Joint Hearing of the Senate and House Agriculture and Rural Affairs Committees

Legislation to Authorize Establishment of a State Program for Production and Marketing

of Hemp and Hemp Products
(Senate Bill 50 and House Bill 967)

May 13, 2015
Harrisburg, Pennsylvania

Offered by
John J. Bell, Government Affairs Counsel

Good morning, Chairman Vogel, Chairwoman Schwank, Chairman Causer, Chairman Sabatina and members of the Senate and House Agriculture and Rural Affairs Committees.

I am John Bell, Government Affairs Counsel for Pennsylvania Farm Bureau, on whose behalf I am testifying today. Thank you for the opportunity for us to share several thoughts and concerns relative to proposed legislation to enable Pennsylvania to engage in hemp production and marketing in the Commonwealth.

Pennsylvania Farm Bureau is a general farm organization whose membership is comprised of families who are active in farming or who have particular interest in agriculture and rural prosperity in the Commonwealth. Officially, 59,780 families are members of Farm Bureau. And by the end of our membership year in June, we expect to have more than 60,000 families as Farm Bureau members.

In recent years, those in the agricultural industry have made concerted effort in developing cutting-edge products and processes to increase the usefulness and demand of farm products and achieve higher profit margins on farms. The need for innovation and creativity in product and market development to increase farmers’ bottom lines is especially important in Pennsylvania. Farm families in the Commonwealth would commonly tell you that achievement of profitable farms is challenging in today’s world. And there is common concern whether today’s opportunities will be sufficient to retain long-term economic viability of their farms in the future.

The quest for development and marketing of new and innovative agricultural products has, in some ways, has become an obsession in the industry. Individuals in agriculture and agribusiness have been actively searching for that single new or innovative product that will provide a financial bonanza to farming operations and give farmers much greater peace of mind in daily managing the farm’s economic risks.

From ethanol production, to efforts to expand aquatic production on farms, to development and use of genetics in farm production, innovative concepts have raised the hope and excitement among ag producers that more lucrative farm products to help them sleep much better at night are on the immediate horizon. However, a number of what appeared to be “can’t miss” ideas for agriculture and agricultural production have not fully lived up to the potential that they were initially believed to be.

The National Council of State Legislatures reports that twenty-two states have enacted laws related to industrial hemp production and marketing. Seven of these have enacted pilot programs for agricultural and academic research similar in nature to the program envisioned in Congress, when Congress enacted its hemp authorizing legislation in the 2014 farm bill.

I did attempt to contact Farm Bureau staff of the seven states whose statutes enable the performance of hemp research and study. One comment that was offered, and I thought worth sharing with you, was that if the state intends to implement a worthwhile program of hemp research and study, it must develop a definitive plan that coordinates and prioritizes funding for research and study activities. Without a serious effort by the state to coordinate and timely commit funding for hemp research and study projects, performance of research and study activities can become disjointed, haphazard, and far less helpful in revealing and responding to challenges that participants in hemp production and development may face.

As with other opportunities for expansion of product development and creation of new products, Farm Bureau certainly sees the potential benefit that increased efforts in production and marketing of hemp in Pennsylvania can provide to the Commonwealth’s agricultural economy. And Farm Bureau supports legislation such as Senate Bill 50 and House Bill 967 that will authorize and facilitate more active pursuit of available opportunities.

But we don’t want to overstate our belief and what many in agriculture believe to be the degree of economic benefit that pursuit hemp production and marketing may provide to Pennsylvania. Production of hemp does show promise as a viable production commodity for Pennsylvania farms. But we don’t necessarily see more concentrated pursuit of hemp production and product marketing alone as a cure-all to the economic challenges that farm families in the Commonwealth may face in future operation of their farms.

There are several practical challenges that must be overcome in advancing the production and marketing development of hemp and hemp products, just as there are with many “new” industries. There is not currently in place an integrated, nationwide strategy for product development, handling and marketing of hemp from farm to consumer.

At this point the degree of genuine interest among consumers for hemp and hemp products is not fully known, and must be evaluated and understood. Public acceptance of innovations in agriculture and the food industry has, in recent history, been mixed. Consumers have not been willing to blindly accept the high praises made by agricultural industry about their new or innovative products.

Ideas for products that appear to be impeccable in theory have failed to pan out economically, because of actual or perceived problems with the product itself or the way in which the product is made. In the aggressive pursuit of production of that “hit” farm product, the agricultural industry has not accurately analyzed the degree to which the product is satisfying the wants or needs of specific consumer types or is compatible with the personal values individual consumers or consumer types hold, resulting in substantial economic loss to persons and groups making serious investment in that pursuit.

