March Maryland Hemp Report

March 31, 2020

 

Ambitious and hopeful Maryland hemp farmers are currently planning for the 2020 growing season. A lot of interest has been expressed in planting for CBG production, while some are holding to producing CBD with hopes that smaller plots than last season and an increase in value for domestically produced product will better profits over last year. Some concern has been expressed from those producing hemp for oil or the smokeable flower market over cross-contamination from increased interest in growing hemp from fiber and seed. 

 

A heightened emphasis on seed-free female flowers, which generate cannabinoids and terpenes in greater abundance, is at risk of cross-pollination by industrial hemp, which pollen rich males are not removed throughout cultivation for fiber and seed. As the hemp industry grows in acreage nation wide these hemp producers run the risk of losing entire crops as the pollen from neighboring industrial hemp farms can degrade the quality of their female flowers if they become pollinated and prioritize growing seed over producing cannabinoids. Many ideas have been discussed about creating buffer areas between farms, designated areas miles apart for cultivating the different crops, but these ideas are very limiting on the newly developing industry and could place unfair restrictions on farmers. If only we could eliminate these potential burdens and still grow together.

 

USDA Considers Hemp Regs a Draft, Could Delay Enforcement 

 

This month the USDA Secretary Sonny Perdue told Congress that the Interim Final Rules regulating federal hemp production may be considered a draft, which means their enforcement could be delayed, as stated in an article published by Hemp Industry Daily. A question came up in the Senate Agriculture Committee, where Oregon Senator Jeff Merkley asked Perdue whether the interim final rule could be referred to as a draft given recent “evolving changes,” including the decision to delay enforcement action on two controversial elements, testing and disposal (two of the three topics of concern mentioned in last months report).

 

“I would functionally say it’s a draft plan, as this is a very unique crop,”said Perdue. ”However, beyond minor changes, the interim final rule can’t be changed until there is a notice of final rulemaking", he added.

 

Even with "pushbacks from DEA", whom Perdue said "really didn't like the whole program to begin with", the USDA made some changes to the IFR where they could, including delaying the requirement that labs testing hemp for THC levels need DEA certification.

 

These delays in enforcement have regained hope and will help those involved in the industry, as well as the USDA, to have time to learn more about this unique crop in the coming season and the impact these regulations could have on the industry.

 

Coronavirus Impacts Industries Across the Globe- Hemp Is No Exception

 

The Coronavirus 19, or COVID-19, pandemic has had numerous severe consequences for both citizens and businesses across the globe. The Center for Disease Control has implemented the closures and restricted operations of numerous businesses throughout the nation, including cafes, bars, and restaurants. In Maryland, Governor Larry Hogan on March 24 ordered the closure of all non-essential businesses. Agriculture and the entire supply chain were deemed essential by Governor Hogan, along with the Department of Homeland Security that deemed the entire food and agricultural production system "Critical Infrastructure".

 

The Coronavirus is expected to impact industries across the globe immensely - and the hemp industry is no exception. Businesses throughout the United States are bracing for the virus’s impact and doing all that they can to keep themselves afloat. One major reason for the consequences the virus will have on the hemp industry is its reliance on hardware which is manufactured almost exclusively in China and shortages will be experienced. These shortages include the hardware necessary for product packaging materials, and specialized equipment crucial to the processes of laboratory testing, extraction and more.

 

Hemp material that’s routinely exported from China to the United States is expected to reduce in availability, leading to local shortages which could impact the development and production of consumer goods produced by these materials. This could have a positive effect on smaller hemp companies with local manufacturing, as noted by Nick Easley CEO of Denver, Colorado-based 3C Consulting. In a recent interview with the Hemp Industry Daily, Easley spoke to the COVID-19-related changes seen so far in the cannabis industry specifically and what they can expect going forward.

 

“It’s forcing companies to look at their supply chain. ‘Where do my products come from? Do I have multiple options for vendors?’ Everyone was looking for the cheapest option forever, and that’s China.”

 

Those willing to reconsider their outsourced production methods (and with the capital to do so) may not only hold strong beyond the end of the outbreak, but may serve as a source of American manufacturing jobs, eventually leading to a rise in local opportunities within both industries. In his words, “The biggest thing I see is finally a break for U.S. CBD companies and hemp companies to do something when they don’t have massive competition. It’s also a moment for smaller companies that have lost their market share to China to step up, ramp up, and focus on relationships.”

 

Beyond the direct causes of COVID’s impact, financial losses are being felt universally by citizens around the world, with ripple effects of losses in profits, hours and even jobs felt by businesses and employees everywhere. These have also made investors and consumers unusually wary of new investments and purchases alike, contributing to a vicious financial cycle until the market regains stability.

 

Relief Bill Signed Into Law

 

On March 27, President Trump signed into law a $2 trillion coronavirus relief bill, as Washington tries to blunt economic destruction from the pandemic ripping through the U.S. Farmers who produce hemp, along with hemp businesses could see relief from this coronavirus stimulus deal, which is the largest economic rescue package in American history.“Now that federal law treats hemp as an agricultural commodity and not a controlled substance, we would expect that distressed hemp farmers would have access to the same emergency federal funds as growers of other crops,” Jonathan Miller a Kentucky-based attorney and director of the advocacy group U.S. Hemp Roundtable, told Hemp Industry Daily.

 

The Small Business Association (SBA) had released information about the application process for Economic Injury Disaster Loans, but in a webinar on March 26 it was stated that this was not available for agricultural small businesses, according to Steve Colella Maryland SBDC Business Consultant. Farmers are urged to stay in-tuned with information coming from the USDA on the release of an application process to receive potential relief funds, as most relief funds have been on a first come first serve basis.  

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