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hello i'm doris hamilton the manager of the hemp program at the kentucky department of agriculture i want to thank the uk extension hemp specialist for including me on today's program as my part of this educational series i'll be covering the rules and regulations of the hemp licensing program basically the things you need to do to operate legally as a hemp grower that's what i'm covering there are lots of rules and reports when it comes to growing hemp [Music] first i'd like to introduce you to the full hemp team here at kda from left to right in this picture there's edmond andrew me shelby and kim if you have questions about the hint program please don't depend on a friend or a neighbor to guide you in the right direction the regulations are constantly changing so consult the regulations on our website or ask us we're here to help now in addition to us the full-time staff we also have a crew of inspectors in the fall that will be coming out to collect hemp samples for the thc testing [Music] we're fortunate here in kentucky to have an agriculture commissioner who fully supports the hemp industry here's a recent message from commissioner quarles about the current state of the hemp industry taken from a letter to license holders he writes kentucky's hemp industry is still maturing if you're just entering the industry or agriculture generally you should make sure you don't invest more money than you can afford to lose in farming no crop is a sure thing and our experience last year showed that the nation's hemp industry is still facing crippling federal regulatory and supply chain growing pains kentucky farmers and agribusinesses continue to lead the effort and hemp is becoming a larger part of kentucky's ag economy i also want to point out that commissioner quarles has been a tireless advocate for the hemp industry with national leaders he has worked closely with the usda in the development of federal hemp program rules he has written letters to the fda and actually met with them as recently as february of this year to discuss a common sense path forward for cbd marketing he works with the leaders of the bankers association for favorable lending policies he is also in regular communication with senators mcconnell and paul as well as our entire federal delegation commissioner quarles and the entire kda team continues to go to back for kentucky hemp [Music] here's a little background on the hemp program this is a chart found on our website that we add to each year just to show some basic stats of the program the first year of the program was in 2014 we planted about 33 acres that year from there the interest and the acres produced have increased dramatically and the types of hemp have shifted from primarily grain and fiber to what is now 92 percent of the crop being harvested for cbd purposes will that shift reverse course and include more grain and fiber in the years to come only time will tell and consumer demand and supply chain development will drive that shift if it happens now taking a look at the acres produced in 2015 we had over 900 acres planted then after three years of steady expansion we saw an explosion in the acres up to twenty six thousand and five hundred acres that was planted last year the excitement was off the charts this explosion in production in 2019 was seen across the entire united states and it flooded the market some national estimates say there was eight times more hemp produced than was needed last year with overproduction you see prices plummet unfortunately a lot of 2019 growers are left holding material that they can't sell in many cases this hemp was grown under a contract but the processor canceled or just failed to meet the contract we've also seen a lot of hip processors file bankruptcy so the industry is experiencing a great deal of financial difficulties right now please understand that i'm not here to encourage you to plant hemp whether or not you plant hemp is entirely up to you and i want each person to assess their risks very carefully hemp licenses are available and holding a license makes growing hit legal but i would never encourage anybody to risk more than they can afford to lose this is a very high risk industry and the market is very unstable keep an eye on our website for the 2020 updates to this table but we all expect a decline in the numbers this year as this market stabilizes and continues to develop rest assured that we at kda are doing all we can to support the industry but it is currently struggling next let's take a look at the state of kentucky and how far the hemp program reaches this is based on the 2019 license holders every county in green here had at least one hemp license holder the red dots are where the processors are located one dot per county and many counties have several processors like jefferson county and fayette you can see that hemp reaches from the east to the west and the north to the south here in kentucky last year hemp was planted in 100 out of our 120 counties the kentucky hemp program is conducted in accordance with both state and federal law the most important section of kentucky law for us all is this section of statute shown on this slide as you see in red there it is unlawful for a person who does not hold a license issued by the department or who's not an agent of a licensee so basically an employee it's illegal for them to cultivate handle and handle just means to be in possession of or to process or market those types these types of hints so living hemp plants bible seeds leaf materials or floral materials so it is unlawful for anyone in the general public without a license to be in possession of hemp plants seeds leaf material or floor material and the penalties for those without a license are the same as those penalties for marijuana federal law was updated in 2018 started with a new definition of hemp first thing you'll notice is the federal definition drop the word industrial from the definition so now it's just hemp not industrial hemp the other major change to the definition was the addition of these bold words that makes sure to include the seeds and all derivatives the extracts the cannabinoids basically anything you can get from the plant whether it's growing or not but ultimately all of it must have a delta nine thc of not more than point three percent on a