FCA to issue guidance on loans to hemp producers
The Farm Credit Administration will as soon as next week issue guidance to Farm Credit System member institutions on making loans to hemp producers, FCA Chairman and CEO Dallas Tonsager told the House Agriculture Appropriations Subcommittee on April 2.
Tonsager explained the FCA’s plans in response to a question from Rep. John Moolenaar, R-Mich., at a subcommittee hearing on the rural economy at which FCA and farm credit institutions testified.
Tonsager said that the FCA will leave the decision about making loans to hemp producers up to the individual farm credit institutions, since the conditions for growing hemp vary so much from state to state. He noted that the 2018 farm bill made growing hemp “legal” throughout the country, but the law also calls on the Agriculture Department to develop a hemp policy and calls on the secretary of agriculture in each state also to issue regulations.
Jeffery Hall, who is also a member of the FCA board and chairman of the Farm Credit System Insurance Corporation, noted that the Agriculture Department is not expected to issue regulations until the 2020 crop season, and that the states vary dramatically in how quickly they have moved to issue hemp production regulations.
Rep. Andy Harris, R-Md., questioned the Farm Credit System getting involved in making loans to hemp producers. The 2018 farm bill removed hemp from the federal government’s list of drugs on the grounds that its tetrahydrocannabinol (THC) level is so low that it is not psychoactive.
But Harris maintained the Food and Drug Administration will soon regulate cannabinoids (CBD) that are now being promoted for a variety of uses and that the market for CBD may be much smaller than is currently expected. If hemp is grown only for rope, it won’t be profitable, Harris said.
“Why would the Farm Credit System weigh into that in a period of uncertainty?” Harris asked.
Tonsager described developing the guidance on hemp as a “struggle” and said he’s unaware of the debate over CBD.
After he left the hearing, Tonsager told reporters that farm credit institutions have already been making loans in the 10 states that have had hemp growing pilot projects under the 2014 farm bill without any guidance from the FCA.
Tonsager said the FCA wants “to allow the continued growth of an industry that has been promising,” but that the institutions will be told they should take many issues into consideration, including the market for the hemp and whether it can be transported legally. Tonsager said the FCA would need to add the issues raised by Harris to the guidance.
A Tonsager aide noted that the FCA has told FCS institutions they cannot make loans for marijuana production even in states that have legalized it since marijuana is still illegal at the federal level. ❖
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