industrial hemp

Press release:

U.S. Senator Charles E. Schumer today announced, following his major effort, the successful inclusion of $2 million in the soon-to-pass bipartisan omnibus spending package for Fiscal Year 2020 for the Food and Drug Administration (FDA) to continue research, market surveillance, and appropriate regulatory activities for products containing the increasingly popular cannabidiol (CBD).

Even though CBD products have gained popularity since the 2018 Farm Bill legalized the farming, manufacturing, and selling of industrial hemp, Schumer explained that the FDA has yet to set regulations or safety requirements for CBD derived from hemp.

According to Schumer, the lack of federal guidance and clarity is sowing chaos for both consumers and in the rapidly emerging Upstate New York industrial hemp industry, which saw sales of CBD products surpass $200 million nationally in 2018.

Therefore, in the upcoming, bipartisan appropriations package, Schumer fought for a provision setting aside $2 million for regulatory activities, research, and policy evaluation of CBD products.

The legislation also includes a requirement that the FDA issue a report to Congress within 60 days on its progress determining a regulatory framework for CBD products. Additionally, the provision requires the FDA to study a sample of CBD products currently on the market, to better understand which products are mislabeled or otherwise misrepresented.

“CBD is brimming with potential to be a billion-dollar industry across New York State, bringing along countless jobs and truly meaningful economic development with it. But before that can happen, we need to be 100-percent sure we understand the ABCs of CBD—its impact on human health, and how best to regulate it at the federal level,” Senator Schumer said.

“That’s why during the negotiations for the bipartisan spending package, which is set to pass in the next few days, I fought tooth and nail to secure a provision setting aside $2 million for the FDA to, at long last, begin developing a regulatory framework for CBD—and demanding the agency update Congress on its progress.

Once these necessary rules and restrictions are set, the industry will seed and grow from one corner of the state to the other, many good-paying jobs will be created in the industrial hemp space, farmers will be able to safely cash in on this cash crop, and consumers will be protected.”

CBD is one of the two main chemical compounds that can be found in the cannabis plant. However, CBD is not psychoactive, meaning that it cannot get a person high—unlike tetrahydrocannabinol (THC), the other chemical compound found in many types of cannabis plants, primarily marijuana.

CBD products have become exceptionally popular in the marketplace, with estimated sales of CBD-containing products, such as oils, gummies, balms, lotions, and capsules, surpassing $200 million in 2018.

According to the New York State Department of Agriculture and Markets, there are currently just under 500 people, businesses, and organizations spread across New York State licensed to grow and process industrial hemp.

According to news reports, roughly three-quarters of those licenses were approved for the purposes of cultivating and extracting CBD. Currently, there are 18,000 acres of land licensed for industrial hemp growing in New York State, with 14,000 designated for CBD cultivation and extraction.

Furthermore, of New York’s 62 counties, 56 are home to industrial hemp farms and related growing operations. Schumer explained that these figures show just how much potential CBD products have to boost the economy across New York State, should clear guidance on CBD be issued by the FDA.

Industrial hemp is a type of cannabis plant that is grown largely for industrial uses, but it can also be utilized for food, oil, and cosmetic products. Hemp contains a very small amount of THC, typically between 0.2 and 0.3 percent on a dry weight basis, and while from the same species of plant as marijuana, the two plants have varied widely in use.

However, due to the existence of THC in hemp, Schumer explained, both plants were considered “controlled substances” under federal law, meaning the U.S. Drug Enforcement Administration (DEA) was the primary regulator for hemp production.

Schumer argued that this narrow view has undermined the crop’s agricultural and economic potential. With the Hemp Farming Act of 2018 passed by Congress and signed into law last year, this unnecessary roadblock has been lifted, and industrial hemp’s significant potential to become a cash crop in Upstate New York will be unleashed.

