the CDPHE
registrants at just over 30 percent each. These businesses largely
focused on hemp flower processing for CBD and other cannabinoid
extraction; however, several food manufacturers incorporate hemp
protein and oils from hemp seed into their processes.
This discussion highlights the growth in hemp processing and
manufacturing activities related to the extraction, food, and
supplements. Other hemp processing and manufacturing activities such as
non-food industrial applications like textiles, paper, polymers,
building materials, and specialized equipment manufacturing are also
present in the state. These hemp processors represent a currently small
industry in its early stages with unknown capacity, but with the
potential to grow and establish itself as a significant agricultural
and manufacturing industry and employer in the state. No comprehensive
source of information on these sources was identified and therefore not
summarized here.
Anecdotally, there are a relatively small number of industrial
manufacturing facilities, operating at a relatively small scale in the
state. Companies in their early stages have perfected methods to
manufacture a diverse array of products, including concrete,
insulation, plastics, animal bedding, and textile fabrics. These
companies are in different stages of growth and scale. The industrial
hemp products manufacturing sector represents a potential opportunity
for growth and investment as demand and the industrial supply chain for
hemp products in the U.S. matures. In that case, acreage in the state
devoted to fiber and oil seed would be expected to increase.
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Future Opportunities
Hemp has the potential to diversify farm incomes and drive economic
growth in Colorado. Future levels of hemp production will be influenced
by a multitude of factors that can be difficult to predict including
the number of hemp growers, the hemp area planted, growth and
diversification of intended end use, and processing and retail
capacity. Most important, hemp enterprises must remain profitable
relative to other agricultural alternatives. Industrial and consumer
hemp products must also remain competitive with established and new
alternatives.
The appropriate scale of production also remains an open question.
Many hemp registrations under the pilot program were for small- or
micro-sized areas (ten percent of 2019 registrations were less than 1
acre, for example, Figure B5). Business turnover will also play a role
in the number of registrants producing hemp into the future. Many
producers may simply experiment with hemp and decide not to continue
with its cultivation. In addition, growers will need to understand the
risk management tools at their disposal and be able to take advantage
of them. Currently, there is a lack of information and confusion around
crop insurance which needs to be clarified going forward.
While the industry is experiencing an oversupply of hemp biomass at
the farm level there is anecdotal evidence suggesting that contracts
(production and marketing) have played a role in grower access to
processing and therefore profitability. If processing capacity remains
relatively small scale this trend may continue, and producers would be
discouraged from growing hemp for the spot market. The sector is also
likely to be shaped by developing vertical relationships among
extractors, processors, and industrial users or retailers. There will
likely be continued supply chain issues related to uncertainty, such as
around testing and processing, as the industry continues to grow and
develop. These growing pains should ease, however, as innovation
pipelines increase yields, make THC levels more predictable and stable,
and potentially reduce other risks such as those associated with cross-
pollination.
In Colorado, the vast majority of industrial hemp cultivation is
for CBD or other cannabinoid production. As an early mover, Colorado
may have an advantage in cannabinoid production, but the state needs to
consider whether other industrial hemp applications would be profitable
for producers in the state. As the industry grows, hemp production for
fiber and oil seeds or dual purposes may increase, but the supply chain
will need to grow alongside increased cultivation. The supply chain is
immature, but there is potential interest in industrial hemp materials
in transportation and construction for example by auto manufacturers
for vehicle interiors or by major home building and aerospace
manufacturing corporations.
Research and development by major end-users or by materials
manufacturers are still necessary to determine if hemp-based materials
are an advantageous alternative to current materials. Given Colorado's
history of hemp cultivation, the state could attract a major
decortication facility or other mid-stream manufacturing plants if
demand for industrial hemp products materializes.
The lack of reliable information on hemp marketing channels and
other hemp-related data will continue to improve; providing valuable
information as this emerging industry grows. While we have current
information on registered hemp processing and manufacturing businesses,
in the future the compilation of further data on processors and
manufacturers that produce non-industrial items like textiles or
building materials (that do not fall under CDPHE's purview) will be
helpful in informing the industry.
While farms are experiencing a frictional oversupply due to a
fragmented market, consumers are looking for new food and dietary
supplement alternatives; and businesses are looking for sustainable and
renewable energy and building materials. Despite the recent challenges
on the supply side, there is undeniable potential for growth in demand
for industrial and consumer hemp products in the U.S. As the entire
industrial hemp supply chain grows and matures, Colorado is poised to
take advantage of this growth in demand if it materializes. For this
growth in demand to occur the industry needs to be proactive about
addressing quality issues, unproven medical efficacy claims, and the
accuracy of dosing. It is imperative that Colorado explores any
potential opportunity and develops the supply chain for the emergence
of industrial hemp for textiles, polymers, and building materials.
Overall, there is a lack of consumer education around cannabinoids,
which is exacerbated by the lack of Federal regulations related to
cannabinoids in consumer products. On the industrial side, there is a
lack of applied research and proven cost-effective use cases for
different hemp applications.
Colorado can continue to lead the industry in hemp innovation by
facilitating and maintaining a favorable regulatory environment for
research and development. The recommendations outlined in this CHAMP
document demonstrate that the Colorado hemp industry is eager to
position the state to be a production and manufacturing leader.
To achieve leading status, research and development will be needed
in several areas including (1) plant genetics; (2) effective uses for a
variety of hemp industrial applications; (3) consumer uses and
preferences for cannabinoid products; and (4) scalable and safe
manufacturing practices.
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Notes

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A Partnership of the Colorado Departments of Agriculture,
Public Health & Environment, Regulatory Agencies, and Office of
Economic Development and International Trade.

The Chair. Thank you very much.
At this time, I want to welcome the Ranking Member, Mr.
Thompson, and allow him the opportunity for 5 minutes for any
opening statement he would like to make.

