In 1878, James Marshall discovered the first flakes of gold at Sutter’s Mill in Coloma, California. Those flakes led to the California Gold Rush and turned the newly acquired ex-Mexican territory into a billion-dollar shot for the American economy.
One-hundred seventy years later, with the stroke of a pen, High Plains farmers could be poised for a similar boom—or a bust—with the federal legalization of industrial hemp in the 2018 farm bill. From state agencies to farmer and commodity organizations, industrial hemp is the hot topic of discussion on the High Plains. In 2017, the lobbying group Vote Hemp estimated that the total retail value of hemp products in the United States at $820 million. Today, U.S. firms are buying up companies that specialize in hemp products and creating new products for the American consumer from CBD-infused soft drinks to hemp-based building materials. The rush is on.
But, before farmers go racing to stake a claim in this new cash crop, there are some points to ponder.
First things first: “Industrial hemp” is not “marijuana.”
While both are from the plant species cannabis sativa and both naturally produce the psychoactive cannabinoid tetrahydrocannabinol, the line of distinction lies in the THC content in the plants. Hemp, by federal law, must not contain more than 0.3 percent THC by dry weight. Anything above that level and the plant is classified as marijuana and is subject to the Controlled Substances Act of 1970.
This is a critical distinction, explained Larry Mishkin, attorney with Hobart and Associates, a Denver, Colorado, law firm specializing in cannabis laws.
“The marijuana in the late 1970s or the 1980s was about 5 to 7 percent THC content,” Mishkin said. “Today’s marijuana can reach into the high 20 percent of THC content.” Compared to industrial hemp’s definition of 0.3 percent or lower, there shouldn’t be enough THC in hemp to affect an individual.
This distinction in THC content changed the tide in public acceptance of industrial hemp in the last couple of years. And led to President Donald Trump signing the 2018 farm bill into law Dec. 20, thereby legalizing the industrial hemp industry in the U.S. under the federal umbrella.
“The section of the farm bill declares unequivocally that hemp and all cannabinoids are not controlled substances,” explained Larry Mishkin, an attorney with Hobart and Associates, based in Chicago, Illinois. “That’s huge because up until then there was confusion because marijuana was a Schedule 1 drug under the Controlled Substances Act of 1970.” But now, the federal government has said—in black and white—hemp is legal, he added.
“Now, there’s nothing that says every state has to allow hemp, but the states were told that they can legislate hemp how they choose,” Mishkin said. “It’s much like what the states were told about alcohol at the end of Prohibition.”
And this is where industrial hemp laws get tricky. Because, right now, while the cultivation, manufacturing, and distribution of industrial hemp and CBD products are legal, according to federal law, each state and tribe has the duty to write the laws for their own residents.
This state-by-state patchwork of laws has some similarities, but there can also critical differences that farmers and investors need to pay attention to before they join this gold rush, according to Mishkin.
That’s why it’s critical that interested individuals research the laws of their state and consult an attorney before they start staking their claims, Mishkin advised. Still, there are ways to mitigate the risk if you choose to join the rush.