United States Department of Agriculture

Economic

Research

Service

Economic

Information

Bulletin

Number 217

February 2020

Economic Viability of Industrial 

Hemp in the United States: 

A Review of State Pilot Programs

United States Department of Agriculture

Tyler Mark, Jonathan Shepherd, David Olson, 

William Snell, Susan Proper, and Suzanne Thornsbury
Economic Research Service 

www.ers.usda.gov

United States Department of Agriculture

Recommended citation format for this publication:

Mark, Tyler, Jonathan Shepherd, David Olson, William Snell, Susan Proper, and Suzanne 

Thornsbury. February 2020. Economic Viability of Industrial Hemp in the United States: 

A Review of State Pilot Programs, EIB-217, U.S. Department of Agriculture, Economic 

Research Service.

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United States Department of Agriculture

Economic

Research

Service

Economic

Information

Bulletin

Number 217

February 2020

Abstract

After a hiatus of almost 45 years, the Agricultural Act of 2014, Public Law 113-79 (the 2014 

Farm Bill) reintroduced industrial hemp production in the United States through State pilot 

programs. U.S. industrial hemp acreage reported by State pilot programs increased from 0 in 

2013 to over 90,000 acres in 2018, the largest U.S. hemp acreage since the 146,200 acres grown 

in 1943. While the U.S. hemp industry grew rapidly and commercial hemp production was 

legalized again by the 2018 Farm Bill, the industry’s long-term economic viability is uncertain. 

This study documents outcomes and lessons learned from the State pilot programs and examines legal, agronomic, and economic challenges that may affect the transition from the pilot 

programs to economically viable commercial production. Competition with alternative crops for 

acreage, global competitiveness, market transparency, and the ability to manage regulatory and 

market risks will determine patterns of development in the emerging U.S. hemp industry. 

Keywords: hemp, cannabidiol, CBD, pilot program, infant industry, Farm Bill

Acknowledgments

The authors thank State departments of agriculture staff for answering questions, Fred Gale 

for providing China data, Travis Minor for helpful reviews and edits, and David Marquardt for 

producing the maps. We also thank the following individuals for technical peer reviews: Dawn 

Thilmany, Associate Department Head and Professor, Agricultural and Resource Economics 

at Colorado State University; Aaron Smith, Associate Professor, Agricultural and Resource 

Economics at the University of Tennessee, Knoxville; and Bill Liefert, Senior Economist at 

USDA, Economic Research Service (ERS). Thanks also to Jana Goldman and Cynthia A. Ray 

with USDA, ERS for editorial and design services.

About the Authors

Tyler Mark is Associate Professor, Jonathan Shepard is Extension Farm Management Specialist 

and graduate student, and William Snell is Extension Professor and co‐director for the 

Kentucky Agricultural Leadership Program, all in the Department of Agricultural Economics 

at the University of Kentucky. David Olson and Suzanne Thornsbury are economists with 

USDA, ERS. Susan Proper is a former USDA ERS economist. 

Economic Viability of Industrial 

Hemp in the United States: 

A Review of State Pilot Programs

Tyler Mark, Jonathan Shepherd, David Olson, 

William Snell, Susan Proper, and Suzanne Thornsbury
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Economic Viability of Industrial Hemp in the United States: A Review of State Pilot Programs, EIB-217

USDA, Economic Research Service

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

State Pilot Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Support and Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Lessons Learned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Moving Beyond the Pilot Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

2018 Farm Bill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Hemp Beyond 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Global Context for Hemp . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Economic Viability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Competition for Acreage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Global Competitiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Market Transparency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Risk Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Regulatory Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

Appendix A: A Brief History of U.S. Hemp Before the 2014 Farm Bill . . . . . . . . . . . . . . . . . . 39

Appendix B: Individual State Pilot Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

Appendix C: Uses of Hemp . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63

Appendix D: Literature Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

Appendix E: Selected Legislation Relevant to Hemp . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

Marihuana Tax Act of 1937 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

2014 Farm Bill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

2018 Farm Bill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

Contents

Errata

On August 10, 2020, Appendix B tables were updated to reflect that the reported 2018 greenhouse areas for Montana, Vermont, and West Virginia were not available (N/A) and the 2017 

greenhouse area for Minnesota was also not available (N/A). Vermont processor numbers in 

2016 were updated to 1 (grain), 3 (CBD), and 4 (total). Values in the associated charts and text 

were correct and are unchanged.
ERS is a primary source 

of economic research and 

analysis from the U.S. 

Department of Agriculture, 

providing timely information on economic and policy 

issues related to agriculture, 

food, the environment, and 

rural America.

United States Department of Agriculture

A report summary from the Economic Research Service February 2020

Economic Viability of Industrial

Hemp in the United States: 

A Review of State Pilot Programs

Tyler Mark, Jonathan Shepherd, David Olson, William Snell, 

Susan Proper, and Suzanne Thornsbury

What is the Issue?

After a hiatus of almost 45 years, the Agricultural Act of 2014, Public Law 113-79 (the 2014 

Farm Bill) reintroduced industrial hemp production in the United States through State pilot 

programs. Beginning in 2014, States with laws that allowed growth or cultivation of industrial 

hemp could establish a pilot program or conduct research on the crop. Production beyond the 

pilot programs was legalized in the Agricultural Improvement Act of 2018, Public Law 115-334 

(the 2018 Farm Bill). This study documents outcomes and lessons learned from the State pilot 

programs and examines legal, agronomic, and economic challenges that may affect the transition from the pilot programs to economically viable commercial production. 

What Did the Study Find?

Under the pilot programs, United States industrial hemp acreage reported by States increased 

from zero in 2013 to over 90,000 acres in 2018, the largest U.S. hemp acreage since the 146,200 

acres planted in 1943. 

The State pilot programs restarted production of a crop that had not been grown in the United 

States for decades. Some challenges became apparent: 

• establishing State legislation that allowed hemp to be grown or cultivated; 

• acquiring critical production inputs (e.g., seeds, insecticides, herbicides) and credit; 

• inconsistency between State requirements; and

• lack of basic data and information for decision-making. 

The 2018 Farm Bill addressed many of the challenges identified in the pilot programs or authorized subsequent regulations to address them.

The pattern of establishment and expansion of industrial hemp was influenced by existing infrastructure, public sector support, relative profitability of alternative enterprises, and ultimately 

market development and economic returns. After the pilot programs, acreage continued to 

expand with 146,065 acres of hemp reported as planted to the U.S. Department of Agriculture’s 

(USDA) Farm Service Agency in 2019. 

www.ers.usda.gov

United States Department of Agriculture

Economic 

Research 

Service

Economic 

Information 

Bulletin 

Number 217

February 2020

Economic Viability of Industrial 

Hemp in the United States: 

A Review of State Pilot Programs

United States Department of Agriculture

Tyler Mark, Jonathan Shepherd, David Olson, 

William Snell, Susan Proper, and Suzanne Thornsbury

Summary
By December 2019, hemp could be grown legally in every State except Idaho, Mississippi, and South Dakota. 

As with other crops, it is not likely that hemp will be economically viable in every State. Even if barriers to 

entry are low, growers are not likely to plant or process hemp if more profitable options exist. States that moved 

quickly to establish pilot programs were not leading producers of competing major field crops. 

Long-run economic viability will be affected by factors including

• competition from other domestic crops for acreage, 

• global competitors in hemp and hemp products, 

• market information and transparency, and 

• the regulatory environment. 

 How Was the Study Conducted?

This study is based on a collection of the available data drawn from State pilot program annual reports, 

website information, USDA’s Farm Service Agency, unstructured discussions with State staff, and thirdparty information. Study results provide a detailed synthesis of the pilot programs established by the 2014 

Farm Bill and identify lessons learned including factors that will affect economic viability of the industry 

moving towards commercial production. There is no systematic comprehensive data source regarding the 

emerging United States hemp industry or requirement to report a consistent set of data for the pilot programs. 

States collected data at various times and levels of aggregation. For example, some States report hemp data 

by intended end use (i.e., grain, fiber, cannabidiol (CBD) or other extracts) while others do not report data. 

Some States categorize applicants separately as processors or growers while other States report only total 

applicants. To provide the most complete information available on each pilot program, we have not tried to 

consolidate information about licensing and applications when categories are inconsistent. Since the data are 

from various sources, and reporting categories and definitions vary, caution should be used in adding State 

data from multiple sources to reach national or regional statistics. 

www.ers.usda.gov
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Economic Viability of Industrial Hemp in the United States: A Review of State Pilot Programs, EIB-217

USDA, Economic Research Service

Economic Viability of Industrial 

Hemp in the United States: 

A Review of State Pilot Programs 

Introduction

After a hiatus of almost 45 years, the Agricultural Act of 2014, Public Law 113-79 (the 2014 Farm 

Bill) reintroduced industrial hemp production in the United States.1 The 2014 Farm Bill allowed 

State departments of agriculture and institutions of higher education to legally grow and cultivate 

hemp for purposes of research or to license growers in their State for these activities. States with 

laws that allowed growth or cultivation of industrial hemp could now establish a pilot program and 

conduct research on the crop. Although some States had small university-based hemp research projects on specific agronomic topics, most of the pilot programs licensed individual producers to grow 

hemp under the supervision of the State agriculture department or a university to explore general 

issues of agronomic and economic viability.2 Commercial production of hemp outside of the pilot 

programs was not allowed. Hemp is a versatile plant with a number of potential end-uses, including 

food from hemp seed, fiber from hemp stalks, and oil from the flowers and seeds. State pilot 

programs varied in the uses approved. 

1Section 7606, entitled “Legitimacy of Hemp Research,” defines industrial hemp as “the plant Cannabis sativa L. and any 

part of such plant, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on 

a dry weight basis.” Delta-9 tetrahydrocannabinol (THC) is the psychoactive ingredient in marijuana. Including that definition of industrial hemp as the legal definition in 7 U.S.C. 5940 was a critical step in allowing hemp production to restart in 

the United States. This was the first time in decades that hemp was legally defined as a crop different from marijuana (see 

Appendix A: A Brief History of U.S. Hemp Before the 2014 Farm Bill).

2In this report, the term “pilot program” refers to the entire set of industrial hemp-related activities conducted within a 

State under auspices of either the State department of agriculture or a university.
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USDA, Economic Research Service

State Pilot Programs

Although authorized in 2014, State pilot programs varied significantly in their date of establishment, the extent of hemp production, and how they were supported and managed. In 2014 only 

four States (Colorado, Indiana, Kentucky, and Vermont) reported hemp planted on a total of 1,866 

acres; Colorado alone accounted for 97 percent of that acreage.3 Many additional States had regulations and licensing procedures under development but were unable to pass legislation or establish 

pilot programs until after 2014. In 2015, Tennessee, Oregon, and Virginia added pilot programs, 

and several other States had passed legislation but did not plant hemp until the following year.4 The 

number of States with pilot programs increased steadily in 2016 and 2017, and by 2018, 22 States 

reported hemp planted on a total of 90,017 acres nationwide (Figure 1).5 Only three States (Idaho, 

Mississippi, and South Dakota) lacked legislation in place to allow hemp programs after 2018. 

Figure 1

Years of industrial hemp planting reported by States from 2014 to 2019

 

Source: USDA, Economic Research Service calculations based on data reported by State pilot programs.

3Kentucky and Vermont also reported nine and four processors in 2014, respectively. 

4Virginia established a pilot program in 2015 but reported no producers or processors. 

5Additional information on State pilot programs is presented in Appendix B: Individual State Pilot Programs. 
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Economic Viability of Industrial Hemp in the United States: A Review of State Pilot Programs, EIB-217

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The earliest pilot programs, established in 2014 and 2015, were not necessarily the largest by 2018. 

While Colorado, Kentucky, and Oregon licensed individual growers and expanded their programs 

quickly, some other early pilot programs remained small experimental projects. For example, 

Indiana reported 5 acres of hemp planted in 2015 and reported only 16 acres in 2018. Other pilot 

programs established after 2015, notably Montana, were able to expand quickly and became some 

of the largest U. S. hemp producers.6 Beginning in 2015, USDA’s Farm Service Agency began 

collecting data on hemp acreage planted.7 However, similar to other crops, not every grower participates in Farm Service Agency programs and so, as expected, reported acreage planted is lower than 

the totals reported by State pilot programs (Figure 2). Some advocacy groups also collected data. 

Beginning in 2016, Vote Hemp published an annual hemp crop report that included estimates of 

acreage grown.8

Some States licensed greenhouse space as well as field acreage in the pilot programs. By 2018, 13 

States reported only field production while 9 additional States were showing both field and greenhouse growers. Like field acreage, greenhouse plantings grew rapidly between 2014 and 2018. 

Colorado, Massachusetts, Minnesota, Nevada, New York, Pennsylvania, and Oklahoma all reported 

greenhouse production of more than 10,000 square feet (0.23 acres) by the 2018 crop year. Colorado 

alone had nearly 5 million square feet (approximately 114 acres) of greenhouse hemp. Some of the 

greenhouse space is used for growing seedlings, clones, and seeds, rather than for growing plants for 

harvest. USDA added hemp to the organic certification program in 2016, in response to stakeholder 

demand, which was a popular option in some States (Dingha et al., 2019).9

Nationally, the number of producers reported to have approved hemp licenses increased from 292 in 

2014 to 3,852 in 2018, although many of these producers were small (Figure 3). Because of various 

legal and logistical issues, not all the licensed producers planted hemp or planted as many acres as they 

had licensed. However, the number of approved licenses more than doubled between 2017 and 2018. 

Information about the number of hemp processors is even more difficult to ascertain. Some States 

with pilot programs did not have a separate application or license requirement for processors, so 

the data on nationwide processor numbers are limited and do not reflect the extent of the pilot 

programs.10 Based on the data that are available, there was an increase in processor applications 

between 2014 and 2018. There were 823 processors reported by State pilot programs in 2018, 

however, this does not capture missing data, size of operations, or if the processors were active. In 

some cases, growers may also license themselves as processors if they plan to process the hemp 

beyond its first stage or produce an end-use hemp product.11

6Reported planted acreage in Montana expanded from 550 in 2017 to 22,000 in 2018. 

7During the pilot programs, USDA, Farm Service Agency data include only data reported by Agency customers and are a 

simple total of reported acres. 

8Vote Hemp reports planted acreage for States where data are available, and estimates planted area for other States at 70% 

of licensed hemp acreage. 

9Organic hemp is subject to the National Organic Program regulations at 7 CFR Part 205 National Organic Program. As 

of mid-November 2019, Program data indicate 15 or more certified organic operations in 5 States (Wisconsin, Colorado, New 

York, California, and New York) that included hemp in their certification. 

10For example, data on processors from Colorado are not available, and Tennessee did not require processors to have a 

license after 2016. 

11Some States issued processing licenses at no additional cost if an applicant paid for a grower license, whether the 

grower had any intention of processing on any meaningful scale. Some States required additional licenses for activities such 

as transportation of hemp or hemp products. 
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Economic Viability of Industrial Hemp in the United States: A Review of State Pilot Programs, EIB-217

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Figure 2

Reported U.S. hemp acreage and greenhouse area, 2014-2018 

Acres

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

2014 2015 2016 2017 2018

Acres reported by States

FSA acres

Vote hemp acres

GH Sq Ft reported by States

Greenhouse 1,000 Sq Ft

Note: FSA = Farm Service Agency. GH Sq Ft = Greenhouse square feet. Not all States reported data on the same basis. 

Reported acreage may include planted, harvested, and/or licensed or approved acreage. Not all States reported greenhouse 

data. Farm Service Agency data include only data reported by Agency customers and are a simple total of reported acres. 

Source: USDA, Economic Research Service calculations based on data reported by State pilot program, USDA, Farm 

Service Agency, and Vote Hemp. 

Figure 3

Approved U.S. producer hemp licenses, 2014-2018

Licenses

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

2014 2015 2016 2017 2018

Source: USDA, Economic Research Service calculations based on data reported by State pilot programs. 

