By Michael Maharrey

A Indiana House committee unanimously passed a bill that would expand the state’s hemp law to prohibit state prosecution of people who sell or possess industrial hemp and industrial hemp products. Passage of this legislation would open the door for a commercial hemp market in the state, setting the foundation to nullify federal prohibition in practice.

Rep. Jim Lucas (R-Seymour) and Rep. Sean Eberhart (R-Shelbyville) introduced House Bill 1137 (HB1137) on Jan. 9. The legislation would clarify the existing hemp law in Indiana to prevent state prosecution of people selling hemp or hemp products.

Except as provided in subsection (a), a person may process, manufacture, possess, transport, sell, distribute, buy, or otherwise use industrial hemp or industrial hemp products if the industrial hemp was planted, grown, cultivated, harvested, and processed by persons licensed under this chapter or by persons in another jurisdiction according to the laws of that jurisdiction. A person who engages in an activity under this subsection is not subject to a civil or criminal action or penalty under state law.

Committee on Agriculture and Rural Development passed HB1137 12-0 with some technical amendments.

Practically speaking, final passage of HB1137 would end state prosecution of individuals or businesses selling CBD oil and other hemp products. Last year, an Indiana TV station reported on raids conducted by state excise police and the Indiana Alcohol and Tobacco Commission. According to WTHR, excise officers confiscated CBD oil products from dozens of stores across Indiana, citing the businesses with violating state law for possessing marijuana.

CBD oil has proven effective in treating a number of medical conditions, including seizures, pain and anxiety.

Provisions in HB1137, along with changes in the definition of hemp in the bill would open the door for legal CBD sales in the state, and would also protect sellers and buyers of other hemp products.

HB1137 would also remove the current requirement that the state seed commissioner must apply for necessary permissions, waivers, or other forms of legal status by the United States Drug Enforcement Agency or other federal agencies to implement the state industrial hemp law.

HB1137 would open the door for an expanded commercial hemp market in Indiana, despite federal prohibition.

FEDERAL FARM BILL

In 2014, Congress cracked the door open for hemp in the U.S. with an amendment to the 2014 Farm Bill. The law allows hemp cultivation for research purposes, but prohibits “commercial” production.

The “hemp amendment” in the 2014 farm bill  —

…allows State Agriculture Departments, colleges and universities to grow hemp, defined as the non-drug oil-seed and fiber varieties of Cannabis, for academic or agricultural research purposes, but it applies only to states where industrial hemp farming is already legal under state law.

In 2016, the U.S. Department of Agriculture and Drug Enforcement Agency released a “statement of principles” to guide interpretation of the hemp section in the Farm Bill. It states, “The growth and cultivation of industrial hemp may only take place in accordance with an agricultural pilot program to study the growth, cultivation, or marketing of industrial hemp established by a State department of agriculture or State agency responsible for agriculture in a State where the production of industrial hemp is otherwise legal under State law.”

In short, the current federal law authorizes farming of hemp – by research institutions, or within state pilot programs – for research only. Farming for commercial purposes by individuals and businesses remains prohibited.

The definition of “commercial” remains murky and has created significant confusion.

The statement of principles also asserted that industrial hemp programs are limited to fiber and seed. It didn’t mention the CBD oil or other edible hemp products.The DEA has interpreted that to mean they remain illegal. According to the DEA, CBD cannot be sold under any circumstances. WTHR interviewed DEA spokesman Rusty Payne.

“It’s not legal. It’s just not.”

Payne says cannabis plants are considered a Schedule I controlled substance, and medicinal oils derived from cannabis plants are illegal according to two federal laws: the Controlled Substance Act and the Food, Drug and Cosmetic Act. He said confusion surrounding the Agricultural Act of 2014 (better known as the “Farm Bill”) is frequently cited as legal justification by those who want to manufacture, sell or use CBD oil. The DEA believes the Farm Bill permits only CBD research — not CBD marketing and sales.

“Anybody who’s in violation [of the federal laws] always runs that risk of arrest and prosecution,” he said.

Passage of HB1137 would expand the market for CBD oil and other commercial hemp products. While prospective producers would still have to take federal law into consideration, by eliminating the possibility of state prosecution, the law would clear away a major obstacle to a widespread CBD sales, and more generally the development of a commercial hemp industry in Indiana.

Several other states with federally-compliant hemp programs, such as Kentucky, North Dakota, Minnesota and New York, have grown significant acreage under federally-approved research programs. This takes a first step, but with federal shackles in place, these states are not legally allowed to develop any kind of commercial market. Ironically, many of these “federally compliant” programs are not actually federally compliant.

Recognizing its limited research program was hindering the development of the industry, West Virginia dumped its federally compliant hemp program during the 2017 legislative session and will now issue federally non-compliant commercial licenses to growers. West Virginia Public Broadcasting confirmed limits imposed by the old program due to its conformity with federal law were holding back the development of a viable hemp industry and everyday farmers cannot benefit.

“But because of the strict requirements under the 2014 bill, growers are not able to sell their plants and cannot transport them across state lines to be turned into those usable products. That’s limited the ability to create a real hemp industry in the state.”

OTHER STATES

Other states, including Colorado, Oregon, Maine, California and Vermont have simply ignored federal prohibition and legalized industrial hemp production within their state borders.

Colorado was the first state with widespread commercial hemp production. Farmers began growing hemp in southeast Colorado back in 2013 and the industry is beginning to mature. The amount of acreage used to grow industrial hemp in the state doubled in 2016 to nearly 5,000 acres, and nearly doubled again in 2017.

The Oregon legislature initially legalized industrial hemp production in 2009. While it was technically legal to grow hemp in the state, farmers didn’t take advantage of the opportunity for nearly five years. When the Oregon Department of Agriculture finally put a licensing and regulatory program in place early in 2014, farmers began growing hemp. The initial regulatory structure placed significant limits on hemp farming and effectively locked small growers out of the market. In 2016, Gov. Kate Brown signed House Bill 4060 into law. It relaxed state laws regulating hemp already on the books and made the crop more like other agricultural products. Within months, the Oregon Department of Agriculture had already promulgated new rules under the reformed law. According to Oregon’s Cannabis Connection, the rules set the stage to creates a “massive” medical hemp market. The state produced 3,469 acres of hemp in 2017.

Both Colorado and Oregon demonstrate how loosening rules at the state level encourage the market and allow hemp a legitimate commercial hemp industry to develop.

HUGE MARKET FOR HEMP

According to a 2005 Congressional Research Service report, the U.S. is the only developed nation that hasn’t developed an industrial hemp crop for economic purposes.

Experts suggest that the U.S. market for hemp is around $600 million per year. They count as many as 25,000 uses for industrial hemp, including food, cosmetics, plastics and bio-fuel. The U.S. is currently the world’s #1 importer of hemp fiber for various products, with China and Canada acting as the top two exporters in the world.

During World War II, the United States military relied heavily on hemp products, which resulted in the famous campaign and government-produced film, Hemp for Victory!

WHAT’S NEXT

HB1137 will now move to the full House for a vote.