Tuesday, November 12, 2019

By Peggy Kirk Hall and Ellen Essman

OSU Agricultural & Resource Law Program

Ohio’s newly created hemp program is one step further toward getting off the ground.   On October 9, the Ohio Department of Agriculture (ODA) released its anxiously awaited proposal of the rules that will regulate hemp production in Ohio.   ODA seeks public comments on the proposed regulations until October 30, 2019.

There are two parts to the rules package:  one rule for hemp cultivation and another for hemp processing.   Here’s an overview of the components of each rule:

1. Hemp cultivation

The first rule addresses the “cultivation” of hemp, which means “to plant, water, grow, fertilize, till or harvest a plant or crop.”  Cultivating also includes “possessing or storing a plant or cop on a premises where the plant was cultivated until transported to the first point of sale.”  The proposal lays out the following regulatory process for those who wish to cultivate hemp in Ohio.

Cultivation licenses.  Anyone who wants to grow hemp must receive a hemp cultivation license from the ODA.  Licenses are valid for three years.  To obtain a license, the would-be hemp cultivator must submit an application during the application window, which will be between November 1 and March 31.  The application requires the applicant to provide personal information about the applicant, and if the applicant is a business, information about who is authorized to sign on behalf of the business, who will be primarily responsible for hemp operations and the identity of those having a financial interest greater than ten percent in the entity.    The cultivation license application will also seek information about each location where hemp will be grown, including the GPS coordinates, physical address, number of outdoor acres or indoor square footage, and maps of each field, greenhouse, building or storage facility where hemp will grow or be stored.  Cultivators must pay a license application fee of $100, and once licensed, an additional license fee of $500 for each growing location, which is defined as a contiguous land area or single building in which hemp is grown or planned to be grown.  All applicants and anyone with a controlling interest ithe hemp cultivation business must also submit to a criminal records check by the bureau of criminal identification and investigation.

Land use restrictions.  The proposed rules state that a licensed hemp cultivator shall not:

• Plant or grow cannabis that is not hemp.
• Plant or grow hemp on any site not approved by the ODA.
• Plant, grow, handle or store hemp in or within 100 feet of a residential structure or 500 feet of a school or public park, unless for approved research.
• Comingle hemp with other crops without prior approval from ODA.
• Plant or grow hemp outdoors on less than one-quarter acre, indoors on less than 1,000 square feet, or in a quantity of less than 1,000 plants without prior approval from ODA.
• Plant or grow hemp within half a mile of a parcel licensed for medical marijuana cultivation.
• Plant or grow hemp on property that the license holder does not own or lease.

Hemp harvesting.  Licensed growers would be required to submit a report to ODA at least 15 days before their intended harvest date and pay a pre-harvest sample fee of $150.  ODA then has to sample the hemp for THC content, and only if approved can a cultivator harvest the crop, which in most cases must occur within 15 days after the sample is taken.  Failing to harvest within the 15-day window might require a secondary sampling and sampling fee.  A cultivator would be required to have a hemp release form from ODA before moving any harvested materials beyond the storage facility.

Random sampling.  The proposed rules also allow for random sampling of hemp by ODA and provide details on how ODA will conduct the sampling and charge sampling fees.  Any cultivator is subject to random sampling in each location where hemp has been cultivated. ODA will report testing results that exceed 0.3 THC to the cultivator, who may request a second sample.  A cultivator must follow procedures for destroying any leaf, seed, or floral material from plants that exceed 0.3 THC and any material that was co-mingled with the 0.3 THC materials, but may harvest bare hemp stalks for fiber.

Destruction of hemp.   Under the proposed regulations, a license holder must submit a destruction report before destroying hemp and ODA must be present to witness the destruction.  The proposed rules also authorize ODA to destroy a crop that was ordered destroyed, abandoned, or otherwise not harvested and assess the costs against the licensee.

Reporting and recordkeeping are also important in the proposed rules.  Licensed cultivators must submit a planting report on an ODA form for each growing location by July 1 or within 15 days of planting or replanting, which shall include the crop’s location, number of acres or square footage, variety name, and primary intended use.  The rule would also require licensees to submit a completed production report by December 31 of each year.    A licensee that fails to submit the required reports would be subject to penalties and fines. Cultivators must maintain planting, harvest, destruction and production reports for three years.

Control of volunteer plants.  A licensee must scout and monitor unused fields for volunteer hemp plants and destroy the plants for a period of three years past the last date of reported planting.  Failing to do so can result in enforcement action or destruction of the plants by ODA with costs assessed to the licensee.

Pesticide and fertilizer use.  The laws and rules that apply to other crops will also apply to hemp, except that when using a pesticide on a site where hemp will be planted, the cultivator must comply with the longest of any planting restriction interval on the product label.   ODA may perform pesticide testing randomly, and any hemp seeds, plants and materials that exceed federal pesticide residue tolerances will be subject to forfeiture or destruction without compensation.

Prohibited varieties.  The proposed rule states that licensed cultivators cannot use any part of a hemp plant that ODA has listed as a prohibited variety of hemp on its website.

Clone and seed production.  Special rules apply to hemp cultivators who plan to produce clones, cuttings, propagules, and seed for propagation purposes.  The cultivator can only sell the seeds or plants to other licensed cultivators and must maintain records on the variety, strain and certificate of analysis for the “mother plants.”  The licensee need not submit a harvest report, but must keep sales records for three years of the purchaser, date of sale, and variety and number of plants or seeds purchased.

