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USDA Touts Hemp Industry’s Growth But Says Challenges Remain

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Hemp production in the U.S. has scaled up rapidly since lawmakers lifted federal prohibition of the crop, with more acres of hemp grown in the country today than at any point since the 1940s. But the fledgling industry is still very much in flux, and reporting practices that vary wildly from state to state have hampered efforts to fully understand it.

Those are the top-level takeaways of a report released Wednesday by the U.S. Department of Agriculture (USDA) that explores the economic viability of the American hemp industry as the country transitions to a legal era.

After decades of prohibition due to hemp’s close relationship to its high-THC cannabis cousin marijuana, Congress in 2014 approved state-level pilot programs, allowing growers in certain states to produce and sell hemp as part of limited research initiatives. In 2018, lawmakers went further, ending federal hemp prohibition entirely. Since then, the sector has exploded.

Approved US producer hemp licenses 2014-2018

“Under the pilot programs, United States industrial hemp acreage reported by States increased from zero in 2013 to over 90,000 acres in 2018, the largest U.S. hemp acreage since the 146,200 acres planted in 1943,” the USDA study found. “By December 2019, hemp could be grown legally in every State except Idaho, Mississippi, and South Dakota.”

As of last year, more than 146,065 acres of planted hemp were reported to the agency.

The 83-page report, “Economic Viability of Industrial Hemp in the United States: A Review of State Pilot Programs,” attempts to draw conclusions about the legal, logistical and economic challenges that might arise as US farmers return to a crop that hasn’t been grown in the country for generations.

One of the biggest obstacles, the study shows, is keeping everyone on the same page.

“There is no systematic comprehensive data source regarding the emerging United States hemp industry or requirement to report a consistent set of data for the pilot programs,” noted the authors, who said they drew on annual reports, website information, internal USDA data, unstructured discussions with state agencies and other third-party information to compile the document.

“States collected data at various times and levels of aggregation,” the study says. “For example, some States report hemp data by intended end use (i.e., grain, fiber, cannabidiol (CBD) or other extracts) while others do not report data.”

US hemp acreage and greenhouses

Inconsistency between state requirements was one of the main obstacles highlighted by the report. USDA found that state-level hemp programs ran into a handful of common problems, starting with the difficulty of passing state-level legislation to regulate the new programs. Other problems arose in obtaining “critical production inputs,” such as seeds and insecticides, or in trying to easily distinguish industrial hemp from high-THC marijuana, which remains federally illegal.

A fundamental problem, the USDA report found, was “lack of basic data and information for decision-making”—something that should come as no surprise to anyone who’s watched a legislative hearing on cannabis.

Getting stakeholders involved early seemed to help smooth some wrinkles, the study found. In some states, authors wrote, “hemp legislation failed repeatedly, typically because of law enforcement concerns or lack of public support.”

“Colorado and Kentucky are two examples of States that included law enforcement stakeholders early when establishing their pilot programs,” the report notes. “This allowed an early basis for dialogue and shared knowledge.”

Data from state pilot programs also led analysts to conclude that while industrial hemp is a burgeoning industry in the U.S., it likely won’t emerge as a strong economic player in every state.

“As with other crops, it is not likely that hemp will be economically viable in every State,” the study concludes. “States that moved quickly to establish pilot programs were not leading producers of competing major field crops,” it found, and “growers are not likely to plant or process hemp if more profitable options exist.

Hemp-producing states could also run into competition internationally, the report says, acknowledging that the U.S. is one of many hemp-producing regions globally. “While the reintroduction of hemp production in the United States is relatively recent,” it says, “hemp production has already been legal in other parts of the world,” including Canada, Europe and China.

Canada hemp production

Under a recent trade deal with the U.S., China agreed to import more American-grown hemp and other agricultural products over the next two years.

For now, the rising tide of interest in hemp-derived CBD appears to be lifting all boats. “Global production was small and relatively stable until the recent worldwide interest in CBD oil,” the USDA study found. “There is some demand for hemp as a sustainable natural fiber, hemp seeds and protein as a food ingredient, and hemp extracts for cosmetics and food, but CBD oil has been the primary source of demand growth.”

Earlier this month, USDA officials said they won’t be able to comply with a request by farmers and some state lawmakers to increase the federal THC limit on industrial hemp, which is currently defined as cannabis that contains no more than 0.3 percent THC. Advocates had asked for that limit to be increased to 1 percent, but the agency said that’s a job for Congress.

They did, however, say that a new public comment period will be opened before hemp rules are finalized.

China Must Import More Hemp From U.S. Under New Trade Deal

Photo courtesy of Brendan Cleak.

