$LXRP Colorado Now Has to Modify Its Rules to Meet Federal Requirements

November 11, 2019

Hemp farmers all over the country can finally heave a sigh of relief after the U.S. Department of Agriculture released its long awaited interim final rule on hemp. Senator Cory Gardner applauded the USDA soon after the regulations were announced, thanking it for “moving forward on hemp rulemaking and recognizing hemp production as an agricultural activity.” He said that legal hemp has the potential to be a major boon to agricultural communities across Colorado, giving farmers another viable and profitable option for their fields.

However, farmers in Colorado haven’t yet celebrated the news. Even though the Colorado Department of Agriculture has said it intends to submit a new hemp plan to the USDA in 2020, the state of Colorado had already implemented its own state plan on hemp long before it was legalized at the federal level in December 2018.

According to Shawn Hauser, a hemp attorney with Vicente Sederberg, the state will have to alter some of its hemp regulations to align more closely with the USDA regulations. She adds that it could result in more restrictive rules than the ones Colorado hemp farmers are accustomed to. For example, they will be subject to stricter testing requirements for THC levels, and there will be less opportunity to mitigate hot hemp (hemp with more than the federally set 0.3% THC limit).

“Federal rules are pretty strict with requiring hot hemp to be destroyed by a DEA agent. There is no opportunity for remediation or correction. The way the federal regulations are set up, they’re going to affect every state significantly,” she says, adding that “the testing and sampling specifically are different from what most states have in practice.”

The new regulations require 100% of all hemp harvests to undergo THC testing in labs certified by the Drug Enforcement Administration. Hauser argues that Colorado’s Agriculture Department has only enough bandwidth to test about 25% of the current hemp harvests, and that there aren’t enough DEA certified labs to test the entire crop anyway. This means that there could be delays in harvesting hemp as farmers wait for THC test results from the few approved facilities.

The rules were implemented with effect from October 31, and they will be replaced in two years with the final rules. States have a year to either send in their own proposals for hemp regulation or ban the crop altogether. According to Hauser, the CDA’s Colorado Hemp Advancement and Management Plan (CHAMP), a committee created by Governor Jared Polis, will send Colorado’s hemp proposal to the USDA.

A public comment period is currently underway for all interested parties to give their opinions on the USDA’s regulations. Analysts think hemp companies like HTC Extraction Systems (TSX.V: HTC) and Lexaria Bioscience Corp. (CSE: LXX) (OTCQX: LXRP) anticipate some supply shocks as these rules kick in next planting season, but the overall outlook is optimistic.

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