Now In Effect: New Oregon Law Expands Hemp Market, Sets Stage to Further Block Federal Prohibition

SALEM, Ore. (April 1, 2016) – Oregon Governor Kate Brown has signed a bill into law that relaxes state hemp licensing requirements, making the crop more like other agricultural products. The measure opens up the hemp market to small and individual farmers, paving the way for faster development of Oregon’s hemp market, and further thwarting federal prohibition in effect.

A bipartisan coalition of four representatives, along with 14 cosponsors, prefiled House Bill 4060 (HB4060) on Jan. 27. The new law makes a number of positive changes to Oregon’s industrial hemp program that will encourage further development of a hemp market within the state.

The Senate passed HB4060 25-0, and the House voted 54-4 to approve the measure. A provision in the bill declared an emergency, it went into immediate effect upon Gov. Brown’s signature.

The law removes a requirement that industrial hemp crops be grown in in fields at least 2.5 acres in size, opening the door for small farmers and individuals to grow hemp for commercial purposes.

Also of note, the new law removes current limits on how growers can establish their crops, authorizing them to use any propagation method to produce industrial hemp, and allowing them to retain agricultural hemp seed for propagation for future years. The latter has been a point of serious contention in other states with developing hemp markets, as the federal DEA has gone to great lengths to ensure that it is the only source of approved seeds.

The Oregon Farm Bureau (OFB) and Oregonians for Food & Shelter (OFS) both supported HB4060, saying it will help expand hemp farming in the state.

“OFB and OFS support HB4060 with the goal of regulating industrial hemp the same as any other agricultural commodity. Oregon’s industrial hemp farmers have asked the Legislature to build flexibility into their license, and we support this request. Farmers throughout the state are looking for a crop that could increase their viability into the future. A functional industrial hemp program gives growers that option.”

The Oregon legislature initially legalized industrial hemp production in 2009. When the Oregon Department of Agriculture finally put its licensing and regulatory program in place early in 2014, some farmers began growing hemp, despite high barriers to entry. Passage of this new law will likely spur even more activity and grow the market within the state. Oregon Industrial Hemp Farmers Association members said with the new law in place they expect to grow at least 200 acres of industrial hemp in 2016.

The federal government still prohibits the cultivation of industrial hemp in most cases, and it prohibits the commercial cultivation of hemp in all cases. Despite federal prohibition, Oregon’s current law sets the foundation for people to stop the ban by encouraging hemp production in the state. By relaxing regulations and facilitating further development of the hemp industry with this new law, Oregon will ultimately expand this “illegal” market.

The evolution of the hemp program in Oregon also demonstrates a practical reality. Public policy analyst Michael Boldin pointed out when states pass bills that remove a layer of law, markets will inevitably begin to develop.

“As those markets take root, legislators start feeling the pressure to relax laws further,” he said. “Some critics complain that state licensing programs ‘restrict freedom.’ Still, state-restricted hemp farming is better than no hemp farming at all. That’s at least a little more freedom. And as we’re seeing in Oregon, it ultimately opens the door to even freer markets down the road. A little freedom begets more freedom.”

FEDERAL FARM BILL

Early in 2014, President Barack Obama signed a new farm bill into law, which included a provision allowing a handful of states to begin limited research programs growing hemp. The “hemp amendment”

"…allows State Agriculture Departments, colleges and universities to grow hemp, defined as the non-drug oil-seed and fiber varieties of Cannabis, for academic or agricultural research purposes, but it applies only to states where industrial hemp farming is already legal under state law."

In short, current federal law authorizes the farming of hemp – by research institutions only, for research only. Farming for commercial purposes by individuals and businesses remains prohibited. Oregon law ignores federal prohibition and authorizes commercial farming and production anyway.

OTHER STATES

Oregon joins with a number of other states – including Colorado, South Carolina, Connecticut, Maine, North Dakota and Vermont – simply ignoring federal prohibition and legalizing industrial hemp production within their state borders.

While prospective hemp growers still have to take federal law into consideration, by eliminating the state requirement for federal permission, state hemp legalization clears away a major obstacle to widespread commercial hemp farming within the borders of the state.

Farmers in SE Colorado started harvesting the plant in 2013, and farmers in Vermont began harvesting in 2014, effectively thwarting federal restrictions on such agricultural activities. On Feb. 2 of last year, the Oregon hemp industry officially opened for business and one week later, the first license went to a small non-profit group. As more people engage in hemp production and the market grows within these states, more people will become emboldened creating an exponential wave, ultimately blocking the federal ban in effect.

HUGE MARKET FOR HEMP

According to a 2005 Congressional Research Service report, the U.S. is the only developed nation that hasn’t developed an industrial hemp crop for economic purposes.

Experts suggest that the U.S. market for hemp is around $600 million per year. They count as many as 25,000 uses for industrial hemp, including food, cosmetics, plastics and bio-fuel. The U.S. is currently the world’s #1 importer of hemp fiber for various products, with China and Canada acting as the top two exporters in the world.

During World War II, the United States military relied heavily on hemp products, which resulted in the famous campaign and government-produced film, “Hemp for Victory!”.

HB4060 represents a second step toward hemp freedom in Oregon.