Marijuana Moment is made possible with support from readers. If you rely on our cannabis advocacy journalism to stay informed, please consider a monthly Patreon pledge.

Ben Adlin is a Seattle-based writer and editor. He has covered cannabis as a journalist since 2011, most recently as a senior news editor for Leafly.

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Oregon Marijuana Sales Spike Could Continue As Consumers ‘Permanently Adjust Their Behavior’ Following COVID

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Record-setting Oregon marijuana sales continue to be a bright spot in the state’s coronavirus-slowed economy, state analysts reported this week, but a convergence of unknowns—including the end of federal coronavirus relief and a possible rise in cannabis prices due to devastating wildfires—could still mean a rocky road ahead for consumers.

“Marijuana sales continue to be strong,” Oregon’s Office of Economic Analysis wrote in a quarterly revenue forecast published on Wednesday. “Since the pandemic began, the increase in recreational sales have been more than 30 percent above forecast.”

The increase tracks with other more established cannabis markets, such as those in Colorado, Washington and Nevada, which have also seen “strong gains” since the pandemic, the office said. “There are a number of likely reasons for these higher level of sales and expectations are that some of these increases will be permanent.”

oregon marijuana tax revenue forecast

Oregon Office of Economic Analysis

Analysts also expressed a rosier outlook on the future of the state’s marijuana market than they did in last quarter’s report, which acknowledged a spike in sales since the pandemic began but concluded that business was eventually “expected to mellow” as incomes fell and bars reopened. Officials now forecast Oregon will see “somewhat more” in sales than previously projected.

The state has recently seen a string of record-setting months for cannabis sales. Over the summer, monthly cannabis sales had averaged more than $100 million, according to an Oregon Liquor Control Commission (OLCC) report.

OLCC

The projected uptick in sales will mean an extra $30 million in marijuana tax revenue for the state during its two-year budget period ending in 2021. Total adult-use cannabis taxes for that period are now forecast to end up at more than $276 million.

“Factors leading to increases in sales include higher incomes due to federal support, increased stressors in everyday life, reductions in other forms of entertainment or recreational opportunities, and simply more time on one’s hand be it due to a COVID-related layoff, or increased working from home,” the report said.

“A key question is now that the federal aid is gone and other entertainment options return in the months ahead, will some of this increase in sales in recent months subside?” the Office of Economic Analysis wrote in the new report. “In a recent meeting of our office’s marijuana forecast advisory group, the broad consensus was that yes, some of these sales will come off, but not entirely so. And the longer the pandemic lasts, the more likely customers will permanently adjust their behavior as they become accustomed to their new routines and buying patterns.”

For now, the bulk of the increases appear to be driven by existing consumers. While “indications are that the customer base is broadening some as the market grows due to more users trying an increasingly socially acceptable product and ongoing converts from the black market to the legal market,” the report said, the increase “is more likely to be due to larger or more frequent sales to existing consumers than due to more consumers alone.”

“One item to watch moving forward are prices,” analysts wrote. “In recent years the supply of marijuana has greatly outstripped the demand, leading to lower prices. This is great news for consumers. Given that marijuana is a normal good, lower prices have led to larger quantities sold. But now that demand has increased, while supply has held steady, and with the potential impact of the wildfires right as growers are prepping for harvest, this balance in the market may shift… As such, it may be that prices rise, or at least not decline like they have in recent years.”

oregon marijuana prices and sales

Oregon Office of Economic Analysis

As far as tax revenue goes, any price increase would likely lead to more money for the state, “as the decline in quantity sold is not large enough to outweigh the price impact,” the report said.

How cannabis revenue is spent would also be affected by a drug decriminalization ballot proposition, Measure 110, that voters will decide in November. While the initiative isn’t expected to change the amount of taxes collected, it would redirect marijuana tax funds to expand drug treatment programs. “Whether current programs receiving marijuana tax revenue would ultimately see budgetary impacts,” analysts said, “would remain up to the Legislature should voters approve the measure this fall.”

Measure 110, which broadly seeks to reframe problem drug use in medical rather than criminal terms, is one of two key drug-reform measures on Oregon’s ballot in less than six weeks. The other would legalize the therapeutic use of psilocybin, the main psychoactive ingredient in psychedelic mushrooms. That measure would be the first of its kind in the U.S., although Canada has recently granted some patients immunity from that country’s prohibition on psilocybin.

Oregon Marijuana Businesses Impacted By Wildfires Are Ineligible For Federal Relief, Agency Confirms

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Texas Ban On Smokable Hemp Lifted Until 2021, Judge Rules

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A Texas ban on smokable hemp products hit another roadblock in court last week when a state judge barred officials from enforcing the prohibition until an industry challenge can be heard in court.