These days, producers and marketers must consider not only how useful or beneficial a new product may be to consumers’ daily lives but how compatible the product and its production practices are, actually and perceptually, with consumers’ social consciousness, personal values and self-image. Marketing of legitimate food products and use of beneficial production and processing practices have become dashed by nightmarish perception and image problems.

And there are legal issues that could arise and potential burdens and consequences that can befall farmers and others in the pursuit of hemp production today. Regardless of what hemp production and marketing activities that Pennsylvania or any other state may individually want to authorize within the state’s borders, that authority is legally countermanded by the more stringent limitations, regulation and enforcement and criminal and civil sanctions that are broadly prescribed for marijuana under federal drug laws.

Cannabis plants – even those whose use and usefulness are strictly limited to hemp product production – are still considered a “controlled substance” under federal drug statutes. And while Section 7606 of the Farm Bill may provide some limited exception to the production and marketing of certain cannabis plants for “pilot study” and “research,” through a state’s department to agriculture or an “institution of higher learning” (i.e. a college or university), the statutory language of Section 7606 does not provide the type of clarity or detail that ensures persons engaged in a state program have absolutely met this exception.

Section 7606 does not prescribe the degree or quality of “research” or “study” that needs to be performed pursuant to the state’s limited authority, when engagement of production and marketing activities goes beyond the scope of what participants may perform under the Section’s limited authority, or the degree of administration or administrative oversight that a state department of agriculture or a university must perform as condition for authority of the state or its participants to grow and market hemp.

Failure by a state or its participants in hemp production and marketing to comply with the conditional requirements of Section 7606 subjects those persons to criminal prosecution and sanctions of federal drug laws, as well as seizure of a person’s land and other assets as contraband. If the state program does not meet the Section 7606’s prerequisites for authorization, land owned by farmers growing industrial hemp plants may become vulnerable to land seizure actions by federal authorities.

It is also worth noting that portions of land in “legal” cannabis is being grown pursuant to Section 7606 may become targets for growth of “illegal” cannabis by neighbors for personal recreational use or by local criminals or criminal enterprises for illegal marketing to recreational users. That possibility may create practical vulnerabilities and consequences for landowners in the wake of enforcement actions by federal and state authorities.

You may have heard about the unexpected, cumbersome and potentially dangerous outcomes and circumstances recently experienced by producers, marketers and handlers of cannabis in a state that has essentially authorized the production and marketing of cannabis for medical or recreational use, because of uncertainty and incompatibility of their state’s laws with federal drug laws, which still predominantly treat such production and marketing as illegal. Mainstream financial institutions have been reluctant to finance transactions from production and marketing of cannabis or receive or handle the monetary proceeds from these transaction, out of fear federal authorities will aggressively pursue transaction monies as contraband and cast a broad net of freeze and seizure upon other assets the institution may hold. In the absence of financial participation by financial institutions, large-volume producers and marketers of cannabis products have had to complete their sales to buyers strictly through cash transactions. Huge sums of cash were being transported, transferred and stored, which not only placed the sellers in a conundrum what to do and where to go with the money after the transaction but also placed those who actually moved, received and handled the cash at great personal risk of being harmed by from attempted robberies by criminals.

While it may be a bit extreme to draw an exact parallel of the experience of some states that have authorized production, marketing and use of medical and recreational marijuana with what Pennsylvania would authorize in production and marketing of hemp, it does illustrate the need to more carefully consider and effectively minimize the potential consequences that incongruity with federal law may pose for persons who produce market industrial hemp cannabis and cannabis products under Pennsylvania’s authorizing statute.

The simple solution to avoid many of these potential maladies is to change federal law to at least exclude the type of cannabis plants used for industrial hemp production as a federally controlled substance. Farm Bureau supports this change in federal law. But we obviously realize such change is beyond what you and your colleagues in the General Assembly are legally able to do.

Pennsylvania Farm Bureau encourages you to move forward in enacting enabling legislation that will allow Pennsylvania to engage in production and marketing of hemp and hemp products, consistent with the authority provided to the Commonwealth under the federal Farm Bill. But we also ask that you remain vigilant in ensuring the application and enforcement of ambiguities in federal statutes are not used abusively or arbitrarily against persons acting in good faith to comply with law while participating in production and marketing of hemp in the Commonwealth.

Thank you again for the opportunity to share our views in this matter. I would be happy to answer any questions you may have.