Hemp Eligibility for USDA Programs Under the 2018 Farm Bill

Hemp Eligibility for USDA Programs?  Hemp is an eligible renewable biomass feedstock for USDA rural development programs including Section 9003 (innovative new technologies), REAP (energy production- biofuels, electricity production) and B&I (commercially proven processes/technologies).  Normally under the rural development programs, agriculture production is not an eligible purpose. Agriculture production can be considered an eligible purpose when not eligible for the USDA Farm Services Agency farm loan programs and when it is a part of an integrated business also involved in the processing of agriculture products.  However, nurseries for raising the plants would be an eligible purpose as well as conversion of the hemp feedstock into biofuels, biobased products (non-food or feed products) or electricity. In all cases projects and project developers must meet the regulations set forth by the Agricultural Marketing Service (AMS) discussed below.

Some background: The 2018 Farm Bill directed USDA to establish a national regulatory framework for hemp production in the United States.  USDA established the U.S. Domestic Hemp Production Program through an interim final rule.  This rule outlines provisions for the USDA to approve plans submitted by States and Indian Tribes for the domestic production of hemp.  It also establishes a Federal plan for producers in States or territories of Indian tribes that do not have their own USDA-approved plan.

The interim final rule governs the production of hemp under the 2018 Farm Bill; it does not affect industrial hemp that was or is being cultivated under the 2014 Farm Bill programs.  That industrial hemp remains subject to the requirements of the 2014 Farm Bill.

USDA general guidance on hemp projects to date requires that, that in addition to meeting the basic program eligibility requirements (e.g. eligible applicant and eligible project purpose), applicants proposing projects involving hemp must meet the requirements in the AMS hemp regulation.  For this, applicants will have to demonstrate that they are:

1. Licensed to grow hemp, and,
2. Part of a USDA approved State, Tribal or Federal plan.

For processing/manufacturing projects, the processor/manufacturer must demonstrate that any hemp they are using has been certified under the AMS regulation. States choosing to continue to operate under the 2014 Farm Bill authority will not be eligible since although the 2014 program allows for licensed hemp production, production is limited to research purposes only. The authority for states to continue to operate under the 2014 pilot, authorized under the 2014 Farm Bill, expires in October this year, and states will have to develop a state plan or rely on USDA to establish a plan to continue to legally support hemp producers in the state.

Lee Enterprises Consulting is continuing to monitor state plan development activity as the October deadline approaches, including hemp eligibility for USDA programs. We also offer a wide range of services in biofuels, biochemicals, biotechnologies, biomaterials, synthetic biology commercialization, feedstocks, and hemp/cannabis.  The company has business and financial services like due diligence, feedstock availability, grants and loans and bio market research.  The company also offers technical and engineering related services like techno economic analysis, environmental evaluations, feasibility studies, risk analysis and expert witness engagements.   The company also has strategic partnerships in place to assist clients with insurance, legal, accounting, plant fabrication, feedstock procurement.   With over 150 experts worldwide, Lee Enterprises Consulting also has experts in anaerobic digestion, fermentation, biomass, conversion technologies for things like tires and railroad ties, organic synthesis, fuel additives, ethanol gas, biodiesel fuel including algae biofuels, solid state and industrial fermentation, green energy grants, ag biotech, agricultural waste, alcohol fuels, alternative proteins and animal-free products, sustainable foods, beverage fermentation, biocatalysis, biodiesel conversion, biogas production, biomass power, carbon intensity, co2 utilization, combined heat & power, Fischer-Tropsch technology, food waste, hydrothermal carbonization, industrial enzymes, landfill management, microbial fermentation, organic synthesis, plastic pyrolysis, plastic recycling, plastic waste, pyrolysis oil, reactor design, renewable identification number, the Renewable Fuel Standard (rfs2), solid recovered fuels, torrefaction and torrefied biomass, waste to energy, and waste-to-hydrogen.   This is a multidisciplinary group of green energy consultants that is a virtual “one stop shop” for any client need and handles projects of all types and sizes.

Look at our 150+ experts and the services we provide.  Most of our experts are also available to advise and serve as expert witnesses in bioeconomy litigation matters.  For the larger projects, we specialize in putting together full service, interdisciplinary teams with one point of contact.  See video about LEC here.  Call us at 1+ (501) 833-8511 or email us for more information.