Cultivation research.  Universities may research hemp cultivation without a license but private and non-profit entities that want to conduct research must have a cultivation license.  Cultivation research licensees would be exempt from many parts of the proposed rules, but must not sell or transfer any part of the plants and must destroy the plants when the research ends.

Enforcement.  The proposed rule grants authority to the ODA to deny, suspend or revoke cultivation licenses for those who’ve provide false or misleading information, haven’t completed a background check, plead guilty to a felony relating to controlled substances within the past 10 years, or violated the hemp laws and rules three or more times in a five-year period.

2. Hemp processing

The proposed rules package by ODA also addresses processing, which the rule defines as “converting hemp into a hemp product” but does not include on-farm drying or dehydrating of raw hemp materials by a licensed hemp cultivator for sale directly to a licensed hemp processor.    Because of this definition, many farmers who want only to grow and dry hemp would need only a cultivation license.  Growers who want to process their licensed hemp into CBD oil or other products, however, must also obtain a processing license.  The processing rules follow a similar pattern to their cultivation counterpart, as follows.

Processing licenses.  In addition to submitting the same personal, business and location information as a cultivation license requires, a hemp processing license application must list the types of hemp products that the processor plans to produce.   An “extraction operational plan” including safety measures and guidelines is required for processors who want to extract CBD from hemp to produce their product, and an applicant must indicate compliance with all building, fire, safety and zoning requirements.  The amount of the license fee depends on what part of the hemp plant the processor plans to process.  Processing raw hemp fiber, for example, requires a $500 license fee for each processing site, whereas processing the raw floral component of hemp requires a $3000 fee for each site.  Like the cultivation license, a processing license is valid for three years.  Applicants and those with a controlling interest in the business must submit to a background check.

Land use restrictions.  The proposed regulations would prevent a licensed processor from:

• Processing or storing any cannabis that is not hemp.
• Processing or storing hemp or hemp products on any site not approved by ODA.
• Processing, handling, or storing hemp or hemp products in or adjacent to a personal residence or in any structure used for residential use or on land zoned for residential use.
• Processing hemp within 500 feet of a school or public park, except for approved research.

Financial responsibility.    A licensed processor must meet standards of financial responsibility, which require having current assets at least $10,000 or five percent of the total purchase of raw hemp materials in the previous calendar year, whichever is greater, and possessing a surety bond.

Inspection and sampling.  As with cultivation licensees, hemp processing licensees would be subject to inspection and sampling by ODA under the proposed rule.

Food safety regulations.  The proposed rule requires hemp processes to comply with federal and state food safety regulations.

Sources and extraction of cannabinoids (CBD). A processor who wants to extract or sell CBD products must obtain the materials from a licensed or approved cultivator or processor in Ohio or another state with hemp cultivation licenses.  The regulation outlines components of the extraction operational plan that a processor must submit with the processing application, as well as acceptable extraction methods and required training.

Product testing.  A hemp processor must test hemp products at an accredited testing laboratory before selling the products.   The proposed rule describes the testing procedures, which address microbial contaminants, cannabinoid potency, mycotoxins, heavy metals, pesticide and fertilizer residue and residual solvents.  There are testing exemptions, however, for hemp used exclusively for fiber, derived exclusively from hemp seed and hemp extracts.  The testing laboratory must create a certificate of analysis for each batch or lot of the tested hemp product.

Processor waste disposal.  Under the proposed rule, a licensed processor must follow procedures for proper disposal of hemp byproducts and waste and must maintain disposal records.

Product labeling requirements are also proposed in the rule.  A processor must label all hemp products except for those made exclusively from hemp fiber as outlined in the rule and in compliance with federal law and other existing Ohio regulations for standards of identify and food coloring.

Recordkeeping.  As we’d expect, the proposal states that hemp processors must maintain records for five years that relate to the purchase of raw, unprocessed plant materials, the purchase or use of extracted cannabinoids, and the extraction process.

Prohibited products.  Finally, the proposed rules include a list of hemp products that cannot be offered for sale, which includes hemp products with over 0.3 percent THC by dry weight basis, hemp products which laboratory testing determines do not meet standards of identity or that exceed the amount of mytoxins, heavy metals, or pesticides allowed, and any hemp products produced illegally.

What’s next for the hemp rules?

Keep in mind that these rules are not yet set in stone; they are a simply a proposal for hemp licensing rules in Ohio.  Those interested in cultivating or processing hemp in the future should read the draft rules carefully.  The proposed rule for hemp cultivation is here and the proposal for hemp processing is here.  Anyone can submit comments on the proposed rules here.  Your comments could affect what the final hemp rules require for hemp cultivators and processors.  After ODA reviews all comments, it will issue its final hemp licensing regulations.

Federal law requires that after Ohio finalizes its rules, ODA must submit them to the USDA for approval.  That approval won’t occur, however, until USDA completes its own hemp regulations, which are due out in proposal form any day now.  Ohio’s rules will become effective once USDA approves them, hopefully in time for the 2020 planting season.  Stay tuned to the Ag Law Blog to see what happens next with hemp production in Ohio.

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