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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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State And Local Marijuana Regulators Demand Congress Prioritize Federal Legalization Bill

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A coalition of state and local marijuana regulators sent a letter to House leadership on Wednesday, demanding that they prioritize a marijuana legalization bill that’s expected to get a floor vote following the election.

The letter, which is being supported by the Drug Policy Alliance (DPA), says that regulators “need comprehensive support in their individual and collective efforts to more responsibly and equitably manage challenges and develop solutions associated with cannabis and cannabis policy.”

They said the Marijuana Opportunity, Reinvestment and Expungement (MORE) Act represents a solution, and they urged legislators to vote in favor of it when it comes up for a vote.

Enacting the reform “would ensure that the federal government is a partner to state and municipal regulators both in our collective responsibility to serve our community through the reform of failed cannabis policies and in our collective responsibility to recognize and correct injustices,” they wrote, adding that criminalization has created “widespread” harms that disproportionately impact communities of color.

“As such, our attempts to eliminate these harms must be systemic and comprehensive and will require collective leadership at every level of government and collaboration amongst both the public and private sectors in order to achieve outcomes by centering equity in cannabis policy development, reform and implementation,” they wrote.

Nine regulators from Los Angeles, Oakland, Portland, Sacramento, San Francisco, Massachusetts and Illinois signed the letter.

“For those of us who manage state and municipal cannabis policies, and for those individuals who have been and continue to be impacted by cannabis policy, the need for comprehensive federal reform is clear and urgent,” the letter states. “Existing federal prohibition policies are antithetical to our collective responsibility to promote policies that are based in science, compassion and harm reduction.”

Leadership initially signaled that a floor vote on the MORE Act would happen in September, but following pushback from certain centrist Democrats who worried about the optics of advancing marijuana reform before another coronavirus relief package, it was postponed until after the election.

Majority Leader Steny Hoyer (D-MD) subsequently made a commitment that the body would bring up the bill sometime “later this autumn.” While advocates were disappointed by the delay, they’re confident the MORE Act will clear the chamber with some bipartisan support when it’s ultimately scheduled for action.

Rep. Don Young (R-AK) said last month that he was “confident” it would pass the House.

Rep. Matt Gaetz (R-FL), the sole GOP cosponsor on the bill, also said that he would be voting “yes” on the MORE Act, though he expressed criticism about a provision that would impose a federal excise tax on marijuana sales to be reinvested in communities most impacted by the drug war, calling them “reparations.”

Rep. Tom McClintock (R-CA) said “I intend to vote yes on the bill” in an interview with Politico.

McClintock, along with Gaetz, voted for the MORE Act when it was marked up by the Judiciary Committee last year.

“These regulators know first-hand the complications of regulating a substance that remains illegal at the federal level and the harms imposed as a result on communities of color and low-income people,” Maritza Perez, director of national affairs at DPA, said in a press release. “They also understand that creating a safe and equitable industry, which the MORE Act does, provides a historic opportunity to begin repairing the extensive damage prohibition has caused over the last 50 years.”

Prior to the vote’s postponement, DPA and more than 120 other civil rights and drug policy reform groups such as the ACLU and NAACP sent a letter to House leadership emphasizing the need to pass the MORE Act to promote social justice.

Read the latest letter from the regulators on cannabis reform below:

Regulator Letter More Act by Marijuana Moment

Key New Jersey Senate Committee Holds Marijuana Legalization Hearing Ahead Of Referendum Vote

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Key New Jersey Senate Committee Cancels Marijuana Legalization Hearing On Implementing Referendum

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A New Jersey Senate committee announced on Wednesday that it would be taking public testimony on Thursday about how to implement marijuana legalization if voters approve the reform referendum next month—but the panel canceled the event later in the day.

While the legislature decided to leave adult-use legalization up to voters as a ballot measure, legislators must still develop regulations to enact the system—and the temporarily scheduled hearing appeared to be a first step in that process.

The Senate Judiciary Committee was set to “receive public testimony concerning the legislative implementation of Public Question No. 1 on the General Election ballot, which, if approved, would legalize cannabis for personal, non-medical use by adults age 21 years or older,” a notice stated. “Public Question No. 1 would also create a legalized cannabis marketplace overseen by the State’s Cannabis Regulatory Commission.”

Sen. Nicholas Scutari (D), who chairs the committee and previously introduced a legalization bill that did not advance to a floor vote, said earlier this month that he’s been working in recent weeks with the governor’s office and legislative leaders to finalize a detailed enabling bill to implement legal market regulations.

He said the measure, which could be enacted as soon as the first week of November, would look similar to a bill he previously introduced, though he wants to add a retroactive provision to end cannabis-related prosecutions for pending cases.

“This is something about social justice. This is an economic opportunity for New Jersey,” the senator said at the time. “We can be the first state in the Northeast—absent Massachusetts, but in our economic area—to move forward and I want to be a leader in this.”

The committee had invited people to submit testimony for the hearing by emailing it to [email protected].

A staffer with the Office of Legislative Services told Marijuana Moment in an email that “the public hearing scheduled for October, 22, 2020 at 9:30 am has been canceled” and said it was “unknown” if the event will be rescheduled.

In any case, if polling is any indication, it appears that voters are poised to pass the cannabis referendum on their ballots next month.

A survey released on Tuesday found that that 65 percent of New Jersey voters are in favor of the marijuana referendum. Just 29 percent are opposed to the policy change and six percent remain undecided.

