Most farmers who decide to grow hemp go into it with good intentions and high hopes. With all the excitement generated by the opportunity to legally grow hemp, it’s easy for farmers to get caught up in the “it won’t happen to me” attitude when it comes to regulatory compliance issues.

However, compliance issues can and do happen, leaving farmers to face the real possibility of crop destruction with no way to derive economic benefit from their failed hemp plants.

If hemp exceeds the 0.3% tetrahydrocannabinol (THC) threshold set by federal regulations, a farmer can be ordered to destroy the crop, otherwise known as a “hot crop.” As the former Colorado Industrial Hemp Program Manager for over three years, I had the dreadful task of telling farmers that their hemp crop tested hot.

Prior to delivering the news about the hot crop, I would brace myself for the farmer’s angry reaction. In fact, what I typically encountered was just the opposite. Farmers were polite, respectful and often even gracious— but of course, they expressed their deep disappointment at having to destroy what they worked all season to grow.

As the U.S. Department of Agriculture (USDA) prepares to implement additional rules that will regulate hemp farmers, these farmers continue to struggle with how to legally grow hemp within the proposed regulatory framework. Shouldn’t we be seriously exploring how hot hemp can be used for non-ingestible hemp products like t-shirts or hempcrete where THC levels aren’t an issue? This issue must be explored and solutions must be found.

Beyond the Farm: Challenges for Regulators

As the USDA hemp rules are rolled out, regulators will also have their own share of difficulties, including:

• Personal conflict. Most government regulators are good people who try to do the right thing. For these regulators, it will be personally challenging to enforce the crop destruction rules and watch the impact of crop destruction on farmers.

• Reporting burdens. On the administrative side, regulators will be faced with processing a massive number of harvest reports in a very short time frame. Is the information on the harvest report accurate?
  Additionally, myriad farmers will have to resubmit their report because the harvest time originally submitted must be moved up or delayed. Farmers routinely deal with hail, rain, insect infestation and a variety of other factors, all of which require them to change their anticipated harvest date. These revised harvest dates compound the administrative burden on the regulatory agency and impact inspections. From my experience, it can actually be described as “mass chaos.”

• Legal challenges from hemp farmers. The 800-pound gorilla in the regulatory room is when regulators impose a sanction on a farmer and the farmer legally challenges the sanction. Once issued, a hemp registration issued by the government becomes a property right of the farmer. Property rights carry with them due process rights and an opportunity to be heard. Government agencies have tight budgets that aren’t designed to handle the financial burden of too many legal challenges.

The regulators and the hemp industry agree that regulation of hemp farming is a good thing because it protects the public and brings certainty and validity to the industry. It’s time that those rules are revisited through the lens of practicality and government efficiency, and that can’t happen until both sides are willing to listen to each other.

The hemp market continues to settle as farmers look to the 2020 season. As U.S. growers learn from lessons they picked up in previous years, and as more growers get into the game, the national and international markets will shake out and begin to look more like a commodities market. PanXchange market updates, which we share on Hemp Grower, show us that the transition is already under way.

Andrew Graves, chairman of Atalo Holdings, will be explaining how his company has prepared for the long-term when he speaks at Cannabis Conference 2020. We decided to check in with him to tee up that spotlight session and get a sense of what farmers can be thinking about in this upcoming planting season.

Hemp Grower: Let’s begin with Hemp Knowbility. Why is it important to your company to be talking about long-term plans with other farmers? 

Andrew Graves: We have spent the last five years learning to be proficient in planting, cultivating and harvest, drying and then extracting our material. We now feel like we have accumulated enough information that we can share it with other groups and other farmers on a consulting basis. We'll even do big grows for those groups that are interested. We have a plethora of different avenues that we can travel. And it's all about the fact that we have total traceability with our genetics. It's repeatable. And we know how to achieve those things through our new hybrid, which we've developed over these years. We feel like we have a very good product that can help farmers and other groups to achieve their goals.

HG: Whether it’s in that capacity or more informally, what are some helpful ways to get hemp farmers out of the urgency of the fast-paced market to think more about long-term planning?

AG: As head of the company, I have to be thinking of all if I can. What I think is that genetics will lead us to the future, and that means really, really good hybrids. I believe that seed technology in general—and that means anywhere from seed coating to types of colors—all of these things will help farmers to get their use their precision planters to get this thing seeded and placed correctly in the soil.

Now, our company is all about outdoor growing. We are not confined to greenhouse. We think about scale. And that is thinking of the future, because this, obviously, in my mind, will be a commodity. It will be commoditized in every way of the crop. So, the other ways that our company thinks about whole plant—obviously we would use seed and sell seed to a grower that is specific to whatever he was trying to do. Right now, they all call and look for some kind of CBD that’s off the charts in percentage. However, you know and I know it has to remain compliant. Those companies in the future that offer a plant that gets the CBD percentage right up there where it can remain legal, but also, we can offer ways for those growers to sell the various parts of the plant. And that would mean dust, plant fiber, branches, the seed itself: this is something that we offer as a company that you just have to be able to sell everything, as they say, in the old Chicago stockyards, including the squeal. That's what it's going to take in order to make farmers remain profitable in this industry, because everyone around the world seems to be trying to get in.

We remain confident that clones are an option, but currently they're priced in such a fashion that it makes them almost unprofitable from the get-go. I just don't think long-term that clones and transplanting are going to be the way of the future. We have to be preparing for that time when the low-cost producer is the winner. That's where we're going.

HG: Is there a certain scale at which farmers should begin thinking about commoditization? Or, rather, where does the small farmer fit in all of this?

AG: Here in the very beginning, it's affecting us all. The average grower here is 20 acres. Unless, in the very near future, unless you’re a 50-acre grower or better, I don't think you can stay in this game. It’s going to go to the larger acreage. Unfortunately, that's what happens in agriculture. The farmers are very good. They find ways to be efficient and to make money. And that's just the way they work. And we have to be acting on their behalf to give them the right ideas, the right tools, to show them how to use the tools, and we'll back up and watch how they operate. It’s all going to be in seed and seed technology.

HG: How about geography? Climate obviously plays an important role in this crop. How will various state hemp programs shake out as commoditization becomes a vital factor in the industry?

AG: Well, unfortunately, I have no way to predict weather. But I will say to all growers, wherever you are, if you're raising hemp outside, hemp does not like wet feet. So, here in Kentucky, the soils are deep. It does rain, or it or it has, shall we say; nothing is a given. But it rains in a lot of places north of here, south of here. The key is deeper soil, fertile soil and well drained soil. River bottom sounds great until you get a deluge of rain. And then that hemp is going to be grounded. I think Kentucky all the way to the Mississippi River and north all the way to Michigan are going to be the key growing areas for hemp.

HG: What do you hope attendees will bring back to their business from your session at Cannabis Conference 2020? 

AG: I hope that they will be able to capture key bullet points of efficient, quality-based production that they can take home and multiply the effects of. That would be my hope, because for years we've been preaching about hemp. And now we can preach about from a qualified standpoint about things that do work—and some things that do not work. So that's my hope, that they would come and listen to a little of the background, the history of Kentucky and the surrounding areas, from my standpoint, what experiences we've seen in the last five years or so, and where we can help them get to in their cultivation practice.