Table 1 provides detailed information on the status of the pilot program in each State as of 2018. By 

2018, Colorado, Kentucky, Montana, and Oregon were the only States reporting more than 5,000 

acres of hemp planted. Most other States still had relatively small programs, even though pilot 

programs had been authorized since 2014. 
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Economic Viability of Industrial Hemp in the United States: A Review of State Pilot Programs, EIB-217

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Table 1Hemp Acreage and Participation Reported by State Pilot Programs, 2018

State 2018 Area by Type and Intended Use Number of Processors 2018 Range of Fees Number of Approved Applicants Number of Employees in State’s Program2Colorado

Grain

$500 application plus $5/acre and/or $3. 00/1,000 sq ft

Registrants1 835 FT 3. 5

Fiber Registrations1 1,075 PT (FTE) 0

CBDTotal acres 30,950GH SQ FT 4,788,523 Total 95

Hawaii

Grain 2

Information not available

Grower application fee $500+$250 grower licensee fee+$40/hour for inspection+laboratory testing costs plus $2/acre + $. 33/sq ft 

Approved3 10 FT 1

Fiber PT (FTE) 0

CBDGH SQ FT 1,000

Illinois

Grain

Information not available

No fees for 2018; fees beginning 2019University4

Approved 3 FT N/A

Fiber 3 PT (FTE) N/ACBDTotal acres 1

Indiana

Grain 5 Grain 1

No fees for 2018; fees beginning 2020

Approved 11 FT 2

Fiber 11 Fiber 0 University 1 PT (FTE) 0

CBD CBD 0Total acres 16

Kentucky

Grain 2,337 Grain 18

$100 Grower application + $400 per address + $250 for secondary THC5 test (if required); Processor fees $500-$3,000; Broker/Handler/Seed Dealer $500; Site modification fee $750

Approved 210 FT 3

Fiber 335 Fiber 25 University 14 PT (FTE) 2

CBD 4,028 CBD 49GH SQ FT 750,812

Total acres 6,700Cert seed acres 2,875
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Economic Viability of Industrial Hemp in the United States: A Review of State Pilot Programs, EIB-217

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State 2018 Area by Type and Intended Use Number of Processors 2018 Range of Fees Number of Approved Applicants Number of Employees in State’s Program2Maine

Grain

No record for Maine; growers and processors use same application

$100 application per non-contiguous location + $500 license + $50/acre

Approved 82 FT 0

Fiber PT (FTE) 0. 65

CBDTotal acres 550

Massachusetts

Grain Grain 0

$100 application fee + $300 grower fee + $150 for second THC test if applicable

Approved 14 FT 4

Fiber Fiber 0 PT (FTE) 1

CBD CBD 9Total acres 21 Total 9GH SQ FT 15,050

Minnesota

Grain 623 Grain 2 $37 application fee + 

$550 grower participation fee + $250 for THC testing beyond 1st test if required + $100/location fee; $350 each for processor, broker/handler, or seed dealer license

Approved 65 FT 2

Fiber 14 Fiber 0 University 1 PT (FTE) 0

CBD 72 CBD 6Total acres 709GH SQ FT 55,000

Montana

Grain Grain 0

$450 application + $250 per THC test; Seed dealer $55 (standard for all seed dealers in MT)

Approved 58 FT 1

Fiber Fiber 1 University 2 PT (FTE) 0

CBD CBD 2Total acres 22,000Cert seed acres 22,000

Nevada

Grain

Information not available Information not available

FT 3

FiberCBD

PT 

(FTE) 0

GH SQ FT 176,912Total 1,523

Table 1Hemp Acreage and Participation Reported by State Pilot Programs, 2018—continued
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Economic Viability of Industrial Hemp in the United States: A Review of State Pilot Programs, EIB-217

USDA, Economic Research Service

State 2018 Area by Type and Intended Use Number of Processors 2018 Range of Fees Number of Approved Applicants Number of Employees in State’s Program2New York

Grain Grain 0

$500 grower fee; $500 processor fee

Approved 104 FT 2

Fiber Fiber 14 University 2 PT (FTE) 3

CBD CBD 22

Total 720

GH SQ FT 66,615

North Carolina

Grain NR Grain $250 application + $250 

grower participation fee + $59 for 1st inspection & $150 for 2nd inspection + $2/acre for 49-500 acres and/or $2/1,000 sq ft 

Approved 450 FT 10

Fiber NR Fiber University 20 PT (FTE) 0CBD NR CBD

GH SQ FT NR Total 300

Total 3,184

North Dakota

Grain Grain 0

$150 for either grower or processor + $25/ac

Approved 27 FT 1

Fiber Fiber 5 University 2 PT (FTE) 0

CBD CBD 0Total 2,800

Oklahoma

Grain

Information not available

$500 application fee + $5/acre +$500/location fee + $. 33/sqft (if applicable) + $35/hr inspection fee + actual cost of THC testing; $100 seed dealer license fee

Approved 28 FT N/A

Fiber PT (FTE) N/A

CBDGH SQ FT 63,000

Total 4 

Cert seed acres

447

Oregon

Grain Grain $1,300 grower participation fee +actual cost 

of THC testing; $1,300 processor fees; $120 seed dealer fee

Approved 584 FT 2

Fiber Fiber PT (FTE) 5

CBD CBDTotal 11,754 Total 212

Table 1Hemp Acreage and Participation Reported by State Pilot Programs, 2018—continued
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State 2018 Area by Type and Intended Use Number of Processors 2018 Range of Fees Number of Approved Applicants Number of Employees in State’s Program2Pennsylvania

Grain Grain 1

$250 application + $2,000 participation fee + $150 each for 1st and 2nd THC test if applicable + $100 site modification fee

Approved 35 FT 2

Fiber Fiber 0 University 3 PT (FTE) 1

CBD CBD 2Total acres 585 Total 3GH SQ FT 18,000Cert seed acres

11

South Carolina

Grain Grain 0 $50 app + $400 permit 

for growers; $100 app + $3,000 license for processors

Approved 20 FT N/A

Fiber Fiber 1 PT (FTE) N/A

CBD CBD 1Total 1,600 Total 2

Tennessee

Grain

Information not available

Grower application fee $250 + $35/hr for field inspections + $175 THC testing + $2/acre; processor fee $250University

Approved 226 FT 0

Fiber 3 PT (FTE) 2CBDTotal 1,034

Vermont

Grain Grain 1 $25 application fee + 

$120 for 1st THC testing + Seed dealer fees based on tonnage

Approved 461 FT 0

Fiber Fiber 2 University 1 PT (FTE) 1. 5

CBD CBD 20Total 3,290

Virginia

Grain Grain 0

$45

Approved 85 FT 0

Fiber Fiber 20 University 85 PT (FTE) 0

CBD CBD 0

Total 135 Total 20

Table 1Hemp Acreage and Participation Reported by State Pilot Programs, 2018—continued
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State 2018 Area by Type and Intended Use Number of Processors 2018 Range of Fees Number of Approved Applicants Number of Employees in State’s Program2Washington

Grain Grain 0 $450 each for grower 

or processor/marketer application; $800 for combination (grower/processor/marketer license) application +$300 licensee fee (for all) +$200 inspection+ mileage fee + time fee. THC testing $200-$2,000

Approved 11 FT 0

Fiber Fiber 9 PT (FTE) 0

CBD CBD 0Total 142 Total

West Virginia

Grain

data not available

$100+$5/ac + inspection $35/hr plus driving time; $150 per THC test per sample

Approved 46 FT 2

Fiber University 1 PT (FTE) 1

CBDTotal 155

Wisconsin

Grain Grain small # Application fee: 

0-30 acres=$150; 31-199acres=$5/acre; 200ac+=$1,000 + $350 grower participation fee + $250 each for 1st and second THC test; $100 processor fee; $50 site modification fee (plus any acreages fee changes); change of farm manager fee = $15 (to cover cost on new background check)

Approved 247 FT 0

Fiber Fiber small # PT (FTE) 5

CBD CBD 100

Total 1,700 Total 100+

GH SQ FT NA

Note: CBD = cannabidiol; PT = part time; FT = full time; FTE = full time equivalent; GH = greenhouse; SQ FT = square feet; THC = tetrahydrocannabinol; NA = Not available. 1Colorado used the terminology “registrants” to refer to the individuals or entities who applied to grow hemp and “registrations” to refer to sites (i.e. land areas) covered by the license. There could be multiple registrations for each registrant. 2States defined staff participation differently. In some cases, only a portion of a “full-time” employee was assigned to the hemp pilot program. In other cases, multiple “part-time” employees were assigned to the hemp pilot program and were aggregated to a full time equivalent (FTE) reported number. 3Approved is the number of licenses approved. 4University is the number of universities with approved licenses. 5THC is delta-9 tetrahydrocannabinol. 

Table 1

Hemp Acreage and Participation Reported by State Pilot Programs, 2018—continued

Source: USDA, Economic Research Service calculations based on data reported by State pilot programs. Area may include licensed, planted, or harvested acres and/or greenhouse (sq ft) depending upon data the State collects and reports. 
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Support and Management 

States adopted a variety of approaches to support and manage their hemp pilot programs (Table 

2). All States with pilot programs ultimately charged fees to cover at least a proportion of program 

costs, although fee schedules varied widely, and some States did not begin charging until 2018 

or 2019. Some States charged a single fee per application, while others charged by per planted or 

intended planted acre. Fees often varied significantly between producers, processors, and brokers, as 

some (but not all) States included different categories of licensees. 

Table 2

State pilot program support and management characteristics

Program Similarities Program Differences

Support Fees to Cover Program Costs Fee Schedule

Small Staff University Extension

Management THC Testing Required THC Sampling, Testing Procedures, 

and Costs 

Background Checks Stakeholder Engagement

GPS Field Locations Seed Source Requirements

Annual Reports Detail of Data Collected

Note: THC = delta-9 tetrahydrocannabinol. GPS = Global Positioning System.

Source: USDA, Economic Research Service compilation. 

Most States had fewer than five people to implement and oversee the pilot programs. Even by 2018 

as the number of applications increased, program support staff remained small (Table 3). Partly 

because of the plethora of optimistic speculative market analysis for hemp, many potential growers 

were new to agricultural production. Existing staff with expertise in addressing stakeholder needs 

for conventional crops were not as familiar with the rapidly changing economic, agronomic, and 

legal issues involved with growing hemp and reliable consistent information was not readily available. Most States did not necessarily have the resources to expand staff numbers and capabilities, 

even as hemp production rapidly increased. At levels of production in the thousands of acres per 

State at most, the cost for additional staff dedicated to industrial hemp may be difficult to justify. 

However, this creates challenges in supporting a new industry with elevated regulatory and reporting 

standards. Additional support was provided by university Extension services in some States, while 

others did not have these resources available during the pilot programs.12

Table 3

Average staff responsibility for hemp pilot program in States with reported data

Coverage per Staff Person

Production Average Minimum Maximum

Field Acres (n=17) 2,479 4. 2 22,000

Greenhouse Square Ft (n=8) 203,514 1,000 1,368,149

Processor Number (n=13) 12.6 0.5 30.3

Source: USDA, Economic Research Service calculations based on data reported by State pilot programs, 2018. 

12University extension programs have been developing additional resources as interest in hemp grows. For example, 

Cornell is offering a Plant and Soil Science degree in hemp and Vermont is offering a medical degree in hemp. Indiana and 

Kentucky both have recently hired a dedicated staff person and Oregon has a global hemp center. Oregon and Kentucky both 

have hemp work groups. 
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Management of the pilot program components varied widely. In the pilot programs, product testing 

was required by all States to help producers show that the THC (delta-9 tetrahydrocannabinol) content 

met the legal definition of industrial hemp. Hemp is unlike other crops because of the requirements for 

background checks, coordination with law enforcement, and THC sampling and testing. THC content 

can vary widely depending on which part of the plant is selected for testing and when in the plant life 

cycle it is tested. For example, THC is concentrated in the flowering portion of a hemp plant. In some 

cases, States provided the testing with or without a separate fee. Other States required certified testing 

by third parties. Testing methods, standards, and costs varied widely which added uncertainty and 

could lead incentives for growing and/or processing hemp to vary between States. 

The Hemp Industry Association established voluntary process control standards for hemp producers 

and for verifying THC content in 2019, but the guidelines were not in place during the pilot 

programs (U.S. Hemp Authority, 2019). The American Society for Testing and Materials has a 

cannabis standards committee, but the standards themselves were still under development and not 

available for the pilot programs (ASTM, 2017). 

Most States required background checks for producers and required producers to provide Global 

Positioning System location information on their hemp fields and submit to audits or spot checks of 

the crop.13 Some States established advisory boards or commissions to promote industrial hemp. 

Engaging stakeholders through boards or commissions provided useful input and could supplement State support staff, but also required time and resources to convene and manage. All States 

produced annual reports, although the level of data collected, detail provided, and accessibility 

varied widely.14

Challenges

Overall, the hemp pilot programs were successful in restarting production of a crop that had not 

been grown in the United States for decades. However, some challenges became apparent: establishing State legislation that allowed hemp to be grown or cultivated; acquiring critical production 

inputs (e. g. seeds, insecticides, herbicides) and credit; inconsistency between State requirements; 

and lack of basic data and information for decision-making. 

A few States had strong political consensus to pass hemp legislation on the first attempt, but in other 

cases hemp legislation failed repeatedly, typically because of law enforcement concerns or lack of 

public support. Colorado and Kentucky are two examples of States that included law enforcement 

stakeholders early when establishing their pilot programs. This allowed an early basis for dialogue 

and shared knowledge. The State pilot programs were very responsive to law enforcement concerns, 

and staff were available to answer questions about legal rights to grow and/or process hemp. After 

2014, most States used Kentucky or Colorado’s legislation and administrative procedures as a 

template, with local variations. 

13These requirements are not unique to hemp. Field locations and spot checks are typical requirements by State departments of agriculture and USDA agencies to demonstrate program eligibility and environmental compliance for other existing 

field crops. Coordination with law enforcement and background checks are unique requirements for hemp. 

14Some, but not all, reports are accessible through State websites. For more information, see Executive Summary on how 

this report was conducted. 
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Access to adequate quantities of viable seed was a challenge for many pilot programs because of 

legal challenges for procurement, availability of appropriate strains, and lack of transparent, reliable identification about seed characteristics. There is no systematic source of data on the origin of 

hemp seed planted in the United States. (Federal Register, 2019b). During the pilot programs, viable 

hemp seeds were still subject to U.S. Drug Enforcement Agency (DEA) permitting requirements. 

Marijuana and hemp are the same species of plant, Cannabis sativa L., and cannot be distinguished 

by visual inspection or smell. State legislatures had to balance promoting a new crop with law 

enforcement concerns.15 This issue was not resolved until 2016 though a “Statement of Principles” 

on industrial hemp from the U.S. Drug Enforcement Agency, the U.S. Department of Agriculture, 

and the U.S. Food and Drug Administration (Federal Register, 2016). Imported seeds were still 

subject to DEA restrictions until 2018 when industrial hemp was legally removed from the definition 

of marijuana in the Controlled Substances Act.16

With multiple end-uses for hemp, some strains are better suited for particular products.17 For 

example, strains developed for cannabidiol (CBD) oil use produce shorter plants that are not well 

suited for fiber end products, while strains bred for fiber use produce tall plants that are poorly suited 

for CBD oil or grain. There are significant information gaps about the characteristics of various 

cultivars. Commercial plant breeding programs have mainly focused on hemp fiber, seed, or grain 

production over the past 50 years. Hybrid strains developed outside a commercial plant breeding 

program may not produce consistent results and mainly focus on high THC marijuana. During the 

pilot programs, there was relatively little agronomy research to develop varieties with consistently 

high CBD and low THC content optimal for oil production. As hemp product markets develop, a 

profit incentive may form to develop strains high in CBD oil and plant breeders will likely respond 

in time. 

Even when strains are available for a specific end use, it can be hard for a grower to distinguish 

between them without consistent, standardized identification and/or clear labelling. Some companies 

did offer strains claiming high CBD content, but there was no centralized certification organization 

to verify those claims during the pilot phase. At times, producers found out that the strain selected 

did not meet CBD content or other performance claims only after planting the seed or testing for 

THC. In particular, seeds sold as all female for CBD production sometimes turned out to not be 

female or testing was so limited that claims could not be verified or lacked meaning.18 Since 2016, 

Colorado and Montana have had State programs for certifying hemp strains (Colorado Department 

of Agriculture, 2018; Montana Department of Agriculture, 2019a). Voluntary standards groups, 

particularly the American Society for Testing and Materials, are starting to address certification and 

testing issues. 

15In 2014, U.S. Customs confiscated Italian hemp seed shipments destined for Kentucky because they were considered 

viable cannabis seeds without the U.S. Drug Enforcement Agency permit required by the Controlled Substances Import and 

Export Act. Kentucky sued in court to get the seeds back. (Kentucky Department of Agriculture vs. DEA, U.S. Customs and 

Border Protection, U.S. Justice Department, and Eric Holder, May 2014.) In April 2019, USDA’s Agricultural Marketing Service and Animal and Plant Health Inspection Service issued a joint statement detailing requirements for hemp seed imports 

(USDA AMS, 2019b). 

16U.S. Drug Enforcement Agency and U.S. Food and Drug Administration regulatory authorities were not changed by the 

2014 Farm Bill definition of industrial hemp. 

17For discussion of hemp products, see Appendix C: Uses of Hemp. 

18Only female flowers produce the cannabinoids used for CBD oil.
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During the period of the pilot programs, there were no pesticides registered with the Environmental 

Protection Agency for use on cannabis, either for hemp or marijuana. As of 2019, there were still 

no pesticides recognized as safe for use on hemp under the Federal Insecticide, Fungicide, and 

Rodenticide Act. Some pesticide manufacturers applied to add hemp to the authorized uses for 

existing pesticides registrations in cases where the Environmental Protection Agency previously 

determined the residues will be safe under any reasonably foreseeable circumstances and established 

tolerance exemptions for those residues in or on all raw agricultural or food commodities (Federal 

Register 2019a).19 The Colorado Department of Agriculture has a list of pesticides approved for use 

on cannabis in that State, which has been available since 2016 (Colorado Department of Agriculture, 

2016). Montana has similar guidance on pesticides for use on hemp (Montana Department of 

Agriculture, 2018). 

Likewise, as of November 2019, there were no herbicides explicitly registered for use on hemp. 

Hemp for fiber is grown in high-density plantings that will typically shade out weeds. However, 

hemp for oil extracts or grain is grown in rows with wider spacing where weeds can become a 

problem. In parts of the Midwest where hemp was grown during WWII, volunteer hemp (i.e., ditch 

weed) is itself a relatively common weed. One study in Kentucky evaluated current herbicides for 

suitability for hemp, but more research is required in different areas with different cultivars of hemp 

to produce definitive results (Maxwell, 2016). In areas where hemp or marijuana was grown historically, there may be wild plants or illegal plantings that can crossbreed with planted hemp, causing 

problems with seed quality and THC content. 

During the pilot program, access to credit markets was a challenge for many hemp producers and 

processors. Traditional banks were reluctant to lend on the crop itself as they saw it as too risky. 

Producers who did secure financing often had to rely on equity in their operations in contrast to 

having the hemp crop stand as collateral for a loan. Many processors rely on venture capital for their 

business as other sources can find the financial and regulatory risks outside of their guidelines for 

lending.20

Variability between industrial hemp regulations across States made it challenging for processors to 

operate in multiple States during the pilot programs. Interstate commerce was particularly problematic, given different State hemp laws and testing procedures. For example, inconsistent testing rules 

for THC content can result in a crop that tests as “hemp” in one State being confiscated as “marijuana” as it travels to another State. 

19As of 8/23/19 the Environmental Protection Agency had received ten applications. In December 2019, the Environmental Protection Agency approved adding hemp to the use sites of 10 pesticides. Nine of the products are biopesticides and one 

is a conventional pesticide. 