dry weight basis and this means total thc other provisions of the federal law make it clear that the measurement of thc must include both forms of the delta 9 thc molecule the delta 9 thca and the delta 9 thc in its neutral form so certificates of analysis will generally refer to this as total thc so that total thc must be below 0.3 percent to be legally defined as hemp in response to the 2018 farm bill the usda released their interim final rule on october the 31st of 2019. that interim final rule took effect immediately and it will require updates to sampling and testing in kentucky for 2021 maybe even for 2020 if it goes in if it goes into effect on november 1st then we're looking at changes in 2020 but there are some hopes that that will be extended and we'll be able to operate under our pilot program uh through the end of the crop year for 2020 but that is yet unknown we are currently operating under our pilot program at least until october 31st uh maybe through the end of the year but that is yet to be seen the main changes expected from the usda interim final rule for 2021 include just a few things for kentucky one the measurement of uncertainty which is basically the variance or the margin of error added to the point three percent to arrive at an acceptable measured thc level so that variance is going to be less than our 0.399 percent that we currently use as acceptable next the retested samples might be confined to the original sample that means no more post-harvest retest and any thc tests that are above 0.5 will be considered a negligent violation that doesn't mean any criminal intent it just means that with proper care it should have been avoided but the federal rule says that if someone commits three negligent violations in a period of five years we must suspend their license for a period of five years so all of these changes are going to make compliance more difficult so genetic selection is even more important in the hip licensing program we issue two types of licenses the processor handler license and the grower license the processor handler license is required for any individual business who's taken hemp plant material turning it into finished products the most prevalent type of processor currently is the cbd extraction facilities processors or handlers can possess hemp they can handle it they can store it or they can market it they cannot have live plants that requires a grower license those classified as handlers involve businesses who are marketing hemp or have hemp in their possession folks like brokers labs and seed cleaners a grower doesn't need a process or handler license to dry chop grind or market their own crop but anyone that's handling another person's crop for these purposes should have a processor handler license now what's covered under the grower license growers can have live plants they can grow in a field or in a greenhouse or any other indoor area as long as they're licensed growers can produce transplants or grow the crop to full maturity or both under a grower license you can store your hemp dry chop grind and market your own crop can you grow your hemp crop under somebody else's license no the grower and the owner of the crop needs to be the license holder we used to issue a university hemp license but now they fall under the other two licenses depending on the type of research they're conducting on this slide you can see all the universities and colleges who have been conducting hemp research over the past several years pictured in the center is dr david williams who was a tremendous catalyst for hemp research and who accomplished a lot in hemp research before his passing his legacy lives on at the university of kentucky and work continues by many excellent researchers there at uk murray state has established a hemp center for excellence ksu focuses on organic production western conducts a lot of hemp research and the list goes on all of the other logos depicted here have been active in hemp research and we appreciate all of their work very much now let's talk about those grower licenses since this program is designed to help educate the growers the grower application deadline is march the 15th and we expect it will be at march the 15th in years to come processor applications are accepted year-round the grower fees the application fee has been removed so no application fee but there is a 200 service charge for paper applications the online applications have no fees for those but the grower licensing fees those are based on the the address is where growing occurs at and those are the same as last year it's four hundred dollars per growing address and there's still no charge for storage only addresses the secondary pre-harvest sample fee is 250 dollars per sample so if we have to sample the same plot twice that will apply for the second trip out also if a growing address has more than three samples required this will apply to all samples above those first three that are covered by the licensing fees the site modification fee is 750 per gps coordinate for growing locations so that's for each field or each greenhouse that's added after that application is submitted as you know every hemp applicant has to provide a background check with their application those background checks must be free from felony convictions and drug-related misdemeanors for the past 10 years this is required by law the background check instructions will always be found in the instructions for the applications if you're looking for information on the hemp licensing program here's where you'll find it on our website when you google kentucky department of agriculture hemp program it'll take you right here once you see this webpage pitch pictured here you're in the right place to find the full details of the program in 2020 we launched our new online application system most of the applicants are now using that online application system where all the reports and notifications are submitted online our website's made up of five main program pages the first of which is the overview page among other things found on the overview page you'll find a few helpful lists there the seed in the transplant providers list is the list of individuals who've offered to make their contact information public for the purpose of selling planting materials there's also a list of processors and handlers which provides a way