Program Growth

Year Registered Land Area Harvest

Colorado’s Industrial Hemp Program

The Regulatory Program and Industry Status

Nov 20th, 2017

Colorado Counties Incorporated

What is Industrial Hemp?Federal Farm Bill Definition

The term ‘industrial hemp’ means the plant

Cannabis sativa L. and any part of such plant,

whether growing or not, with a delta-9

tetrahydrocannabinol concentration of not more

than 0.3 percent on a dry weight basis.

If it is over 0.3% delta-9 THC concentration it is marijuana

and it is not Industrial Hemp.

And if it is not grown in a regulated system, federally or in CO, it is

not Industrial Hemp no matter what the THC is.

So what does hemp look like?

So what does hemp look like?

So what does hemp look like?

How can I tell marijuana

from Industrial Hemp?

Visually they look the same

because they are the same

genus and species of plant. The

only difference is the level of

delta-9 THC concentration

which can only be determined

through laboratory analysis.

You just can’t get high from hemp.

Who set 0.3% as the THC limit?

• UN Office on Drugs and Crime and most international trade

agreements generally recognized a limit of 0.3% THC.

• Canada and Australia use 0.3% THC.

• Much of the European Union uses 0.2% THC.

• The 2014 Farm Bill uses 0.3% THC.

• And in Colorado the voters defined Industrial Hemp as

0.3% THC concentration and below in the Constitution.

• It wasn’t the CDA and we have NO authority to change it.

If you can’t get ‘high’ what is

industrial hemp good for?

The Congressional Research Committee

estimates that there are more than

25,000 uses for industrial hemp. Those

uses include paper, textiles, biofuels,

graphene for high capacity batteries, car

parts, insulation and building products,

cosmetic and body care products, dietary

supplements and food products, CBD….

How has the market developed?

Congressional Research Committee- Hemp as an Agricultural Commodity 3/10/17

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Domestic Production in US (& CO)Domestic production continues to increase as more states

provide regulatory structures for and more processors begin to

enter the market.

2014 – 220 acres(200) less than 300,000 sqft (270,000)

2015- 2500 acres (2200) .6 million sqft (570,000)

2016 – 8900 acres (5700) 1.6 million sqft (1.2)

2017 – 25000 acres (9800) 2.2 million sqft (2.1)

Until 2017, CO has accounted for more than 50% of all US hemp

production every year since it was authorized in 2014.

What changes have we seen in the industry?

In 2014 we saw mostly small outdoor operations, limited

agronomic expertise, most growers were under capitalized

and a significant number registered purely for a historic

certificate with no intent to plant.

We are seeing a shift in the industry. Outdoor production

space has increased significantly and indoor space

registered exploded. The size of individual growing sites

increased and has moved to traditional agricultural

production areas. Agronomic practices have improved.

Businesses are better funded and production plans are

better developed. More investors and processors are

entering the market.

An Industry Still Emerging

In 2014 almost all plantings were one acre or

less. Anything over 5 acres was considered a

large planting.

Today almost half the registered land areas

are over 5 acres and almost 20% of the

registrations are for 50 acres or more.

Individually 10 registrants have more acres registered in 2017

than all registrants combined grew in 2014. The two largest

producers registered more acres than all states combined

harvested in 2015.

Where in CO is hemp cultivated?

Industrial hemp is a matter is statewide concern so

the CDA will issue registrations anywhere in the

state.

It is broadly distributed across the state. Currently

51 of Colorado’s 64 counties have at least one

registered land area.

Weld county currently has the most registrations

followed by Delta, Larimer, Mesa, and Boulder.

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Emerging Segments of the Industry

Colorado, like most states since, have seen the CBD

segment of the industry emerge the fastest. Initially

CBD probably represented over 60% of the acres

planted. Today that percent is significantly lower.

While CBD planting remains an important segment of

the industry, planted acres for grain now far outweigh

the total acres of CBD planted and growth rate for new

land areas dedicated to grain production are the

fastest growing segment of Colorado’s hemp industry

today.

The CDA grants commercial and research & development

registrations on specific land areas for the cultivation of

industrial hemp within CO. It is a voluntary program. Land

areas not registered with the program are not protected by

this program from local, state or federal agencies.

We inspect and sample cannabis growing on registered land to

verify compliance.

While we work with the industry to understand the issues

involved with this emerging industry we have no jurisdiction

over processing or products containing industrial hemp. That

does not mean no one regulates these processes. Other state

or local regulations may apply.

The role of the CO Dept. of Agriculture

Why is it important to

understand the total

Cannabis landscape?It is required to obtain a registration to cultivate industrial

hemp under the Farm Bill.

In Colorado Constitutionally you can grow six marijuana

plants. The only place in Colorado where you can not grow

marijuana is a land area voluntarily registered to grown

industrial hemp. That makes registering a land area and not

the individual critical to our program.

That also means Colorado has a little different relationship

with some of our federal partners, including the DEA,

because of our Cannabis landscape.

Purposeful RulesWhy are the Rules so important for a program?

Ensure compliance with federal guidelines in the Cole

Memorandum and comply with the 2014 Farm Bill.

Ensure that all registrants in have a level playing field in the

market.

Ensure that those that violate the rules don’t benefit from

doing so.

Ensure that those that abuse the system are denied access

to the protections the program offers so they don’t

jeopardize the program for those that follow the Rules.

How does the program work?