20The Secure and Fair Enforcement Banking Act of 2019 (H. R. 1595), passed by the House on September 25, 2019, 

generally prohibits a federal banking regulator from penalizing a depository institution for providing banking services to 

a legitimate marijuana-related business. On December 3, 2019 the Federal Reserve Board, the Federal Deposit Insurance 

Corporation, FinCEN, the Office of the Comptroller of the Currency and the Conference of State Bank Supervisors issued a 

statement clarifying the legal status of hemp growth and production and the relevant requirements under the Bank Secrecy 

Act. The statement emphasizes that banks are no longer required to file suspicious activity reports for customers solely 

because they are engaged in the growth or cultivation of hemp and following applicable laws and regulations. In addition, 

USDA, Farm Service Agency issued Notice FLP-807 on October 31, 2019 with Guidance on Making Direct and Guaranteed 

Loans to Hemp Producers. 
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An ongoing challenge for the hemp industry is the collection and sharing of basic data and information foundational to making informed production, processing, and marketing decisions. The absence 

of data on the size and location of growers, buyers, and competitors in this fast-developing industry 

was a significant challenge during the pilot programs. The programs themselves became a data 

source as States produced annual reports of their hemp pilot programs. The economic information 

that was documented focused on fees assessed by State programs on growers and processors and 

employment levels of the pilot programs, although detail and clarity vary significantly from State to 

State. Advocacy organizations also collected and published information on the growing hemp industry.21 The USDA, Farm Service Agency began collecting data on planted hemp acres with the 2015 

crop year.22

Beyond basic data, most agronomic and economic research on hemp is in its infancy, with more 

information currently published in the grey literature than peer reviewed.23 While the grey literature 

can be widely accessible, it is often difficult to distinguish quality or applicability beyond a single 

circumstance. In the pilot programs, there was little objective information on regulatory status for 

CBD oil or economics available which created ongoing challenges for decision-making. 

Lessons Learned 

For industrial hemp, the 2014 Farm Bill was a landmark piece of legislation that reintroduced a crop 

that was last grown commercially in the United States in the 1950s, independent of legal issues. In 

most States, hemp had not been produced commercially in more than 100 years because of limited 

demand for food, fiber, and textile uses. The pilot programs demonstrated that, like many new industries, the pattern of establishment and expansion of industrial hemp is influenced by existing infrastructure, public sector support, relative profitability of alternative enterprises, and ultimately market 

development and economic returns. 

Existing Infrastructure

It is not surprising that pilot program acreage was concentrated in relatively few States. As with 

other crops, it is likely that hemp will not be economically viable in every State. Hemp production 

in the pilot programs ramped up quickly in States where existing infrastructure and/or knowledge 

made barriers to entry relatively lower. Although 23 pilot programs reported acreage and greenhouse 

plantings by 2018, the emerging industry continued to be concentrated where hemp had been grown 

previously or in States with established medical marijuana production. Production developed more 

rapidly in States that had proven agronomically suited to hemp in the past, particularly Kentucky. In 

1917, long before legal restrictions on growing cannabis, the USDA Yearbook reported that nearly 

all the hemp produced in the United States was grown in Kentucky. Kentucky continued as the 

major hemp producing State prior to World War II and had the advantage of many tobacco barns 

that were suitable for drying hemp (Oliver and Hopkins, 1951). In addition, former tobacco growers 

21For example, Vote Hemp published data on acres beginning in 2016 (Vote Hemp, 2019). 

22During the pilot programs, growers participating in FSA programs were required to report information on their crops, 

including hemp. The USDA, Agricultural Marketing Service interim rule, published in October 2019, requires all hemp 

growers to report data to FSA on field acreage, greenhouse or indoor square footage, and intended end-use (e. g. fiber, 

CBD, grain, or seed) of all hemp planted. 

23Grey literature are materials and research produced by organizations outside of the traditional peer-reviewed commercial or academic publishing and distribution channels. See Appendix D: Literature Review for more information. 
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in Kentucky and other States had institutional knowledge associated with high-value/labor-intensive 

field crops and experience using migrant labor and equipment.24

The pilot programs also developed more rapidly in States where they could benefit from the expertise of cannabis producers, particularly Colorado, Montana, and Oregon. States with medical marijuana already had laws and regulations in place that could be modified to address industrial hemp 

and experience from growing cannabis could be transferred to growing hemp. Colorado passed 

legislation in 2016 allowing hemp to be tested for THC content by commercial marijuana retailers 

(Justia US Law, 2016), which has made such testing particularly convenient and inexpensive, further 

contributing to the viability of Colorado’s hemp industry. Colorado was among the first States to 

legalize medical marijuana sales and production. In the longer term, competition for investment 

capital and acreage between hemp and marijuana may ultimately be more of an issue. 

Public Sector Support

Public sector support is one avenue to help overcome barriers to entry where they do exist. Pilot 

programs that were able to plant for the 2014 crop year had strong State government support for 

hemp production, and existing university research. Companies involved in legal hemp or cannabis 

production in Canada invested in processors in Colorado and Kentucky, contributing to the size of 

the pilot programs in these States and the longer term economic viability of commercial production. Various State governments have also invested in promoting hemp, which may contribute to 

economic viability. This has especially been the case in Kentucky and the Pacific Northwest with 

investment in research and development of new uses and products. 

Other States that did not have historic hemp production have provided significant funding to help 

promote recent production within the State. For example, in 2017, the State of New York announced 

$10 million in grant funding to support the hemp industry. This funding was split into two $5 

million components with the first to support research and production of hemp and the second to 

provide capital grants that eligible companies can use to advance hemp processing within the State. 

Relative Enterprise Profitability

Even if barriers to entry are low, growers are not likely to plant or process hemp if more profitable 

options exist. States that moved quickly to establish pilot programs were not leading producers of 

competing major field crops, such as wheat, corn, cotton, or soybeans. Agronomic and/or economic 

limitations on these alternatives may encourage producers towards faster consideration of hemp 

production. In contrast, the Corn Belt States that did produce hemp during WWII, including Illinois 

and Minnesota, had much smaller and later pilot programs while Iowa did not have a pilot program 

at all. 

Conventional field crops, both major and minor, exhibit relatively low switching costs, allowing 

producers to move between crops planted from one year to the next based on several factors, 

including seed and fertilizer costs, land rental prices, labor costs, and the expected value of production. Switching from established field crops into a new minor crop-like hemp is unlikely in the short 

run because of the difficulty of achieving economies of scale for input supplies, harvesting and 

24Hemp may also be a good fit for hops or vegetable growers. For example, Oregon has been identified as a location 

where hemp could be used to spread the costs of existing infrastructure used for harvest and drying of hops (Nesin, 2019). 

Tennessee identified vegetable grower experience with migrant labor as an advantage for growers in that State. 
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planting equipment, and processing. Production variability over time in minor crops is often greater 

as growers are opportunistic in these markets and use them to fill gaps.25

Specialty and minor crops are often agronomically suited to a limited geographic area or economically viable in only a few States. Typically, regional production has centered around a limited 

number of processing plants or contracting companies.26 Many specialty or minor crops have no 

cash or “spot” market and are only grown by growers who have contracts (formal or informal) 

with processing companies. Growing a specialty or minor crop without a contracted buyer can be 

financially risky if there is not an established alternative cash market.27 Producers selling their 

commodity into a thin market can be disadvantaged from a lack of price transparency needed for 

decision-making and risk reduction, and from a lack of alternative buyers. Although still early, 

the emerging hemp industry has somewhat followed the pattern of established field crops, where 

economic viability is concentrated in a region near the contracting and processing companies, and 

where the revenue per acre is competitive with alternative crops. International cannabis and hemp 

companies have made significant investments in processing facilities in several States. 

Outside of the historic production areas, States primarily focused on intensive greenhouse operations 

for hemp, specializing in CBD oil production or other hemp extracts. CBD oil is harvested mainly 

from the flowering portion of the hemp, so short varieties specialized for greenhouse growing 

are preferred to taller varieties developed for fiber uses. Some of the greenhouse production is for 

growing seedlings, clones, and seeds, rather than for growing the plants from seed to harvest. The 

agronomic and economic viability of greenhouse-grown hemp offers possibilities to expand the 

industry geographically, because of the widespread availability of commercial greenhouses and 

greenhouse equipment for specialty crops. 

Market Development 

Ultimately, the relative profitability of hemp and hemp products will shift as these industries develop 

and mature. As an industry originates, there are typically relatively few producers or consumers with 

high startup costs including initial investments and research (i.e., infant industry). Production and 

pricing uncertainty and risk are high and rapid turn-over is often observed. The early pilot program 

years represented such a phase for U.S. hemp. As an industry transitions into the growth stage, there 

is an influx of consumers who expand demand even as producers continue to expand supply, with 

potential to add more volatility in the markets. There can be periods with both increasing supplies 

and rising prices that attract new producers. Prices can then fall rapidly as capacity expands. Prices 

of hemp products are likely to change if commercial production increases under the 2018 Farm Bill. 

The growth stage is eventually followed by a period of market consolidation and maturity where 

25For example, U.S. production of mustard and safflower (two minor crops) has been highly variable, dropping when 

soybean and wheat prices are high or stocks from the previous year are ample, and has never expanded outside a few States. 

26For example, U.S. sesame growers reported about 140,000 acres to the USDA, Farm Service Agency in 2019 (as of 

December 2, 2019), which makes the crop a similar size to industrial hemp in 2019. Sesame is produced in the United States 

under contract to one or two companies each year and is primarily grown in Texas and Oklahoma, where the potential yield 

is highest and therefore revenue per acre can be competitive with wheat and cotton. Although sesame can be grown in other 

States, the revenue per acre compared to other crops is not necessarily competitive. Companies that contract for sesame do 

not offer contracts in every State. 

27For example, crambe (a minor oilseed) production in the United States dropped to zero when there were no longer any 

processors to purchase the crop. 
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industry leaders emerge, and the expansion rate of the industry slows. Prices tend to stabilize and the 

more typical inverse relationship between increasing supplies and decreasing price is observed. 

Hemp product markets are at different stages of development. Oil extracts are attracting heightened 

interest from potential producers and investors compared with other hemp products, and CBD oil is 

currently estimated to generate much higher profits per acre than other hemp products. Regulatory 

status of CBD oil and other extracts is still evolving, which adds to the market uncertainty. A CBD 

product called Epidiolex is licensed by the U. S. Food and Drug Administration as a drug (Devinsky 

et al., 2014). This means that CBD oil cannot legally be sold as a dietary supplement, per the Federal 

Food, Drug and Cosmetic Act. The U.S. Food and Drug Administration has issued warning notices 

to companies attempting to sell CBD oil as a nutritional supplement or making claims about its efficacy for treating a variety of diseases.28

During the pilot programs, the market for fiber was uncertain. There have been large-scale investments in fiber processing facilities, but buyers are not available in all regions and transportation 

costs limited profitability for fiber where margins were thin. The equipment used for processing 

hemp fiber is unique within the fiber industry and there are few, if any, domestic equipment 

producers. U.S. fiber processors must engineer their equipment or import from Europe or China. 

Competing suppliers of imported fiber are readily available. The United States was importing hemp 

fiber, in both raw and processed forms, for some end uses even when domestic production was not 

allowed (Figure 4). It is not yet known if U.S. fiber will be able to compete with imports in the long 

run or if additional end uses will expand demand for hemp fiber as supplies increase. Since 2014 

fiber imports have shifted towards processed forms with Europe emerging as a major supplier to the 

United States (Figure 5). 

As a joint product with oil production, changes in domestic and international fiber output will be influenced by the growing demand for CBD oil. Some producers may have planned to grow hemp for CBD 

oil or other extracts and also profit from selling the residual fiber, much as cotton producers sell both 

the cotton lint and the cotton seed. But negative returns to fiber could offset profits from oil, and there 

were few examples of dual use reported as markets developed during the pilot programs. 

Economic Returns

While the pilot programs provided experience in growing and processing hemp and alternative 

hemp products, information on economic returns remains difficult to ascertain. Even during the 

pilot programs, producers, processors, and lawmakers struggled to find sound information on the 

economic returns to hemp production. The pilot programs themselves became a source of information, but systematic data collection on production, prices, or sales was not required. 

28The U.S. Food and Drug Administration is evaluating the regulatory frameworks that apply to certain cannabis-derived 

products that are intended for non-drug uses, including whether and/or how the U.S. Food and Drug Administration might 

consider updating its regulations, as well as whether potential legislation might be appropriate (U.S. Food and Drug Administration, 2019). 
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Figure 4

U.S. imports of raw hemp, 1991-2019

Tons

0

200

400

600

800

1,000

1991 93 95 97 99 01 03 05 07 09 11 13 15 17 19*

Canada China Europe Other

Note: HS code 5302100000 True hemp (Cannabis sativa L.), raw or processed but not spun; tow and waste of true hemp 

(including yarn waste and garnetted stock).

*2019 is a partial year, January-September.

Source: USDA, Economic Research Service calculations using data from U.S. Department of Commerce, Bureau of Census. 

Figure 5

U.S. imports of processed hemp, 1989-2019

Tons

Canada China Europe Other

0

100

200

300

400

500

600

700

1989 91 93 95 97 99 01 03 05 07 09 11 13 15 17 19*

Note: HS code 5302900000 True hemp, processed, not spun, tow and yarn waste other.

*2019 is a partial year, January-September.

Source: USDA, Economic Research Service calculations using data from U.S. Department of Commerce, Bureau of Census. 
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There were no enterprise budgets available in 2014 when the first pilot programs began and, as of 

late 2019, still no publicly reported price information. Transparent, accurate price reporting and forecasting are critical for well-functioning markets. They are often provided as a public good through 

a government source. Without such basic data being available, there is no benchmark for privately 

negotiated prices, which may or may not be reputable or available to all growers. During the pilot 

programs, there was no Federal data collection on hemp production, other than the USDA, Farm 

Service Agency acreage reporting beginning in 2015. As the State programs developed, some information slowly became more available. As of 2019, budgets were available for Kentucky, New York, 

Tennessee, Pennsylvania, and North Dakota for hemp production. The available budgets reflect 

projections under limited assumptions and much market uncertainty and should be used with caution 

for investment decisions. 

Hemp production budgets from the University of Kentucky show modest returns for grain, negative returns for fiber, and large returns above variable costs for CBD oil (Shepherd and Mark, 

2019). Typically, the producer plants a hemp strain suitable for producing either oil extracts or fiber, 

making a mid-season transition in output product difficult if not impossible as a viable market 

strategy. These budgets are specific to Kentucky but can be modified for other States. Even within 

Kentucky, every line of the budget can be tailored to be specific for a particular operation. Prices are 

highly variable and subject to continuous change along with future technology developments in the 

genetics, production tools, and processing techniques. 

Tennessee, Pennsylvania, North Dakota, and New York also have production budgets available in 

2019, but these budgets were not available for most of the pilot phase. The University of Tennessee 

has a production budget for CBD oil that shows a positive return per acre based on the assumptions 

used (Cui and Smith, 2019). The budget assumes that the price received is $1.50 per percent CBD per 

pound of material and notes that labor costs included are likely lower than what some researchers are 

observing. University of Tennessee budgets for other hemp products are currently not available.

Pennsylvania State University has budgets for grain and fiber that show potentially modest returns 

per acre compared with conventional crops (Harper et al., 2019). These budgets highlight variability 

in returns, the potential erosion of profits through transportation expenses to processors, and the 

importance of the initial planting decision to grow for either seed or fiber. The Pennsylvania State 

University hemp budgets explicitly include the need to till the soil for weed control because of the 

lack of approved pesticides and incorporate the cost of a cover crop to minimize erosion caused by 

this tillage. 
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Moving Beyond the Pilot Programs

The U.S. hemp industry is developing quickly after a long hiatus. The Agricultural Improvement Act 

of 2018 (Public Law 115-334) (the 2018 Farm Bill) addressed many of the challenges identified in 

the pilot programs or authorized forthcoming regulations to address them. Acreage expanded rapidly 

between 2018 and 2019 with the USDA, Farm Service Agency reporting 146,065 planted acres in 

2019; acreage estimates from private advocacy organization sources such as Vote Hemp showed a 

similar magnitude of increase in licensed and harvested acres.29 Some major agricultural States that 

had not previously grown hemp under the pilot programs, including Arizona, Arkansas, California, 

Florida, Georgia, Kansas, and Nebraska, began production in 2019. With the recently released USDA, 

Agricultural Marketing Service interim regulations, the 2020 crop may be larger still. While production is expanding, the industrial hemp industry still faces challenges in transitioning from the pilot 

programs to a mature industry with economically viable, sustainable commercial production. 

2018 Farm Bill

The 2018 Farm Bill made further amendments to U.S. narcotics control laws to define hemp and 

hemp products, added hemp to crop insurance laws, authorized USDA to develop regulations to 

produce commercial hemp, and legalized the production of hemp outside the pilot projects.30

Here are relevant sections of the Farm Bill:

• Section 12619 removes hemp from the Controlled Substances Act definition of marijuana. 

Removing hemp from the Controlled Substances Act and further defining hemp to include 

derivative products were critical steps in allowing commercial production of hemp outside of 

carefully defined pilot programs. 

• Section 7129 of the 2018 Farm Bill adds hemp to the list of alternative crops regulated by 

USDA. 

• Section 7501 adds hemp as a critical agricultural material, which allows USDA to fund hemp 

research, within the requirements set by the farm bills and the (then) forthcoming AMS regulations (USDA, National Institute of Food and Agriculture, 2019).31

• Section 10113 has an additional, expanded definition of hemp as “the plant Cannabis sativa 

L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 

tetrahydrocannabinol concentration of not more than 0. 3 percent on a dry weight basis.” The 

reference to “derivatives, extracts, cannabinoids” is particularly relevant for the CBD sector. 

• Section 10114 addresses interstate commerce of hemp. 

29Some estimates are as high as 500,000 acres licensed for 2019 (Vote Hemp) or as much as 1,000,000 acres projected to 

be planted by 2022 (New Frontier).

30For the full text of these sections of the 2018 Farm Bill, as well as relevant earlier legislation, please see Appendix E: 

Selected Legislation Relevant to Hemp. 

31USDA published its interim final rule establishing a domestic hemp production program on October 31, 2019. 
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• Section 10113 amended the Agricultural Marketing Act of 1946 by adding subtitle G (sections 

297A through 297D of the Agricultural Marketing Act). 

• Section 297B of the Agricultural Marketing Act requires the Secretary of Agriculture 

(Secretary) to evaluate and approve or disapprove State or Tribal plans regulating the production of hemp. 