OPENING STATEMENT OF HON. GLENN THOMPSON, A REPRESENTATIVE IN
CONGRESS FROM PENNSYLVANIA

Mr. Thompson. Well, good morning, and thank you, Madam
Chair and Ranking Member Baird, for holding today's hearing and
to the witnesses for being here, much, much appreciated. I
think this is our first hearing on this commodity, which is
amazing, given the work that we did laying the foundation in
the 2014 and 2018 Farm Bills, so long overdue, and thank you to
both of you for your leadership on this.
While I am excited to hear from such a distinguished group
of witnesses, I am disappointed we are having another hearing
where USDA--and in this case the FDA too--are missing in
action, absent without leave, from the discussion. I think
everyone in attendance would have welcomed to hear their
perspectives as a part of this hearing.
These two agencies have an integral role related to both
regulation and oversight of the hemp program, and without them,
we are missing a piece of the puzzle on an issue that has never
once been publicly discussed by this Committee. And I hope we
can rectify that in the remaining months of Congress,
especially given the testimony. And thank you for your
testimony, all five of you, and specifically where you noted
the frustration of waiting for the FDA in particular.
As we all know, there was a lot of excitement--I witnessed
it firsthand--and trepidation surrounding hemp following the
passage of the 2018 Farm Bill. However, after the first growing
season, many producers were left with hemp in the field and had
no markets to sell their products to. And since the 2019
growing season, there has been a significant decrease in the
number of acres planted. At the same time, though, we have seen
continued investments in using hemp fiber for a variety of
industrial products. I think it really is reflected in American
agriculture innovation, not just in the practice, but
identifying uses for this commodity.
The investments have been made in using hemp fiber for a
variety of industrial products. Now, I am excited to learn more
from our witnesses today and have appreciated hearing that,
about the innovative work that is being done. These
conversations are important to our oversight mandate, so I look
forward to the Q&A part of this hearing to continue to gain
perspective on what worked and what didn't work and learn more
about what stakeholders are thinking as we approach the
reauthorization for the 2023 Farm Bill. I do appreciate all the
recommendations and thoughts in your oral testimony and your
written testimony. I once again want to thank our panel for
taking time to be with us today.
And with that, Madam Chair, I yield back.
The Chair. Thank you very much to the Ranking Member of the
full Committee. I appreciate your opening statement and your
comments during this time.
I wanted to at this time begin the questioning. At this
time, Members are recognized for questions in order of
seniority, alternating between Majority and Minority Members.
You will be recognized for 5 minutes each in order to allow us
to get to as many questions as possible. Please keep your
microphones muted until you are recognized in order to minimize
background noise. I recognize myself for 5 minutes.
And I first want to thank all of the witnesses for their
testimony and for being with us.
Commissioner Quarles, in your article, Hemp, Kentucky, and
the Law, you discuss the economic opportunities of hemp, but
also the challenges. Could you outline some of the complexities
that arose after the 2018 Farm Bill? Has the USDA Final Rule
helped to clarify things for states, Tribes, and other
producers?
Dr. Quarles. Thank you so much for that question, Chair
Plaskett. The biggest issue before 2018 for industrial hemp was
obviously the Federal prohibition, classifying it as a
controlled substance. And so after the 2018 Farm Bill was
passed, other issues emerged as, say, speed bumps, I guess you
could say, for the progress of hemp legalization. These were a
half dozen issues or so ranking from problems with the banking
industry, with interstate travel or transportation of hemp
material seeds, seedlings, et cetera. We also saw issues where
there was some confusion from law enforcement, as well as the
need for us to have standardized and uniform testing across the
country.
And so I know that USDA at the time inherited a monumental
task with legalizing hemp through regulation, and we knew that
the interim rule findings would need to be adjusted into the
final rule as well. I think that the USDA deserves accolades
for the progress that they have made. They have separated out
the production of hemp versus the legal products, but there are
still a lot of issues that I think need to be addressed in the
2023 Farm Bill. For instance, I think that the lot program at
USDA, there is a lot of confusion. There is a lot of issues
between the state regulators, as well as the reporting
guidelines with the FSA. And I would agree with Commissioner
Greenberg that this might be an opportunity for us to look for
those states that elect to have hemp programs to have a
cooperative federalism program with funding attached because
what we are seeing right now is that some states may not want
to continue underneath the USDA program and leave it to USDA
and not let the states regulate.
And the final issue that I have is that we need to make
sure we have a productive conversation with FDA so that they
can give us clear guidance, particularly on what to do with
floral products that derive from hemp.
The Chair. Thank you.
Dr. Quarles. We have a lot of companies that want to sell
these products. We just need guidance from the FDA. Thank you.
The Chair. Thank you. And Commissioner Greenberg, how have
the markets for hemp in the U.S. developed and fluctuated since
Congress passed the 2018 Farm Bill? What is needed to provide
certainty and stability across the market for farmers,
producers, and consumers of hemp?
Ms. Greenberg. Thank you for the question, Chair Plaskett.
It is an excellent question and one we are very much focused on
in Colorado. I mentioned market diversification and how
important that is to a thriving hemp economy. Immediately after
the 2018 Farm Bill, as I mentioned, we saw a very narrow market
opportunity for our producers, which was strictly around CBD.
But since then, we have seen much growth around a much more
diversified industry for hemp. That includes fiber, food, fuel,
and other products like you have heard about today that we are
looking into and seeing progress on.
I would say one barrier that we are intimately focused on
and familiar with in Colorado is the gaps and limits in our
supply chain primarily around processing and manufacturing here
in this country, so that is a place that we are very much
focused on. I think we have a lot of production capacity and
incredible farmers who are able to grow fantastic crops. We
need to make sure every step along the supply chain across
these market opportunities are strengthened and grown.
The Chair. Thank you. I guess one of my other questions is
how do--and this is for any of the witnesses. How do you
suggest increasing socially disadvantaged farmers' involvement
in the hemp production? This seems to be a market where those
who are already up and running farming know the process, know
how to get things to market are the most successful. How do we
get socially disadvantaged farmers involved in this?
Dr. Phipps. Thank you for that question, Chair Plaskett. As
an 1890 institution, we were clearly founded to address issues
like that. So like all of the other land-grant institutions,
while we serve the tripartite mission of education, outreach,
and research, we have an added layer of making sure that we are
targeting the most disadvantaged members of our society,
including farmers, community members, et cetera. So I think the
USDA has already made great strides, and I do want to give them
accolades for the programs that they have put into place for
Tribal communities, as well as historically Black colleges and
universities, and for Black and other minority farmers.
I think that projects similar to the one that I am running
that I have mentioned, the SUSHI Project where we actually
partner with all three types of land-grant institutions, so we
have 1890s, Central State, and Kentucky State. We have College
of Menominee Nation that Marcus has already mentioned, and we
have three 1862s. I think encouraging those sorts of
transdisciplinary, multi-institutional research projects and
outreach projects would be helpful.
The Chair. Thank you. Thank you very much.
At this time, I would ask the Ranking Member to begin
questioning the witnesses for his 5 minutes.
Mr. Baird. Thank you, Madam Chair. I am going to begin with
the question to Dr. Phipps. In your testimony you mentioned
your role as the project director for a grant from Agricultural
Food and Research Initiative, Sustainable Agriculture Systems,
and it is a grant that includes researchers from six different
land-grant institutions. So could you talk a little more about
the importance of these competitive grants, the lessons that we
have learned going through the application process, and how a
multiple-institution project may have benefited your
application?
Dr. Phipps. Absolutely. So we are still in the early stages
of this project. We are finishing up year 1 of a 5 year
project, but we have already seen the benefits of having,
again, integrated, transdisciplinary, and multi-institution
focus in the project. And so, like I mentioned, we have Central
State University, we have Kentucky State University, we have
College of Menominee Nation, we have University of Kentucky,
which has already been spoken about here. Tyler Mark is an
economist there. We have Mississippi State University. We have
an environmental economist on our team from there and a
University of Delaware consumer economist.
I would say that, as I mentioned in my opening, I think
that in order to adequately address these complex issues that
we are dealing with, you need to have people that are working
from all different sides of the issue, so you need your
economists, you need your social scientists, you need Tribal
representatives, you need people that are focused on equity and
nutrition and health. You need fish nutritionists. You need
hemp or whatever crop you are working with experts to be able
to touch on all of the aspects that are going to make the
project successful and provide the wealth of information that
is needed for policymakers and for consumers ultimately to make
decisions regarding a project.
And so, again, I think that the Sustainable Agriculture
Systems Program within USDA, it is currently their flagship
program, up to $10 million, has done an excellent job of making
sure that they are addressing those complex issues in ways that
are going to be sustainable and valuable answers for the long-
term. And I think that more projects that have those kinds of
requirements and those kinds of partnerships are going to be
key to continuing to move forward in whether we are talking
about hemp or any other commodity crop or agricultural issue.
Thank you.
Mr. Baird. Thank you. I really appreciate the work you are
doing at Central State University. I would also like to
recognize other land-grant universities that are doing great
research in the hemp industry, which includes, as you mentioned
the University of Kentucky, which was one of my alma maters,
and they are not represented here today on this panel, but they
have prepared a written testimony. So Madam Chair, with your
permission, I would like to submit their statement for the
record.
The Chair. It is very welcome, and without objection.
[The joint statement is located on p. 141.]