for you to contact companies in kentucky who may be interested in purchasing hemp we also publish a list of all license holders by county this helps people to interact with the local growers for a lot of different reasons one thing this list is used for frequently is for growers in a specific area to contact one another to discuss any concerns they might have about cross pollination other pages include hemp and the law this page is where you'll find all the federal and state laws and the program regulations the applications page is obviously where you'll find the application instructions in the online application portal the license holders forms and deadlines page is where you'll find all deadlines and forms that you need finally the restrictions on seller transfer has guidance about the proper transfer of hemp materials and products we have a couple of new announcements this year for those who are selling seeds or transplants these aren't new rules but they are existing rules that we realize may not have been followed in the past so we're trying to get the word out to the hemp community who may not be familiar with these standard agriculture seed regulations any person who's distributing seeds must adhere to the applicable kentucky seed laws go to the uk division of regulatory services seed program website for details on that program and how to get a seed distributor permit here again is a set of regulations that we'd like to bring to your attention any producer intending to sell transplants of any kind including hemp need to have a class a nursery license from the kentucky office of the state entomologist you can visit their website seen here for more details now it's mainly for those that are selling outside the state of kentucky generally the movement of transplants and live plants within the state of kentucky does not require that nursery license but if you're planning to sell live plants outside the state of kentucky you should have that nursery license and this is a national requirement that helps to prevent the spread of insects and plant diseases when live plants move from state to state i just want to take one more opportunity to urge everyone to proceed with caution this is a very high risk industry experiencing some troubling market adjustments there are no guarantees in hemp this is a new industry and on top of that these are new companies and new production techniques the prices are not well developed and some companies have had trouble making payments now that's actually a gross understatement given recent events more than half of the 2019 farmers contracts were not paid several hemp companies have filed for bankruptcy in recent months so please be careful and don't invest more than you can afford to lose here's some data from a recent report from hemp benchmarks showing the declining prices across the board for cbd hemp in addition to the harvested material price declines the crude hemp oil and the cbd isolate prices are down more than 80 percent in the last year [Music] certainly something to consider [Music] now let's talk about growing locations in the online system it enables you to enter your growing locations and map those directly in the system if the property doesn't have an address you'll need to enter an estimated address remember any growing location that's submitted after the original application is submitted costs 750 for each field or greenhouse that's the site modification surcharge that mapping portion of the software has a nice help feature clicking on that help button w ll bring up a video that shows you exactly how to outline fields and identify greenhouses and storage buildings now here's a view of the mapping feature in that application software it's the same mapping that you would use if you're going to do a site modification as well a common problem that we see with maps is the incorrect identification of separate fields does this red outline show a single field by definition a single field has to be a contiguous planting so those tree lines that you see in there these are going to be separations of one field to another so if you look at this it really is four separate fields there's this triangular one then this would be another field this area here could be considered and would be considered one field there's no division but you can tell by the picture that it's been used for multiple purposes but it is one field as far as a contiguous area that could be planted contiguously with him the hemp regulations there's a specific section titled land use restrictions we'll go over all of those so everybody is aware of those rules number one you can't plant any cannabis that's not hemp number two you can't grow hemp on any site that's not licensed so if you have your front field licensed and you have a few extra plants you can't go plant those in the backfield because the backfield isn't licensed if you need to add more fields to your license later we can do that with what's called the site modification but it does cost 750 per field or per greenhouse so just keep that in mind next you can't grow hemp in or adjacent to any structure used for residential purposes so no hemp growing in your house your garage or your yard it must be grown in an agricultural field or building number four just says you also can't handle hemp in or near your house either we don't strip the bike in our house and we aren't going to strip hemp in our house either the production of hemp in residential areas would mimic criminal activity with marijuana this is an agricultural crop and should be conducted as such hemp has to be physically separated from other crops you can plant hemp and tomatoes in the same field but plant the hemp on one side and the tomatoes on the other side don't mix them number six you have to plant at least a thousand plants in each growing site and number seven each outdoor planting or field must be at least a quarter of an acre these restrictions are common sense practices to legitimize hemp as an agricultural crop you can imagine how much trouble it would be to distinguish the difference between a hemp crop and illegal marijuana from a helicopter if hemp is planted as a few plants in the middle of a cornfield a few more land use restrictions number eight hemp can't be grown in a field that is located within a thousand feet of a school or public recreation area there is an