Press release:

U.S. Senator Charles E. Schumer announced today that following his major push, the Federal Reserve, Federal Deposit Insurance Corporation (FDIC), Financial Crimes Enforcement Network (FinCEN) and Office of the Comptroller of the Currency (OCC), in tandem with the Conference of State Bank Supervisors, have confirmed the legality of banks and other financial institutions extending services and products to industrial hemp-oriented businesses and farms.

Schumer explained that without access to traditional financial services, local farmers and the industrial hemp industry across Upstate New York had been unfairly restricted on capital investment, preventing further economic growth and the creation of good-paying jobs, and choking off valuable income for farmers.

Lack of Awareness By Lending Institutions

Schumer said the lack of awareness by lending institutions about the legality of industrial hemp had created an unwarranted murkiness around the legality of financing hemp-oriented businesses — and that new guidance was urgently needed.

With that now cleared up, the industrial hemp industry can continue to seed and grow across Upstate New York.

“This is a strong step in the right direction to boost the growth of the industrial hemp industry, and I am glad federal regulators, including the Fed, heeded my call to provide clarity to banks that industrial hemp is fully legal and their member banks are free to lend to farmers and producers," Schumer said.

"Now that the feds have issued to lenders updated guidance clarifying hemp’s legality as a crop, the industry will really start to take root and grow. I fought so hard to strip the burdensome and outdated federal regulations from industrial hemp because of all the good it can do for our farmers, our economy and our consumers. Today’s updated financial guidance related to industrial hemp means that we’re one big step closer to the complete emergence of a job-creating, economy-boosting industry across New York State.”

No More 'Suspicious Activity Reports' for Industrial Hemp-oriented Businesses

Specifically, the Fed, FDIC, FinCEN and OCC announced that under the Bank Secrecy Act, banks will no longer have to file Suspicious Activity Reports for industrial hemp-oriented businesses seeking to attain loans or other services. Schumer explained that this will significantly increase the likelihood that these businesses receive financial services, and help the industry continue growing and creating good-paying jobs for New Yorkers.

Schumer explained that since the 2018 Farm Bill removed the federal regulatory shackles from industrial hemp production, manufacturing, and selling, New York’s industrial hemp industry has started to grow significantly, with new farms and businesses emerging and existing ones expanding operations. This has brought considerably more good-paying jobs and revenue to Upstate New York, making industrial hemp a critical new part of the state’s agricultural future.

That being said, as industrial hemp farmers and businesses are exploring the full benefits of the 2018 Farm Bill, they have experienced serious difficulty accessing financial products with regulatory uncertainty at financial institutions. While some companies have agreed to offer financial services to the growing hemp industry, many have not due to confusion over the crop’s legal status.

The Schumer-backed Hemp Farming Act of 2018 was introduced by Majority Leader Mitch McConnell (R-KY), Sens. Rand Paul (R-KY), Jeff Merkley (D-OR) and Ron Wyden (D-OR). It passed and was signed into law as part of the 2018 Farm Bill.

This legislation:

• Removes industrial hemp from Schedule 1 of the Controlled Substances Act;
• Empowers states to be the principal regulators of hemp;
• Allows hemp researchers to apply for competitive grants from the U.S. Department of Agriculture (USDA); 
• And makes hemp farmers eligible to apply for crop insurance.

Industrial hemp is a type of cannabis plant that is grown largely for industrial uses, but it can also be used for food, oil, and cosmetic products.

The Roadblock of a Spec of THC Lifted

Hemp contains a very small amount, typically between 0.2 and 0.3 percent of tetrahydrocannabinol (THC), and while from the same species of plant as marijuana, it has varied widely in use. However, due to the existence of THC in hemp, Schumer explained, both plants were considered “controlled substances” under federal law, meaning the U.S. Drug Enforcement Administration (DEA) was the primary regulator for hemp production.

Schumer argued that this narrow view has undermined the crop’s agricultural and economic potential.

With the Hemp Farming Act of 2018 passed by Congress and signed into law last year, this unnecessary roadblock has been lifted, and industrial hemp’s significant potential to become a cash crop in Upstate New York will be unleashed.