Mr. Baird. So then I have one more question. Mr. Wang, you
spent several years in Australia before joining Ecofibre. And
while Ecofibre recently entered the U.S. market, you mentioned
they have been in operation in Australia since 1999. So could
you share some of the differences between what is going on in
Australia and what you see here in the U.S. and what this
Committee might learn to incorporate in our 2023 Farm Bill?
Mr. Wang. Yes, sure. Thank you for the question, Mr. Baird.
So Ecofibre started, as I mentioned, in 1999 primarily as a
genetics company collecting a range of genetics from across the
world for hemp or cannabis at the time, and a lot of work done
by Ecofibre was to set up a genetic pool for the research to be
done. So today, we have about 2,100 different accessions of
hemp genetics. And the work done for the first 15 years was
really about growing hemp in the latitudes of Australia, which
actually matched the latitudes of the United States, which is
quite important because I think while people think it is easy
to grow, it actually it is a bit harder, and genetics is at the
core of that. So that is what the company had done for about 15
years.
The work done over there was brought over to the U.S.
mainly because of the market size and opportunity in the U.S.
And, listen I think the U.S. with the farm bill in 2018 has
probably a better structure in my opinion. In Australia right
now hemp is regulated by three different agencies. For food,
there is something called FSANZ (Food Standards Australia New
Zealand), for medicinal purposes it is the Therapeutic Goods
Administration, and for fiber it is actually the Department of
Primary Industries. So for me, it is a lot of work managing
three different regulators for a single crop.
The United States, like I said, has done it in a different
manner. So you came from a crop down, which I think is far
superior. I think a lot of the challenges we have, while they
seem significant or not, it is just a bit of clarity required
for one specific segment. I think for food and for industrial
uses, the U.S., we are very well set up for that. The
challenges just become of--I always come from consumer or
manufacturing background. They want to know the supply chain
exists. Anyone of any size company who is going to use hemp,
whether it be in car doors or building supplies, wants to know
if they introduce a product to the market, they will have a
controlled supply chain that will be there, and that is a big
gap that we have today.
Mr. Baird. Thank you very much. I am out of time. I would--
--
The Chair. Thank you.
Mr. Baird. I could spend another hour----
The Chair. Yes.
Mr. Baird.--asking--oh, you are going to say no. Okay.
Thank you.
The Chair. Thank you. I will just remind the witnesses,
too, as you are answering questions, please be mindful of the
time so that we can get all of the questions of the Members.
I would now like to call on the gentlewoman from Ohio, Ms.
Brown, for her 5 minutes.
Ms. Brown. Thank you, Chair Plaskett and Ranking Member
Baird, for holding this hearing today.
The 2018 Farm Bill legalized the production of hemp and
opened the door for creativity and opportunity for both growers
and processors. In the years since the last farm bill, we have
seen firsthand the importance of strong interagency
communication and coordination, especially as it pertains to
hemp production. For example, the USDA requires any laboratory
testing hemp for the THC compliance to be registered with the
Drug Enforcement Agency.
Mr. Grignon, what are the impacts you have seen in certain
areas of the country where there is no access to DEA-approved
laboratory?
Mr. Grignon. Well, I think some of the issues that we are
running into is because there are only a few registered DEA
labs, a lot of the THC testing is only in certain areas, so you
have to literally wait. So you have to take the time to cut
your samples or have your samples be cut, and they have to be
processed and shipped over to the lab. Now, if there is not a
lab in your state, you have to wait and go--basically a few
states over, so there is basically a lack of testing capacity
in our country right now to handle the hemp industry if we were
to start to expand more.
Ms. Brown. Thank you, Mr. Grignon. A streamlined approach
obviously to regulating hemp products is critical. So, Dr.
Phipps, can you speak to some of the complexities that arose
after the 2018 Farm Bill as it pertains to the regulation of
hemp and hemp-derived products?
Dr. Phipps. Thank you for that question, Representative
Brown. As you know, my background is primarily in how hemp can
affect human nutrition, and so I would say that I can speak to
the regulations affecting hemp as animal feed. And so we know
that there has been a lot of difficulty in getting FDA approval
of hemp as an animal feed. We know that there was a chicken
application that went in. It came back with some feedback. I
would say that one of the most difficult issues with that is it
is costly and it is very unwieldy, the system, currently as it
is. And so a possible solution to that could be infusing
dollars into the FDA CVM in particular to streamline that
process. Perhaps looking at what is being done in the European
Union right now where they have hemp already approved in a
variety of forms as animal feed and perhaps using that as a
starting point in determining how we can streamline our
processes.
I would yield my time to anybody on the panel that can
speak to some of the other complexities related to fiber and
other parts of the process.
Ms. Brown. Well, before you do that, I would just
respectfully reclaim my time. I know that you, Dr. Phipps, have
a very exciting project that was recently awarded, $10 million
in funding from the National Institute of Food and Agriculture.
And in your written testimony, you talk about the lack of
consumer awareness around nutrient benefits of hemp products.
How can the USDA and FDA do a better job of educating consumers
in this space?
Dr. Phipps. Sure. So we have an entire section of NIFA that
is based on outreach and extension in the land-grants and
through other projects. I would say, again, continuing to fund
land-grant institutions who have a specific mission to
providing that kind of education and outreach. There is work
being done already, again, a partnership between the University
of Delaware and University of Kentucky looking at what consumer
knowledge currently is related to hemp versus marijuana, what
are the nutrient values of hemp grain both from human
consumption, as well as how they can benefit the food supply
related to animal production. I would say continued funding
into those areas, curriculum building from K-12 that can
address some of these issues, that is another way that we can
slow the rise of chronic disease in this country is to make
sure that we start educating our young folks into ways that
they can change their diets and their families' diets to be
healthy. Thank you.
Ms. Brown. Well, thank you, Dr. Phipps. I look forward to
hearing from and hearing and working with my colleagues to
strengthen the hemp production in the next farm bill. So thank
you, Madam Chair. With that, I yield back.
[Mr. Grignon's supplementary information is located on p.
144.]
The Chair. Thank you very much to the gentlewoman from
Ohio.
And at this time, I call on the Ranking Member of the full
Committee on Agriculture, Mr. Thompson, for his 5 minutes.
Mr. Thompson. Madam Chair, thank you so much, and thank you
to all the panelists once again for your testimony.
Mr. Wang, over the last 18 months my colleagues and I have
been championing conservative natural climate solutions to help
address climate change. We know our producers are part of that
solution, a big part of that solution and not part of the
problem. That being said, I am particularly interested in the
work that Ecofibre is doing to make hemp a natural climate
solution, particularly surrounding Hemp Black. Can you talk
more about this work?
Mr. Wang. Yes, thank you, Mr. Thompson, and thank you for
that question. What we have been working on is--so when you
start from the core part of the plant, we know it is carbon
negative, it is one of the largest carbon sequesters, so I
won't go into that topic. But of the plant, a large part of the
fibers being used already for many different uses, and that
makes up about 25 to 30 percent of the plant, which leaves a
vast majority of the plant, the stalk, unused. And it is being
used for a lot of lower-quality, low-grade uses such as plant
bedding or animal bedding.
So what the stalk has is a very high amount of carbon in
it. And so we went through a lot of research and developed a
carbonization process to actually create an equivalent of
carbon black. And so for everything that is black or colored
black in the world, right now, it is typically used by carbon
black, which is the incomplete combustion of petroleum, which
is a carbon-positive input. So the Hemp Black that we create
with the hemp-based carbon is 100 percent biobased, as tested
by the USDA as part of the BioPreferred Program. And it is a
highly carbon-negative input. And so that input is carbon
black, which can be used in bioplastics, it can be used in
rubber, it can be used as a colorant in textiles or as an ink
or a coating right now. So our focus right now is using it to
make a lot of different plastic products, 25 percent biobased,
everywhere from simple black shipping pallets, which is a big
movement to shipping pallets to do that to black plastics used
in agricultural purposes or construction purposes, to use it as
the dyes as opposed to carbon black for something as simple as
jeans that are black on that. So what we are really doing is
finding a one-for-one replacement for an existing supply chain
material that is used significantly across the world, and it is
petroleum-based, and replacing with something that is plant-
based, which is hemp.
So there is a pretty significant net carbon effect. And we
use the term think negative because while the world wants to
get to net-zero, most everything is carbon-positive, so you got
to have something negative to get there. And the beauty of hemp
is there are so many different uses of hemp that I only am
covering sort of very narrow pathway to that. But because it is
such a flexible crop to be used for so many different uses, you
can actually have the growing being negative and actually
permanently sequester carbon while you are doing it. And for
us, the biggest thing is it has to be a one-for-one supply
chain replacement because I would not expect manufacturers
downstream to invest significant amounts of capital just
because we want to put hemp into it. Number two, it has to be
equal technical specs, which it is. And three, we have to make
sure it is cost equal to or better than, and in due course with
scale, I would assume that a petroleum-based carbon black/gray,
hemp-based carbon black, we can get the hemp-based carbon black
equal to or better on a cost structure than petroleum.
Mr. Thompson. All right. Good. Well, thank you.
Would other witnesses like to comment on how hemp can be
used as a natural climate solution? Go ahead.
[Mr. Grignon's supplementary information is located on p.
144.]
Ms. Greenberg. Yes, thank you, Representative, for the
question. I think what Mr. Wang next to me described is very
much how Colorado is thinking about the opportunities with
regards to hemp. We are very focused on climate mitigation and
the leadership role agriculture can play in solving our climate
challenges that we have before us now. Hemp is a big part of
that solution. I think we have a lot of opportunities, again,
looking across diversifying supply chains, investing in the
