The 2018 Farm Bill: Updates and Industrial Hemp May 15, 2019

2018 Farm Bill Implementation

Election Option to switch election each year in 2021, 2022, and 2023 at producers discretion PLC or ARC-CO or ARC-IC Up to 10 workshops using the decision tool in 2019 prior to the election period

Farmers in all counties can update yields (one time) for PLC PLC - Yield Update Farmers in all counties can update yields (one time) for PLC Discretion of the owner to update yields Effective in 2020 Yield comparison included in the decision tool

PLC- Effective Reference Prices PLC Reference Prices will remain the same as the 2014 Farm Bill Except now we will have an “Effective” Reference Price Effective Reference Price 85% of the 5 year rolling Olympic average of marketing year average price The higher of the two prices will be used in the PLC calculation The effective reference price may not exceed 115% of the reference price

Incorporates effective reference price into benchmark revenue ARC ARC plug yield increases from 70% to 80% of the county transitional yield Incorporates effective reference price into benchmark revenue Trend adjustment on yield – waiting for details Splits large counties with unique weather or soil areas in the county Cimarron, Beaver and Texas counties may be candidates Prioritizes the use of RMA data

ARC- Dryland and Irrigated Guarantees ARC Yields broken into dryland and irrigated for guarantees No more combined counties

Not eligible for ARC/PLC re-election or payments Land in Grass Farms (FSA number) with crop base that have been in grassland or pasture (including idle land) continuously from 2009 to 2017 Not eligible for ARC/PLC re-election or payments Farmers will be informed of eligibility for new Grassland Conservation Initiative program from 2019 to 2023 Farms cannot be reconstituted to change eligibility Enrollment by June 10 $18/acre payment for 5 years Letters on eligibility or requesting farm records for ARC/PLC eligibility have been mailed out or will be soon (Stakeholder announcement 5-7-19)

Preserving Our Greatest Resources Title II: Conservation

Conservation Reserve Program (CRP) Oklahoma CRP Acreage Spring 2018 (source NRCS-OK-USDA) CRP Acreage cap increased from 24 million acres to 27 million acres by 2023 Rental rate decreased from 100% county avg to 90% for continuous enrollment 85% for general enrollment

Environmental Quality Incentive Program (EQIP) funding increased Working Land Programs Environmental Quality Incentive Program (EQIP) funding increased Reduces livestock producer set-aside from 60% to 50% Conservation Stewardship Program (CSP) funding decreased Some funds diverted to pay for Grassland Conservation Initiative Contracts no longer renew automatically $700 million for new enrollments and contract extensions Deadline was May 10, 2019 for funding in FY2019 (FY2020 starts October 1)

Limitations on farm ownership loans increased $300,000 to $600,000 Ownership, Operating, and Emergency Expenses Title V: Credit Implemented in April Standard operating loans and farm ownership loan limits increased from $1.399 million to $1.750 million Limitations on direct operating loans increased from $300,000 to $400,000 Limitations on farm ownership loans increased $300,000 to $600,000

Enterprise units crossing county lines implemented in March “Do No Harm” Title XI: Crop Insurance Enterprise units crossing county lines implemented in March Clarifies cover crops as a “good farming practice” Whole Farm Revenue Protection Authorizes hemp for crop insurance coverage, but not in this crop year

Dual Use Crop Insurance RMA Announced the Dual Use Option for the 2020 crop year this week. Availability in blue counties Rainfall Index Insurance for growing season 1 Combined with multi-peril crop insurance for wheat, and in some counties oats or barley. Sales close July 15 for the planting period July 16 to October 15. Must pull cattle off of wheat before the date in the insurance agreement to be eligible for a payment on wheat.

