Missouri’s Industrial Hemp Pilot Program Begins to Sprout

On January 2, 2019, the Missouri Department of Agriculture published proposed rules for the Industrial Hemp Pilot Program.

Image result for missouri hemp

The Program is the result of HB 2034, which became effective on August 28, 2018. It exempts industrial hemp from the definition of marijuana and the list of controlled substances and establishes, in accordance with federal law, an Industrial Hemp Agricultural Pilot Program to be implemented by the Department of Agriculture.

Along with the passage of the 2018 Farm Bill, which authorizes states to implement a pilot program and legalizes industrial hemp on a federal level, hemp is on pace to becoming a major cash crop in Missouri.

Missouri’s Pilot Program will allow qualified Growers and Handlers in Missouri, who have obtained a valid industrial hemp registration from the Department of Agriculture, to grow, harvest, cultivate and process industrial hemp.

In its first major step in rolling out the Program, the Department issued proposed rules. These rules are subject to change and were published to solicit and encourage public participation in the rulemaking process.

The Department has published the following proposed timeline for implementation:

  • January 2, 2019: Public comment period on proposed industrial hemp rules opens.
  • February 1, 2019: Public comment period closes.
  • June 30, 2019: Industrial Hemp Pilot Program rules become effective.
  • July 1, 2019: Industrial Hemp Pilot Program receives any spending authorized by the approved FY2020 budget.
  • August 2019: Industrial Hemp education & outreach meetings begin. The meetings will review current laws, regulations and application processes.
  • September 3, 2019: Industrial Hemp Pilot Program grower and handler applications available online.
  • October 31, 2019: Grower and handler applications approved and applicants will be notified.
  • November 30, 2019: Registration fees due from handlers and approved growers.

In short, Missouri’s robust Program could allow for the cultivation of industrial hemp by the end of the year; or more practically speaking, by the start of the 2020 farming season.

The following is a brief summary of the proposed rules.

Application Process. In order to grow, cultivate, handle, and/or sell industrial hemp, a person must obtain a valid industrial hemp “registration” through a strict application process.

Potential applicants are broken down into two main categories: Growers and Handlers. A Grower is defined as a “person, joint venture, or cooperative who is a Missouri resident or an entity that is domiciled in this state that produces industrial hemp.” A Handler is a “person, joint venture, or cooperative who is a Missouri resident or an entity that is domiciled in this state that receives industrial hemp for processing into commodities, products, feed, or agricultural hemp seed.”

Put simply, a Grower is a farmer, and a Handler turns the crop into a sellable commodity so that it can be processed into one of its 25,000+ uses (e.g., CBD, hemp seeds, fiber, oil, etc.).

Additionally, if a Grower or Handler is engaged in the production and cultivation, or in the processing and/or distribution, of agricultural hemp seed, they must also obtain an agricultural hemp seed production permit.

This is an essential component of the Program since all seeds must either be “certified” (i.e., by an agency authorized to officially certify hemp seeds) or enrolled in the Missouri Crop Improvement Association’s certification or heritage seed programs (which has not been created yet). This component of the Program will likely be subject to extensive public commentary and revision before it becomes final.

Short Window to Apply for an Application. Although there is not a specified limit on the number of registrations to be issued to Growers and Handlers, other than the acreage limitation, it appears that the Department intends to implement a short window for applicants to submit their applications: “Applications must be postmarked by the deadline for closing the application period. Notice of the open application period will be posted on the department’s website.”

It is currently unknown when the Application Period will begin and end, but according to the Department’s “Proposed Industrial Hemp Timeline,” applications may be available online by September 3, 2019. A deadline for closing the application period is not yet posted, but it is anticipated that applicants will be approved and notified by October 31, 2019. That means the Application Period may be less than 60 days. These dates, however, are subject to change.

Acreage Limitation. Notably, HB 2034 limits the amount of land on which industrial hemp may be grown in Missouri to a total of 2,000 acres statewide. Individually, registrants are limited to growing hemp on a plot of land between 10 and 40 acres.

Applications and Merit System. Although the applications are not available yet, they will require applicants to provide specific and detailed information, including the following, according to the proposed rules:

(A) The complete legal name, mailing address, email, and phone number of the applicant;

(B) The applicant’s state of residence or state in which the entity is domiciled;

(C) Type of business entity: person, cooperative, or joint venture;

(D) Type of registration: grower or handler;

(E) Request for Agricultural Hemp Seed Production Permit, if applicable;

(F) Legal description, street address, and Global Positioning System (GPS) coordinates for the plot of land used for cultivating industrial hemp and the industrial hemp storage facility location, if applicable;

(G) Legal description, street address, and Global Positioning System (GPS) coordinates for the industrial hemp processing facility and industrial hemp storage facility location, if applicable;

(H) Global Positioning System (GPS) coordinates for each variety of industrial hemp planted;