• Section 297C of the Agricultural Marketing Act requires the Secretary to establish a Federal 

plan for producers in States and territories of Indian Tribes not covered by plans approved 

under section 297B. 

• Lastly, section 297D of the Agricultural Marketing Act requires the Secretary to promulgate 

regulations and guidelines relating to the production of hemp, including sections 297B and 

297C, in consultation with the U.S. Attorney General. 

No State or Tribal production plans could be approved until the 2018 Farm Bill implementing 

regulations were published and effective (USDA, AMS, 2019a). Some States and Tribes submitted 

production plans to the USDA prior to the interim rule in order to have them ready for review as 

soon as the Agricultural Marketing Service regulations were available; for example, Montana and 

Kentucky rapidly made their plans public (Montana Department of Agriculture, 2019b; Ag News 

2018).32 Until the Agricultural Marketing Service regulations were published, and State and Tribal 

plans in conformance with those regulations are approved by the U.S. Department of Agriculture, 

hemp production is still subject to the requirements in the 2014 Farm Bill. The 2014 Farm Bill provisions remain in effect for 12 months after the interim rule was published. Under the 2018 Farm Bill, 

to be approved, a State or Tribal production plan is required to include the following:

• a system to maintain relevant information regarding land on which hemp is produced in the 

State or territory of the Indian Tribe, including a legal description of the land, for a period of 

not less than 3 calendar years;

• a procedure for testing THC levels of hemp produced in the State or territory of the Indian Tribe;

• a procedure for the effective disposal of plants that are produced in violation of the THC 

thresholds, and products derived from those plants;

• a procedure to comply with the enforcement procedures required by the Farm Bill;

• a procedure for conducting annual inspections of, at a minimum, a random sample of hemp 

producers to verify that hemp is not produced in violation of Farm Bill requirements; 

• a procedure for submitting required information to USDA in a timely way (including acreage 

planted, harvested, and disposed); and

• a certification that the State or Indian Tribe has the resources and personnel to carry out the 

practices and procedures described. 

32Twenty draft production plans were received by the USDA, Agricultural Marketing Service for subsequent review prior 

to interim regulation being released in October 2019. On December 27, 2019 USDA announced that 3 State and 3 Tribal 

plans had been approved. The USDA, Agricultural Marketing Service maintains updates on the status of State and Tribal 

hemp production plans for USDA approval on their website.
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Hemp Beyond 2018

Moving beyond the pilot programs in 2018, interest in hemp production grew rapidly in 2019 (Figure 

6). For example, the number of approved producer applications in Kentucky increased from 210 in 

2018 to 978 in 2019. Hemp acreage reported to the USDA, Farm Service Agency increased from 

32,464 acres in 2018 to 146,065 in 2019.33 By mid-2019, 47 States had passed legislation to allow some 

form of hemp production. Only Idaho, Mississippi, and South Dakota did not have legislation in place. 

While not every State with legislation was ready to submit a production plan to the USDA under the 

2018 Farm Bill, producers could still grow hemp under provisions of the 2014 Farm Bill for 12 months 

after the new regulations were issued. 

Hemp production may expand even more rapidly in 2020 as the regulatory environment becomes 

more stable and if farmers face depressed market outlook for other commodities. On October 31, 

2019, the USDA, Agricultural Marketing Service released for comment an interim rule for the 

Establishment of a Domestic Hemp Program (Federal Register, 2019b). After reviewing and evaluating the comments, the USDA will draft and publish a final rule within 2 years. Under the interim 

rule, hemp producers must operate under an approved plan: either the USDA or a USDA-approved 

State or Tribe plan. The USDA, Agricultural Marketing Service rule includes provisions for maintaining information on the land where hemp is produced, testing the levels of THC, disposing of 

plants not meeting necessary requirements, licensing requirements, and ensuring compliance. The 

USDA has also made public procedures for sampling and testing hemp material. 

Figure 6

Industrial hemp production density at the county level, 2019

Planted acres

0-100

101-400

401-1,000

1,001-2,000

2,001-5,277

Other countries

Data as of December 2019.

Source: U.S. Deparment of Agriculture, Farm Service Agency.

33To provide context, crops with similar acreage reported to FSA in 2019 (as of December 2, 2019) include safflower 

(142,090 acres), sweet potatoes (145,439 acres), flue-cured tobacco (149,157 acres), and Extra Long Staple (ELS) cotton 

(161,021 acres). 
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Global Context for Hemp

While the reintroduction of hemp production in the United States is relatively recent, hemp production has already been legal in other parts of the world. Global production was small and relatively 

stable until the recent worldwide interest in CBD oil. Hemp competes for acreage with locally and 

regionally important food and feed crops, but is still not currently considered a major crop in any 

country or region of the world.34 There is some demand for hemp as a sustainable natural fiber, 

hemp seeds and protein as a food ingredient, and hemp extracts for cosmetics and food, but CBD oil 

has been the primary source of demand growth. 

Canada, Europe, and China are major foreign hemp-producing regions and potentially formidable 

competitors for an emerging U.S. industry because they have several decades or more of additional 

agronomic and marketing experience.35 Canada and the European Union also have decades of regulatory stability and investor knowledge of the industry. Along with the United States, Canadian and 

European Union hemp industries face competition from low-cost suppliers in Eastern Europe and 

China. Those regions could potentially expand exports quickly if the demand for CBD oil proves to 

be long lasting and local regulatory regimes are supportive. 

Canada

Canada is perhaps the most relevant analog for the U.S. hemp industry and may prove to be a tough 

competitor moving forward. Canada’s modern hemp industry has developed following a similar 

legislative and policy path as the U.S. industry, but it began 20 years earlier. In 1994, the Canadian 

government offered experimental research licenses for hemp production. In 1998, commercial 

production became legal in Canada with grower licenses and other regulatory provisions covering 

production, processing, transporting, delivery, sale, and trade provided by Health Canada. 

During early years of commercial production, the Canadian hemp industry experienced considerable 

production volatility. Acreage and prices fluctuated widely during the 1990s once research licenses 

were available. Planted acres in Canada were often far less than licensed acres. Early hemp growers 

and processors found that the market demand was unknown, and expansion was not as fast as 

initially predicted. Markets were affected by speculative demand, competition from other crops, and 

changes in U.S. import rules for hemp-related products.36

Like growers in the U.S. pilot programs, many Canadian growers took risks in growing a crop 

without a contracted buyer. Those who grew hemp without a contract sometimes found no established market for their output, resulting in price declines and reduced acreage the following year. 

An early hemp contracting company in Canada shut down after only a few years, leaving additional 

producers with no buyer for their crop. Canada was able to benefit in the longer run from steady 

34Hemp has been cultivated for thousands of years, primarily in Asia and Europe, for food and textile uses. It was traditionally a competitor to flax, cotton, jute, sisal, abaca, and other natural fibers. As natural and synthetic alternative fibers 

became widely available after WWII, hemp production shrunk worldwide. International treaties on narcotics contributed to 

the decline. Hemp can be grown in many different regions, but a longer growing season is needed for grain use rather than 

fiber or straw use. 

35Other hemp-producing countries include Chile, Brazil, South Korea, Russia, Ukraine, and the Philippines. 

36In the early 2000s, the U.S. Drug Enforcement Agency published several rules banning hemp food imports with any 

level of THC, which disrupted imports from Canada for several years until the courts eventually resolved the issue in favor of 

allowing such imports (Johnson, 2018). 
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demand from the United States for hemp food grain, textiles, and cosmetic oils, and there are now 

established brands that use Canadian hemp. Current Canadian hemp production is mostly for grain 

and CBD as producers struggle to find profitable markets for fiber. 

Canadian hemp acreage has been trending upward since 2008 with improved processing technology, 

research, and government financial support (Government of Alberta, 2012; 2015). There are an 

increasing number of Canadian businesses developing hemp products and overall growing demand 

including domestic and foreign demand for organic hemp for food, as well as demand for CBD oil. 

Canada is a major international supplier of hemp oil for the U.S. market (Figure 7). 

Figure 7

U.S. imports of hemp oil, 1999-2019

Tons

0

200

400

600

800

1,000

1,200

1,400

1999 01 03 05 07 09 11 13 15 17 19*

Canada Europe Switzerland Other

Note: HS code 1515904010 Hemp oil not elsewhere specified or indicated, Whether/Not Refined Not Chemically Modified.

*2019 is a partial year, January-September.

Source: USDA, Economic Research Service calculations using data from U.S. Department of Commerce, Bureau of Census. 

Opportunities for hemp seed exports to the United States increased once U.S. production was allowed 

under the pilot programs. According to the USDA, Agricultural Marketing Service interim rule, hemp 

seeds can be imported into the United States from Canada if accompanied by either: (1) a phytosanitary certification from Canada’s national plant protection organization to verify the origin of the seed 

and confirm that no plant pests are detected; or (2) a Federal Seed Analysis Certificate (SAC, PPQ 

Form 925) for hemp seeds grown in Canada (Federal Register, 2019b). 

Despite overall market growth, Canadian hemp production remains volatile, ranging from 80,000 

acres to nearly 140,000 acres between 2014 and 2018 (Figure 8).37 Planting volatility may be 

influenced by competition from conventional field crops; for example, Canada’s acreage of minor 

oilseeds is also fairly volatile year to year in response to world prices. Hemp production was 

expected to expand in 2019 as Health Canada reported double the number of hemp licenses (Glass, 

2019). Canada recently legalized marijuana cannabis as well as marijuana edibles, oils, and extracts. 

The hemp regulations were modified to allow hemp producers to sell hemp to cannabis processors to 

make CBD oil. 

37Some private sector estimates are lower at 70,000 acres in 2018 including 20,000 devoted to CBD (Arnason, 2019). 
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Figure 8

Canadian hemp acreage 1998-2018

 

Source: Health Canada.

Europe

Hemp production has a long history in Europe and was an important source of canvas and rope for 

European navies as far back as the 1700s. The European hemp industry has remained relatively 

small, in part because of the high cost of specialized equipment to handle hemp fiber and limited 

demand for textile and food uses of hemp. France, the United Kingdom, Romania, and Hungary 

are among the largest producing European nations. The European Union subsidized fiber crops, 

including hemp, as part of the Common Agricultural Policy in the 1970s, but later phased out 

most of the support programs. Like trends in Canada, European hemp production is rebounding in 

response to expanded demand for organic seed for food consumption and the emerging demand for 

CBD oil products (European Industrial Hemp Association, 2015). 

The European Union supplies hemp seeds globally but the allowable THC content for hemp is only 

0.2 percent in most of Europe, rather than the 0.3 percent allowed in Canada and the United States. 

Hemp cultivars from Europe typically meet U.S. and Canadian standards for THC content, but some 

U.S. and Canadian cultivars have too much THC to be legally exported to Europe. A list of Canada’s 

approved hemp cultivars includes seeds from Italy, Hungary, France, Finland, Germany, Romania, 

and Ukraine. 

China

While the current regulatory and legal environment in China is evolving, and data sources for 

China’s hemp production differ, it is likely China is the world’s largest industrial hemp producer as 

of 2019 (Moon, 2019). Hemp has been grown in China for thousands of years for textile and fiber 

use, and many sources state it was first cultivated in China.38 Much of the available industrial equipment for processing hemp is from China. As a low-cost producer with agronomic expertise, China 

38See, for example, Encyclopedia Britannica “Hemp, Description and Uses” 2019. 
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may be able to increase production very quickly to become a major competitor in the world hemp 

market. 

Chinese producers face similar, if not greater, regulatory and market uncertainties than U.S. growers. 

Hemp production requires a license, which is only available in some provinces, and the government 

has sought to discourage speculation in cannabis-related stocks. Much of the existing information 

regarding China hemp production is either highly speculative market analysis or stern reminders about 

narcotics regulations. Given China’s strong anti-narcotics laws, the legal status of hemp cultivation in 

China is uncertain, and there is likely more production than is reported to the government. 

Even with potential under-reporting, official statistics indicate that production more than doubled 

from 26,000 metric tons in 2015 to 125,000 metric tons in 2017. In 2018, the most recent year for 

which data are available from the China National Bureau of Statistics, reported production was 

down to 106,000 metric tons (Figure 9). Despite China’s ranking in global production, hemp is still 

a minor crop for China.39

Figure 9

China hemp production, 1978-2018

 

Note: ha = hectare. 

Source: China National Bureau of Statistics.

. 

39To put hemp production in context, China produced 1.8 million metric tons of barley in 2017 and 2.2 million metric tons 

of millet. 
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Economic Viability

Moving forward, economic prospects for the U.S. industrial hemp industry remain uncertain but the 

pilot programs revealed some influencing factors. Competition with alternative crops for acreage, 

global competitiveness, market transparency, and the ability to manage regulatory and market risks 

will determine patterns of development in the emerging U.S. hemp industry. In addition, concentration 

among growers, processors, and retailers will likely evolve that may affect competitive price discovery. 

The pilot programs highlighted the value of data and information available for growers and processors 

making decisions. As hemp markets grow and mature, this will be even more critical. 

Competition for Acreage 

Hemp is competing for acreage against commodity and specialty crops with established markets 

and decades of agronomic research and industry experience. Still, the farm sector as a whole is in 

a period of reduced income and increased pricing uncertainty which may encourage growers to 

plant a new crop even if risks are high (Key et al., 2019). So far, the largest hemp acreage is found 

in States that are not leading producers of conventional field crops such as corn, soybeans, wheat, 

or cotton. Some competing crops are eligible for farm program payments, including the Agriculture 

Risk Coverage/Price Loss Coverage programs and low-interest marketing assistance loans from the 

USDA, Farm Service Agency. Conventional field crops and many minor and specialty crops were 

eligible for the Market Facilitation Program payments in 2018 and 2019, while hemp was not. These 

programs provide a source of price risk protection for other crops that was not available for hemp. 

States have a variety of fee structures for licensing, sampling, and/or testing THC content that could 

have different impacts on competitiveness among regions and/or different end uses of hemp. For 

example, given the current profitability levels of CBD production, higher application and licensing 

fees may not be a significant burden on CBD producers. However, these fees could potentially 

render hemp unprofitable for grain and fiber where margins are tighter or uncompetitive with other 

commodity crop returns. For major crops such as corn and soybeans, a profit difference of as little as 

a few dollars an acre can cause significant yearly shifts between crops, so even a relatively small fee 

could discourage hemp production if competing crops have no fee. 

Hemp may compete for investment with legal marijuana in many States and Canada. While the 

legalization of marijuana potentially expands the pool of expertise and processing facilities, the 

marijuana industry also competes with hemp for growers, processors, and investors. The legalization of medical marijuana in most States and recreational marijuana in a few States and Canada 

has allowed marijuana processors to scale up processing. Outside investors may be attracted to the 

potentially larger market and profit potential for marijuana. This could ultimately help lower barriers 

to expansion of the domestic hemp industry, by promoting the growth of the processing industry and 

building expertise in production. Since hemp and marijuana are the same plant species, it complicates the legal and production issues for hemp producers for now. For example, several States are 

now trying to ban “smokable hemp” to address law enforcement concerns. Canada added THC 

testing requirements for hemp after marijuana was legalized. Marijuana can crossbreed with planted 

hemp or wild hemp, causing problems with seed quality and THC content for both crops. 

Governments and private companies have spent billions of dollars in the last 50 years developing 

wheat, corn, and soybean varieties with improved yields and disease resistance. Specialty crops 

(i.e., fruits and vegetables) have also benefited from considerable research to improve varieties for 
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yield, shipping stability, taste, and disease resistance. The legal status of hemp limited such varietal 

improvements from occurring in any country. While strain improvement efforts are ramping up for 

hemp as production has expanded, they are still in the early stages and lag many other crops. 

Global Competitiveness

As the hemp markets evolve, supplies could grow more quickly than demand—particularly given the 

rapid growth in licensed producers and planted acres—and prices may fall rapidly as some growers 

realized in 2019.40 New entrants are more likely to be producers in marginal production areas, with 

lower yields and lower profits. Their economic viability could be less than the producers who were 

early movers from pilot program regions, particularly if the additional output does cause prices to 

fall. If some States can achieve economies of scale with regards to growing, processing, and testing, 

that will make it more difficult for producers in other areas to profitably enter the market. 

There is growing demand for hemp extracts, including CBD oil, and may possibly be for other products in the future. If hemp for CBD or other purposes proves to be a profitable crop, competition 

from abroad will likely increase. Canada and Europe both have established infrastructure, management expertise, and markets. China has access to lower wage employees, unknown capacity, and the 

potential for more lenient regulatory standards in the future. 

The current lack of input standardization and market information exacerbates risk in U.S. hemp 

markets. For example, there are challenges in obtaining seed that is optimized for targeted enduses, particularly CBD oil production or other extracts. Hemp seeds react differently depending on 

weather and soil conditions, making hemp crop test results uncertain. Seeds developed outside a 

commercial plant breeding program are likely to have highly variable results. There are State-level 

efforts to overcome these challenges. Colorado’s Department of Agriculture has a certified hemp 

seed program, which certifies that certain strains are appropriate for Colorado’s climate and are low 

risk for testing over the legal limit for THC. Montana has a similar program. On a national level, 

there are currently no U.S. private or federally developed standards for hemp seed as there are for 

other commodities like corn or soybeans, so standards still need to be created and adopted to ensure 

well-functioning markets.41 Given the different end uses of hemp, separate standards may be needed 

for the different strains. Canada has a list of approved hemp cultivars (seed varieties), but all varieties are subject to THC testing.42 The European Union has a similar list of registered cultivars, but 

little information on the suitability for end uses. 

Market Transparency

Transparency in both the input and hemp products markets will be important to establishing 

economic viability and helping producers and processors manage risk. A critical economic issue 

will be the level of consumer demand for hemp and hemp products and how elastic (responsive to 

changes in price) that demand will be in the long term. That will determine the extent to which 

hemp can compete for acreage, and where hemp will be economically viable. Hemp appears to be 

a profitable crop in some States for some uses at the current amount supplied. However, minor and 

40Prices at a November 2019 hemp auction market held in Tennessee were reportedly about 25 percent of what producers 

had expected as buyers were said to be disappointed in quality of the product (AgriFax, 2019). 