processing and manufacturing, and then going back to the farm
and making sure our farmers have support around climate-smart
agricultural production, to make sure we are looking at soil,
water, and climate altogether and the markets that combine
those things into a sustainable marketplace for our producers.
Thank you.
Mr. Thompson. Excellent. Any other witnesses care to
comment on that?
Mr. Wang. I just might add one more Mr. Thompson.
Mr. Thompson. Please.
Mr. Wang. The one thing that we are working on as well is
mine site remediation because there is a lot of soil, as you
know what happens on mine sites, and hemp is actually a
phenomenal remediator of soil to bring it back to life again by
putting the nutrients back in. So, from a soil standpoint, that
has a significant opportunity for that.
Mr. Thompson. Having represented now for some time the
Pennsylvania 15th, it was the 5th district before that, but it
is the district that has more abandoned mine sites than the
other 434 districts added together, so that is that is a very
exciting innovation you shared this morning.
So thank you to all our witnesses. Madam Chair, thank you.
The Chair. Thank you to the Ranking Member.
At this time, I would like to recognize the gentlewoman
from Maine, Ms. Pingree, for 5 minutes.
Ms. Pingree. Thank you very much, Madam Chair. Thank you
for holding this hearing and thank you to you and the Ranking
Member for your concerns about the challenges that growers in
states are facing in growing hemp, which is a promising crop,
and we have a long ways to go before we have smoothed out all
the issues.
I think someone earlier mentioned my bill, the Hemp
Advancement Act (H.R. 6645), and some of the problems I am
going to bring up this morning I am trying to solve in that
bill. But I want to discuss one in particular that seems
frustrating. The existing DEA lab testing requirements plus the
10 year ban on people with drug-related felony convictions
receiving a hemp license basically treat hemp like a schedule I
drug, which is ridiculous in my mind. And I have talked to some
producers in Maine who have problems--where their employees are
struggling to get fingerprints that are acceptable by the FBI
for criminal history reports. One grower told us that it had to
be printed five times before it finally worked. We have only
one Post Office that does fingerprinting, which is in Portland,
Maine. I can't make appointments there. The State Bureau of
Identification does fingerprinting there in Augusta. We have a
big rural state. We have growers all over the state. So I am
just talking about some of the complications.
My bill would remove this unjust 10 year ban and also
removes the requirement about hemp testing be done in DEA labs,
which I think has already come up.
But, Ms. Greenberg, thank you for the work that you are
doing in Colorado. Have growers in your state run into similar
issues? And could you speak to how eliminating the DEA lab
testing requirement plus this 10 year conviction ban could help
our hemp growers?
Ms. Greenberg. Absolutely. Thank you, Representative
Pingree, and excellent questions. On the first question, the
DEA labs, as I mentioned in my testimony earlier, this has been
a big barrier for us. We have a state-of-the-art brand-new
laboratory at our headquarters in Colorado. We have fantastic
scientists, experts in their field. We are a state that has
been regulating both marijuana and hemp successfully for many
years and doing so separately and able to manage that through
our labs across the state. So the fact that we are now 3 years
into navigating our requests for certification with DEA and
still have yet to receive it with almost a decade track record
of success to us indicates that that is excessive in the
regulatory structure and not necessary to creating a safe and
reliable regulatory framework for regulating hemp in our
states.
On the second question on the 10 year ban, as I mentioned
earlier, we feel strongly that hemp is a commodity crop. It is
legal to produce and that we should not be criminalizing or
intending to criminalize producers for producing a legal crop.
I think with that framework that 10 year ban is something we
would absolutely be interested in looking at. We are doing
quite a lot of equity work as well throughout our state and
making sure that folks who have not had access to producing for
one reason or another have access to that now. Now that hemp is
legal, it is a legal crop, and we want to make sure that we
maintain that--within our regulatory structure as well.
Ms. Pingree. Thank you. Thank you for the work you are
doing, and thank you.
The other thing that we are working on in the Hemp
Advancement Act is to raise the level of THC threshold for hemp
and the in-process hemp extract to make the rules more workable
for growers and processors, also ensuring that final hemp
products sold to consumers aren't intoxicating.
Mr. Quarles and Ms. Greenberg, can you talk about producers
that have had to destroy their entire crop due to the current
THC threshold and how raising the threshold could help growers
and processors, also has caused--unnecessary hardship to
growers?
Dr. Quarles. Yes, thank you for that question. Since the
early days of bringing it back almost a decade ago, we have had
to deal with what we commonly term hot hemp, hemp that exceeds
the legal definition. And so we have had a struggle to
determine how to do that both under the 2014 Farm Bill
underneath the research side, and then again after 2018. And
even today, with almost a decade of improved genetics, we still
find varieties that consistently test hot. So one of the things
we do is that we actually prohibit varieties that we know will
test hot, and we don't consider it to be hemp, and so we try to
prevent and mitigate on the front end. And then on the back
end, if a crop were to exceed the \3/10\ of 1 percent
threshold, we actually have an opportunity to retest that crop
as well. And during the interim final rule, we advocated
strongly that USDA allow growers to have a second testing
opportunity, which they did include in the final rule. So that
helps us out a little bit as well.
For your question about raising THC, we at NASDA actually
passed a policy on behalf of all the State Departments of
Agriculture a couple of years ago that would advocate for an
increase to one percent THC. We think that after a lot of
conversations with law enforcement, as well as those on the
ground producing the crop and in the labs testing it, that
raising it to one percent would allow for us to have a little
bit more flexibility, particularly on the research of genetics.
Ms. Pingree. Thank you so much. I am out of time, but I
want to thank the witnesses for your time today and the work
that you are doing. Thanks so much.
I yield back, Madam Chair.
The Chair. Thank you very much. At this time, I would like
to yield 5 minutes to Mr. Carbajal of California if he is
available. Are you there Mr. Carbajal? You may begin. You are
muted.
Mr. Carbajal. Thank you, Madam Chairman, and sorry about my
delay. Thank you to all the witnesses that have joined us
today.
We have made tremendous strides in the 2018 Farm Bill when
hemp was legalized. I know the Agriculture Committee doesn't
have jurisdiction over de-scheduling cannabis, but I hope that
once we are able to work through that, this Committee can work
to recognize cannabis as an agricultural product as well.
Cannabis is already legal in California and several other
states. Legalizing hemp has allowed this industry to start
flourishing, as hemp can be used in a variety of products from
CBD to clothing to food. This is a versatile product that has
benefits for consumers and the economy. In this next farm bill,
I hope we can continue finding ways to bolster research and
production.
Commissioner Greenberg, the decrease in registered hemp
acres in Colorado from 2020 to 2022 is significant, falling
from nearly 90,000 to less than 4,000. You note this is due to
many factors, including supply chain disruptions, a surplus,
the lack of infrastructure for food and fiber production from
hemp. Have other crops been grown on this acreage that is not
currently producing hemp? Which of these factors do you most
attribute to the decline in registered acreage, and how can
Congress help alleviate this?
Ms. Greenberg. Thank you, Representative, for the question.
The production in 2019 looked a lot different depending on
where you were in the state. There were some existing farmers
who were trying out hemp production as part of a much larger
production and other commodities or other crops. There were
other producers who came in who were maybe first-time hemp
growers who put everything into a hemp business and rolled the
dice on the 2019 market. So it really depends in terms of kind
of which entry point a producer came in, in 2019, what that
land is being used for now. We certainly continue to see plenty
of land under production with other crops that was in hemp
production in 2019.
So, I think the primary driver of that sort of rise and
fall within the course of a single season was sort of the fury
or the fervor around the hemp production opportunities within
that year, just tons of untapped opportunity, a lot of folks
coming in at once, an unregulated marketplace, and a lack of
diversity in market opportunities.
So where I see us now, I think we are in a much more stable
growth position. I think we have probably stabilized to a place
that is more manageable based on just the maturity of markets.
Right now, we are in a nascent phase of this industry, and I
think as markets mature as we get more stable regulatory
environments and we build up the supply chain processing and
manufacturing opportunities, and then as we have discussed,
look at those environmental opportunities as well where our
hemp producers can tie in to climate markets or other
marketplaces that are driving toward a carbon-neutral future,
as all of those aspects develop, I think we are going to see a
steady rise back toward production but in a more sustainable
rate.
Mr. Carbajal. Thank you for that very thorough answer.
Dr. Phipps, in your testimony, you talked about a lack of
incentives for hemp growers to partner with domestic buyers and
processors. What kind of incentives would be helpful? Do you
see Congress facilitating this connection? If so, what should
that look like?
Dr. Phipps. Thank you for your question. So yes, in my
testimony, I mentioned that one of the stakeholder concerns
that we see is a lack of incentives for growers to partner with
producers. So, as has been spoken about previously, at the very
beginning, there was a sharp rise in production of hemp and
many growers were counting on partnerships with processors to
be able to process their products. And so I think that if we
can incentivize, as we fund processors to build infrastructure,
we provide funding within that, that they can set aside to
recruit growers and pay growers for their products. When that
happens, we can build the network at the same time.
Mr. Carbajal. Thank you very much. Madam Chair, I yield
back.
The Chair. Thank you very much to Mr. Carbajal. Thank you
for your testimony.
At this time, I would like to call the gentleman from
Florida, Mr. ``Big Al'' Lawson.
Mr. Lawson. Thank you, Madam Chair. Can you hear me?
The Chair. I can hear you loud and clear, sir.
Mr. Lawson. Okay, thank you. And welcome to the Members
that are on this Committee today and before the Committee, and
also give an honor to our Ranking Member, Congressman Baird,
for this hearing that we have today.
Many of the witnesses today mentioned massive financial
barriers when entering the industrial hemp market, including