(I) An industrial hemp production, research, and marketing plan;

(J) The application for a grower registration must include submission of:

  1. Any evidence of farming experience for the department’s consideration, such as a copy of an IRS Schedule F federal tax form for at least one (1) of the past three (3) years, the applicant’s farm serial number (FSN) issued by the United States Department of Agriculture-Farm Service Agency, or evidence of agricultural education;
  2. A detailed map of the plot of land on which the applicant plans to grow industrial hemp, showing the boundaries and dimensions of the growing area in acres and the location of different varieties within the growing area;
  3. Requested number of acres for production and cultivation of industrial hemp;
  4. Variety of certified agricultural hemp seed to be planted and the number of acres of each variety. In subsequent renewal years, the variety of certified agricultural hemp seed to be planted and the number of acres of each variety must be provided at the time of renewal;
  5. A statement of verification and supporting documentation that the registered grower has reasonable grounds to believe that the certified agricultural hemp seed to be planted is of a type and variety that will produce a delta-9 THC concentration of not more than three-tenths of one percent (0.3%) on a dry weight basis;
  6. Documentation verifying any non-certified agricultural hemp seed to be planted is enrolled in the Missouri Crop Improvement Association’s certification or heritage program.

While the majority of these items are self-explanatory, perhaps the most important aspect of the application will be a complete and detailed application that highlights “farming experience” and the “industrial hemp production, research, and marketing plan.”

This is because the “department will select applicants for a grower registration by scoring the following factors:

(A) Application for registration;

(B) Applicant’s farming experience;

(C) Detailed map of the plot of land on which industrial hemp will be cultivated; and

(D) Applicant’s industrial hemp production, research, and marketing plan.”

What’s more, in the event of a tie “the department will select the applicant that received the highest score on farming experience. If a tie score still remains, the department will select the applicant that received the highest score on the industrial hemp production, research, and marketing plan.”

It is thus vital to have a robust application that satisfies each requirement, as well as extensive farming experience and a detailed industrial hemp production, research and marketing plan.

Department Assumptions by the Numbers. The Department anticipates that approximately 200 Growers and 40 Handlers will apply. The Department further anticipates that 170 Growers and 40 Handlers will obtain a registration.

When Will the Application Process Begin? Before the application process starts, the proposed rules must become final, binding and effective. That means, the proposed rules must go through the mandated rulemaking process, allowing for time to solicit public comments and any revisions. The Department anticipates that applications will be available in September and applications could be approved by October 31, if not earlier.

How much will it cost to apply? There is a $100 nonrefundable application fee per type of registration. Each applicant must also complete and pay for a state and federal criminal background check. It is anticipated that applicants will receive a notification within 60 days of submission whether they are denied or conditionally approved.

Registration Fees. If an applicant is conditionally approved, they will be required to pay the following registration fees:

  • Grower Registration Fee: $500 plus $45 per acre to be planted.
  • Handler Registration Fee: $500 plus the following amount depending on the type of processing desired: (1) $500 for processing the grain component of industrial hemp; (2) $500 for processing the fiber component of industrial hemp; (3) $3,000 for processing the leaf and/or floral material component of industrial hemp (e.g., hemp extract and/or CBD); or (4) If processing more than one component above, the handler shall pay the fee associated with each component. For example, if a Handler intends to process CBD and the fiber component, the registration fee would be $4,000 ($500 registration fee + $500 fiber component + $3,000 for CBD processing).
  • Agricultural Hemp Seed Production Permit Fee: $500.

Registrations are effective for three years, and registrants must pay the following annual fees:

  • Registered growers must pay an annual renewal fee of $45 per acre for the second and third year of registration.
  • Registered handlers must pay an annual renewal fee equal to the applicable processing fee listed above (e.g., $500 and/or $3,000) for the second and third year of registration.
  • Registered growers and handlers must renew their registration every three years, if they wish to continue in the Program.

Industrial Hemp Plant Monitoring System. The law requires that an industrial hemp plant monitoring system be implemented. The proposed rules (2 CSR 70-17.110) lay out a robust monitoring system that requires detailed reporting, testing, sampling and monitoring of all seeds and plants grown and sold. The aim is to ensure a quality product that complies with all federal and state requirements of industrial hemp, including the most important element that the plant material contains no more than three-tenths of one percent (0.3%) delta-9 THC on a dry weight basis. The law authorizes the Missouri State Highway Patrol to destroy without compensation any material found to be in excess of 0.3%.

Summary. This is a good start to the Pilot Program. The proposed rules will likely be subject to additional revisions. If you are interested in commenting on the rules, you can submit your comments here to the Department of Ag: https://agriculture.mo.gov/proposed-rules/#proposed-rules under the “Comment” tab for each proposed rule.

We will continue to keep you apprised of any revisions to the proposed rules.