41There are not enough data or research to establish a seed program for the U.S. market now.

42There were 52 cultivars on the Canadian approved list for the 2019 growing season (Health Canada, 2019). 
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specialty crops, like hemp, tend to have relatively inelastic demand and relatively elastic supply 

as markets mature.43 Development of the processing sector (i.e., availability of buyers and market 

access) is likely to be uneven as hemp markets evolve. Growers will need reliable current information on processor location, capacity, and pricing to make decisions about investment. 

It is certainly possible that the production and/or imports of hemp for CBD will grow more rapidly 

than the demand, putting downward pressure on CBD prices, like what happened with the early 

hemp industry in Canada. It is also possible that the demand for hemp-derived products will 

continue to outpace increases in hemp production in the United States and globally for some time 

and continue to draw investment and new producers into hemp farming. Hemp for CBD offers an 

opportunity for higher economic returns for hemp producers, but also possesses more volatile financial and regulatory risk than markets for hemp fiber and grain. However, if supply outpaces demand 

and prices fall rapidly, many producers and processors could be faced with significant startup and 

input costs that may force them to exit the industry. 

In a mature agricultural crop market, increased demand temporarily raises the price for the available 

supply because the supply is inelastic in the short term (the amount of production cannot increase 

right away). The higher price attracts new entrants to the market the following crop year, which then 

causes prices to fall, and eventually the market reaches an equilibrium where there is enough supply 

to meet demand at the stable market price. 

Like other commodities, the industry structure will evolve as hemp markets develop. Growers and 

processors may choose to vertically integrate to manage risks and/or distinguish their products in 

the marketplace and develop brand labelling. Growers may choose to horizontally integrate through 

cooperatives to address economies of scale or other issues. Global alliances can develop over time 

with shared investment or other resources such as data and information.44

In many States, the producers and processors who participated in pilot programs had more practical 

and current knowledge of hemp economics and production than most universities and governmental 

agencies. The absence of pricing transparency remains a serious impediment. While all hemp 

growers will be required to report acreage planted information to the USDA, Farm Service Agency 

under the USDA, Agricultural Marketing Service interim rule, there are no requirements to report 

pricing or sales data. Without access to consistently reported reliable price and production information, U.S. growers do not have the information to move beyond speculative decision-making which 

will create added risks and market volatility. 

Risk Management

Risks are typically high as an industry develops and U.S. hemp growers and processors face market 

and regulatory uncertainty. Hemp is now eligible for federally subsidized crop insurance under the 

Whole Farm Revenue Protection policy, administered by the USDA, Risk Management Agency. It is 

43For example, mustard is a profitable contracted crop in certain areas of the United States and Canada, but there is only 

so much mustard that the world demands at any price. When there is a large carryover from the previous crop year because 

of a large crop or reduced trade demand, mustard prices fall and acreage drops as farmers switch to more profitable crops the 

following year. If mustard acreage did not shrink, prices would fall even more sharply because of relatively inelastic demand. 

Mustard is grown on about 750,000 acres in the U.S. and Canada, which is more than double the most optimistic estimates of 

current hemp acreage in North America. 

44See, for example, Yang and Burge, 2019. 
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also eligible for Farm Service Agency Noninsured Crop Disaster Assistance in 2020 for producers 

with a 2018 Farm Bill license issued by a State, Tribe, or USDA agency. Under the Whole Farm 

Revenue Protection policy, hemp will not qualify for replant payments. Growers will be eligible to 

purchase whole farm revenue protection if they have a license under a State or Tribal production 

plan to grow commercial industrial hemp approved by the USDA or USDA production plan and a 

valid marketing contract (USDA RMA, 2019). Even when insurance is available, producing hemp 

with THC above the compliance level will not constitute an insurable cause of loss. 

Producers will still face the risk of processor financial stability and the evolving regulatory and 

policy environment. Many new market entrants to hemp are small and new to farming. They will 

compete against large, established farms that have a higher tolerance for risk and greater capital 

resources, as well as some crop diversification to reduce risk. 

A significant risk in hemp markets is managing levels of THC. If a product tests higher than 0.3 

percent THC, it cannot legally be sold or possessed for sale. Income goes to zero and additional 

costs for disposal and legal risks are incurred. Product standards and testing are critical sources 

of information and key to risk management. The American Society for Testing and Materials 

has several dozen voluntary standards under development for cannabis and hemp producers and 

processors, with participants from 25 countries involved, but interaction with Federal and State 

standards is not clear. Once developed, the Society’s standards will reflect the needs of cannabis 

producers as well as hemp producers, and foreign as well as U.S. regulatory requirements. 

Guidelines for product testing are included in the USDA, Agricultural Marketing Service interim 

rule (Federal Register, 2019b). State and Tribal plans must incorporate procedures for sampling 

and testing hemp including timing of testing, how samples are collected, ensuring testing is 

completed by a Drug Enforcement Agency-registered laboratory using a reliable methodology, and 

how results are reported and interpreted.45

Regulatory Environment

In addition to the core economic challenges, the regulatory environment is still evolving, both for 

hemp in general and separately for CBD oil and other extracts. While the 2018 Farm Bill removed 

some previous legal restrictions on growing industrial hemp, the FDA’s authority to regulate the sale 

of hemp and cannabis products for food and drug use has not changed (Dabrowska and Johnson, 

2019). The potentially most profitable hemp product (i.e., CBD or other oil extracts) can only legally 

be sold in the United States for a subset of the end uses that potential customers demand. Before 

food and drug use is allowed, the FDA must consider issues, such as cumulative exposure risks and 

long-term effects, that may require more research before issuing regulations.46 Absent new FDA 

regulations, legislation could also change the status of CBD oil and reduce uncertainty about access 

to potentially lucrative markets. If food and nutritional supplement uses were legalized in the United 

States, there is a possibility that foreign competitors would immediately enter the market with 

ample supplies. Prices could fall sharply as a result, depending on the strength of demand, which is 

unknown at this time. 

45The October 2019 U.S. Department of Agriculture’s Agricultural Marketing Service interim rule establishes a process 

to calculate a confidence level for reporting THC test results, defines the ‘‘acceptable hemp THC level,’’ and explains how 

to interpret test results with the measurement of uncertainty. AMS provides USDA guidelines for sampling and testing and 

information on registering a testing laboratory.

46The Food and Drug Administration has authority to issue a regulation allowing the use of such ingredients in food and 

dietary supplements and has stated that they are actively considering this issue (Federal Register, 2019b). 
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The absence of completed regulations has caused serious problems for the hemp industry. The FDA 

is issuing cease and desist orders to CBD oil manufacturers for making illegal health claims, and 

for marketing CBD as a food or drug. Idaho State police confiscated a load of industrial hemp being 

shipped from Oregon to Colorado in January 2019, on the grounds that since the USDA had not yet 

approved Oregon’s production plan, it was not protected under the interstate commerce provisions of 

the 2018 Farm Bill. The USDA issued a legal opinion that States and Indian Tribes cannot prohibit 

the interstate transportation or shipment of hemp lawfully produced under the 2014 Farm Bill pilots 

(Vaden, 2019). The Ninth Circuit Court of Appeals (Big Sky Scientific LLC v. Idaho State Police) 

returned the case to Idaho State court. A similar case occurred in August 2019 in South Dakota, 

involving confiscation of a shipment of hemp from Colorado to Minnesota. 
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Conclusions

 Overall, the pilot programs for industrial hemp authorized in the 2014 Farm Bill were successful 

in restarting production of a crop that had not been commercially grown in the United States for 

decades. Some common challenges and lessons learned in moving production beyond the pilot 

programs have become apparent. The 2018 Farm Bill addressed many of these challenges or authorized subsequent regulations to address them, but lack of reliable, transparent data and peer-reviewed 

research and market information continues to be a challenge. 

While the numbers of planted acres and participants in the U.S. industrial hemp industry increased 

rapidly under the pilot programs, and hemp can now be grown legally in nearly every State, the 

long-term trends for U.S. industrial hemp are uncertain. The long-term economic viability of industrial hemp in the United States will be affected by:

• competition from conventional field crops and marijuana (in States where it is legal) for 

acreage, 

• well-established foreign competitors for hemp product markets, 

• the ability to decrease production and pricing uncertainty through transparency and risk 

management, and,

• continued market development. 

The history of specialty crops in the United States generally shows that they remain specialty crops. 

It is difficult to imagine, for example, the demand for acres for industrial hemp matching the demand 

for acres to grow corn or soybeans for animal or human food. On the other hand, the recent rapid 

growth of the alternative plant protein food sector does show some possibility for a “specialty” crop 

to suddenly become a growing market sector. The next few years should see a resolution of the legal 

and regulatory issues constraining hemp production in the United States, leaving domestic production, imports, consumer demand, and exports to dictate growth and long-term market size. 
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Appendix A: A Brief History of U.S. Hemp Before the 2014 

Farm Bill

Hemp was grown in the United States during the Colonial era as an essential source of fiber for 

sailing ship rigging, ropes, and canvas. Hemp fiber, extremely strong and rot-resistant, was a strategic resource for U.S. and European navies. The invention of steam ships reduced the military 

and commercial shipping demand for hemp, although some uses for other textiles, paper, and rope 

remained. Demand for U.S.-produced hemp fell steadily through the late 1800s as cheaper imported 

jute and abaca became more widely available, and innovations in cotton processing provided an 

alternative domestic supply of textiles and rope (Hemp Industries Association). Hemp supplies 

decreased in response, with U.S. production falling to a mere 105,000 pounds (52. 5 tons) on 140 

acres by 1933 (USDA Agricultural Statistics Yearbook, 1946). 

At the same time, public health concerns with cannabis consumption were increasing. The 

Marihuana Tax Act of 1937 (Public Law 75-238) established taxes on cannabis products and enacted 

additional Federal restrictions which effectively discouraged industrial hemp production in the 

United States.47 What is now defined as industrial hemp met the definition of “marihuana” in that 

law. Although taxes to register, grow, and dispense cannabis for medical and industrial purposes 

were only $1-3, the reporting requirements were considerable, and there was a tax of $100 per 

ounce--the equivalent purchasing power of nearly $2,000 today--for sales to unregistered parties. 

Violations were subject to a fine up to $2,000 and prison time. Hemp production in the United 

States remained small, partly due to the legal restrictions on “marihuana” but also due to the falling 

demand and ready availability of alternatives for most uses. 

In 1941 and 1942, Japan invaded much of Southeast Asia, effectively cutting off the U.S. supply 

of imported alternatives to hemp fiber. The Department of the Army and the U.S. Department of 

Agriculture issued the legally required tax stamps to U.S. farmers to grow hemp in support of the 

war effort. Production reached a 20th century peak of 70,340 tons of fiber and 7,000 tons of seed 

on 146,200 acres in 1943.48 Following the end of WWII, planted acres declined again in response 

to competition from synthetic fibers which had become widely available, increasing public antidrug sentiment, and Federal regulations that included hemp in the definition of marijuana. The 

U.S. Department of Agriculture reported 1,140 acres of hemp in 1951; later years had no recorded 

production. Synthetic fibers replaced natural fibers for rope and many textile uses. Flax continued 

to provide a cost-effective natural substitute for other textile and food uses of hemp, as well as 

providing valuable linseed oil as a byproduct of fiber production. However, there was still some 

demand for hemp for specialty food and textile uses and hemp imports were reported from Chile, 

Peru, Italy, Yugoslavia, and Italy (USDA Agricultural Statistics Yearbook, 1958). 

In 1970, the Controlled Substances Act (CSA, Public Law 91-513) replaced the Marihuana Tax 

Act of 1937 as the Nation’s comprehensive drug policy. The Act labeled any variety of cannabis, 

including what is now defined as industrial hemp, as a Schedule 1 drug and made it illegal to grow 

without a Drug Enforcement Agency permit. This effectively ended hemp production in the United 

States, except for a few small experimental projects. It was very difficult to obtain permits, and the 

47See Appendix E: Selected Legislation Relevant to Hemp for excerpts. 

48To put this in context, U.S. corn production in 1943 was about 75 million tons. 
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required paperwork and physical security made hemp production prohibitively expensive. Cannabis 

was, and is, subject to international narcotics treaties to which the United States is a signatory. 

However, the Controlled Substances Act did not end U.S. demand for specialty textile and food uses. 

The United States imported hemp oils for cosmetic products, hemp fabrics and clothing, raw hemp 

as an industrial input, and non-viable hemp seeds as a food ingredient. Major suppliers were the 

Philippines, Canada, and Europe. The logical inconsistency of permitting the import of a crop that 

could not be legally grown in the United States did not go unnoticed by producers, importers, and 

their representatives in Congress. The United States continued to import small amounts of hemp in 

the 1960s from Eastern Europe (USDA Agricultural Statistics Yearbook, 1967). 

State and Tribal attempts to legalize hemp production in the United States in the 1990s and 2000s 

were challenged successfully by the Drug Enforcement Agency. The courts consistently upheld the 

Agency’s authority to regulate cannabis, which included hemp.49 Meanwhile, peer-reviewed drug 

trials in the United States were demonstrating efficacy of CBD oil for the treatment of epilepsy. 

Although some States began legalizing medical marijuana as early as 1996, Federal laws still classified all cannabis as a Schedule 1 drug. From the Marihuana Tax Act of 1937 until the passage of the 

2014 Farm Bill, hemp was subject to the same legal restrictions as marijuana. 

49See Monson vs DEA, 589 F. 3d 952, 8th Circuit Court, 2007, for example.
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Appendix B: Individual State Pilot Programs

The following States did not participate and/or did not report information for industrial hemp 

pilot programs; Alabama, Alaska, Arizona, Arkansas, California, Connecticut, Delaware, Florida, 

Georgia, Idaho, Iowa, Kansas, Louisiana, Maryland, Michigan, Mississippi, Missouri, Nebraska, 

New Hampshire, New Jersey, New Mexico, Ohio, Rhode Island, South Dakota, Texas, Wyoming, 

and Utah. 

Appendix table B1

Colorado State Pilot Program for Industrial Hemp 

2014 2015 2016 2017 2018

Reported 

Area* (acres 

except for 

GH)

Grain N/A N/A N/A N/A N/A

Fiber N/A N/A N/A N/A N/A

CBD N/A N/A N/A N/A N/A

Total 1,811 3,567 8,988 12,024 30,950

GH (sq ft) 253,000 570,980 1,360,000 2,300,000 4,788,523

USDA FSA N/A N/A 2,153 2,511 5,562

Vote Hemp N/A N/A 5,921 9,700 21,578

Processors

(number)

Grain Administered 

through Colorado Department of Public 

Health and 

Environment 

Administered 

through Colorado Department of Public 

Health and 

Environment

Administered 

through Colorado Department of Public 

Health and 

Environment 

N/A N/A

Fiber N/A N/A

CBD N/A N/A

Total 20 95

Fees N/A N/A N/A N/A $500 Application plus $5/

acre and/or 

$3.00/1,000 

sq ft

Applications

(number)

Registrants 131 166 312 386 835

University N/A N/A N/A N/A N/A

Staff**

(number)

Full time N/A N/A N/A N/A 3.5

Part time N/A N/A N/A N/A N/A

Notes: N/A = not available. Colorado used the terminology “registrants” to refer to the individuals or entities who applied to 

grow hemp. Acreage information taken from 2018 year-end review. Only registered acres reported with data as of 11/26/18.

*Area may include licensed, planted, or harvested acres and/or greenhouse (sq ft) depending upon data the State collects 

and reports. Acreage reported by the USDA, Farm Service Agency and Vote Hemp included for comparison.

**Staff data are reported in full-time employment equivalents. 

Source: USDA, Economic Research Service compilation.
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Appendix table B2

Hawaii State Pilot Program for Industrial Hemp 

2014 2015 2016 2017 2018

Reported Area*

(acres except 

for GH)

Grain N/A N/A 2

Fiber N/A N/A N/A

CBD N/A N/A N/A

Total 1 1 2

GH (sq ft) N/A N/A 1,000

USDA FSA N/A N/A N/A

Vote Hemp 1 1 1

Processors

(number)

Grain Information 

not available

Information 

not available

Information not 

available Fiber

CBD

Total

Fees No Fees No Fees $500 Application plus 

$5Grower application fee $500+$250 

grower licensee 

fee+$40/hour for 

inspection+laboratory 

testing costs plus $2/

acre + $0.33/sq. ft. acre 

and/or $3.00/1,000 

sq ft

Applications

(number)

Approved 0 0 10

University 0 0 N/A

Staff**

(number)

Full time 0 1 1

Part time 0 0 0

Notes: N/A = not available. Actual production did not begin until 2018.

*Area may include licensed, planted, or harvested acres and/or greenhouse (sq ft) depending upon data the State collects 

and reports. Acreage reported by the USDA, Farm Service Agency and Vote Hemp included for comparison. 

**Staff data are reported in full-time employment equivalents.

Source: USDA, Economic Research Service compilation.
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Appendix table B3 

Illinois State Pilot Program for Industrial Hemp 

2014 2015 2016 2017 2018

Reported Area* 

(acres except for 

GH)

Grain N/A

Fiber N/A

CBD N/A

Total 1

GH (sq ft) N/A

USDA FSA N/A

Vote Hemp 1

Processors

(number)

Grain N/A

Fiber N/A

CBD N/A

Total N/A

Fees No Fees

Applications

(number)

Approved 3

University 3

Staff**

(number)

Full time N/A

Part time N/A

Notes: N/A = not available. 

*Area may include licensed, planted, or harvested acres and/or greenhouse (sq ft) depending upon data the State collects 

and reports. Acreage reported by the USDA, Farm Service Agency and Vote Hemp included for comparison. 

