$LXRP Business Leaders Say Federal Hemp Rules Could Hamper the Smokable Flower Market

December 19, 2019

Just a year after the 2018 Farm Bill legalized the industrial use of hemp and its extracts, the market for cannabidiol (CBD), one of hemp’s main extracts, had grown so rapidly it had quickly outpaced regulatory authorities. After months of pressure from stakeholders and politicians, the United States Department of Agriculture (USDA) released its interim final rule on hemp.

However, as the sector adjusts to the new regulations, there have been fears that they may be a little too tough, especially on the budding smokable hemp industry. Observers and farmers alike fear that the USDA’s insistence on testing the topmost part of the plant, the flower, for THC concentration will leave a large number of farmers counting huge losses.

Ryan Pettigrew, a hemp consultant based in Fort Collins, Colorado, concurs. “They basically killed the smokable hemp flower market in this country when it was really starting to build steam, and it presented no rational positive concern besides the typical government fear-mongering, ‘Reefer Madness’ nonsense,” he argues.

The new regulations require all hemp plants to be tested by federal, state or otherwise approved agents in U.S. Drug Enforcement Administration (DEA) registered labs 15 days before harvest. The agents will test one plant per acre from the top 8-10 inches of the plant.

The topmost part of the plant, coincidentally, contains the highest concentrations of CBD and THC, and farmers argue this could make most of their crop test above the legal limit.

Casey Flippo, CEO, and co-founder of extraction firm Natvana in Little Rock, Arkansas says that with the new regulations, there will be zero plants grown to maturity. “It’s almost impossible until the genetics catch up to the market. There are some genetics out there that are currently being developed for little to no THC, and those are going to be an absolute necessity moving forward.”

He argues that the sampling protocol laid out by the USDA will “annihilate the market” for smokable hemp.

The USDA granted a comment period for interested parties to offer suggestions before the regulations became permanent. A lot of the commenters have proposed another sampling procedure; test the entire plant to get a more realistic expression of THC across the entire plant.

Scott Propheter, vice president of Agronomy and Outreach at Criticality, a vertically integrated hemp and CBD company in North Carolina, says that there’s a deep lack of understanding about the many variables involved in growing hemp.

“We know that farmers will be negatively impacted if the USDA rules go into place as is because right now, nobody knows enough about the genetics. Then you throw all sorts of other uncertainties into the mix, with weather, soil types, microclimates, and there are a million different variables that we just don’t know enough about.”

Industry watchers are certain that hemp companies like The Green Organic Dutchman Holdings Ltd. (TSX: TGOD) (OTCQX: TGODF) and Lexaria Bioscience Corp. (CSE: LXX) (OTCQX: LXRP) are watching keenly to hear how the USDA responds to these concerns since the future of the industry is at stake.

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