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USDA Unveils Guidelines For Federal Loans To Hemp Business

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The U.S. Department of Agriculture (USDA) recently released guidelines for processing federal loans for the hemp industry.

Since hemp was federally legalized under the 2018 Farm Bill, it is now considered an agricultural commodity like any other crop, and USDA has taken several steps to sync the market with its various programs and services. And the department’s new memo to state and county offices provides clarity on how to process direct or guaranteed loan applications for hemp producers.

The seven-page document, which was released last month, describes the various requirements a hemp business must satisfy in order to access USDA’s lending services. Chief among those requirements is for a prospective borrower to be licensed under a USDA-approved state or tribal hemp program, or under USDA’s basic regulations if the jurisdiction the business operates in has not submitted its own rules.

“While it’s understood that this new commodity will likely produce some servicing challenges because of State and Federal regulations, it should be treated as closely as possible to any other agricultural commodity and serviced in the same manner,” the memo states. “Hemp will be considered like any other borrower produced commodity, if the hemp was produced under a license authorized by the 2014 or 2018 farm bills, and provided the crop is not abandoned or destroyed.”

Borrowers who are not licensed to grow hemp will be considered in non-monetary default and any losses will not be covered.

While the document emphasizes that hemp should generally be treated the same as other crops, it also acknowledges unique requirements and challenges that the market continues to face.

For example, hemp that contains more than 0.3 percent THC must be disposed of under the department’s rules. And, the memo says, USDA’s Farm Service Agency (FSA) “will not pay for these services for direct loans and FSA will not cover a lender’s advance to the borrower to cover the cost as part of any guaranteed loan loss claim.”

Officials should also be cognizant of ongoing problems with banking access for the industry, as some financial institutions still decline to service businesses that produce the crop despite its federal legalization.

“Applicants should ensure the availability of a banking institution authorizing these financial transactions to ensure availability of proceeds to support payment of expenses and debts,” USDA said. “Additionally, producers will be required to assign their sale proceeds to FSA in an amount not to exceed their annual payment.”

For direct and guaranteed loans, hemp businesses must have a contract with FSA laying out termination policies and their ability to repay the loans. Part of that calculus should involve looking at the “intended use of hemp being produced,” whether that’s fiber, seed or CBD oil.

The Farm Bill doesn’t allow for hemp licenses to be transferred, which also has some lending service implications, USDA wrote.

The memo says that “if the borrower defaults on the loan, dies, or abandons the operation, under no circumstance could another legal individual, lender, or FSA Agency official obtain the right to the commodity and attempt to liquidate it as a full or partial income recovery attempt.”

This latest document seems to build off the establishment of loan programs for hemp businesses that was described in a memo released in February. The purpose of that notice, which itself was an update to one published last October, was to provide “updated guidance on the analysis and evaluation of Direct Loan applications and/or requests for guaranteed loans for industrial hemp growers, especially as it relates to contracts.”

USDA announced last year that producers operating under the 2014 Farm Bill could access certain federal loans, but it said regulations had to be developed for those growing hemp under the latest agriculture legislation. In the time since, the department has been systematically approving state and tribal hemp plans on a rolling basis while at the same time pushing to normalize the industry—by providing hemp businesses with access to federal crop insurance, for example.

More recently, the hemp industry scored a victory after Congress passed legislation last month stipulating for the first time that farmers who cultivate the crop are eligible for federal coronavirus relief programs through the Small Business Administration.

Trump Admin Could Let Researchers Study Marijuana Dispensary Products, Scientist Argues After DOJ Memo Released

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Kyle Jaeger is Marijuana Moment's Los Angeles-based associate editor. His work has also appeared in High Times, VICE and attn.

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Connecticut Governor Says He’s Open To Smoking Marijuana After He Signs Legalization Bill

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The governor of Connecticut said on Friday that he isn’t ruling out smoking marijuana after he formally signs a legalization bill into law next week.

While most top politicians might still demure when asked if they’d partake in cannabis given ongoing stigma and federal prohibition, Gov. Ned Lamont (D) said matter-of-factly that “time will tell” when asked by a reporter if people can “expect to see the governor smoking a joint” after legalization goes into effect in the state.

News 12’s John Craven replied incredulously, “Really? You’re open to it?”

The governor first shrugged, then nodded his head yes.

“Not right now, but we’ll see” Lamont said.

Other governors in legal states have been playful about cannabis culture and their own relationship to the plant. But while a growing number of lawmakers are comfortable discussing their past marijuana use, this is a fairly remarkable exchange for the sitting top executive officer of a state.

It’s also a sign of the times, as congressional lawmakers step up the push to end federal prohibition and legalization bills move through numerous state legislatures.

