Lost in the haze around Colorado’s historic vote to legalize marijuana is that when voters passed Amendment 64 in November, they also legalized hemp, marijuana’s long-suffering cousin.
Smoking hemp doesn’t get you high, but growing it, possessing it or selling it carries the same federal penalties as marijuana.
Colorado lawmakers are struggling with how to regulate this now-legal crop in a way that won’t trigger a federal crackdown on those who pioneer this new industry.
As a result, farmers are finding they have a lot in common with those who want to sell joints and pot brownies at recreational marijuana retail stores. Federal prohibition affects more aspects of business life than many newcomers to these industries imagine. It can prevent businesses from opening checking account with funds earned through federally prohibited activities, or prevent them from claiming pot-business deductions on federal tax returns.
“It’s a headache,” said Leland Swenson, the executive vice president of government relations for the Rocky Mountain Farmers Union. “And it doesn’t need to be.”
While much attention this week is focused on recreational pot issues — like a controversial “driving while stoned” bill which passed the state House Tuesday, and yet-to-be-decided issues like which agency will oversee regulating the industry and how its taxing system will be structured — farmers are grappling with their own unanswered questions around hemp.
The biggest unknown is the potential blowback they face if the feds make an issue out of hemp farming, Swenson said. Hemp farmers stand to lose their commodity titles that support the prices of other crops in their fields, like wheat and corn. They could be denied federally backed crop insurance. And they could lose their ability to participate in federally administered conservation programs.
“The real problem that many producers face is that it’s still illegal federally,” Swenson said.
RMFU wrote about these concerns to U.S. Department of Agriculture, asking if there would be a “negative impact” on farmers who take advantage of Colorado’s new law to plant some hemp.
“We haven’t heard back yet,” he said.
The United States is the only industrialized country without a hemp industry, even though hemp is recognized as a legitimate crop under NAFTA and GATT. Despite its federal prohibition, it’s legal to import hemp from places like Canada and France, which provide raw material for U.S. companies making such things as carpet, automotive parts and even concrete, which hemp can be used to strengthen. The annual North American hemp market is estimated to be at least $300 million.
Hemp is attractive to farmers for a number of reasons. It’s well-suited to growing in Colorado’s semi-arid climate and, compared to other crops, yields a higher return per acre. Because of its illegality, there are few studies of the costs and benefits of growing hemp, but a 1997 USDA study shows that hemp is more profitable per acre that every other common crop except tobacco.
“From a producer standpoint, there’s a lot of interest,” Swenson said, “but there are also a lot of questions that they’d like to have answered.”
The process of getting answers may start soon. Colorado lawmakers must adopt industry-wide regulations for recreational marijuana — and industrial hemp — by the end of the legislative session, which is scheduled to adjourn on May 8.
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