The program has 3 key components:

1)Registration -who is involved and where is it

being grown

2)Reports-Pre-Planting, Planting and Harvest

3) Inspection and Sampling- Risk and Random

based selection

There are only 8 pages of Rules.

Inspection and Sampling:

All registrations are subject to inspection and

sampling either scheduled or without notice.

All land and buildings within the registered land area

are subject to inspection.

All Cannabis plants within the registered land area

are subject to sampling.

Registrants wishing to close a registration early are

subject to sampling.

The provisions are designed to protect public safety.

What we sample and how. The Dept. samples within 30 days of harvest.

We avoid sampling the outside edges of the field but allow our

inspectors to use their judgement on where to select.

We sample only female plants.

We sample the female flower when it is present but for material

being grown for biomass and harvested before flowering we select

the top two inches of the plant.

The sample size is reflective of the crop size; ½ oz. for individual

plants, small plots with less than 100 plants the target is 3oz with a

minimum of 1oz, larger plots but less than an acre the target is 8

oz. with a 3 oz. minimum and for multi acre plots the minimum

amount is 8 oz.

What have testing results looked like?

In 2014 31% of the samples taken exceeded the 0.3% THC threshold.

The quantity of material however was very limited and nothing

found was highly intoxicating.

In 2015 and 2016 those compliance rates continued to improve

slightly each year and growers began sorting out those varieties that

were failing. In 2016, 1232 acres were destroyed for exceeding the

THC limit. 78% or 957 acres that failed were in three varieties.

2017 compliance rates are above 91%. The number of acres

exceeding 0.3% THC is also lower, less than 800 acres. Most of the

acres exceeding the THC limit in 2017 are in two varieties; one a

recurring problem variety from 2016 (Colorado Gold) and one new

variety (Marquis M-1) not previously seen or sampled in CO. Less

than 1% of the planted acres would have failed if it were not for

these two varieties.

What happens if the crop exceeds

0.3% THC ?In CO a waiver from civil penalties can be requested for

material that is above 0.3% but below 1.0% if the material is

destroyed on site in a manner approved by the

Commissioner. Material above 1.0% may be subject to civil

penalties and must be destroyed on site in a manner

approved by the Commissioner. In either case it can not be

transported, used for human consumption or enter the

stream of commerce.

If the crop exceeds 0.3% it is no longer industrial hemp and

could be subject to criminal prosecution as an illegal

marijuana grow.

Law enforcement may be notified in either case.

The CDA Approved Certification

ProcessThe process includes four parts.

1) Application including eligibility documentation. (CDA & CSU)

2) THC Testing for variety approval. (CDA)

3) Certified Seed Production from Registered or Foundation seed.

(CSU/CSGA according to A0SCA Rules)

4) Labeling requirements. (CDA/ CSU/CSGA)

It is more than a variety list it is a production system to insure

breeders investments are protected and farmers get seed that

will produce mature plants with a THC below 0.3%.

Issues the industry is facingChanging federal tides and lack of clarity and uniformity at the

federal level.

Different state regulations and interpretations of the Farm Bill.

A developing identity crisis is emerging; division in the industry.

System ‘gamers’ (delaying harvest, MJ plantings).

The ‘can’t catch us all’ non-registering growers.

The blurring of the MJ line.

Local law enforcement becoming increasingly involved.

Lack of Uniform Federal

Interpretation of the Farm BillBureau of Reclamation doesn’t allow the use of

‘colored’ water.

The USDA seed lab won’t enforce the Federal Seed Act

resulting in the U.S. becoming a dumping ground for

low quality ‘certified’ seed from other countries.

USDA will authorize phytosanitary certificates for

export. The DEA says you can’t export.

DEA, FDA, & USDA’s Statement of Principles.

It is implied but not explicitly clear if processed

products can ship across state lines. The federal

OMNIBUS spending bill passed in Dec of 2015 would

IMPLY that the DEA could not prevent the transport

using funds provided in that spending bill.

What about other funds at the DEA’s disposal?

What about another state’s rights?

Legal questions surrounding CBD. It was not

addressed in the Farm Bill and is considered a

Schedule I drug by the DEA.

Shipping Across State Lines?

State Interpretations of the

Farm Bill

• “Pilot program means a pilot program to study the

growth, cultivation or marketing of industrial

hemp”…..

• ”(i)ensures that only institutions of higher

education and State dept. of agriculture are used

to grow”…”

• (ii) requires that sites used for growing industrial

hemp be certified by, and registered with, State

dept .of agriculture”…

An Industry Searching for IdentityUnregistered grow sites, intentionally delayed harvests,

marijuana planted inside registered land areas and

attempts to blur the lines between industrial hemp and

marijuana are beginning to have a negative impact on the

emergence of the industry.

Local law enforcement and regional drug task forces are

becoming more active as a result. The DEA’s position is

also evolving.

The industry is at a critical point between those that view

hemp as an agricultural crop and those that see it as a

stepping stone to a broader Cannabis discussion and

industry.

Will hemp be a viable industry in CO?It is still very unclear where the industry will be in

five or ten years. What does seem relatively certain is

that some part of the industry will be a part of the

agricultural landscape of the state. There are already

more acres of industrial hemp registered than acres

of Rocky Ford cantaloupe, Palisade peaches or pinto

beans in CO.

Will it be as big as corn or alfalfa, highly unlikely.

However the lower water requirement has been a

significant reason a number of corn farmers are

exploring hemp as a way to reduce their water

consumption.

Questions