2018 Farm Bill Allows Interstate Hemp Supply Chain

The Agriculture Improvement Act of 2018 removed hemp from the Controlled Substances Act and opened the door for interstate hemp transportation. Now hemp manufacturers are mobilizing to establish supply chains to move their crops.

"No State or Indian Tribe shall prohibit the transportation or shipment of hemp or hemp products produced," said section 10114, the Interstate Commerce provision of the Agriculture Improvement Act.

According to Erica Stark, executive director of the National Hemp Association, the government shutdown delayed U.S. Department of Agriculture guidelines for transporting hemp. She also said that regulations are still being designed by the numerous federal agencies which will manage the hemp supply chain.

States may establish a regulatory authority over the production of hemp and must submit their own industry monitoring and regulatory plans to the U.S. Secretary of Agriculture. These plans will not supersede current state regulations for hemp.

According to Supply Chain Dive, hemp's relation to cannabis (which is still illegal at the federal level) will cause the regulatory process for approving the transportation of industrial hemp to be far-reaching compared to other commercial goods, and thus require a high level of visibility.

"At a minimum you need a copy of the license of the grower to prove the origin of the shipment." said Stark. She also said that shippers will need to provide laboratory tests to meet the regulatory requirements of hemp products and a certification from the dealer.

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However, the ability to track shipments is still under development.

"Because it's [hemp interstate commerce] new, there's no formal government tracking out there." said Colton Griffin, chief executive officer of Flourish Software, a logistics tracking company for cannabis and hemp products.

Griffin also said that uncertainty among state regulators will be an impediment to the hemp supply chain.

"We had the City of LA issue a public statement that CBD [a cannabinoid oil that is derived from hemp] was not safe for food so it had to be removed from shelves, and then they reversed it a few months later," said Griffin. "It's created a lot of ambiguity for CBD trade."

Still, demand for hemp products will be high now that interstate commerce is legal.

Whole Foods released its expectations for the top 10 consumer food trends in 2019 and listed hemp as having the potential to become a mainstream product in grocery retail.

"It's clear that hemp-derived products are going mainstream, if not by wide distribution, then by word of mouth!" said a Whole Foods' release.

New Frontier Data, an analytics firm that follows the commercial hemp industry, reported that retail outlets like Whole Foods may become the destination of choice for hemp consumers in place of dispensaries once supply chains become more commonplace.

CBD sales grew by roughly 40 percent to $367 million in 2017 according to New Frontier Data. CBD annual sales are expected to reach almost $2 billion in 2022, requiring a more comprehensive supply chain for hemp distribution.

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