The Return of the SAFE Banking Act: Week in Review

The Return of the SAFE Banking Act: Week in Review

After three full years of hemp cultivation, Linda Noel was confident 2021 would be a success.

Those beginning years were rife with issues, including two broken contracts, an entire crop that went hot and cannabidiol (CBD) regulatory hurdles. She learned along the way, though, and hemp grown for CBD had become her primary crop at Terrapin Farm in Franklin, Mass., where she also grows tomatoes. 

But Noel wouldn’t have grown hemp a fourth year if not for the MA Hemp Industry Survive and Thrive amendment included in the state’s 2021 fiscal budget. The amendment allows licensed hemp producers and processors to sell their products to medical and adult-use cannabis dispensaries in the state. Because hemp-derived CBD is only legal for sale as a topical in the state, it’d bring about a lifeline for Massachusetts’ struggling hemp industry.

That amendment passed in December and was expected to take effect March 11. But so far, Massachusetts’ Cannabis Control Commission (the Commission) has yet to administer an update, guidelines or even a timeline on when the industry can expect the market to open up.

“I’m hopeful by the time we go to harvest, there will be a market to sell in the state,” Noel says.

Now, a sense of urgency permeates the state’s hemp industry. The cultivation season is quickly approaching, and producers like Noel are left to decide whether to grow based only on the hope that regulations will be administered in time. Meanwhile, processors say they’re fielding a boom in calls from interested dispensaries, only to hang in limbo as they await guidance.

“There’s not going to be a hemp industry in Massachusetts if this isn’t implemented in a timely fashion,” says John Nathan, president of Bay State Hemp Company, a licensed hemp extractor and processor in the state. “We’re in a legal [cannabis] state that’s about to drop the ball on hemp—the most benign form of the cannabis plant.”

A Struggling Industry

Massachusetts legalized hemp in 2016—the same year it legalized adult-use cannabis—but hemp production in the state didn’t start until 2018, according to telegram.com. That year, the state issued 13 hemp cultivation licenses, the outlet reports.

That number more than tripled in 2019, when nearly 70 people received cultivation licenses, telegram.com reports.

But trouble came that year when the Massachusetts Department of Agricultural Resources (MDAR) issued policy guidance in late June that stated all hemp-derived CBD products aside from topicals were prohibited for sale in the state.

“Right before harvest, they changed the rules,” Noel says. “We were all growing for the CBD market … and they took the whole market out from under us.”

The industry’s struggles continued into 2020, when 40% of the state’s crop tested above the federal 0.3% THC limit and had to be destroyed, according to MDAR.

Noel attributes the widespread hot crop to a drought in the state that year. Her 2-acre crop was included in that statistic, though she believes her crop went hot because she waited too long to harvest it.

“Year two went into the freezer, where it still is …. Year three went into the fire pit,” Noel says.

Industry Lifeline

The budget amendment was created to address farmers’ ongoing struggles and help a now-stagnant industry grow. In 2020, MDAR licensed 69 growers for hemp cultivation, nearly on par with the previous year.

SEE MORE: 2020 Hemp Cultivation Data By State

Multiple sources Hemp Grower spoke with for this story say many farmers in the state only planned to grow hemp again because of the amendment.

“As of right now, [farmers] throw seeds in the ground and either have to burn [their crop] or are offered nickels, and it’s just not right,” says Nathan, who currently sources hemp from about 15 farmers in the state.

The amendment would also help hemp processors in the state, who say dispensaries have already begun inquiring about CBD products.

“We’ve had probably two dozen dispensaries reach out to us. There’s this crazy demand,” says Laura Beohner, the president and co-founder of The Healing Rose Company, a hemp processor and manufacturer of finished skincare products, as well as co-founder and director of the Massachusetts Hemp Coalition. “This would be everything for our business.”

Dispensaries in the state are looking to broaden their offerings beyond THC, says King, the author of the hemp amendment who is also the director of wholesale at Northeast Alternatives, a state-licensed dispensary serving both the medical and adult-use markets. But sourcing cannabinoids besides THC from cannabis cultivators is difficult, as THC still by far presents the most lucrative market for these growers.

READ MORE: CBD vs. THC Flower: Why The Price Difference?

Meanwhile, the hemp industry has an oversupply of CBD biomass (and is also increasingly producing other minor cannabinoids), allowing dispensaries to purchase these products at lower price points.

“For me, it came down to the viability of the hemp industry in Massachusetts and wanting to see a functional and vibrant local market that provides these more therapeutic and less psychoactive [cannabinoids] to people in the state,” King says.

But the delay has caused also issues for both dispensaries and processors, who are unable to meet the demand until the Commission provides guidance.

Beohner says she expected the amendment to double her sales for the 2021 season, so she began hiring new employees in anticipation of the demand. But with its status at a standstill, Beohner had to backpedal on the hiring of one new employee. Much like farmers in the state, she is now taking a wait-and-see approach.

Beohner points to the flagrant disconnect of the two industries in the state. “We’re allowed to sell our products everywhere in the state except dispensaries,” says Beohner, who only sells topical products. “It’s frustrating.”

Sense of Urgency

Notably, one potential pitfall of the amendment is that dispensaries are unlikely to be considered as an outlet for hot hemp. King says this is because the amendment focuses solely on hemp products, which are legally defined as containing below 0.3% THC. However, King sees opportunity for MDAR and the Commission to collaborate on developing a pathway for crops that test above the legal THC limit but below the 1% negligence threshold to be sold into cannabis dispensaries.

When asked for comment, spokesperson for the Commission told Hemp Grower the agency has begun talks with MDAR about how to “safely introduce” hemp products into the cannabis supply chain.

“Compliance with Commission testing protocols, seed-to-sale tracking, and packaging and labeling are just a few of the many requirements that the Commission must consider in order to uphold public health and safety when products are sold to patients and consumers,” the Commission spokesperson said. “At MDAR’s invitation, the Commission expects to provide feedback to MDAR on specific areas of concern for its licensees in the months ahead that clarifies these issues and more.”

But some in the industry say the need is urgent as hemp growers make their final decisions whether or not to plant a crop this year.

“This needs to be implemented probably within the next 30 days, or there will be irreversible damage to our hemp industry,” Nathan says.

Despite the hemp hardships over the past few years, some growers, like Noel, retain optimism. But time will tell how long she and other farmers in Massachusetts hold on to their faith in the industry.

“Being a farmer, we tend to say, ‘This is the year, this is going to be a good year,’” Noel says. “I really hope it is.

Published at Sat, 20 Mar 2021 11:00:00 +0000

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