Specialty Crops and Diversity in Agriculture Title X: Horticulture The horticulture title contains a section that legalizes industrial hemp production as an agricultural commodity Creates a legal definition of <0.3% THC Removes industrial hemp from the list of controlled substances Allows interstate and intrastate transportation

Major milestones in industrial hemp legislation Marijuana Tax Act of 1937 Replaced by the Controlled Substances Act (CSA) in 1970 Patchwork of State Laws for both hemp and marijuana 2014 Agricultural Act 2018 Agricultural Improvement Act 2018 Farm Bill (H.R. 2) Signed into law Dec 20, 2018 Source: ABC News

2018 Farm Bill Definition “The term ‘hemp’ means the plant Cannabis stavia L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.” Title X Horticulture, Subtitle G Industrial Hemp, Section 297A. Only non-viable hemp seeds were exempt from the CSA, meaning hemp seed could not be legally purchased and grown in the US, unless licensed through the Drug Enforcement Agency prior to the farm bill changes. A change in Oklahoma is that state approved hemp seed from approved distributors may no longer be required for producers.

2018 Farm Bill Definition “The term ‘hemp’ means the plant Cannabis stavia L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.” Title X Horticulture, Subtitle G Industrial Hemp, Section 297A. THC is what differentiates hemp from marijuana.

State and tribal authority responsibilities Tracking land in hemp production, Annual, randomized inspection of permitted hemp farms, Testing THC levels, Disposing of crops and products of crops that exceed allowable THC levels, and Reporting to the US secretary of agriculture on these activities The 2018 Farm Bill does not prevent states from passing laws that are more stringent than guidelines provided in the bill.

First, correct the error where possible (e.g. paperwork error) What happens when THC levels exceed 0.3% or some other violation of state rules on hemp production occurs? 2018 Farm Bill Title X Horticulture, Subtitle G Industrial Hemp, Section 297B(e)(1) to 297B(e)(3) addresses negligent violations. First, correct the error where possible (e.g. paperwork error) If a licensed producer has 3 violations in a 5 year period, they are “ineligible to produce hemp for a period of 5 years beginning on the date of the third violation.” The producer in violation will not be subject to criminal action as a result of the violation. BUT 297B(e)(3) gives approved regulatory authorities the power to determine that a hemp producers “has violated the State or Tribal plan with a culpable mental state greater than negligence”, and that producer may be subject to criminal law procedures.

Transportation Section 10114 of the Horticulture Title, Subtitle G prohibits States and Tribal Nations from restricting transportation of hemp and hemp products grown in accordance with the rules in the 2018 Farm Bill.

Oklahoma hemp policy update (as interpreted by a non-lawyer) USDA will publish guidance for States and Tribal Nations in Fall of 2019 to accommodate the 2020 growing season (Notice FLP-798) State Bill 2628 signed by Gov. Stitt in April authorizes ODAFF to submit a plan to USDA for commercial hemp production in Oklahoma. Oklahoma will continue the industrial hemp pilot program until that state plan is approved by USDA.

Other industrial hemp policies (as interpreted by a non-lawyer) It is unlawful to commercially produce industrial hemp in a state or territory without a license issues by USDA Some changes may be occurring at the State and Federal levels that will allow FSA loans in the future, but not at this time to my knowledge. “At this time, all loan requests involving industrial hemp will be denied.” (FLP- 798)

Renewed interest in hemp production has been motivated in part through the increased popularity of hemp products beyond fiber for textiles and industrial applications. The CBD products market may be limited by FDA regulations on medical/therapeutic uses. Food products from hemp seed and oil are already on the market. However, CBD infused food products are currently not allowed under FDA rules. 13% 23% 17% 22% The personal care segment of the market may have more opportunities for expansion with different laws on non-CBD topical applications. 18% R&D into new applications in things like insulation, car manufacturing, and substitutes for plastics. Source: Hemp Business Journal, 2018

Program dates so far: April 2019: USDA-FSA implemented new loan limits for guaranteed loan and operating loans. May 10, 2019: USDA-NRCS deadline for applications on CRP initiatives (new and continuing). May 2019: USDA-FSA will review crop history to determine farm ARC/PLC eligibility. June 2019: Farms eligible for the Grassland Conservation Initiative may choose to sign up for the 5 year period July 2019: Sales deadline for dual purpose crop insurance growing season I September 2019: Secretary Perdue announced that he expects ARC/PLC elections to begin in September. Fall 2019: Industrial Hemp program guidelines for states and tribal nationals released by USDA.

Visit us online at agecon.okstate.edu/agpolicy/ Questions? Amy Hagerman amy.hagerman@okstate.edu 405-744-9811 Visit us online at agecon.okstate.edu/agpolicy/