The results are statistically consistent with three prior polls from the same firm, as well as one from Fairleigh Dickinson University, which similarly found roughly two to one support for the measure. A separate survey released last week by Stockton University showed three to one support for legalizing cannabis among New Jersey voters.

For his part, Gov. Phil Murphy (D) has been actively campaigning in favor of the referendum, participating in fundraisers and ads to encourage voters to approve it.

For example, the governor recorded a video that was released by NJ CAN 2020 earlier this month, outlining why he’s embraced the policy change. Murphy said that the ongoing criminalization of cannabis in New Jersey wastes taxpayer dollars, and he emphasized that prohibition is enforced in a racially disproportionate manner.

The governor similarly said in a recent interview that the marijuana reform proposal prioritizes social justice.

“I wish we could have gotten it done through a legislative process,” he said at the time, referencing lawmakers’ inability to advance a legalization bill last session. “We just couldn’t find the last few votes, so it’s on the referendum. I’m strongly supporting it—first and foremost for social justice reasons.”

Murphy also recently called on voters to support the proposal in an email blast that was circulated by the New Jersey Democratic State Committee.

He said in July that legalizing cannabis is “an incredibly smart thing to do” both from an economic and social justice perspective.

The governor isn’t alone in his attempts to get out the vote for cannabis reform. Filmmaker Kevin Smith earlier this month urged his Twitter followers to “VOTE YES when you see State Public Question Number 1: Constitutional Amendment to Legalize Marijuana.”

NJ CAN 2020, one of two campaign committees working to pass the cannabis referendum, released a series of English- and Spanish-language video ads last week, after having published one prior ad. Meanwhile, campaign finance records compiled  show that legal marijuana supporters are out-raising opponents by a ratio of nearly 130:1.

In June, the state Assembly passed a cannabis decriminalization bill that would make possession of up to two ounces a civil penalty without the threat of jail time, though it hasn’t advance in the Senate.

This story was updated to reflect the hearing’s cancellation.

Virginia Bill To Ban Police Searches Based On Marijuana Smell Gets Governor-Suggested Changes

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Virginia Bill To Ban Police Searches Based On Marijuana Smell Gets Governor-Suggested Changes

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The governor of Virginia suggested changes on Wednesday to bills that would stop police from searching people or seizing property based solely on the smell of marijuana.

Thankfully for cannabis reform advocates, Gov. Ralph Northam (D) isn’t asking lawmakers to amend the marijuana odor provisions of the broader proposal to reform policies for law enforcement searches. Instead, according to a press release sent by his office, he is suggesting an unrelated change to ensure police “can initiate a traffic stop when an individual is driving at night without the use of both headlights and/or without the use of both break lights.”

The House and Senate will now consider the amendment, thought it’s not clear when they will do so. If the governor’s proposal is adopted by lawmakers without changes, the legislation will be formally enacted without needing his signature. Otherwise, it will come back to his desk for action.

Northam’s move comes one week after he signed separate legislation that will allow people issued summonses for cannabis offenses under the state’s new decriminalization law to prepay their civil penalty rather than having show up in court.

Together, when enacted, the two new reforms will build upon the measure to decriminalize cannabis that the governor signed earlier this year, which makes it so possession of up to one ounce of cannabis is punishable by a $25 fine with no threat of jail time and no criminal record.

Under the new search-focused legislation, if enacted, “no law-enforcement officer may lawfully stop, search, or seize any person, place, or thing solely on the basis of the odor of marijuana, and no evidence discovered or obtained as a result of such unlawful search or seizure shall be admissible in any trial, hearing, or other proceeding,” according to a summary.

“Eliminating non-essential interactions based on marijuana odor between law enforcement and otherwise law-abiding citizens is an important step forward for criminal justice reform in Virginia,”Jenn Michelle Pedini, NORML’s development director and the executive director of Virginia NORML, told Marijuana Moment. “However, it is only by legalizing the responsible use of cannabis by adults that the Commonwealth can end its failed experiment with prohibition and begin repairing the decades of damage done to its communities and citizens.”

The Virginia legislature has been especially active on cannabis reform this year. But that said, lawmakers have not been able to reach an agreement during the special session on legislation to provide expungements for prior marijuana convictions that had appeared destined for Northam’s desk after passing either chamber in differing forms.

Under the House-passed measure, eligible convictions would have been automatically expunged after a period of eight years. The Senate’s version, meanwhile, would have allowed people to petition to have their records cleared after a period of five years. The House bill covered more drug crimes, as well.

A conference committee of lawmakers from both chambers was appointed and tasked with ironing out the differences, but the negotiators couldn’t reach a deal by the time the special session’s agenda wrapped up last week.

During the state’s regular legislative session earlier this year, the governor and legislators also expanded Virginia’s limited medical cannabis program in addition to enacting the decriminalization law.

All of these incremental changes come as legislators continue to pursue a broader adult-use legalization plan in the Commonwealth that would include a system of regulated and taxed sales and production.

The decriminalization bill that passed contains a provision that calls for the establishment of a working group to study and make recommendations about adult-use marijuana legalization. That panel is expected to issue its report to the legislature at the end of November.

Meanwhile, the Joint Legislative Audit and Review Committee is doing its own analysis on ending cannabis prohibition and will similarly report on its findings before the end of the year.

bill to legalize marijuana possession was filed for the special session by a delegate running to replace the term-limited Northam in 2021, but it did not advance out of the committee to which it was referred.

New Mexico Voters Strongly Favor Marijuana Legalization And Half Back Drug Decriminalization, Poll Shows

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