A group of four hemp producers sued the state last month over the ban, which began when lawmakers passed a hemp legalization bill last year that explicitly forbade the production of products intended for smoking or vaporization. State health authorities extended its reach earlier this year to prohibit the sale and distribution of such products made outside Texas, a move the hemp companies claim was an unconstitutional overreach of their authorities.

In a ruling issued Thursday, Travis County Judge Lora Livingston wrote that the hemp companies may have a point. Writing that the plaintiffs “have demonstrated a probable right to relief,” Livingston granted a temporary injunction that effectively voids the ban on production, distribution and sale of the products until the conclusion of a trial set to begin in February.

Livingston had previously issued a temporary restraining order in the case last month that had a similar but shorter effect, preventing the state from enforcing the ban for a matter of weeks. The new ruling freezes the ban for at least four months, and potentially longer.

Opponents of the ban said that while the issue is far from over, Livingston’s recent decisions are a sign the challenge could ultimately succeed.

“So far, the rulings relating to this lawsuit are very encouraging,” said Heather Fazio, director of Texans for Responsible Marijuana Policy, which opposes the ban and has organized hundreds of supporters to submit comments to regulators.

“Advocates in Texas have remained vigilant, with both legislative engagement and regulatory oversight,” Fazio said in an email to Marijuana Moment. “Now, Texas businesses are challenging our state’s poorly designed policies in the courts. And they’re winning!”

Plaintiffs are challenging both the legislature’s initial ban on production and processing of smokable hemp as well as the Department of State Health Services (DSHS) added ban on distribution and sale, which they claim violate the state constitution’s protections for economic freedom. They also maintain that DSHS lacked the authority to extend the production ban to retail sales.

The companies also point to logistical problems caused by the ban. Because smokable hemp flower is indistinguishable from hemp grown for other purposes, they argue, the ban will encourage bad actors to mislabel products in order to avoid the prohibition. That could put consumers at risk by exposing them to chemicals and other adulterants not intended for consumption.

Banning smokable hemp would also hurt the state economically, the producers claim, as Texas hemp companies wouldn’t be able to compete with out-of-state producers that can already make and sell anything from hemp joints to CBD vape cartridges.

“The law does not ban the use or consumption of smokable hemp products. As such, Texas consumers will simply buy smokable products made out-of-state,” the lawsuit says. “If Texas had banned the processing and manufacture of cheese in Texas, Texans wouldn’t stop eating cheese.”

Meanwhile, the state’s legalization of hemp for other purposes has caused headaches in the criminal justice community. Because hemp looks and smells similar to marijuana, law enforcement agencies have struggled to know whether individuals have a banned substance until they can chemically analyze a seized product. But state testing labs are overburdened, and in February the state Department of Public Safety said it would “not have the capacity” to perform testing in misdemeanor cases. Prosecutors as a result have dismissed hundreds of low-level cannabis cases.

Marijuana possession arrests fell almost 30 percent in Texas from 2018 to 2019, recently released state data shows, and that trend seems connected to hemp legalization.

Medical Marijuana Should Be Legal For Toothaches, Texas Agriculture Commissioner Says

Image by Lindsay Fox from Pixabay

Marijuana Moment is made possible with support from readers. If you rely on our cannabis advocacy journalism to stay informed, please consider a monthly Patreon pledge.
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Federal Workplace Drug Testing Proposal Could Discriminate Against People Of Color

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A newly proposed federal rule would expand workplace drug testing programs by allowing certain employers to collect and analyze samples of workers’ hair, a move critics say would lead to disproportionate job-related punishments for people of color.

Federal agencies can already test workers’ urine and saliva, which provide evidence of more recent drug use, but “hair testing potentially offers several benefits when compared to urine, including directly observed collections, ease of transport and storage, increased specimen stability, and a longer window of drug detection,” the Substance Abuse and Mental Health Services Administration (SAMHSA) argued in a notice of proposed rulemaking published in the Federal Register on Thursday.

If adopted, the change would affect thousands of government employees as well as private workers in certain federally regulated industries such as those who work in transportation or at nuclear power plants.

Drug reform advocates are skeptical about the move.

“It’s shameful that these harmful federal drug testing guidelines are even being considered again,” Rep. Barbara Lee (D-CA), co-chair of the Congressional Cannabis Caucus, told Marijuana Moment. “Not only is hair follicle testing discriminatory against people of color due to its sensitivity to melanin and darker hair, it gives no indication of someone being impaired on the job. This just goes to show how far behind the federal government is on cannabis policy.”