the registration and testing fees and background checks. So
this question is for Dr. Phipps. Can you speak more on to what
are some of the effects within the land-grant university
system, cooperative extension services that provide technical
and financial assistance to historically underserved
agriculture products, include new and beginning and small size
businesses, veteran-owned and socially disadvantaged farmers
and ranchers based on race and gender?
Dr. Phipps. Thank you for that question. And as I mentioned
earlier, the 1890 land-grants were specifically founded to make
sure that we are equitably financing, educating producers,
farmers, and consumers from underprivileged backgrounds. As a
matter of fact, one of the other projects that I am working on
is designed to grow healthy communities by touching on all
aspects of the social determinants of health, so that includes
building micro-incubator farms in low-access areas. It would
include training in community and economic development and
business development for those small farmers and helping them
to get their products out into the value chain, and then also
educating consumers in that area of the benefits of purchasing
those items from those local farmers that are being developed.
I think that if we can continue that work, certainly, we
need to make sure that we are providing opportunities for
farmers and producers and processors from historically
disadvantaged communities to have access to funding in order to
build infrastructure. In the past, there hasn't necessarily
been equitable access to those competitive grants. We know that
both colleges that serve historically disadvantaged
communities, as well as producers and farmers, from
disadvantaged communities, may not have professional grant
writers. They may not have the ability or the infrastructure
set up to be able to competitively apply for those grants. And
so providing opportunities for that, whether that is earmarked
funds specifically dedicated to them or whether that is
providing assistance in the process of applying for and
receiving those fundings and implementing those particular
programs would be helpful.
Mr. Lawson. Dr. Phipps, there was just one other thing that
I will ask you. I am concerned about gender, especially for
women. Have all of this industry development and STEM affected
women who wanted to enter in this process of hemp development,
especially in what I see is happening in the State of Florida?
Dr. Phipps. So I can't speak to the State of Florida. I am
in the State of Ohio. But I can speak as a woman who is in the
field of agriculture and STEM. And you are correct.
Historically, the fields of agriculture and STEM have been very
dominated by men, dominated by White men. And even in the SUSHI
Project that I am leading, there has been 32 that have been
funded. These are those flagship programs of the USDA. Out of
those 32, there have been only eight women that are lead on the
projects. When we start layering on the additional things on
top of gender such as race or ethnicity, we start to see that
there is a significant under-representation of women receiving
funding, of women farmers, Black women farmers, Brown women
farmers that are entering the field. I certainly think that a
review of funding processes of the way that we are recruiting,
targeting recruitment of those individuals so that we can, I
would say, bring back because women and women of color have
always been involved in agriculture. They have always had a
hand in growing the crops that feed their families and their
communities. And so I think that targeted recruitment and
targeted outreach and targeted funding to bring women,
especially women of color, back into a typically otherwise
dominated agriculture and STEM field is needed and important.
And I thank you for the question.
Mr. Lawson. Okay, thank you very much, Dr. Phipps, and it
was very good what you said about gender, which is very
important to me.
Madam Chair, I am going to have to leave and go to
Financial Services, but this is really a great hearing. I would
like to follow-up with Dr. Phipps on some other issues that are
related to gender. Thank you.
The Chair. Thank you. Thank you very much for your
insightful questions.
As we close, I would like to first invite the Ranking
Member to share any closing comments he may have.
Mr. Baird. Thank you, Madam Chair. And I will make it very
quick because we have votes, I recognize. But, we have heard a
lot of great recommendations for the 2023 Farm Bill here today,
and one that I would like to add is that the FDA hasn't really
had any kind of regulatory framework for hemp-derived CBD, so I
would encourage us to include that in our discussions about the
2023 Farm Bill. And I thank you. I yield back.
The Chair. Thank you, and I agree wholeheartedly with that
assessment.
As we close, I would like to first thank all our witnesses
for their insightful testimony and their answers to our
questions. Your expertise and knowledge are crucial for
ensuring that the next farm bill does all it can to support
producers and ensure the long-term success of the domestic hemp
industry.
Today, we heard an update from several stakeholders on the
current state of hemp production. We also heard about what has
worked for the USDA Domestic Hemp Production Program, and more
importantly, what has not worked and needs improvement. I am
personally excited to continue to work with our panel of
witnesses and the producers they represent, as well as Members
of our Committee, to make sure farmers have the tools,
guidance, and assistance they need to support their businesses
in their communities, as well as now understanding the
processors and others in the supply chain as well.
I would like to again thank our witnesses for being here
today, as well as all our Members for giving this important
topic the attention it deserves.
Under the Rules of the Committee, the record of today's
hearing will remain open for 10 calendar days to receive
additional material and supplementary written responses from
the witnesses to any questions posed by a Member.
This hearing of the Subcommittee on Biotechnology,
Horticulture, and Research is adjourned.
[Whereupon, at 11:21 a.m., the Subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
Submitted Joint Statement by Hon. James R. Baird, a Representative in
Congress from Indiana; on behalf of Robert ``Bob'' Pearce, Ph.D.,
Professor of Agronomy, Department of Plant and Soil Sciences; and Tyler
B. Mark, Ph.D., Assistant Professor, Department of Agricultural
Economics, University of Kentucky
[Chair] Plaskett, thank you for the invitation and opportunity to
provide written testimony to the Biotechnology, Horticulture, and
Research Subcommittee of the House Committee on Agriculture. We
represent the University of Kentucky (UK), 6th Kentucky Congressional
District.
Dr. Pearce is an Extension Professor in the Department of Plant and
Soil Sciences and Interim Director of the University of Kentucky Hemp
Program. He has been working on hemp best management practices since
2016. He leads the national hemp grain and fiber variety trials for the
S-1084: Industrial Hemp Production, Processing, and Marketing in the
U.S. multi-state project and serves as the University of Kentucky
representative on the FFAR Hemp Research Consortium. His research team
has secured funding from USDA-ARS, NIFA, and multiple private
companies.
Dr. Mark is an Associate Professor in the Department of
Agricultural Economics. He has been working on hemp economics since
2014. His team at the University of Kentucky has been part of teams
securing over $13.3 million in funding to evaluate all aspects of the
hemp supply chain since 2014. These projects are funded through USDA-
ARS, AMS, ERS, and NIFA. Specifically, with my collaborators, we are
developing the first national estimates of production costs for hemp,
evaluating and providing producers feedback on contract requirements,
assessing the economic impact of hemp production, evaluating various
pricing strategies, conducting market channel assessments, and
evaluating the demand for hemp products.
Since the passage of the 2014 Farm Bill, much has been learned
about the formation and accumulation of cannabinoids, including
Tetrahydrocannabinol (THC), in Cannabis sativa. The total potential
cannabinoids and the ratio between the many different cannabinoids are
primarily determined by genetics. Plants expressing THC synthase genes
produce THC predominantly and would typically be classified as
marijuana. Plants that do not express THC synthase genes produce mostly
other cannabinoids but often still produce small amounts of THC due to
the non-specificity of other cannabinoid synthases. This can lead to
these plants exceeding the current 0.3% THC threshold for hemp. The
term cultivar describes a population of plants cultivated by selective
breeding. In the aftermath of the 2014 Farm Bill, many cultivars
available to growers were unstable (some still expressing THC synthase
genes), leading to significant challenges for growers to produce
compliant material. As the industry has developed, cultivars have begun
to stabilize, making it possible for growers to manage cannabinoid
levels better. However, a 0.3 percent limit on THC still presents some
challenges for hemp growers and may limit the maximum concentration of
cannabinoids such as CBD achievable while producing compliant material.
The primary argument for increasing the THC level to 1% is to
reduce the incidence of non-[compliance] and allow more opportunities
for hemp production. Will increasing to 1% achieve this goal?
Potentially yes, but as with many policy changes, there will be winners
and losers to this change. This testimony aims to outline key
considerations for the Committee as they discuss increasing the THC
level to 1%. However, it should be noted that the information provided
is from preliminary studies in these areas. Additional funding is
needed to explore further the full implications of transitioning the
hemp industry to a 1% THC rule. Additional state level and national
data are needed on the percentage of acres testing above 0.3% THC,
market demand, and regulatory frameworks are needed to understand the
full implications of this change.
Consideration 1: Acreage, Producers, and Processors
Increasing the THC limit to 1% will have implications across the
hemp supply chain. Figure 1 shows results from pre-harvest compliance
tests for the state of Kentucky from 2018-2021. The percentage of
samples testing above 1% in Kentucky has ranged between a low of 0.2%
in 2018 and 2.0% in 2019 and 2020. Key contributors to the differences
between years are the hemp genetics planted and environmental factors
(e.g., precipitation, stress degree days, soil
conditions).1-2 *
---------------------------------------------------------------------------
\1\ Toth J.A., Stack G.M., Cala A.R., et al., Development and
validation of genetic markers for sex and cannabinoid chemotype in
Cannabis sativa L. GCB Bioenergy. 2020; 12:213222. https://doi.org/
10.1111/gcbb.12667.
* Footnotes annotated with are retained in Committee file.
\2\ Jeong, Hoyeon & Appuhamilage, Buddhika Patalee Mallika & Mark,
Tyler B., 2022. ``The Estimation of Yield of Industrial Hemp in
Kentucky Using Spatial Analysis,'' 2022 Annual Meeting, July 31-
August 2, Anaheim, California 322308, Agricultural and Applied
Economics Association.
---------------------------------------------------------------------------
Figure 1: Kentucky Pre-Harvest THC Results 2018-2021 \3\
---------------------------------------------------------------------------
\3\ Kentucky Department of Agriculture Hemp Program 2021 THC
Summary.