Connecticut lawmakers sent Lamont an adult-use legalization bill on Thursday, and he’s confirmed his intent to sign it into law. It would make the state the 19th to have enacted the policy change and the fourth this year alone.

And while the governor has consistently emphasized the important of social equity in legalization legislation—at one point threatening to veto the bill because of a provision he felt could undermine its intent to effectively stand up disparately impacted communities—he also seems to see the personal benefits of the reform.

Similar to Lamont’s new comments, Washington Gov. Jay Inslee (D) raised some eyebrows in 2018 when he said in an interview that he grows cannabis himself. But then a spokesperson for his office denied that he actually personally cultivates marijuana.

Minnesota Marijuana Reform Could ‘Move Forward’ In Special Session That Just Launched, Top Lawmaker Says

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Minnesota Marijuana Reform Could ‘Move Forward’ In Special Session That Just Launched, Top Lawmaker Says

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Even though a Minnesota House-passed marijuana legalization bill died in the Senate without action by the end of this year’s regular session, a top lawmaker says there’s still a “possibility to move forward” on cannabis reform as part of a special session that began this week.

“Nobody really expected the medical program to be so successfully changed this year,” House Majority Leader Ryan Winkler (D) said at a rally with cannabis reform advocates on Wednesday, referencing a separate measure Gov. Tim Walz (D) signed last month that will allow patients to access smokable cannabis products.

According to The Star Tribune, Winkler added that “surprising things can happen” during a special session. “When you see Republican support and Democratic support in the House and Senate, there is a possibility to move forward.”

Advocates with Minnesota NORML are pushing for several specific policies to be incorporated into legislation that is set to be taken up by the legislature during the special session. The first is to expand the state’s decriminalization policy, and the second is to have the state petition for a federal exemption for Minnesota’s medical cannabis program.

Part of the motivation behind that latter proposal is to ensure that registered patients are able to lawfully purchase and possess firearms in spite of federal restrictions.

At the rally, which was organized by NORML, Republicans Against Marijuana Prohibition (RAMP) and other groups, Winkler and several other lawmakers spoke in favor of modest policy changes such as decriminalizing cannabis.

“Decriminalizing small amounts is important,” Rep. Jeremy Munson (R), one of only a handful of Republicans who voted for Winkler’s broad adult-use legalization bill, said at the rally. “If someone in Minnesota gets caught with two gummy bears, it’s a felony and they’ll lose their gun rights forever.”

The coalition proposed several key reforms that they say should be integrated into public safety and health legislation that’s currently moving through committee during the special session:

-Further reduce penalties for simple possession of marijuana.

-Allow people convicted of possession up to eight grams of cannabis to petition the courts for expungement.

-Require the Minnesota health commissioner to petition the Drug Enforcement Administration (DEA) for an exemption for its medical marijuana program.

”Reducing or eliminating the criminal penalties we’re seeing around marijuana is where we have consensus,” Thomas Gallagher of RAMP said in a press release. “Let’s focus on the people who have small quantities. There is injustice in a trivial amount of marijuana resulting in life-changing punishments like imprisonment, criminal records, and lost jobs and kids.”

Similar to the Minnesota activists’ call, Iowa officials have requested that federal agencies guarantee some level of protection for people participating in the state’s medical marijuana program.

The Hawaii legislature adopted a resolution in April seeking an exemption from DEA stipulating that the state is permitted to run its medical cannabis program without federal interference.

Back in Minnesota, the House approved a bill last month to legalize marijuana for recreational use following 12 committee assignments. That legislation stalled in the GOP-controlled Senate, however.

Advocates are hopeful about the possibility that further cannabis reforms could be accomplished in the special session, but they see an obstacle in Senate Majority Leader Paul Gazelka (R), who has been relatively silent on the issue since the end of the regular session.

He did previously say, however, that “we’re always said we were open to lowering the criminal penalties [for marijuana].”

The decriminalization legislation that advocates are rallying behind would make possession of up to eight grams of cannabis a petty misdemeanor. It would also make people with prior convictions for that level of possession eligible for expungements.

Under the separate medical cannabis expansion bill that the governor has signed, adults 21 and older will be able to access smokable marijuana products. That policy must take effect by March 1, 2022, or earlier if rules are developed and the state’s cannabis commissioner authorizes it.

Dispensaries could also provide a curbside pickup option for patients under the new law. It further removes restrictions for designated caregivers and allows them to tend to six registered patients at once, rather than just one.

Walz, who hadn’t been especially vocal about legalization as the broader legislation advanced during the regulator session, said, “I’ve thought for a long time about that,” adding that “we know that adults can make their own decisions on things, we know that criminalization and prohibition has not worked.”

“I’ve always thought that it makes sense to control how you’re doing this and to make sure that adults know what they’re getting into, and use it wisely,” he said. “I also think there’s a lot of inequity about how folks have spent time in jail or been arrested around this, especially in communities of color.”

