USDA Says $19B Virus Aid Program Won't Cover Hemp Yet

By Jack Queen
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Law360 (May 20, 2020, 9:28 PM EDT) -- The U.S. Department of Agriculture has denied hemp farmers initial access to $19 billion in emergency coronavirus aid, though the agency said Wednesday the crop could become eligible if its price is severely impacted by the pandemic.

Hemp farmers could qualify for aid through the USDA's Coronavirus Food Assistance Program if the industry shows prices have dropped 5% or more since the crisis began, according to the agency's website. That was a change from earlier in the day Wednesday, when hemp and tobacco were explicitly barred from the program.

"We're really pleased about the change," U.S. Hemp Roundtable general counsel Jonathan Miller told Law360 Wednesday, saying language excluding hemp was dropped several hours after his group contacted the USDA.

"Hopefully this is a sign that we can demonstrate to the USDA that there has been a significant price disruption and that our farmers should be eligible for their program," he said.

A USDA spokesperson confirmed the language was changed but declined to comment further.

Direct aid through the program could be a shot in the arm for the hemp industry as it grapples with both the disruption of the coronavirus pandemic and the poor market conditions that preceded it.

Miller said U.S. hemp production has far outstripped demand since the crop was legalized in 2018, forcing farmers to sit on huge stocks of unsold biomass as they wait for buyers. The slow rollout of U.S. Food and Drug Administration regulations for hemp-derived CBD and the agency's overt skepticism of the substance haven't helped either, Miller said.

"The COVID disruption has only made things worse," he said. "This kind of support for our farmers would be very valuable for helping them get through this interim period."

The USDA's food assistance program targets a host of commodities from soybeans to sorghum. If prices for those crops dropped 5% or more from January to April, producers can tap $19 billion in direct relief from bailout funds through the CARES Act.

Proving the price of hemp has dropped 5% could be a challenge, because unlike most commodity crops, hemp lacks firmly established price benchmarks. Prices for hemp-derived CBD provide a close but still inaccurate indicator, according to National Hemp Industry Association Chair Geoff Whaling.

"We've searched the world for prices, but there just aren't any yet," he told Law360 Wednesday. "That's one of the challenges in hemp. CBD prices don't really help because they don't represent the whole plant."

Hemp has fared better than marijuana amid the scramble for trillions of dollars being pumped into the U.S. economy by the federal government. Unlike marijuana companies, for instance, hemp growers are eligible for disaster loans through the Small Business Administration.

Whaling said his organization has been in close contact with the Trump administration and found a receptive ear at the USDA, which he said has been working to include the industry in the relief programs it administers.

--Editing by Amy Rowe.

For a reprint of this article, please contact reprints@law360.com.

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