------------------------------------------------------------------------
Pre-Harvest THC
Results 2018 2019 2020 2021
------------------------------------------------------------------------
.300% or less 81.0% 57.0% 50.0% 57.1%
.301-.399% 14.0% 26.0% 22.0% 25.0%
0.400-0.999% 5.0% 15.0% 26.0% 17.2%
1%+ 0.2% 2.0% 2.0% 0.7%
---------------------------------------------------
Total Tests 100% 100% 100% 100%
------------------------------------------------------------------------

An increase in [allowable] THC levels would likely significantly
decrease the number of acres and producers needed to meet the demand
for floral hemp for cannabinoid production. Increasing the THC limit
from 0.3% to 1% is a 233% increase in THC allowance. Considering only
cannabidiol (CBD) production from floral hemp, this will significantly
decrease the number of producers and licenses needed to support CBD
demand in the United States. The ratio of CBD to THC is approximately
25 to 1 so increasing THC to 1% would allow CBD concentration levels
increase from a current maximum of 7.5% to as much as 25% in floral
biomass.\1\ Reducing the number of producers will positively impact the
processing sector. It will lower the processors' transaction costs
primarily utilizing batch processing methods. Therefore, increasing the
concentration of CBD going into the batch process will improve the
processor's efficiency because they will need to source fewer pounds of
floral material. In addition, processors will need to source floral
material from a smaller number of producers, reducing their search
costs for material.
For the hemp industry's grain and fiber sectors, the increase to 1%
allowable THC would potentially lower the production cost for these
producers by reducing the need for compliance testing. Thus, improving
hemp grain and fiber profitability prospects and allowing for more
competition with traditional commodities for acreage.\4\ The increase
in acreage would also be positive at the processing level through
increased availability of grain and fiber lowering the processing costs
for the sector over time as genetics and production practices improve
through research.
---------------------------------------------------------------------------
\4\ https://hemp.ca.uky.edu/.
---------------------------------------------------------------------------
Consideration 2: Is it 1% THC for floral material harvested or 1% for
finished products?
The predominant hemp market is the production of floral hemp for
the extraction of CBD, terpenes, and other extracts. These products are
produced through their extraction from hemp flower. These cannabinoids,
terpenes, and other extracts are concentrated during this process. So
at the farmgate hemp will be 0.3% under current regulations but once
extracted it can be concentrated up to the isolate level. Thus,
consumers could be consuming levels of THC higher than 0.3%. As the
Committee considers the 1% THC rule, there is a need to define if this
is 1% THC in the biomass or 1% THC in the final product. These are
significantly different regulations and will significantly impact the
profitability and growth of the hemp industry. This line of research
needs considerable research to evaluate the winners and losers
depending on how an increase to 1% THC will impact the industry.
Consideration 3: International Trade
International trade is an important component of the United States
agricultural sector. To expand the hemp industry, especially CBD,
United States hemp producers must look to the international market.
Yes, some countries, such as Uruguay, Argentina, Jamaica, and Portugal,
have relaxed THC laws. Depending on their CBD laws, these are potential
trading partners where the United States hemp producers could see
expansion. On the other hand, Singapore, United Arab Emirates, Turkey,
Saudi Arabia, and the Philippines have some of the strictest THC laws.
Thus trading hemp products containing THC will be problematic for trade
negotiations with these countries and could impact current trade
agreements. More research on the short- and long-term implications need
to be evaluated.
Consideration 4: Hemp Market Confusion
Consumers of hemp products across the United States struggle to
differentiate between hemp and marijuana as the market currently
stands. Since February 2020 through AMS-TM-FSMIP-G-20-004 a monthly
survey has been conducted to evaluate consumer attitudes and
preferences for hemp-derived products. This survey is particularly
relevant for the CBD industry but not the grain and fiber industries.
The survey asks a series of questions about what word comes to mind
when they hear hemp. Overwhelmingly the answers are marijuana and
cannabis.\5\ We also find that most consumers are more familiar with
marijuana than hemp and that 40% of CBD consumers have euphoric
effects. While CBD consumers should not have euphoric effects, this has
been a consistent result within the survey. Thus, as a research team,
we are working to find ways and funding to clearly provide the consumer
education needed to differentiate hemp from marijuana. Increasing the
allowable THC could have a negative impact on the industry as a whole
and further confuse potential consumers. We are also finding that the
confusion in the CBD industry is also impacting the grain and fiber
industry as consumers don't understand the differences between hemp
produced for the floral, grain, or fiber industries.
---------------------------------------------------------------------------
\5\ https://www.udel.edu/academics/colleges/canr/departments/
applied-economics-and-statistics/affiliated-centers/hemp-demand-
research/.
---------------------------------------------------------------------------
Another confusion exists with the emergence of Delta-8 THC in the
marketplace. Delta-8 THC is a psychoactive drug that can be derived
from hemp.\6\ This is a direct competitor to Delta-9 THC. The Delta-8
market developed in response to lower demand for CBD than expected,
excess supply floral biomass on the market that could be synthesized
into Delta-8 THC, and the processors' need to find a product to provide
cash flow as the wholesale price of CBD declined. USDA-FDA has provided
consumer warnings about the use of Delta-8.\7\
---------------------------------------------------------------------------
\6\ Melvin D. Livingston, Andrew Walker, Michael B. Cannell, and
Matthew E. Rossheim, 2022: Popularity of Delta-8 THC on the Internet
Across U.S. States, 2021 American Journal of Public Health 112, 296-
299, https://doi.org/10.2105/AJPH.2021.306586.
\7\ https://www.fda.gov/consumers/consumer-updates/5-things-know-
about-delta-8-tetrahydro
cannabinol-delta-8-thc.
---------------------------------------------------------------------------
Consideration 5: Company Investment
Since 2014 companies have been investing in hemp production and
processing and have been working under the 0.3% THC rule. They have
been investing in genetics and production practices to remain compliant
with current regulations. They have constructed their business model,
financing, and go-to-market strategies with the current regulatory
framework. It is unknown at this point, how many companies will be
impacted significantly if THC is increased to 1%, but it is likely the
most dramatic impact will be on those companies and universities that
have invested in the development of genetics to produce hemp varieties
that produce less than 0.3% THC.
Conclusions
The production of hemp in the United States is in its infancy,
minimal data exists, and regulatory certainty is needed if the hemp
industry is to reach its full potential. As the Committee considers the
implications of increasing the allowable THC level from 0.3% to 1%, a
number of considerations need additional research and a coordinated
effort through USDA and FDA to clearly understand how the industry will
be impacted. However, preliminary research suggests:

increasing allowable THC from 0.3% to 1% will require fewer
acres and producers of floral hemp,

increase the potential profitability of the floral hemp
extraction industry through reduced extraction costs,

decreased acres testing hot initially as hemp breeders
adjust to 1% regulation within breeding programs,

fiber and grain producers become more economically viable
due to reduced testing costs,

impact of increasing allowable THC to 1% for the plant
material compared to the final product will have profoundly
different impacts,

international trade could be impacted either positively or
negatively depending upon the trading partner and their laws,

consumers are confused about the difference between hemp and
marijuana as Delta-8 has put the two industries in direct
competition,

companies that have invested or have a business structure in
place to adhere to the current regulatory framework will
potentially be negatively impacted by a new regulatory
environment.
______

Supplementary Material Submitted by Marcus Grignon, Executive Director,
Hempstead Project Heart
Insert 1
Ms. Brown. . . . I look forward to hearing from and hearing
and working with my colleagues to strengthen the hemp
production in the next farm
bill. . . .

Since the 2018 Farm Bill, many of us in the American hemp industry
from underserved communities were under the assumption with hemp
production being legal under the Agricultural Marketing Act of 1046 we
would have no more issues with legitimacy as an agricultural commodity.
As an underserved hemp producer and the head of an organization that
works with many underserved communities, I can attest the legalization
of hemp has not been a clear path for many of us. We still face issues
with banks, insurance companies, and local law enforcement agencies
throughout the United States.
From my own experience, I have had issues with opening a bank
account for my farming operation. I have been able to find a bank to
work with me, but I am considered a medium risk bank account with
restrictions. These restrictions are I must report ahead of any
transactions going into my account to the President of the Bank.
Further, I am not authorized to have any wire transfers going into and
coming out of the bank account. While I accept the conditions for the
bank account, I just want to be treated as any other farming entity
that works with an agricultural commodity.
During the last 4 years of hemp being legal, it has been difficult
to find capital to support my farming enterprise. As the issue
previously noted affects not just banking but seeking capital. One
avenue to solve this issue is the community development financial
institutions (CDFIs). With a CDFI's assistance on the development of an
agricultural lending product, underserved communities can secure
capital for their farming enterprise. The United States Department of
Agriculture can lend to underserved communities, but we need to be
denied first by another financial institution before seeking assistance
from the department. Funding for CDFI's to develop agricultural lending
products for hemp production will help underserved communities secure
capital.
When it comes to insurance, I have a difficult time finding an
insurance company who will take my money and provide coverage for my
business liability coverage. I have tried USAA and American Family
Insurance. USAA will not work with hemp production companies and
American Family Insurance has a structure for insurance coverage, but
it mainly focuses on medical/recreational cannabis businesses. While I
appreciate the structure American Family Insurance has for cannabis
producers, it does not specify for hemp production, and I have had to
explain none of the applications are applicable to my farming
enterprise.
The other underserved communities Hempstead Project Heart works
with nationally have expressed concerns with similar banking and
insurance issues for their hemp producers. Further, the various 51
jurisdictions across all the states have different rules and
regulations for hemp production. This causes a problem for many
producers who want to transport their hemp products to another
locality. In one state, the hemp product is accepted. In another state
the hemp product is not accepted. It is important in the next 2023 Farm
Bill a ``stamp of approval'' is created under USDA for all hemp
products wherever they are produced in the U.S. are unhindered from
being transported across state lines.
Insert 2
Mr. Thompson. All right. Good. Well, thank you.
Would other witnesses like to comment on how hemp can be used
as a natural climate solution? . . .