The majority leader’s legalization legislation as introduced was identical to a proposal he filed last year, with some minor technical changes. Winkler, who led a statewide listening to gather public input ahead of the measure’s introduction, called it the “best legalization bill in the country” at the time. It did not advance in that session, however.

Under the measure, social equity would be prioritized, in part by ensuring diverse licensing and preventing the market from being monopolized by corporate players. Prior marijuana records would also be automatically expunged.

Walz in January he called on lawmakers to pursue the reform as a means to boost the economy and promote racial justice. He did not include a request to legalize through his budget proposal, however.

The governor did say in 2019 that he was directing state agencies to prepare to implement reform in anticipation of legalization passing.

Winkler, meanwhile, said in December that if Senate Republicans don’t go along with the policy change legislatively, he said he hopes they will at least let voters decide on cannabis as a 2022 ballot measure.

Heading into the 2020 election, Democrats believed they had a shot of taking control of the Senate, but that didn’t happen. The result appears to be partly due to the fact that candidates from marijuana-focused parties in the state earned a sizable share of votes that may have otherwise gone to Democrats, perhaps inadvertently hurting the chances of reform passing.

In December, the Minnesota House Select Committee On Racial Justice adopted a report that broadly details race-based disparities in criminal enforcement and recommends a series of policy changes, including marijuana decriminalization and expungements.

California Senator Previews Next Steps For Psychedelics Bill And Says It’s A Step Toward Decriminalizing All Drugs

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Maine Lawmakers Approve Bill To Decriminalize All Drugs On 50th Anniversary Of Nixon’s ‘War On Drugs’

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The Maine House of Representatives on Thursday approved a bill to decriminalize possession of all currently illicit drugs, delivering a victory to reform advocates on the 50th anniversary of President Richard Nixon’s declaration of the war on drugs.

The Senate also began consideration of the legislation on Thursday, but has not yet taken a vote.

The proposal, LD 967, was approved in 77-62 vote in the House. It would make possession of controlled substances for personal use punishable by a $100 fine, without the threat of incarceration. That fine could also be waived if a person completes a substance misuse assessment within 45 days of being cited.

“We are continually trying to criminalize a symptom of a disease. It hasn’t worked. It won’t work,” Rep. Charlotte Warren (D), who serves as the House chair of the legislature’s Criminal Justice and Public Safety Committee, said before the vote. “We have tried criminalizing this disease for decades, and 11 Mainers a week are dying.”

Rep. Anne Perry (D), sponsor of the bill, said that incarcerating people who are suffering from addiction “only proves to them that they are as bad as they think they are” and perpetuates the cycle of substance misuse. “Law enforcement is not the gateway to treatment and recovery. It’s a gateway to isolation and suicide.”

The measure’s passage flies in the face of Gov. Janet Mills (D), whose administration opposes the reform, as does the state attorney general. Coupled with opposition from Republican legislators, the bill faces an uphill battle to final passage.


Marijuana Moment is already tracking more than 1,100 cannabis, psychedelics and drug policy bills in state legislatures and Congress this year. Patreon supporters pledging at least $25/month get access to our interactive maps, charts and hearing calendar so they don’t miss any developments.

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The Senate also began consideration of the legislation on Thursday night, adopting a different committee report than the House approved, but setting it aside as unfinished business before taking a final vote on the bill. The version moving forward in that chamber would similarly impose a $100 fine for possession, but only for the first two offenses. Subsequent offenses would be considered Class E crimes that could carry jail time.

These actions come one month after a joint House and Senate committee advanced the decriminalization bill with several conflicting recommendations, as well as another measure to reform the state’s drug trafficking laws.

Supporters of the legislation include the American Academy of Pediatrics’s Maine Chapter, Maine Medical Association, Alliance for Addiction and Mental Health Services in Maine and Maine Council of Churches.

Thursday’s decriminalization vote represents a continuation of a national conversation about the need to reform laws criminalizing people over drugs and treat substance misuse as a public health issue, rather than a criminal justice matter.

For the first time ever, a congressional bill to federally decriminalize possession of controlled substances—and incentivize states to do the same—was formally introduced on Thursday.

Last year, Oregon voters elected to end criminalization of low-level drug possession at the ballot.

Vermont lawmakers also introduced a bill in March that would end criminal penalties for possessing small amounts of drugs in the state.

Also that month, a Rhode Island Senate committee held a hearing on decriminalization legislation to replace criminal penalties for possessing small amounts of drugs with a $100 fine.

Back in Maine, a bill was recently introduced that would legalize psilocybin mushrooms for therapeutic purposes.

Senators Publicly Pressure Key Chairman For Vote On Marijuana Banking Bill

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