exception for high school ag departments if they meet all the requirements number nine an applicant cannot include property on their hemp license unless they own it or have complete control of it so you need to own the land or have a written lease or rental agreement to use that land we've seen a lot of disputes about hemp being grown on locations where there's only a verbal agreement so please get those lease agreements in writing next a license holder can't use property that is owned by leased from or was previously submitted on an application by someone who's ineligible or who was terminated from the program for one of these two reasons a criminal record or failure to comply with an order from the department this regulations prevents those with the criminal past from growing under somebody else's license the final land use restriction in the regulations requires this signage if you are growing one acre or less in a particular site this sign must be posted so this helps others including law enforcement identify hemp fields as opposed to illegal cultivation of marijuana i recommend that this sign also be posted on any greenhouses or storage building where you have hint so any field that's one acre or less it's required any building it is definitely recommended we've seen several misunderstandings which could have been avoided by this sign now this sign doesn't mean that law enforcement is going to see this and know that it is a legal hemp field when they see this sign it causes them to stop and to contact us at kda to confirm whether or not it is a legal hemp site templates for this sign are found on our website on the license holder page so be sure to post it on all buildings and especially especially at any field that is one acre or less reporting requirements there are several reports that you need to be aware of if you're growing hemp so let's go over each of those and how they are used be aware of those due dates all reporting is done in the online portal and those reports will appear on your dashboard please don't submit a paper copy of a report or email us in a tax report unless you submitted a paper application and paid the 200 service charge for paper application and paper reports everybody else will submit their reports online it's also worth noting that we don't recommend that anyone other than the license holder complete those reports because they likely don't know all the details and experience has shown us that mistakes are made when somebody else completes the reports a couple of slides about sourcing seeds or planting materials there are some new procedures for 2020. first check to see if the variety or strain is on the department summary of varieties list that's available on our website if the variety is listed then no request is required you can purchase that variety whether it's in state or out of state and ship those or transfer those directly to your farm if it's not on the list the license holder would need to submit a form called a new hemp variety or strain request and that has to be submitted along with a certificate of analysis with a total thc of 0.3 percent or less there are several reasons why growers need to be careful in considering what variety or strain of hemp to plant the genetics plays the biggest role in whether or not the final crop will be compliant with the thc limit last year 17 percent of the plots in kentucky tested above 0.4 txc a total of 43 percent were above 0.3 percent thc but as you know currently our level of acceptable thc is at 0.399 percent thc those high cbd strains of hint they all originated from marijuana strains and most of it will test above the legal limit of thc if it's allowed to fully mature remember according to current law we must comply with the usda rules beginning in november of 2020 so if an exception is not granted before then this will affect our testing after november 1. it may mean no post harvest retests the measurement of uncertainty will be less than our current level so the acceptable level which is now 0.399 will be lower re-testing will be confined to the original sample and any thc measurements above 0.5 will result in a negligent violation the new rule says if a producer has three negligent violations of five years were required to suspend the grower's license for a period of five years so the bottom line is select your planning materials very carefully now let's move on to the actual reports that must be submitted if you have a licensed greenhouse a planting report for each greenhouse is due within 15 days of your first planting if instead of planting you're moving plants from another location into your greenhouse that is considered a planting anything that results in plants being in the greenhouse when there weren't plants in there before is considered your first planting greenhouse or indoor planting reports are also due quarterly at the end of march june september and december field planning reports those reports are due within 15 days of each planting you have to report the different varieties or strains separately because they'll be designated as different lots for testing we'll have to test the different varieties separately and the different fields separately you are required to report every licensed field whether it was planted or not unplanted fields require that you indicate no planting and those reports for fields not planted are due by july the 31st starting this year all hemp planting must be reported at the usda farm service agency so your local fsa office if you're planning hemp and you aren't familiar with this office you'll want to get in touch with them soon new farmers will need to ensure that they have the proper records on file to report crop acreages on the land where they're planting the next step for the program after planning reports is the harvest destruction report these reports are also submitted online in the licensing portal this report is due at least 15 days before your intended harvest and this report is also used to request destruction of any failed crops so if your hemp had poor germination and you want to plow it under and replant with soybeans you have to submit this report before you re destroy that failed hemp crop the submission of this harvest report triggers the inspection and sample collection of the crop for thc testing the grower can't harvest until after the sample collection has