**Staff data are reported in full-time employment equivalents.

Source: USDA, Economic Research Service compilation.
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Appendix table B4

Indiana State Pilot Program for Industrial Hemp 

2014 2015 2016 2017 2018

Reported Area*

(acres except for 

GH)

Grain N/A N/A N/A N/A 11

Fiber 5 5 5 5 N/A

CBD N/A N/A N/A N/A N/A

Total 5 5 5 5 16

GH (sq ft) N/A N/A N/A N/A N/A

USDA FSA N/A N/A N/A N/A 12

Vote Hemp N/A N/A 2 5 5

Processors

(number)

Grain 0 0 0 0 0

Fiber 0 0 0 0 0

CBD 0 0 0 0 0

Total 0 0 0 0 0

Fees No Fees No Fees No Fees No Fees No Fees

Applications

(number)

Approved 3 5 5 8 12

University 3 5 5 8 12

Staff** (number) Full time 3 2 2 2 2

Part time 0 0 0 0 0

Notes: N/A = not available. 

*Area may include licensed, planted, or harvested acres and/or greenhouse (sq ft) depending upon data the State collects 

and reports. Acreage reported by the USDA, Farm Service Agency and Vote Hemp included for comparison. 

**Staff data are reported in full-time employment equivalents.

Source: USDA, Economic Research Service compilation.
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Appendix table B5 

Kentucky State Pilot Program for Industrial Hemp 

2014 2015 2016 2017 2018

Reported Area*

(acres except 

for GH)

Grain 15 435 812 955 2,337

Fiber 11 55 102 160 335

CBD 7 430 1,413 2,145 4,028

Total 33 922 2,300 3,200 6,700

GH (sq ft) N/A N/A 116,313 294,197 750,812

USDA FSA N/A N/A 1,693 2,209 4,711

Vote Hemp N/A N/A 2,525 3,271 6,700

Processors

(number)

Grain 4 6 5 18 18

Fiber 2 4 12 22 25

CBD 3 12 30 31 49

Total 9 22 47 71 92

Fees No Fees No Fees No Fees $50 grower fee 

+ $350 grower 

participation 

fee + $150 for 

second THC; 

processor fee 

$400-1,000; 

$400 for broker and seed 

dealers; Site 

modification 

fee $500

$100 Grower application + $400 per 

address + $250 for 

secondary THC test 

(if required); Processor fees $500-$3,000; 

Broker/Handler/Seed 

Dealer $500; Site 

modification fee $750

Applications

(number)

Approved 20 99 137 204 210

University N/A 8 17 17 14

Staff**

(number)

Full time 0 0 3 3 3

Part time 1 2 1 2 2

Notes: N/A = not available. 

*Area may include licensed, planted, or harvested acres and/or greenhouse (sq ft) depending upon data the State collects 

and reports. Acreage reported by the USDA, Farm Service Agency and Vote Hemp included for comparison. 

**Staff data are reported in full-time employment equivalents

Source: USDA, Economic Research Service compilation. 
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Appendix table B6 

Maine State Pilot Program for Industrial Hemp 

2014 2015 2016 2017 2018

Reported Area*

(acres except for 

GH)

Grain N/A N/A N/A

Fiber N/A N/A N/A

CBD N/A N/A N/A

Total 1 32 550

GH (sq ft) N/A N/A N/A

USDA FSA N/A N/A 27

Vote Hemp 1 30 550

Processors

(number)

Grain N/A N/A N/A

Fiber N/A N/A N/A

CBD N/A N/A N/A

Total N/A N/A N/A

Fees $100 application 

per non-continuous 

location + $500 

license+$0.10/sq ft 

if applicable

$100 application per 

non- continuous location + 

$500 license 

+ $50/acre

$100 application per noncontinuous 

location + $500 

license + $50/

acre

Applications

(number)

Approved 2 34 82

University N/A N/A N/A

Staff**

(number)

Full time 0 0 0

Part time 0.15 0.65 0.65

Notes: N/A = not available. 

*Area may include licensed, planted, or harvested acres and/or greenhouse (sq ft) depending upon data the State collects 

and reports. Acreage reported by the USDA, Farm Service Agency and Vote Hemp included for comparison. 

**Staff data are reported in full-time employment equivalents

Source: USDA, Economic Research Service compilation.
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Appendix table B7 

Massachusetts State Pilot Program for Industrial Hemp 

2014 2015 2016 2017 2018

Reported Area*

(acres except for 

GH)

Grain N/A

Fiber N/A

CBD N/A

Total 21

GH (sq ft) N/A

USDA FSA N/A

Vote Hemp 21

Processors

(number)

Grain 0

Fiber 0

CBD 9

Total 9

Fees $500 Application plus 

$$100 application fee + 

$300 grower fee + $150 

for second THC test if 

applicable/acre and/or 

$3.00/1,000 sq ft

Applications

(number)

Approved 14

University N/A

Staff**

(number)

Full time 4

Part time 1

Notes: N/A = not available. 

*Area may include licensed, planted, or harvested acres and/or greenhouse (sq ft) depending upon data the State collects 

and reports. Acreage reported by the USDA, Farm Service Agency and Vote Hemp included for comparison. 

**Staff data are reported in full-time employment equivalents

Source: USDA, Economic Research Service compilation.
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Appendix table B8 

Minnesota State Pilot Program for Industrial Hemp 

2014 2015 2016 2017 2018

Reported Area*

(acres except 

for GH)

Grain 38 1,014 623

Fiber N/A N/A 14

CBD N/A N/A 72

Total 38 1209 709

GH (sq ft) N/A N/A 55,000

USDA FSA 18 1,429 583

Vote Hemp 51 1,205 710

Processors

(number)

Grain 0 0 2

Fiber 0 0 0

CBD 0 0 6

Total 0 0 8

Fees $550 grower 

participation 

fee + $250 for 

THC testing 

beyond 1st test 

if required + 

$100/location 

fee

$550 grower 

participation 

fee + $250 for 

THC testing 

beyond 1st test 

if required + 

$100/location 

fee; $350 each 

for processor, 

broker/handler, 

or seed dealer 

license

$37 application fee + $550 

grower participation fee + $250 

for THC testing 

beyond 1st test if 

required + $100/

location fee; $350 

each for processor, broker/

handler, or seed 

dealer license

Applications

(number)

Approved 6 47 65

University 1 1 1

Staff**

(number)

Full time 1 2 2

Part time 0 0 0

Notes: N/A = not available. 

*Area may include licensed, planted, or harvested acres and/or greenhouse (sq ft) depending upon data the State collects

and reports. Acreage reported by the USDA, Farm Service Agency and Vote Hemp included for comparison. 

**Staff data are reported in full-time employment equivalents.

Source: USDA, Economic Research Service compilation.
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Appendix table B9 

Montana State Pilot Program for Industrial Hemp 

2014 2015 2016 2017 2018

Reported Area*

(acres except for 

GH)

Grain 0 0

Fiber 0 0

CBD 0 0

Total 550 22,000

GH (sq ft) N/A N/A

USDA FSA 577 13,161

Vote Hemp 542 22,000

Processors

(number)

Grain 0 0

Fiber 0 1

CBD 0 2

Total 0 3

Fees $450 application+$250 per THC 

test; Seed dealer 

$55 (standard for all 

seed dealers in MT)

$450 application + 

$250 per THC test; 

Seed dealer $55 

(standard for all 

seed dealers in MT)

Applications

(number)

Approved 14 58

University N/A 2

Staff**

(number)

Full time 1 1

Part time 0 0

Notes: N/A = not available. 

*Area may include licensed, planted, or harvested acres and/or greenhouse (sq ft) depending upon data the State collects

and reports. Acreage reported by the USDA, Farm Service Agency and Vote Hemp included for comparison. 

**Staff data are reported in full-time employment equivalents.

Source: USDA, Economic Research Service compilation.
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Appendix table B10 

Nevada State Pilot Program for Industrial Hemp 

2014 2015 2016 2017 2018

Reported Area*

(acres except for 

GH)

Grain N/A 0 N/A

Fiber N/A 0 N/A

CBD N/A 0 N/A

Total N/A 0 1,523

GH (sq ft) N/A 0 176,912

USDA FSA 155 96 110

Vote Hemp 216 417 1,881

Processors

(number)

Grain N/A N/A N/A

Fiber N/A N/A N/A

CBD N/A N/A N/A

Total N/A N/A N/A

Fees N/A N/A N/A

Applications

(number)

Approved N/A N/A N/A

University N/A N/A N/A

Staff**

(number)

Full time N/A N/A 3

Part time N/A N/A 0

Notes: N/A = not available. 2016 - first planted crop; Nevada Department of Agriculture did not start recording information 

until the 2018 crop.

*Area may include licensed, planted, or harvested acres and/or greenhouse (sq ft) depending upon data the State collects

and reports. Acreage reported by the USDA, Farm Service Agency and Vote Hemp included for comparison. 

**Staff data are reported in full-time employment equivalents.

Source: USDA, Economic Research Service compilation.
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Appendix table B11 

New York State Pilot Program for Industrial Hemp 

2014 2015 2016 2017 2018

Reported Area*

(acres except for 

GH)

Grain N/A N/A N/A

Fiber N/A N/A N/A

CBD N/A N/A N/A

Total 30 2,000 720

GH (sq ft) N/A N/A 66,615

USDA FSA N/A 266 332

Vote Hemp 30 2,000 2,240

Processors

(number)

Grain 0 0 0

Fiber 0 10 14

CBD 0 8 22

Total N/A 18 36

Fees No Fees $500 grower fee; 

$500 processor 

fee

$500 grower fee; 

$500 processor 

fee

Applications

(number)

Approved 2 78 104

University 2 2 2

Staff**

(number)

Full time 0 2 2

Part time 2 3 3

Notes: N/A = not available. 2016 and 2017- total acres approved only; 2018 - total acres harvested only, approved acres were 

3,500; GH sq ft are harvested totals.

*Area may include licensed, planted, or harvested acres and/or greenhouse (sq ft) depending upon data the State collects

and reports. Acreage reported by the USDA, Farm Service Agency and Vote Hemp included for comparison. 

**Staff data are reported in full-time employment equivalents.

Source: USDA, Economic Research Service compilation.
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Appendix table B12 

North Carolina State Pilot Program for Industrial Hemp 

2014 2015 2016 2017 2018

Reported Area*

(acres except for 

GH)

Grain N/A N/A N/A

Fiber N/A N/A N/A

CBD N/A N/A N/A

Total N/A 3,000 3,184

GH (sq ft) N/A N/A N/A

USDA FSA N/A 452 3,301

Vote Hemp 0 965 3,184

Processors

(number)

Grain N/A N/A N/A

Fiber N/A N/A N/A

CBD N/A N/A N/A

Total N/A 100 300

Fees N/A $250 application + $250 

grower participation fee + 

$150 each for 

1st and 2nd inspection + $2/

acre for 49-500 

acres and/or 

$2/1,000 sq. ft. 

$250 application 

+ $250 grower

participation fee

+ $59 for 1st inspection & $150

for 2nd inspection + $2/acre

for 49-500 acres

and/or $2/1,000

sq. ft. 

Applications

(number)

Approved N/A 120 450

University N/A 10 20

Staff**

(number)

Full time N/A 10 10

Part time N/A 0 0

Notes: N/A = not available. 2017- only provided combined approved and university acres; 2018 - only provided approved 

acres.

*Area may include licensed, planted, or harvested acres and/or greenhouse (sq ft) depending upon data the State collects

and reports. Acreage reported by the USDA, Farm Service Agency and Vote Hemp included for comparison. 

**Staff data are reported in full-time employment equivalents.

Source: USDA, Economic Research Service compilation.
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Appendix table B13 

North Dakota State Pilot Program for Industrial Hemp 

2014 2015 2016 2017 2018

Reported Area*

(acres except for 

GH)

Grain N/A N/A N/A

Fiber N/A N/A N/A

CBD N/A N/A N/A

Total 70 3,020 2,800

GH (sq ft) N/A N/A N/A

USDA FSA 71 2,653 2,669

Vote Hemp 70 3,020 2,778

Processors

(number)

Grain N/A 0 0

Fiber 3 5 5

CBD N/A 0 0

Total 3 5 5

Fees $150 for 

either grower 

or processor 

+ $25/ac

$150 for 

either grower 

or processor 

+ $25/ac

$150 for either 

grower or processor + $25/ac 

Applications

(number)

Approved 5 34 27

University 2 2 2

Staff**

(number)

Full time 1 1 1

Part time 0 0 0

Notes: N/A = not available. 

*Area may include licensed, planted, or harvested acres and/or greenhouse (sq ft) depending upon data the State collects

and reports. Acreage reported by the USDA, Farm Service Agency and Vote Hemp included for comparison. 

**Staff data are reported in full-time employment equivalents.

Source: USDA, Economic Research Service compilation.
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Appendix table B14 

Oklahoma State Pilot Program for Industrial Hemp 

2014 2015 2016 2017 2018

Reported Area*

(acres except for 

GH)

Grain N/A

Fiber N/A

CBD N/A

Total 447

GH (sq ft) 63,000

USDA FSA N/A

Vote Hemp 445

Processors

(number)

Grain N/A

Fiber N/A

CBD N/A

Total N/A

GH N/A

Fees $500 application 

fee + $5/acre 

+$500/location 

fee + $. 33/sq. ft (if 

applicable) + $35/

hr inspection fee + 

actual cost of THC 

testing; $100 seed 

dealer license fee

Applications

(number)

Approved 28

University 28

Staff**

(number)

Full time N/A

Part time N/A

Notes: N/A = not available. 2018 - all acres and GH are cert seed.

*Area may include licensed, planted, or harvested acres and/or greenhouse (sq ft) depending upon data the State collects

and reports. Acreage reported by the USDA, Farm Service Agency and Vote Hemp included for comparison. 

**Staff data are reported in full-time employment equivalents.

Source: USDA, Economic Research Service compilation.
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Appendix table B15 

Oregon State Pilot Program for Industrial Hemp 

2014 2015 2016 2017 2018

Reported Area*

(acres except for 

GH)

Grain N/A N/A N/A N/A

Fiber N/A N/A N/A N/A

CBD N/A N/A N/A N/A

Total 105 1,200 3,000 11,754

GH (sq ft) N/A N/A N/A N/A

USDA FSA N/A 5 180 496

Vote Hemp N/A 500 3,469 7,808

Processors

(number)

Grain N/A N/A N/A N/A

Fiber N/A N/A N/A N/A

CBD N/A N/A N/A N/A

Total 13 66 189 212

Fees $500 (3 yr 

licensee) + 

actual THC 

testing costs

$500 (1 year 

license fee) 

+ actual THC

testing costs

+ $500 for

seed dealer

$1,300 

grower participation fee 

+actual cost

of THC testing; $1,300

processor

fees; $120

seed dealer

fee

$1,300 

grower participation fee 

+actual cost

of THC testing; $1,300

processor

fees; $120

seed dealer

fee

Applications

(number)

Approved 13 83 246 584

University N/A N/A N/A N/A

Staff**

(number)

Full time 0 0 1 2

Part time 2 3 7 5

Notes: N/A = not available. 2015-2018 only approved acres provided.

*Area may include licensed, planted, or harvested acres and/or greenhouse (sq ft) depending upon data the State collects

and reports. Acreage reported by the USDA, Farm Service Agency and Vote Hemp included for comparison. 

**Staff data are reported in full-time employment equivalents. 

Source: USDA, Economic Research Service compilation.
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Appendix table B16 

Pennsylvania State Pilot Program for Industrial Hemp 

2014 2015 2016 2017 2018

Reported Area*

(acres except for 

GH)

Grain N/A N/A

Fiber N/A N/A

CBD N/A N/A

Total 36 585

GH (sq ft) N/A 18,000

USDA FSA 7 34

Vote Hemp 36 580

Processors

(number)

Grain 1 1

Fiber N/A 0

CBD N/A 2

Total 1 3

Fees $250 application + $3000 

participation 

fee + $200 

each for 1st 

and 2nd THC 

test if applicable

$250 application + $2,000 

participation fee 

+ $150 each for

1st and 2nd THC

test if applicable + $100 site

modification fee

Applications

(number)

Approved 16 35

University 2 3

Staff**

(number)

Full time 2 2

Part time 1 1

Notes: N/A = not available.

*Area may include licensed, planted, or harvested acres and/or greenhouse (sq ft) depending upon data the State collects

and reports. Acreage reported by the USDA, Farm Service Agency and Vote Hemp included for comparison. 

**Staff data are reported in full-time employment equivalents.

Source: USDA, Economic Research Service compilation.
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Appendix table B17 

South Carolina State Pilot Program for Industrial Hemp 

2014 2015 2016 2017 2018

Reported Area* 

(acres except for 

GH)

Grain N/A

Fiber N/A

CBD N/A

Total 1,600

GH (sq ft) N/A

USDA FSA 86

Vote Hemp 256

Processors 

(number)

Grain 0

Fiber 1

CBD 1

Total 2

Fees $50 app + $400 

permit for growers; $100 app + 

$3,000 license 

for processors

Applications 

(number)

Approved 20

University N/A

Staff**

(number)

Full time N/A

Part time N/A

Notes: N/A = not available. 

*Area may include licensed, planted, or harvested acres and/or greenhouse (sq ft) depending upon data the State collects

and reports. Acreage reported by the USDA, Farm Service Agency and Vote Hemp included for comparison. 

**Staff data are reported in full-time employment equivalents.

Source: USDA, Economic Research Service compilation.
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Appendix table B18 

Tennessee State Pilot Program for Industrial Hemp 

2014 2015 2016 2017 2018

Reported Area

(acres except for 

GH)

Grain N/A N/A N/A N/A

Fiber N/A N/A N/A N/A

CBD N/A N/A N/A N/A

Total 660 225 130 1,034

GH (sq ft) N/A N/A N/A N/A

USDA FSA N/A 58 50 729

Vote Hemp N/A 225 200 3,338

Processors

(number)

Grain N/A N/A

N/A

N/A

N/A

N/A N/A

Fiber N/A N/A N/A

CBD N/A N/A N/A

Total N/A N/A N/A

Fees Grower application fee 

$250 + $35/

hr for field 

inspections 

+ $175 THC

testing + $2/

acre

Grower application fee 

$250 + $35/

hr for field 

inspections 

+ $175 THC

testing + $2/

acre; processor fee $250

Grower application fee 

$250 + $35/

hr for field 

inspections 

+ $175 THC

testing + $2/

acre; processor fee $250

Grower application fee 

$250 + $35/

hr for field 

inspections 

+ $175 THC

testing + $2/

acre; processor fee $250

Applications

(number)

Approved 49 64 79 226

University 2 2 2 3

Staff**

(number)

Full time 0 0 0 0

Part time 1 2 2 2

Notes: N/A = not available. 