Industrial hemp is a bio accumulator and bioremediator for the
land. The long tap roots of the hemp plant dig down into the soil and
pulls the heavy metals from the soil. Currently, there are various
companies throughout the United States in the hemp industry who
remediate the land with hemp. That is the first action. The second
action is the heavy metals and hydrocarbons that are in the soil
accumulate into the hemp fiber stalk. With these various chemicals and
metals now inside the hemp plant, there is a process to turn these once
land pollutants into fuel. There are various aerospace companies
(https://greenaero.org) who work in the hemp industry on research and
development currently able to create fuel from the remediated hemp
fiber stalks. This fuel could be used for propane for heating or rocket
fuel for space travel.
When you look at hemp as a carbon sequester tool, there's benefits
to produce hemp to act as a carbon sink. I am not talking about carbon
markets or cap and trade mechanisms. I am referring to the ability to
produce hemp through regenerative agriculture and pull carbon from the
atmosphere to sink said carbon in the soil. There has been research
conducted over the past 4 years on this concept and Draw Down Hemp
(https://drawdownhemp.org/) has quantified 16 individual hemp products,
each with the potential to sequester and/or avoid anywhere from .1 to
1.5 gigatonnes of CO2e per year at scale.
Further Material Submitted by Honovi Trudell, Support Staff for
Hempstead Project
Hemp is the forefront solution to the world's most pressing 21st
century problems. Climate change, sustainability, economic stability,
clean energy production, hunger, and material shortages would all be
addressed and solved by Industrial Hemp technology. The current
identity of this crop has neglected to incorporate the scientific
knowledge of Hemp to create real world products that better human and
[E]arth-based life.
Hempstead Project Heart (Hempstead) will change that. This is a
summary of various scientific studies conducted in various nations that
consistently and unbiasedly proven the sustainability of this
Industrial crop. This entry is focused on the Biofuel research
conducted for Hempstead to immediately begin operations in the
production of Industrial Hemp biofuel production for commercial
purposes.
Biomass currently supplies about 12-13% of the global energy
supply. This is without the use of Industrial Hemp. The use of
Industrial Hemp as a biofuel will catapult the use Bioenergy production
as its sustainability and economic benefits cannot be ignored.
The durability of Industrial Hemp; its ability to grow in multiple
soil environments, \3/4\ of American mainland is suitable for its
growth,\1\ (albeit arctic regions) with minimum water requirements or
nutritional inputs for its survival, (not optimal yields) make it a
logical solution for sustainable energy production with worsening
drought conditions. The use of Industrial Hemp will reverse negative
climate effects through its un-paralleled carbon absorption rates.
Studies have shown between 7-22 tons of C02 absorption per
hectare of Hemp are regularly reported. The immediate use of Industrial
Hemp is necessary to reverse the growing damage to [E]arth's atmosphere
from other unsustainable practices. Furthermore, growing Industrial
Hemp for fuel consumption on infertile grounds not only improves that
soils health, but preserves the health of already fertile soil for
food/material, which Industrial Hemp also produces.
---------------------------------------------------------------------------
\1\ F.F. Elliot. ``Economics of Hemp.'' United States Department of
Agriculture. Bureau of Agricultural Economics. (1941).
---------------------------------------------------------------------------
The greater the biomass of the crop, the greater the yields. 12" a
week of growth have been regularly documented, annually reaching
16.\2\ * Our research over the past 3 years has shown with the right
soil health, hemp fiber can grow 14 tall in less than 60 days. The
rapid growth of this crop acts as an immediate climate solution which
allows preservation of forests and other endangered environments.
---------------------------------------------------------------------------
\2\ Ahmad Alcheikh. ``Advantages and Challenges of Hemp Biodiesel
Production: A Comparison of Hemp vs. Other Crops Commonly used for
biodiesel production.'' University of Gavle. Gavle, Sweden. (2015).
* Editor's note: the master's thesis is retained in Committee file.
---------------------------------------------------------------------------
Biodiesel requires no modifications to existing diesel engines. The
production of biodiesel through transesterification with vegetable/
animal fat and alcohol produces a clean fuel which does not produce
sulfuric acid as chemical diesel does. Industrial Hemp Biodiesel is
clean fuel ready for use. Hemp requires minimal water, minimal
fertilization, with few diseases that do not usually affect yields.
Biodiesel yields from Hemp have been untapped because no organization
has so far dedicated to obtaining true results. The conversion of
Cannabis Sativa L. seed oil into biodiesel has a high rate of
conversion that is greater than 99.5% with a total product yield of
over 97%, making it extremely effective in preventing product loss to
saponification as the biodiesel is created.\3\
---------------------------------------------------------------------------
\3\ Ibid.
---------------------------------------------------------------------------
Further, Sulfur ppm of Hemp is 0.4, compared to soybean 1.1 and
rapeseed 2.4. Estimated calculation of Industrial Hemp puts fuel yields
207 gallons per acre to Rapeseeds 102 and Soybeans 56.\4\ The yields
are double that of Rapeseed and nearly four times that of Soy based on
which is currently the most used crop for biodiesel. Palm Oil is said
to yield 508 gallons per acre, but is a highly destructive crop, only
grown in specific tropical regions in the world. It has contributed to
the vast destruction of endangered rain forests and further use of oil
palm trees encourages this destruction/reliance on foreign aid. The
fuel yield for Hemp is an estimate as no company has dedicated to this
in real practice, as Hempstead will. Hemp is deliberately left out of
the equation, despite being a clear and logical solution, due to
private interest from other companies that know Hemp is the strongest
competitor for economic production.
---------------------------------------------------------------------------
\4\ Ibid.
---------------------------------------------------------------------------
Mixing Biodiesel with current petroleum blends has an immediate
market for current existing fuels. B20 (20% Biofuel) which can be
adjusted to B100 to eliminate greenhouse emissions as we lead the
transition to a C02 neutral, and negative, energy climate.
The ecological and economic benefits of this crop equal a multi-
billion-dollar industry that has not yet been tapped. The
unconstitutional yet current legal restrictions constricting Industrial
Hemp and thus the national and economic security of this nation are
being uplifted, and significant progress has been made towards the
recognition of this crop as an Industrial powerhouse since the 2018
Farm Bill. Now is the most important time to invest in sustainable
projects that will create economic boom for communities involved and
the 2023 Farm Bill is the perfect policy mechanism to create thriving
hemp economies throughout the United States.
A secondary product of the hemp biodiesel is the use of hemp
biochar. Hemp biochar uses organic compounds as a catalyst and replaces
harmful chemical fertilizers typically used in farming. This allows the
crop to maximize its improvements to soil health and absorption of
atmospheric C02 to form a beneficial and healthy
relationship with the natural environment. Hempstead created biochar
with our hemp fiber and are studying the effects of the organic
compounds on our research plot. Our hemp industry partner, Western
Fiber, has a USDA research grant to study hemp biochar through the
University of California-Merced.
Hempstead's leadership is un-paralleled, our statements are backed
by decades of scientific and mathematical research. The $2.1 trillion
annual revenue of oil and gas in domestic control can come from the
rural, urban, and Tribal communities producing hemp for biodiesel
instead of the OPEC. All that's needed now is real world creation of
products. What Hemp ultimately creates is a superior fuel that can be
harvested in a few months' time, in soil no other crop can grow in,
with limited water, and immediately offer economic boom as demand for
our what we produce is extremely high.
______

Submitted Questions
Questions Submitted by Hon. Kim Schrier, a Representative in Congress
from Washington
Response from Kate Greenberg, Commissioner, Colorado Department of
Agriculture
Question 1. Ms. Greenberg, we've seen a lot of success with the
regulatory framework set up by the 2018 Farm Bill and outlined in the
final 2021 USDA rule, but the multi-layered data reporting and other
aspects from the rule have created some challenges for states. For
example, hemp farmers have to separately report their acreage to FSA
and the Washington State Department of Agriculture (WSDA), and
according to WSDA, many local FSA offices didn't even know they were
part of this requirement, ultimately creating confusion for everyone.
Can you tell us about what aspects of the final USDA rule present
compliance challenges for states? How could we incorporate flexibility
into the regulatory structure going into the 2023 Farm Bill?
Answer. Colorado producers are experiencing difficulty with Farm
Service Agency (FSA) reporting as county offices seem to have varying
knowledge of the Agricultural Market Service (AMS) requirement. The
Colorado Department of Agriculture (CDA) holds monthly meetings with
the FSA Regional Office to help facilitate compliance with hemp
registrants. Both CDA and FSA are assisting hemp producers with
reporting, and yet we have not fully addressed the problem.
The USDA Final Rule 990.3(a)(1) requires states to collect,
maintain and report to the Secretary relevant, real-time information
for each producer licensed to produce Hemp under the State Plan. Under
990.7 the FR instructs ``All producers licensed to produce hemp under
the USDA-approved state or Tribal plan shall report hemp crop acreage
to FSA and shall provide, at a minimum the following information: (a)
street address, GPS, (b) Acreage dedicated to the production of hemp
and (c) License or authorization identifier in a format prescribed by
USDA.'' This requirement is redundant and can be achieved through the
USDA-approved State Plan and states can include it in their monthly
report to the USDA.
Another challenge for Colorado is the mandatory testing of all
lots. Due to limited state resources, CDA has implemented state-
certified labs and authorized third-party sampling agents. This has
added additional levels of regulation and much higher costs to
producers for sampling and testing. Allowing for certified seed in
[lieu] of testing and a return to random and risk-based sampling based
on intended use and compliance issues would reduce the burden for
farmers and regulators.

Question 2. Ms. Greenberg, despite the authorizations in the 2014
and 2018 Farm Bills, hemp is still an emerging and developing market.
While hemp farmers can legally sell their crops, there is still a lot
to be done to develop domestic markets and increase market access for
their crop. There are still very few processing and manufacturing
opportunities for textiles and infrastructure, limiting what farmers
are able to do with their crop. Therefore, there is significant value
in increasing the market space for our farmers. This could look like
funding for new processing opportunities for sustainable hemp product
manufacturing. How can we continue to grow and incentivize hemp
processing for textile and infrastructure uses in the next farm bill?
Answer. The hemp processing industry is relatively nascent in the
United States. There are various ways the Government can spur
development and innovation in the hemp processing sector. The first is
by providing access to capital via USDA loans with terms that are
favorable to new and expanding businesses that are operating in an
unproven landscape. Traditional lenders often look at these businesses
as high risk, but in order to be successful, they need access to
competitive rates and terms that will allow the business and industry
to grow.
One of the specific areas Congress can assist the industry is by
allocating an earmarked resource to finance hemp research and
development projects and encouraging innovation through financing
incubators. Accelerators and pitch contests attract bright minds with
novel business ideas and have proved to be highly effective in the IT
sector and other emerging industries. Hemp has the potential to play an
important role in agriculture, carbon sequestration, the food industry
as well as material science and thus deserves Federal support for
research and development projects.
In addition to loans, there is a need for grants to lower the
barrier to entry into the hemp processing industry as well as provide
seed capital to get processing businesses and infrastructure up and
running, especially in rural areas close to hemp fiber production to
reduce transportation costs and support the rural economy.
Beyond providing financial assistance directly to hemp processors,
financial incentives in the form of tax credits for the use of hemp in
end products will help jump-start the industry by providing for robust
demand for hemp fiber. Strong demand will help decrease the uncertainty
and make private investment in hemp processing and infrastructure more
attractive.

[all]