Paul Armentano, deputy director for the advocacy group NORML, said it is “mind-boggling that, in 2020, SAMHSA is considering expanding federal drug testing guidelines.”

“Hair follicle testing is highly problematic,” Armentano said. “A positive test, even when confirmed, provides neither evidence of behavioral impairment nor recent drug exposure. Moreover, the sensitivity and accuracy of the test is highly variable.”

Because hair exists outside a person’s body, for example, it’s more vulnerable to contamination—including secondhand smoke and other chemicals—than other sample types. That can put workers at risk of false positives unless results are checked through another testing method.

“Arguably most problematic,” Armentano said in an email, “is the reality that these tests discriminate against certain ethnicities because it is influenced by melanin content and is thus more sensitive to those with darker hair—while far less sensitive to those with gray hair.”

Other factors, such as humidity and hormones, could also affect test outcomes, Armentano added.

SAMHSA in its proposal acknowledges that numerous studies “provide scientific evidence that melanin pigments may influence the amount of drug incorporated into hair,” as well as that hair products more commonly used by people of color could lead to false positives. “As noted,” the filing says, “the Department wishes to solicit feedback on scientific studies comparing drug results and hair color and comparing urine to hair.”

The proposal is the latest effort by SAMHSA to expand federal drug screening to include specimens besides urine, including hair, saliva and even sweat. SAMHSA initially floated the idea of hair-based testing in 1997, and the agency put forward a rulemaking proposal along those lines in 2004. Regulators ultimately rejected that proposal amid concerns over accuracy, but SAMHSA has pursued the plan ever since. In recent years, the agency expanded testing to include saliva.

Unlike urine and saliva, hair can take up to a week to show evidence of drug use, rendering it especially useless as a measure of a worker’s immediate impairment. SAMHSA is proposing that hair testing be used only in pre-employment drug screening and random testing—not in cases where workers are suspected of recent use.

In an effort to protect workers from false positives and ensure that hair tests hold up in court, the proposal includes a directive that an alternate specimen, such as urine or saliva, be collected in order to verify a positive hair-test result. “This two-test approach,” SAMHSA’s summary says, “is intended to protect federal workers from issues that have been identified as limitations of hair testing, and related legal deficiencies.”

Marijuana-related cases, however, may not qualify for that additional layer of scrutiny. “The Department is specifically requesting comments, including support from the recent scientific literature, on whether hair tests that are positive for the marijuana analyte, delta-9-tetrahydrocannabinol-9-carboxylic acid (THCA), should be excluded from the requirement to test an alternate authorized specimen,” the proposal says.

Workers, some labor unions and even a Federal Drug Testing Advisory Board (DTAB) member have criticized the SAMHSA proposal as misguided, warning that the proposal is getting away from the science.

As reported in the trade publication Freight Waves, which covers the shipping and logistics industries, independent truck drivers are opposed to the rule, citing bias toward hair color and texture as well as a general lack of evidence that hair testing would improve driver safety. Major trucking companies, however, generally support the change.

DTAB member Michael Schaffer criticized the rulemaking process as “fatally flawed” because the board was left out of discussions.

“This means that these proposed guidelines were developed without the expertise needed to ensure that they are scientifically accurate and defensible,” said Schaffer, a toxicologist at a drug-testing lab, according to a Freight Waves report. “I fear that these proposed guidelines are going to unnecessarily restrict the use of hair drug testing, an incredibly effective tool at detecting drug use, for reasons which have no scientific basis.”

Armentano at NORML said that doubling down on a testing procedure that could exacerbate racial disparities simply doesn’t make sense, especially given today’s political climate.

“Given the heightened awareness surrounding the need for social and racial equity,” he said, “the idea of proposing a testing procedure that will inherently deny more people of color opportunities than it would others who have engaged in exactly the same activities is beyond tone deaf and counterproductive.”

SAMHSA estimates that about one percent of the 275,000 drug tests it expects federal agencies to do every year will be for hair specimens. When it comes to workers in jobs regulated by the Department of Transportation, the agency anticipates that 1.53 million of a total 6.1 million drug tests will be hair-focused. For nuclear workers, 15,000 of 150,000 total tests would be of hair specimens.

“These projected numbers are based on existing annual pre-employment testing that currently occurs in the regulated industries and current hair testing being conducted,” SAMHSA wrote

The agency is accepting public comments on the proposal through November 9.

This story was updated to add comment from Lee.

FDA Teaches Marijuana Growers And Researchers How To Protect Trade Secrets From Competitors

Photo courtesy of Markus Spiske

Marijuana Moment is made possible with support from readers. If you rely on our cannabis advocacy journalism to stay informed, please consider a monthly Patreon pledge.
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