*Area may include licensed, planted, or harvested acres and/or greenhouse (sq ft) depending upon data the State collects

and reports. Acreage reported by the USDA, Farm Service Agency and Vote Hemp included for comparison. 

**Staff data are reported in full-time employment equivalents.

Source: USDA, Economic Research Service compilation. 
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Appendix table B19 

Vermont State Pilot Program for Industrial Hemp 

2014 2015 2016 2017 2018

Reported Area*

(acres except 

for GH)

Grain N/A N/A N/A N/A N/A

Fiber N/A N/A N/A N/A N/A

CBD N/A N/A N/A N/A N/A

Total 17 71.45 181 580 3,298

GH (sq ft) N/A N/A N/A N/A N/A

USDA FSA N/A N/A 2 2 20

Vote Hemp N/A N/A 180 575 1,820

Processors

(number)

Grain 1 1 1 1 1

Fiber N/A N/A N/A 2 2

CBD 3 3 3 3 20

Total 4 4 4 6 23

Fees $25 application fee + 

$120 for 1st 

THC testing 

+ Seed

dealer fees

based on

tonnage

$25 application fee + 

$120 for 1st 

THC testing 

+ Seed

dealer fees

based on

tonnage

$25 application fee + 

$120 for 1st 

THC testing 

+ Seed

dealer fees

based on

tonnage

$25 application fee + 

$120 for 1st 

THC testing 

+ Seed

dealer fees

based on

tonnage

$25 application fee + 

$120 for 1st 

THC testing 

+ Seed

dealer fees

based on

tonnage

Applications

(number)

Approved 8 9 34 109 461

University 1 1 1 1 1

Staff**

(number)

Full time 0 0 0 0 0

Part time 0.25 0.25 0.25 0.25 1.5

Notes: N/A = not available. 2013-2018 only approved acreages recorded by Vermont Agency of Agriculture.

*Area may include licensed, planted, or harvested acres and/or greenhouse (sq ft) depending upon data the State collects

and reports. Acreage reported by the USDA, Farm Service Agency and Vote Hemp included for comparison. 

**Staff data are reported in full-time employment equivalents. 

Source: USDA, Economic Research Service compilation. 
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Appendix table B20 

Virginia State Pilot Program for Industrial Hemp 

2014 2015 2016 2017 2018

Reported Area*

(acres except for 

GH)

Grain N/A N/A N/A N/A

Fiber N/A N/A N/A N/A

CBD N/A N/A N/A N/A

Total 0 37 87 135

GH (sq ft) N/A N/A N/A N/A

USDA FSA N/A 11 11 16

Vote Hemp N/A 37 87 135

Processors

(number)

Grain 0 0 0 0

Fiber 0 0 0 20

CBD 0 0 0 0

Total 0 0 0 20

Fees No Fees $57.00 $57.00 $45.00

Applications

(number)

Approved 29 34 85 85

University 29 34 85 85

Staff**

(number)

Full time 0 0 0 0

Part time 0 0 0 0

Notes: N/A = not available. 

*Area may include licensed, planted, or harvested acres and/or greenhouse (sq ft) depending upon data the State collects

and reports. Acreage reported by the USDA, Farm Service Agency and Vote Hemp included for comparison. 

**Staff data are reported in full-time employment equivalents.

Source: USDA, Economic Research Service compilation.
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Appendix table B21 

Washington State Pilot Program for Industrial Hemp 

2014 2015 2016 2017 2018

Reported 

Area*

(acres except 

for GH)

Grain N/A N/A N/A

Fiber N/A N/A N/A

CBD N/A N/A N/A

Total N/A 177.5 142

GH (sq ft) N/A N/A N/A

USDA FSA N/A 65 N/A

Vote Hemp 0 175 142

Processors

(number)

Grain N/A 0 0

Fiber N/A 0 9

CBD N/A 0 0

Total N/A 0 9

Fees N/A $450 each for grower 

or processor/marketer 

application; $800 for 

combination (grower/processor/marketer license) 

application +$300 

licensee fee (for all) 

+$200 inspection+ mileage fee + time fee. THC 

testing $200-$2,000

$450 each for grower 

or processor/marketer 

application; $800 for 

combination (grower/processor/marketer license) 

application +$300 

licensee fee (for all) 

+$200 inspection+ mileage fee + time fee. THC 

testing $200-$2,000

Applications

(number)

Approved N/A 6 11

University N/A 1 N/A

Staff**

(number)

Full time N/A 1 0

Part time N/A 0 0

Notes: N/A = not available. 

*Area may include licensed, planted, or harvested acres and/or greenhouse (sq ft) depending upon data the State collects

and reports. Acreage reported by the USDA, Farm Service Agency and Vote Hemp included for comparison. 

**Staff data are reported in full-time employment equivalents.

Source: USDA, Economic Research Service compilation.
61

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Appendix table B22 

West Virginia State Pilot Program for Industrial Hemp 

2014 2015 2016 2017 2018

Reported Area*

(acres except for 

GH)

Grain N/A N/A N/A

Fiber N/A N/A N/A

CBD N/A N/A N/A

Total 10 14 155

GH (sq ft) N/A N/A N/A

USDA FSA N/A N/A 253

Vote Hemp 10 14 155

Processors

(number)

Grain N/A N/A N/A

Fiber N/A N/A N/A

CBD N/A N/A N/A

Total N/A N/A N/A

Fees $100+$5/ac + 

inspection $35/

hr plus driving 

time; $150 per 

THC test per 

sample

$100+$5/ac 

+ inspection

$35/hr plus

driving time;

$150 per

THC test per

sample

$100+$5/ac + 

inspection $35/

hr plus driving 

time; $150 per 

THC test per 

sample

Applications

(number)

Approved 15 22 46

University 1 1 1

Staff**

(number)

Full time 1 2 2

Part time 0 1 1

Notes: N/A = not available. 

*Area may include licensed, planted, or harvested acres and/or greenhouse (sq ft) depending upon data the State collects

and reports. Acreage reported by the USDA, Farm Service Agency and Vote Hemp included for comparison. 

**Staff data are reported in full-time employment equivalents.

Source: USDA, Economic Research Service compilation.
62

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Appendix table B23 

Wisconsin State Pilot Program for Industrial Hemp 

2014 2015 2016 2017 2018

Reported Area*

(acres)

Grain N/A

Fiber N/A

CBD N/A

Total 1,700

GH 22 acres

USDA FSA 665

Vote Hemp 1,850

Processors

(number)

Grain Small number

Fiber Small number

CBD 100

Total Over 200

Fees Application fee: 

0-30 acres=$150; 

31-199acres=$5/

acre; 

200ac+=$1,000 

+ $350 grower 

participation fee + 

$250 each for 1st 

and second THC 

test; $100 processor 

fee; $50 site modification fee (plus 

any acreages fee 

changes); change 

of farm manager fee 

= $15 (to cover cost 

on new background 

check)

Applications

(number)

Approved 247

University N/A

Staff**

(number)

Full time 0

Part time 5

Notes: N/A = not available. 2018 - only gave total number of acres harvested; authors’ research indicates approximately 22 

acres of GH space.

*Area may include licensed, planted, or harvested acres and/or greenhouse (sq ft) depending upon data the State collects 

and reports. Acreage reported by the USDA, Farm Service Agency and Vote Hemp included for comparison. 

**Staff data are reported in full-time employment equivalents.

Source: USDA, Economic Research Service compilation.
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Appendix C: Uses of Hemp

Three main categories of hemp use are food from hemp seed, fiber from hemp stalks, and oil from 

the flowers and seeds.50 There is also a market for hemp “hurds,” which are the inner layer of the 

stalk that can be used for animal bedding or insulation. Hemp fiber is used for making fabric, paper, 

and rope, while the seeds can be eaten or used as a feed ingredient for animals. Seeds can also be 

crushed for hemp oil, an ingredient in soap, cosmetic products, and industrial oils, such as biofuels, 

paints, and solvents. 

Hemp can be used for hundreds of consumer products and industrial inputs, including paper, 

construction materials, automotive parts, packing materials, bio-plastics, fabrics, and bio-energy, 

but the magnitude of demand for these uses is unknown. Estimates released by the Hemp Business 

Journal are that in 2017, 23 percent of market sales value for hemp were derived from CBD, followed 

by personal care with 22 percent, industrial applications at 18 percent, 17 percent from foodstuffs, 

13 percent from consumer textiles, 5 percent from supplements, and 2 percent from other consumer 

products (Hemp Business Journal, no date). These shares will shift over time as new hemp products 

or competing hemp-alternatives are developed. The Journal also projects hemp-derived CBD products will account for 34 percent of market sales value for hemp by 2022. 

Cost-effective alternatives already exist for most uses, particularly flax and synthetic fibers. The 

potentially highest value use of hemp is CBD oil - a hemp or marijuana extract that can be added to 

foods, beverages, and cosmetics - but its legal status is still evolving. Hemp seed and hemp seed oil 

are generally recognized as safe by the Food and Drug Administration for human food use. There 

are unsubstantiated claims as to its efficacy for a wide range of medical and health issues, from 

pain management to acne reduction. Hemp extract products are not approved by the Food and Drug 

Administration for food or drug use, except for one licensed epilepsy drug. 

50See “Hemp as an Agricultural Commodity” (Johnson, 2018) for additional information about potential uses of hemp. 
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Appendix D: Literature Review

The pilot programs revealed some significant research and knowledge gaps; a review of existing 

literature confirms those gaps. Most of the available peer-reviewed literature is dated, primarily 

focused on processing methods for fiber and seed, and was conducted outside of the United States 

under different production scenarios and regulatory contexts. The available literature can roughly be 

categorized around product use, agronomic production, and economics. Economic literature makes 

up the smallest of the three categories of extant hemp literature and is the focus of this section. 

Hemp product use studies typically draw from the hard sciences (i.e., medicine, chemistry, engineering, pharmacology, etc.) and have largely focused on paper products or other fiber uses. 

Agronomic literature from both the peer-reviewed journals as well as from university staff papers 

and bulletins comprise the second category of hemp literature and focuses on production issues 

(Alden et al., 1998). University research has been constrained by the Controlled Substances Act, 

Title II of the Comprehensive Drug Abuse Prevention and Control Act of 1970, and the lack of data 

needed to publish peer-reviewed literature. Farm-level production (farm-gate production/first-use 

stage) studies are still largely relegated to university fact sheets and white papers (for example, 

Ehrensing, 1998; Thomson et al., 1998; Robbins et al., 2013; Fortenbery and Mick, 2014; Shepherd 

and Mark, 2019; Anderson et al., 2019; Hanchar 2019; Harper et al., 2019). 

There is little peer-reviewed economic analysis of industrial hemp, and the widespread availability 

of speculative market analysis in non-journal outlets is potentially confusing to both investors and 

producers. Most of the economic literature that does exist discusses hemp fiber and grain products 

and was written before CBD oil became a major product category. While some recent work has been 

released in this area (e.g. Sterns, 2019), most of the university studies are dated and not applicable to 

the current farm-level economic environment and production systems (Mark and Snell, 2019). 

 For example, the report, “Industrial Hemp in the United States: Status and Market Potential,” 

provided a detailed look at the potential of hemp production in the U.S. and Canada around 2000 

(USDA ERS, 2000). Small and Marcus (2002) offer a comprehensive overview of potential hemp 

uses and encourage caution regarding new crops “touted as goldmines.” Fortenbery and Bennett 

(2004) concluded that “Hemp appears slightly more profitable than traditional row crops, but less 

profitable than other specialty crops.” Cherney and Small (2016) give a concise summary of the 

economic literature in their article “Industrial Hemp in North America: Production, Politics, and 

Potential.” More recently, Johnson (2018) sums up the state of hemp economics as “It is not possible 

to predict with any degree of confidence the potential market and employment effects of relaxing the 

current restriction on U.S. hemp production.” In a separate paper, Johnson (2019) offers a historical 

perspective on the economic literature available and legislative changes relevant to the industry. 

Currently the most profitable, and fastest developing, hemp market is for CBD oil, about which there 

is very little peer-reviewed economic or agronomic literature. Few articles exist in the economics 

literature to address hemp for grain purposes and even fewer for CBD or other extracts. Both potential producers and State licensing authorities found it difficult to obtain information on the economic 

viability of planting hemp for CBD oil or other extract production during the pilot programs. 
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The economics of hemp studies that are published largely address a specific topic that was in the 

national spotlight in their year of writing. Further, most of the economics articles only address hemp 

production from a micro-economic level without a focus on competition with conventional crops for 

acreage (e.g. Alden et al., 1998; Bowyer 2001; Fortenbery and Bennett, 2004).

With the passage of the 2018 Farm Bill, some of the constraints for research funding have been 

removed. Universities and private companies are beginning to release updated working papers, factsheets, and budgets based on information from the pilots, but literature on commercial production is 

still largely absent. At the forefront of the research are those States that have been in hemp production the longest, including Colorado, Kentucky, Oregon, Tennessee, and Vermont. 

Enterprise budgets to help producers analyze basic production costs are included with some of the 

most recently released economic information available (e.g. Hanchar, 2019; Cui and Smith, 2019). The 

University of Kentucky has published six hemp budgets covering fiber, grain, and CBD. The four CBD 

budgets cover the two most common production practices started in the United States and two potential 

mechanical harvest methods that are being explored in trials (Shepherd and Mark, 2019). Colorado and 

Pennsylvania also have crop production budgets available for growers in their States. 

There is existing literature addressing the economics of hemp production in countries other than 

the United States. Canada has good representation in the literature and is often used as the baseline 

for U.S. hemp economics (e. g. Thayer and Burley, 2017; Halliday and Lynch, 2018). One Canadian 

publication showed that on average, gross margins for hemp seed production were $825.63/acre and 

$479.43/acre (C$) for irrigated and non-irrigated hemp enterprises in Alberta (Vera et al., 2010). 

China and European countries make up the bulk of available literature that is not Canadian focused 

(Wang and Shi, 1999; Beherec, 2000; Ranalli and Venturi, 2004; Garnier et al., 2007; Carus et al., 

2013; Amaducci et al., 2015; Foti et al. 2019). 

Industry research is beginning to bridge some of the literature gaps, but lacks third-party validation needed to overcome potential perceived biases and often is only available to customers or 

others with structured relationships. Nesin (2019) is an example of private company research that 

has been released to help customers gain a deeper understanding of the CBD industry. Within these 

articles, they explore the volatility in the hemp market and the potential for a rapid transition of hops 

producers to hemp for CBD and oversupplying the market. 

The extent of gaps in the current economic and market literature cannot be overstated. There is a 

significant need for more farm-level enterprise research and research-on-demand for particular products to determine the profitability of hemp for various uses (grain, fiber, and CBD or other extracts) 

and by regions. Many producers and processors are using anecdotal information and/or obsolete data 

to guide production decisions. Enterprise budgets developed for one region or one type of end use may 

not reflect costs and revenues for another region or use. Reliable data to analyze the cost of production 

are scarce. Research and education publications into the nature of contracts between processors and 

producers would also be beneficial. Significant market research gaps also include international competitiveness and trade, processing alternatives, and market organization and structure. 
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Appendix E: Selected Legislation Relevant to Hemp

Hemp references are bolded where hemp is not the major subject of the sections included below. 

Marihuana Tax Act of 1937

.... 

(b) The term “marihuana” means all parts of the plant Cannabis sativa L , whether growing or not; 

the seeds thereof; the resin extracted from any part of such plant; and every compound, manufacture, salt, derivative, mixture, or preparation of such plant, its seeds, or resin- but shall not include 

the mature stalks of such plant, fiber produced from such stalks, oil or cake made from the seeds 

of such plant, any other compound, manufacture, salt, derivative, mixture, or preparation of such 

mature stalks (except the resin extracted therefrom), fiber, oil, or cake, or the sterilized seed of such 

plant which is incapable of germination. 

SEC. 2. (a) Every person who imports, manufactures, produces, compounds, sells, deals in, 

dispenses, prescribes, administers, or gives away marihuana shall ( 1 ) within fifteen days after the 

effective date of this Act, or (2) before engaging after the expiration of such fifteen-day period in 

any of the above mentioned activities, and (3) thereafter, on or before July 1 of each year, pay the 

following special taxes respectively: 

(1) Importers, manufacturers, and compounders of marihuana, $24 per year. 

(2) Producers of marihuana (except those included within subdivision (4) of this subsection), $1 per 

year, or fraction thereof, during which they engage in such activity. 

(3) Physicians, dentists, veterinary surgeons, and other practitioners who distribute, dispense, give 

away, administer, or prescribe marihuana to patients upon whom they in the course of their professional practice are in attendance, $1 per year or fraction thereof during which they engage in any of 

such activities. 

(4) Any person not registered as an importer, manufacturer, producer, or compounder who obtains 

and uses marihuana in a laboratory for the purpose of research, instruction, or analysis, or who 

produces marihuana for any such purpose, $1 per year, or fraction thereof, during which he engages 

in such activities. 

(5) Any person who is not a physician, dentist, veterinary surgeon, or other practitioner and who 

deals in, dispenses, or gives away marihuana, $3 per year: Provided, That any person who has registered and paid the special tax as an importer, manufacturer, compounder, or producer, as required 

by subdivisions ( 1 ) and (2) of this subsection, may deal in, dispense, or give away marihuana 

imported, manufactured, compounded, or produced by him without further payment of the tax 

imposed by this section. 

...

SEC. 5. It shall be unlawful for any person who shall not have paid the special tax and registered, as required by section 2, to send, ship, carry, transport, or deliver any marihuana within 

any Territory, the District of Columbia, or any insular possession, or from any State, Territory, the 
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District of Columbia, any insular possession of the United States, or the Canal Zone, into any other 

State, Territory, the District of Columbia, or insular possession of the United States: Provided, 

That nothing contained in this section shall apply to any common carrier engaged in transporting 

marihuana; or to any employee of any person who shall have registered and paid the special tax 

as required by section 2 while acting within the scope of his employment; or to any person who 

shall deliver marihuana which has been prescribed or dispensed by a physician, dentist, veterinary 

surgeon, or other practitioner registered under section 2, who has been employed to prescribe for 

the particular patient receiving such marihuana; or to any United States, State, county, municipal, 

District, Territorial, or insular officer or official acting within the scope of his official duties. 

