In January, the U.S. Department of Agriculture’s (USDA’s) Agricultural Marketing Service (AMS) released its final rule on hemp. Though contentious aspects of the rule remain, some industry members believe the outcome is a big win for states and farmers.
One supporter is Justin Swanson, a prominent hemp lobbyist and lawyer in the Midwest. Based in Indiana, Swanson is principal at Bose Public Affairs Group, a government affairs and communications firm, and part of the Governmental Services Group at Bose McKinney & Evans LLP. He also serves as president of the Midwest Hemp Council, a trade organization that supports both cultivation and regulatory advancements in the region’s hemp industry.
In the wake of the rule’s release, Swanson expressed optimism to Hemp Grower about the flexibility afforded to state regulators and farmers alike, particularly on three issues: remediation, performance-based testing and field sampling measurements of uncertainty.
Under the final rule, farmers whose hemp tests above the legal 0.3% tetrahydrocannabinol (THC) limit can either dispose of the flower material or blend the entire plant into biomass material and have that retested. States also can develop their own field-sampling measurements of uncertainty (acceptable margins of error to account for differences during the sampling process), just as labs are required to include a measurement of uncertainty with their results. And, states can develop their own performance-based sampling methods as long as no more than 1% of plants in a lot do not test above the acceptable THC limit.
“States are supposed to be hubs for innovation and experimentation,” Swanson says. “It’s absolutely the right play to make. I’ll be even happier if I start seeing states really fully leverage this flexibility and get innovative and really kick-start this process.”
Hemp Grower spoke with Swanson about the status of the federal rule-making process, as well as his efforts to make hemp craft flower legal in Indiana and the future of hemp farming in the Midwest.
Paul Barbagallo: Tell us a little a bit about the Midwest Hemp Council.
Justin Swanson: Our core vision is to help promote and connect the entire hemp plant supply chain. And not just in Indiana. We recognized early on that the best way for farmers to be successful in this industry is to be working outside their communities, outside their state lines, and really figuring out what a good partner looks like for each individual farmer’s situation.
Barbagallo: You’ve been heavily involved in advocating for Indiana—and Midwest—hemp growers as the USDA finalizes regulations for hemp growing in the U.S. How do you feel about the final rule?
Swanson: It’s a vast improvement from the interim final rule. Our members would all agree that the final rule does a much better job recognizing the nuances and realities of hemp farming. For example, [the USDA] changed from a 15-day harvest window to a 30-day harvest window requirement. They also made it clear that farmers can only be subject to one negligent violation per growing season. Things like this helped quite a bit.
Barbagallo: Do any aspects of the final rule still give you concern as far as growing hemp in Indiana specifically?
Swanson: One of the bigger concerns is that labs be DEA [U.S. Drug Enforcement Administration]-certified. More and more labs are coming online. But in Indiana, for instance, we only have one DEA-certified lab. Probably the biggest question that the USDA decided not to take head-on is this idea of hemp extract work-in-progress.
Barbagallo: One of the most controversial aspects of the final rule is the THC limit. The Agriculture Improvement Act of 2018 (the 2018 Farm Bill), which federally legalized hemp, set the THC limit at 0.3%. Can this still be workable for farmers?
Swanson: The 0.3 percent threshold is purely arbitrary; [the USDA] went as far as they can go in the final rule in terms of raising the negligent threshold to 1% instead of 0.5%, and that’s really helpful. At the end of the day, if this industry is really going to take off, and farmers are going to have the confidence to move forward and invest in the industry, we’re going to have to raise that [THC limit] to 1%.
Barbagallo: Do you expect further legislative action to address that limit?
Swanson: Ultimately, you’re going to need a statutory change from Congress to change the [THC limit]. I do think that’s coming sooner rather than later. I fully expect that threshold to be raised. It’s more of a question of when, and not if.
Barbagallo: Broadly speaking, are you happy with how the final rule deferred to state authority over hemp farming?
Swanson: For as much as there’s left to be desired in the final rule, there’s even more opportunities for states to solve issues themselves. I’m personally really excited to see which states—I’m hoping it’s Indiana—really take this flexibility that’s offered and run with it when it comes to remediation, performance-based testing and the field sampling measurement of uncertainty.
Barbagallo: Indiana has made it a crime to manufacture, deliver or possess smokable hemp. Those laws are now being challenged in court. Meanwhile, you’ve been advocating for a state bill, H.B. 1224, to resolve this dispute and legalize smokable hemp. What is the state of play today with smokable hemp in Indiana?
Swanson: The Midwest Hemp Council is really ground-zero for craft hemp flower [legislation]. We’re demonstrating here in Indiana to our lawmakers, regulators and other policy makers that this is no different than a niche market like craft beer. We’re trying to educate people on what it is. Craft hemp flower is just another delivery method of CBD to the body based on consumer preference. It was criminalized in 2019, unfortunately, based on complaints from law enforcement [in Indiana]. That law was challenged in federal court. Now we’re back in federal district court, where we won originally, and [we’re]waiting on a new ruling on it. While that case is pending in the courthouse, we’re at the statehouse educating lawmakers on the benefits of opening up this market. [We’re working to modernize] our hemp statutes really to reflect the intent of the 2018 Farm Bill, which was to legalize every inch of the plant and every extract and derivative of that plant.
Barbagallo: Hemp flower really provides another opportunity for the farmer.
Swanson: Exactly. This is really going to help stabilize the CBD market. Think about it: When farmers sell their hemp crop to a processor to be converted into CBD oil, they will get about 50 cents per percent CBD per pound for that crop. But selling hemp flower directly can earn a farmer as much as $250 per pound. So, with craft hemp flower, instead of only having one outlet for your CBD biomass, you now have another option for that flower to sell directly to a consumer or to a retailer or other distributor. It’s going to provide confidence for farmers to move forward in the hemp space.
Barbagallo: Do you see regional advantages for hemp cultivation developing in the Midwest region?
Swanson: Our farmers have been trying to answer that question since 2018. Just because a genetic grows well in one state does not equate to it growing well in another state. What I’ve personally seen is that the produce farmers are more well-positioned to do CBD growing because it’s basically horticulture—you want to keep those plants feeling good. That’s in the southern part of the state. In the central and northern part of the state, you’re probably going to see more interest in the fiber and grain side because it’s much closer to row-crop farming.
Barbagallo: What do you see for the future regarding other uses of hemp, such as food and clothing?
Swanson: CBD has traditionally been the rock star of the industry. But the longer, more sustainable play is on the fiber and grain side. The more educated consumers get about sustainable clothing and food, they’re going to be asking questions about how it’s made and where it’s coming from. It’s just a matter of time.