FOR IMMEDIATE RELEASE
February 19, 2019
LAPEER, Mich. – As we all now know, on November 6, 2018, Michigan voters approved Proposal 1 and made Michigan the twelfth U.S. jurisdiction to legalize recreational marijuana, which officially went into effect December 6. This act, the Michigan Regulation and Taxation of Marihuana Act (MRTMA), has accrued massive media coverage because of its implications regarding cannabis and THC-based products, but what’s been overlooked by many is MRTMA’s effect on industrial hemp and hemp-based products.
Industrial hemp is a low THC-concentrate version of the plant genus cannabis, meaning that ingestion of hemp or hemp products will not produce psychoactive effects. Hemp is commonly grown as a fiber crop for use in such things as paper and textiles, with hemp seeds quickly becoming a marketable commodity, as the seed and its oil are incorporated into health foods, supplements, cosmetics, and medicine. Estimates suggest that industrial hemp could generate returns of $200-$400 per acre. And that’s a conservative estimate.
For decades, federal law has not differentiated hemp from other forms of the cannabis plant. All forms of cannabis have effectively been illegal since 1937 under the Marihuana Tax Act. Later, and more formally, under the 1970 Controlled Substances Act. Over the last several years, the United States has allowed for various pilot programs to study cannabis in limited ways.
Michigan officially authorized the cultivation of industrial hemp for research purposes back in 2014 through the Industrial Hemp Research Act (IHRA), with responsibility for administration of the act given to the Michigan Department of Agriculture and Rural Development (MDARD). The Public Health Code was also amended to except industrial hemp from the definition of marihuana. Under both acts, industrial hemp is defined as “the plant Cannabis sativa L. and any part of the plant, whether growing or not, with a [THC] concentration of not more than 0.3% on a dry weight basis.” MCL 333.7106(2); MCL 286.842(c). Under IHRA, however, only MDARD and Michigan’s colleges and universities are permitted to conduct industrial hemp research. Despite these changes in Michigan law, “industrial hemp research has never gotten off the ground.”
That’s soon to change.
“Michigan and the U.S. as a whole are about to witness a major resurgence in hemp farming, which will likely be very similar to the “Hemp for Victory” campaign that took place during WWII,” said Lapeer-based attorney and marijuana activist Bernard Jocuns. “However, skilled farmers will have the opportunity to cash in and potentially supplement their current agricultural cash crops.”
The hemp stalk produces extremely durable fibers that are ideal for making canvas, rope, textiles, paper, friction linings, and for compression molding. Inside the stalk is hurd, which is useful for paper, mortar, cement block, fiberglass, and insulation. Hemp seed is used to produce bird seed, ink, fuel, oil, solvents, varnishes, and personal hygiene products. It is considered a superfood containing essential omega-3 fatty acids and proteins.
According to an article written by attorney Gregory Schmid for Review Magazine, “Now that the legal barriers to hemp products have fallen many entrepreneurs are incorporating hemp into products. Hopefully these changes are not too late for the American hemp industry, which lags far behind Canada, China, and Europe. With cannabis prohibition nearing its end nationwide, hemp farming is legal once again in America after the Marijuana Tax Act in 1937 effectively banned it. Over the past decade hemp products have mostly used imported ingredients. Even as would-be hemp farmers sought access to seeds and permits, they were denied access to federal programs crop insurance and other benefits generally available to the farming community due to the Schedule 1 stigma.”
By its terms, MRTMA greatly expands upon the state’s previously limited authorization of industrial hemp. While Michigan’s constitution restricts certain methods of amending statutes, the enactment of “[a]n act complete within itself, even though amending another statute or act by implication, is not one of the evils sought to be prevented by” the constitution. Weber v Orion Bldg Inspector, 149 Mich App 660, 664 (1986). It is fairly evident that MRTMA, by creating a new, independent statute and expressly making other laws inapplicable to it, is “an act complete within itself.” As such, MRTMA implicitly serves as the enabling statute for industrial hemp regulation.
As of right now, there is a package of hemp bills pending in the legislature that seeks to provide for licensing and regulation of industrial hemp growers by MDARD by amending IHRA and the Public Health Code. However, as noted above, MRTMA supersedes IHRA’s limited authorization and regulation of industrial hemp. The amendments proposed by the Hemp Bills therefore would amend by implication MRTMA’s broad authorization of industrial hemp and the Department of Licensing and Regulatory Affairs (LARA’s) authority to regulate it.
Unfortunately, however, as an initiated law, changes to MRTMA require three-quarters supermajority support from both legislative chambers. Therefore, unless the Hemp Bills receive such support, their amendments to IHRA, the Public Health Code, and now, by implication, MRTMA will likely be invalid.
“With bills being passed on several levels regarding hemp farming and under MRTMA, applicants will soon be able to apply for hemp farming licensure,” said Jocuns. “The process is still being worked out in Michigan, but it will open many doors and generate untold amounts of new revenue in the State of Michigan.”
As it stands today, the commercial cultivation, processing, and sale of industrial hemp is legal and unregulated in Michigan. The caveat is that rules could potentially be promulgated by LARA pursuant to MRTMA, perhaps imposing licensing requirements and restricting the industrial hemp market. It is unclear at this time if or when rules are coming or how those rules would regulate industrial hemp. Consequently, those who take advantage of the current regulatory environment—or lack thereof—may find themselves subject to and incompliant with future regulations.
While this is a massive step for the legalization of the Cannabis sativa L plant, industrial hemp will still be a highly regulated crop. Before you go out and start growing a crop of your own, remember that this is federal law’s first significant step in decriminalizing the cannabis plant. We are a long way from treating industrial hemp like flowers, tomatoes, or other legal crops.
Should a state desire it, a state can act as the primary regulatory authority over hemp activities within its jurisdiction. To do so, the state must submit a plan for regulation and receive USDA approval for the program. The USDA will ensure the proposed program meets minimum standards, and work with the state to implement the program.
If a state does not choose to head its own program, industrial hemp cultivators within that state can still apply for licensure directly to the USDA. Ultimately, regardless of your state’s desired participation level, cultivators will be required to obtain a license from a regulatory agency before engaging in legal industrial hemp cultivation.
Hemp regulations are likely to vary from one state to another, but all programs will be required to implement certain aspects. These regulations will include locational restrictions, testing procedures for THC, disposal requirements, and mandatory inspections of operators. Failure to obtain a cultivation license or comply with applicable regulations could result in loss of licensure and both financial and criminal punishment. Expect industrial hemp to start out as a highly regulated operation, not unlike the licensing requirements expected of commercial marijuana operators under state programs.
If enacted, it will be about a year before the USDA will adopt the requisite regulations necessary to begin a licensing program. Industrial hemp research programs established pursuant to the 2014 Farm Bill will remain in effect.
Until federal law changes and the USDA establishes a licensing program pursuant to the 2018 Farm Bill, CBD products are still subject to current federal and state laws.
While this might be seen as a slight setback, the 2018 Farm Bill is an important first step in changing federal policy surrounding both hemp and cannabis in general. Amending the Controlled Substances Act will allow other federal agencies to expand opportunities to the industrial hemp and CBD markets. Soon, we may see policy expansions in agencies such as the Drug Enforcement Administration, Food and Drug Administration, United States Patent and Trademark Organization, and many more. As our federal departments expand services and protections to industrial hemp, we continue to set the state for the future decriminalization and expansion of protections for the greater marijuana industry.