While marijuana gets all the headlines, a bill to legalize industrial hemp passed the New Jersey Legislature and is now awaiting action by Gov. Phil Murphy. Under Assembly Bill 1330, license holders would be able to plant, grow, harvest, possess, process, distribute, buy or sell industrial hemp within the state.
Hemp is used in a wide range of industrial applications, such as dietary supplements, skin products, clothing and accessories. As federal and state regulators relax the legal restrictions on growing and distributing hemp, it is poised to become a billion-dollar industry. However, before jumping in, there are ten things you need to know about the current status of federal and state law:
- Investing in Hemp: Across the country, entrepreneurs are betting that hemp is the next big industry. The global industrial hemp market size is expected to reach USD $10.6 billion by 2025, according to a new report by Grand View Research.
- Federal Law Restricts Industrial Hemp:Under the Controlled Substances Act (CSA), all cannabis varieties, even industrial hemp, are considered Schedule I controlled substances. However, under the 2014 farm bill, hemp production is allowed under certain circumstances. Most notably, hemp must be grown and cultivated “in accordance with an agricultural pilot program … established by a State department of agriculture or State agency … in a State where the production of industrial hemp is otherwise legal under State law.”
- Most Hemp Is Imported:Hemp product sales were estimated at $700 million in 2016, according to a June report by the Congressional Research Service. However, because hemp production is restricted, most hemp sold in the U.S. initially comes from overseas. Countries like Canada and China provide both finished hemp-containing products and as ingredients for use in further processing.
- Definition of Industrial Hemp:While hemp and marijuana are both a part of the cannabis family, marijuana contains high levels of the psychoactive ingredient tetrahydrocannabinol, commonly called THC, while hemp contains minuscule amounts. Assembly Bill 1330 defines industrial hemp as an agricultural product that is any variety of Cannabis sativa L. with a delta-9-tetrahydrocannabinol concentration of 0.3% or less on a dry weight basis.
- Industrial Hemp Agricultural Pilot Program:Assembly Bill 1330 directs the New Jersey Department of Agriculture to create an industrial hemp agricultural pilot program that promotes the study and cultivation of hemp to the maximum extent permitted by federal law.
- Industrial Hemp Oversight:The Department of Agriculture is required to adopt rules and regulations to administer the pilot program. These include creating requirements for the licensing or contracting of growers participating in the program, prescribing hemp testing procedures to ensure compliance with federal law, creating a fee structure for the administration of the program and certifying germinating seeds and hemp cultivars if necessary.
- Hemp Licensing:Under Assembly Bill 1330, hemp growers must apply to the Secretary of Agriculture for a license. Among other requirements, applicants must submit to fingerprinting and criminal background checks. The application must include the name and address of the applicant, and documentation and a legal description of the land to be used for the growing and production of industrial hemp.
- Benefits for Farmers:Establishing hemp as a legal and viable agricultural crop could significantly benefit farmers. The ability to grow hemp on an industrial scale would allow farmers to diversify their products by adding a lucrative cash crop. The pilot program’s research into cultivation methods of industrial hemp would also aid farmers seeking to grow hemp for the first time.
- New York Already Allows Industrial Hemp:Neighboring New York has already given industrial hemp the green light. In 2017, the state established the Industrial Hemp Research Pilot Program, which allowed farmers, businesses and universities to obtain licenses to grow and process industrial hemp. As of April of 2018, 62 applicants had been granted permits to produce. In total, 15 states have established their own hemp industries.
- Congress May Legalize Industrial Hemp Nationwide:The Industrial Hemp Farming Act of 2018 aims to facilitate the possible commercial cultivation of industrial hemp by amending the CSA to exclude “industrial hemp” from the statutory definition of marijuana. Industrial hemp would be defined based on its THC content and set at a threshold of 0.3% THC. Many of the provisions in the bill are included in the Senate version of the 2018 farm bill legislation, which is now being debated in Congress.
The Scarinci Hollenbeck Cannabis Law Practice group will be continuously tracking Assembly Bill 1330 and the 2018 farm bill. We encourage prospective members of the New Jersey hemp industry to check back regularly for updates.
Dan McKillop leads Scarinci Hollenbeck’s Cannabis Law practice group, which is comprised of attorneys from several of the firm’s practices. Dan has represented entities seeking to obtain medical cannabis dispensary licenses and he has a thorough knowledge of current Federal and state medical and adult-use cannabis law and proposed cannabis legislation. Dan regularly authors articles and presents at business events regarding the emerging cannabis industry, and he is a member of the New Jersey CannaBusiness Association and an Editor of the Cannabis Law Journal.