taken place once that sample is collected the grower must complete the harvest within 15 days of that sample collection so don't wait for your test results to come back once we take that sample go ahead and start harvesting because you have to be finished within 15 days after harvest that harvested material cannot be commingled transported beyond the processor or outside the commonwealth nor can it be transferred or sold until that material is released by kda as the result of a compliant test result most materials are stored on site until the test results come back so each different lot of hint that was sampled separately must remain separate until cleared for sale by kda with the compliant thc test we realized that our turnaround time on test results was not ideal last year we weren't happy with it and we know a lot of the growers weren't happy with it so we're making some major changes to decrease that turnaround time we're going to get those results back sooner two weeks is our goal i have a few more important details to share with you about the sampling and the thc testing a hundred percent of the plots intended for harvest are inspected and sampled prior to harvest by kda inspectors new for 2020 the licensing fee of 400 per address covers only the first three tests required at any address all additional samples above three required at a licensed address will require a secondary pre-harvest sample fee of 250 per sample so please consider that when you're making your plans for planting if you plant five lots which is a contiguous planting of the same variety or strain at any address that those first three samples are included but the grower will be required to pay 500 for the two additional required samples remember 0.3 total thc is the legal limit set by law in 2020 kda will allow for a measurement of variance of 0.099 so pre-harvest test results up to 0.399 will be considered compliant this basically just builds in that variance that exists but at the lab when it comes to testing that means that hemp lots with the pre-harvest test result below or equal to 0.399 are allowed the market any materials above 0.3 total thc should not leave the kentucky program different jurisdictions are going to have different levels of variance what happens if a pre-harvest hemp crop sample comes back above 0.399 thc harvested hint material with the lot testing between 0.4 and 0.99 thc is eligible for a post-harvest retest at a cost of 250 this year if the retest is done prior to the implementation of the usda rule which might be on november 1st of this year 2020 is the final year for the research pilot program and the last year that we might be able to allow be allowed to offer a post harvest retest the usda rule does not allow this and again the usda rule is currently scheduled to take effect on november the 1st hemp lots that test at or above one percent are required destroyed immediately without options for retest last year about one percent of the crop acres tested above one percent thc and were ordered destroyed with the post harvest retest materials from lots with post harvest retest at or above 0.4 must also be destroyed last year almost 10 percent of the post-harvest tests were at or above the 0.4 thc limit restrictions on sale or transfer it's our last topic for the day these transfer requirements are guidelines to help license holders understand what's legal to sell or transfer and to whom the in-program materials are basically anything that requires a license to possess in kentucky live plants seeds and anything with leaf or floral material these materials can move to or from only license holders in kentucky and be sure to verify those licenses these items may be transferred to other hemp programs in other states but at your own risk it is the license holder's responsibility to know the laws in another state if you're shipping to another state if the items are legal to be possessed by the public in another state they can be sold in that other state but it's critical that you know the laws in that jurisdiction where the material is going you have to have the hemp licenses with the shipment and that paperwork must document the legal origin and the legal destination for the hint shipping a ziploc bag of hemp flour to an apartment in kansas is not a legal transfer so know your laws before you start shipping these things the items listed in the out of program materials table are basically things that do not have live plants bible seeds or anything with leaf or floral material these items are eligible to transfer to anyone they can be sold to the general public again it is the license holder's responsibility to ensure compliance with other state laws all food products and all products must meet the regulations of other pertinent authorities such as the food safety fda and any others all finished products must be tested and proven less than 0.3 percent total thc and that testing data must be kept for at least three years now based on the state law there is a list of prohibited products found in the regulations to help folks determine what is and is not eligible to be sold to the public in kentucky and again this is based on the state law just regulations are clarifying specifics the following items cannot be sold to members of the public and cannot be manufactured in kentucky hemp cigarettes hemp cigars chew dip and other smokeless material consistent of hemp leaf material or hemp floral material and hemp leaf material or floral material teeth these items can't be sold to the general public not to anyone who doesn't have a hemp license whole hemp buds ground hemp floral material ground hint leaf material and they can be sold to another license holder but not to the general public in kentucky the bottom line is this 2020 is the final year of the pilot program beginning october 31st 2020 all states must operate under the usda hemp program rules unless that's extended as a result changes to the operation of the kentuckian licensing program are likely to occur applicants and license holders will be notified of any changes or updates to the regulations or program operation above all be careful in your financial decisions in this current unstable and depressed hemp market if you need to reach me or any member of the hemp team here at kda call the hemp team here at kda call us or send us an email we'd be happy to help you