The U.S. Department of Agriculture’s interim final hemp production rules are now available. They were published Oct. 31 in the Federal Register and public comment will be allowed for 60 days on the USDA website.

Several more steps are required to the process to finalize Texas industrial hemp rules, according to Texas A&M AgriLife Extension Service specialists working with hemp.

Hemp refers to the Cannabis plant with tetrahydrocannabinol, THC, concentration of not more than 0.3 percent on a dry-weight basis. Cannabidiol, or CBD, is the most referenced product aligned with hemp production, but non-consumable hemp products include cloth, cordage, fiber, fuel, paint, paper, particleboard and plastics.

Texas action

Tiffany Dowell Lashmet, AgriLife Extension agricultural law specialist, said a significant portion of the USDA rules tell tribes and states outlining their own hemp production plans what must be included. Another portion puts in place rules for producers in states or tribes that don’t want to create their own plan.

Texas, through the Texas Department of Agriculture, will be submitting a state plan, which must be approved by USDA. Until that happens, no physical procurement of hemp seed, planting or production is allowed in Texas, said Calvin Trostle, AgriLife Extension agronomist in Lubbock.

AgriLife Extension is gearing up to help producers work through the regulatory compliance and production processes.

Once the approved TDA rules are released, there will be requirements for an application and licensing process, fees for application and inspections, notification, rules to govern how industrial hemp will be tested in the field and more.

Production and testing will center on the acceptable hemp THC level, which is 0.3% taking into consideration the measurement uncertainty. Anything testing above the limit will be regarded as “hot” or marijuana and could be subject to destruction.

Agriculture commission general counsel Tim Kleinschmidt said while the rules and regulations process might be wrapped up by February, it will likely be March before the department is ready to begin taking applications for licenses and permits. The statute allows them 60 days to process a license.

Financial risks

Justin Benavidez, and AgriLife Extension economist in Amarillo, pointed out financial risks involved in growing hemp.

USDA published the cost of production per acre as $19,000 per acre.

“When we talk about corn and cotton production here in the High Plains, our budgets talk about a $670-per-acre variable cost for production,” Benavidez said. “So that is considerably higher than what we typically see for crop production here on the High Plains.”

Overall revenues outlined in the USDA rules vary depending on the type of production model, but as far as net returns, they range anywhere from negative $25,000 per acre up to a positive $7,000 per acre, he said. The range depends on whether it is a floral production, grain or fiber model.

Trostle said the higher side of USDA’s production figures are likely to be costs for smaller scale, high CBD production hemp. Larger farms where mechanical means are used, rather than production largely by hand, could be considerably less.

“There’s a lot of risk involved, and it’s certainly something to think about when you are going forward with that hemp production model,” Benavidez said. “If you are seeing a $19,000-per-acre investment on the side of production and then are forced to destroy it because of THC levels, that is something to keep in mind.”