SEC. 6. (a) It shall be unlawful for any person, whether or not required to pay a special tax and register 

under section 2, to transfer marihuana, except in pursuance of a written order of the person to whom 

such marihuana is transferred, on a form to be issued in blank for that purpose by the Secretary. 

...

SEC. 7. (a) There shall be levied, collected, and paid upon all transfers of marihuana which are 

required by section 6 to be carried out in pursuance of written order forms taxes at the following rates: 

(1) Upon each transfer to any person who has paid the special tax and registered under section 2 of 

this Act, $1 per ounce of marihuana or fraction thereof 

(2) Upon each transfer to any person who has not paid the special tax and registered under section 2 

of this Act, $100 per ounce of marihuana or fraction thereof. 

(b) Such tax shall be paid by the transferee at the time of securing each order form and shall be in 

addition to the price of such form. Such transferee shall be liable for the tax imposed by this section 

but in the event that the transfer is made in violation of section 6 without an order form and without 

payment of the transfer tax imposed by this section, the transferor shall also be liable for such tax. 

(c) Payment of the tax herein provided shall be represented by appropriate stamps to be provided by 

the Secretary and said stamps shall be affixed by the collector or his representative to the original 

order form. 

(d) All provisions of law relating to the engraving, issuance, sale, accountability, cancelation, and 

destruction of tax-paid stamps provided for in the internal-revenue laws shall, insofar as applicable and 

not inconsistent with this Act, be extended and made to apply to stamps provided for in this section. 

...

SEC. 12. Any person who is convicted of a violation of any provision of this Act shall be fined not 

more than $2,000 or imprisoned not more than five years, or both, in the discretion of the court. 
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2014 Farm Bill

SEC. 7606. LEGITIMACY OF INDUSTRIAL HEMP RESEARCH. 

 (a) In General. --Notwithstanding the Controlled Substances Act (21 

U. S. C. 801 et seq.), the Safe and Drug-Free Schools and Communities Act 

(20 U. S. C. 7101 et seq.), chapter 81 of title 41, United States Code, 

or 

any other Federal law, an institution of higher education (as defined in 

section 101 of the Higher Education Act of 1965 (20 U. S. C. 1001)) or a 

State department of agriculture may grow or cultivate industrial hemp 

if--

 (1) the industrial hemp is grown or cultivated for purposes 

 of research conducted under an agricultural pilot program or 

 other agricultural or academic research; and

 (2) the growing or cultivating of industrial hemp is allowed 

 under the laws of the State in which such institution of higher 

 education or State department of agriculture is located and such 

 research occurs. 

 (b) Definitions. --In this section:

 (1) Agricultural pilot program. --The term ``agricultural 

 pilot program’’ means a pilot program to study the growth, 

 cultivation, or marketing of industrial hemp--

 (A) in States that permit the growth or cultivation 

 of industrial hemp under the laws of the State; and

 (B) in a manner that--

 (i) ensures that only institutions of higher 

 education and State departments of agriculture are 

 used to grow or cultivate industrial hemp;

 (ii) requires that sites used for growing or 

 cultivating industrial hemp in a State be 

 certified by, and registered with, the State 

 department of agriculture; and

 (iii) authorizes State departments of 

 agriculture to promulgate regulations to carry out 

 the pilot program in the States in accordance with 

 the purposes of this section. 

 (2) Industrial hemp. --The term ``industrial hemp’’ means the 

 plant Cannabis sativa L. and any part of such plant, whether 

 growing or not, with a delta-9 tetrahydrocannabinol

 concentration of not more than 0.3 percent on a dry weight 

 basis. 

 (3) State department of agriculture. --The term ``State 

 department of agriculture’’ means the agency, commission, or 

 department of a State government responsible for agriculture 

 within the State. 

2018 Farm Bill

SEC. 7129. SUPPLEMENTAL AND ALTERNATIVE CROPS; HEMP. 

 Section 1473D of the National Agricultural Research, Extension, and 

Teaching Policy Act of 1977 (7 U. S. C. 3319d) is amended--

 (1) in subsection (a)--

 (A) by striking ”2018” and inserting “2023”’’; and

 (B) by striking ”crops,” and inserting ”crops 

 (including canola),”;

 (2) in subsection (b)--

 (A) by inserting ”for agronomic rotational purposes 

 and as a habitat for honey bees and other pollinators” 

 after “alternative crops”; and

 (B) by striking ``commodities whose” and all that 

 follows through the period at the end and inserting 

 “commodities.”;
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 (3) in subsection (c)(3)(E), by inserting “(including hemp

 (as defined in section 297A of the Agricultural Marketing Act of 

 1946))” after “material”; and

 (4) in subsection (e)--

 (A) in paragraph (1), by striking ”and” at the 

 end;

 (B) in paragraph (2), by striking the period at the 

 end and inserting”; and”; and

 (C) by adding at the end the following new 

 paragraph:

 “(3) $2,000,000 for each of fiscal years 2019 through 2023.”. 

SEC. 7501. CRITICAL AGRICULTURAL MATERIALS ACT. 

 (a) Hemp Research. --Section 5(b)(9) of the Critical Agricultural 

Materials Act (7 U. S. C. 178c(b)(9)) is amended by inserting “, and 

including hemp (as defined in section 297A of the Agricultural Marketing 

Act of 1946)” after “hydrocarbon-containing plants”. 

 (b) Authorization of Appropriations. --Section 16(a)(2) of the 

Critical Agricultural Materials Act (7 U. S. C. 178n(a)(2)) is amended by 

striking “2018” and inserting “2023”. 

SEC. 7605. LEGITIMACY OF INDUSTRIAL HEMP RESEARCH. 

 (a) In General. --Section 7606 of the Agricultural Act of 2014 (7 

U. S. C. 5940) is amended--

 (1) by redesignating subsections (a) and (b) as subsections 

 (b) and (a), respectively, and moving the subsections so as to 

 appear in alphabetical order;

 (2) in subsection (a) (as so redesignated)--

 (A) by redesignating paragraph (3) as paragraph (4); 

 and

 (B) by inserting after paragraph (2) the following:

 “3) State. --The term `State’ has the meaning given such 

 term in section 297A of the Agricultural Marketing Act of 

 1946.”;

 (3) in subsection (b) (as so redesignated), in the 

 subsection heading, by striking “In General” and inserting 

 ``Industrial Hemp Research”; and

 (4) by adding at the end the following:

 ”(c) Study and Report. --

 “(1) In general. --The Secretary shall conduct a study of 

 agricultural pilot programs--

 “(A) to determine the economic viability of the 

 domestic production and sale of industrial hemp; and

 “(B) that shall include a review of--

 “(i) each agricultural pilot program; and

 “(ii) any other agricultural or academic 

 research relating to industrial hemp. 

 “(2) Report. --Not later than 12 months after the date of 

 enactment of this subsection, the Secretary shall submit to 

 Congress a report describing the results of the study conducted 

 under paragraph (1).”. 

 (b) <<NOTE: 7 USC 5940 note.>> Repeal. --Effective on the date that 

is 1 year after the date on which the Secretary establishes a plan under 

section 297C of the Agricultural Marketing Act of 1946, section 7606 of 

the Agricultural Act of 2014 (7 U.S.C. 5940) is repealed. 

SEC. 10113. HEMP PRODUCTION. 

 The Agricultural Marketing Act of 1946 (7 U.S.C. 1621 et seq.) is 

amended by adding at the end the following:

 ”Subtitle G--Hemp Production

“SEC. 297A. <<NOTE: 7 USC 1639o.>> DEFINITIONS. 

 “In this subtitle:

 “(1) Hemp. --The term `hemp’ means the plant Cannabis sativa 

 L. and any part of that plant, including the seeds thereof and 

 all derivatives, extracts, cannabinoids, isomers, acids, salts, 
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 and salts of isomers, whether growing or not, with a delta-9 

 tetrahydrocannabinol concentration of not more than 0.3 percent 

 on a dry weight basis. 

 “(2) Indian tribe. --The term `Indian tribe’ has the meaning 

 given the term in section 4 of the Indian Self-Determination and 

 Education Assistance Act (25 U.S.C. 5304). 

 “(3) Secretary. --The term `Secretary’ means the Secretary 

 of Agriculture. 

 “(4) State. --The term `State’ means--

 “(A) a State;

 “(B) the District of Columbia;

 “(C) the Commonwealth of Puerto Rico; and

 “(D) any other territory or possession of the 

 United States. 

 “(5) State department of agriculture. --The term `State 

 department of agriculture’ means the agency, commission, or 

 department of a State government responsible for agriculture in 

 the State. 

 “(6) Tribal government. --The term `Tribal government’ means 

 the governing body of an Indian tribe. 

“SEC. 297B. <<NOTE: 7 USC 1639p.>> STATE AND TRIBAL PLANS. 

 “(a) Submission. --

 “(1) In general. --A State or Indian tribe desiring to have 

 primary regulatory authority over the production of hemp in the 

 State or territory of the Indian tribe shall submit to the 

 Secretary, through the State department of agriculture (in 

 consultation with the Governor and chief law enforcement officer 

 of the State) or the Tribal government, as applicable, a plan 

 under which the State or Indian tribe monitors and regulates 

 that production as described in paragraph (2). 

 “(2) Contents. --A State or Tribal plan referred to in 

 paragraph (1)--

 “(A) shall only be required to include--

 “(i) a practice to maintain relevant 

 information regarding land on which hemp is 

 produced in the State or territory of the Indian 

 tribe, including a legal description of the land, 

 for a period of not less than 3 calendar years;

 “(ii) a procedure for testing, using post-

 decarboxylation or other similarly reliable 

 methods, delta-9 tetrahydrocannabinol 

 concentration levels of hemp produced in the State 

 or territory of the Indian tribe;

 “(iii) a procedure for the effective disposal 

 of--

 “(I) plants, whether growing or 

 not, that are produced in violation of 

 this subtitle; and

 “(II) products derived from those 

 plants;

 “(iv) a procedure to comply with the 

 enforcement procedures under subsection (e);

 “(v) a procedure for conducting annual 

 inspections of, at a minimum, a random sample of 

 hemp producers to verify that hemp is not produced 

 in violation of this subtitle;
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 “(vi) a procedure for submitting the 

 information described in section 297C(d)(2), as 

 applicable, to the Secretary not more than 30 days 

 after the date on which the information is 

 received; and

 “(vii) a certification that the State or 

 Indian tribe has the resources and personnel to 

 carry out the practices and procedures described 

 in clauses (i) through (vi); and

 “(B) may include any other practice or procedure 

 established by a State or Indian tribe, as applicable, 

 to the extent that the practice or procedure is 

 consistent with this subtitle. 

“(3) Relation to state and tribal law. --

 “(A) No preemption. --Nothing in this subsection 

 preempts or limits any law of a State or Indian tribe 

 that--

 “(i) regulates the production of hemp; and

 “(ii) is more stringent than this subtitle. 

 “(B) References in plans. --A State or Tribal plan 

 referred to in paragraph (1) may include a reference to 

 a law of the State or Indian tribe regulating the 

 production of hemp, to the extent that law is consistent 

 with this subtitle. 

 “(b) Approval. --

 “(1) In general. --Not later than 60 days after receipt of a 

 State or Tribal plan under subsection (a), the Secretary shall--

 “(A) approve the State or Tribal plan if the State 

 or Tribal plan complies with subsection (a); or

 “(B) disapprove the State or Tribal plan only if 

 the State or Tribal plan does not comply with subsection 

 (a). 

 “(2) Amended plans. --If the Secretary disapproves a State 

 or Tribal plan under paragraph (1)(B), the State, through the 

 State department of agriculture (in consultation with the 

 Governor and chief law enforcement officer of the State) or the 

 Tribal government, as applicable, may submit to the Secretary an 

 amended State or Tribal plan that complies with subsection (a). 

 “(3) Consultation. --The Secretary shall consult with the 

 Attorney General in carrying out this subsection. 

 “(c) Audit of State Compliance. --

 “(1) In general. --The Secretary may conduct an audit of the 

 compliance of a State or Indian tribe with a State or Tribal 

 plan approved under subsection (b). 

 “(2) Noncompliance. --If the Secretary determines under an 

 audit conducted under paragraph (1) that a State or Indian tribe 

 is not materially in compliance with a State or Tribal plan--

 “(A) the Secretary shall collaborate with the State 

 or Indian tribe to develop a corrective action plan in 

 the case of a first instance of noncompliance; and

 “(B) the Secretary may revoke approval of the State 

 or Tribal plan in the case of a second or subsequent 

 instance of noncompliance. 

 “(d) Technical Assistance. --The Secretary may provide technical 

assistance to a State or Indian tribe in the development of a State or 
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Tribal plan under subsection (a). 

 “(e) Violations. --

 “(1) In general. --A violation of a State or Tribal plan 

 approved under subsection (b) shall be subject to enforcement 

 solely in accordance with this subsection. 

 “(2) Negligent violation. --

 “(A) In general. --A hemp producer in a State or the 

 territory of an Indian tribe for which a State or Tribal 

 plan is approved under subsection (b) shall be subject 

 to subparagraph (B) of this paragraph if the State 

 department of agriculture or Tribal government, as 

 applicable, determines that the hemp producer has 

 negligently violated the State or Tribal plan, including 

 by negligently--

 “(i) failing to provide a legal description 

 of land on which the producer produces hemp;

 “(ii) failing to obtain a license or other 

 required authorization from the State department 

 of agriculture or Tribal government, as 

 applicable; or

 “(iii) producing Cannabis sativa L. with a 

 delta-9 tetrahydrocannabinol concentration of more 

 than 0. 3 percent on a dry weight basis. 

 “(B) Corrective action plan. --A hemp producer 

 described in subparagraph (A) shall comply with a plan 

 established by the State department of agriculture or 

 Tribal government, as applicable, to correct the 

 negligent violation, including--

 “(i) a reasonable date by which the hemp 

 producer shall correct the negligent violation; 

 and

 “(ii) a requirement that the hemp producer 

 shall periodically report to the State department 

 of agriculture or Tribal government, as 

 applicable, on the compliance of the hemp producer 

 with the State or Tribal plan for a period of not 

 less than the next 2 calendar years. 

 “(C) Result of negligent violation. --A hemp 

 producer that negligently violates a State or Tribal 

 plan under subparagraph (A) shall not as a result of 

 that violation be subject to any criminal enforcement 

 action by the Federal Government or any State 

 government, Tribal government, or local government. 

 “(D) Repeat violations. --A hemp producer that 

 negligently violates a State or Tribal plan under 

 subparagraph (A) 3 times in a 5-year period shall be 

 ineligible to produce hemp for a period of 5 years 

 beginning on the date of the third violation. 

 “(3) Other violations. --

 “(A) In general. --If the State department of 

 agriculture or Tribal government in a State or the 

 territory of an Indian tribe for which a State or Tribal 

 plan is approved under subsection (b), as applicable, 

 determines that a hemp producer in the State or 

 territory has violated the State or Tribal plan with a 
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 culpable mental state greater than negligence--

 “(i) the State department of agriculture or 

 Tribal government, as applicable, shall 

 immediately report the hemp producer to--

 “(I) the Attorney General; and

 “(II) the chief law enforcement 

 officer of the State or Indian tribe, as 

 applicable; and

 “(ii) paragraph (1) of this subsection shall 

 not apply to the violation. 

 “(B) Felony. --

 “(i) In general. --Except as provided in 

 clause (ii), any person convicted of a felony 

 relating to a controlled substance under State or 

 Federal law before, on, or after the date of 

 enactment of this subtitle shall be ineligible, 

 during the 10-year period following the date of 

 the conviction--

 “(I) to participate in the program 

 established under this section or 

 section 297C; and

 “(II) to produce hemp under any 

 regulations or guidelines issued under 

 section 297D(a). 

 “(ii) Exception. --Clause (i) shall not apply 

 to any person growing hemp lawfully with a 

 license, registration, or authorization under a 

 pilot program authorized by section 7606 of the 

 Agricultural Act of 2014 (7 U. S. C. 5940) before 

 the date of enactment of this subtitle. 

 “(C) False statement. --Any person who materially 

 falsifies any information contained in an application to 

 participate in the program established under this 

 section shall be ineligible to participate in that 

 program. 

 “(f) Effect. --Nothing in this section prohibits the production of 

hemp in a State or the territory of an Indian tribe--

 “(1) for which a State or Tribal plan is not approved under 

 this section, if the production of hemp is in accordance with 

 section 297C or other Federal laws (including regulations); and

 “(2) if the production of hemp is not otherwise prohibited 

 by the State or Indian tribe.

“SEC. 297C. <<NOTE: 7 USC 1639q.>> DEPARTMENT OF AGRICULTURE. 

 “(a) Department of Agriculture Plan. --

 “(1) In general. --In the case of a State or Indian tribe 

 for which a State or Tribal plan is not approved under section 

 297B, the production of hemp in that State or the territory of 

 that Indian tribe shall be subject to a plan established by the 

 Secretary to monitor and regulate that production in accordance 

 with paragraph (2). 

 “(2) Content. --A plan established by the Secretary under 

 paragraph (1) shall include--

 “(A) a practice to maintain relevant information 

 regarding land on which hemp is produced in the State or 
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 territory of the Indian tribe, including a legal 

 description of the land, for a period of not less than 3 

 calendar years;

 “(B) a procedure for testing, using post-

 decarboxylation or other similarly reliable methods, 

 delta-9 tetrahydrocannabinol concentration levels of 

 hemp produced in the State or territory of the Indian 

 tribe;

 “(C) a procedure for the effective disposal of--

 “(i) plants, whether growing or not, that are 

 produced in violation of this subtitle; and

 “(ii) products derived from those plants;

 “(D) a procedure to comply with the enforcement 

 procedures under subsection (c)(2);

 “(E) a procedure for conducting annual inspections 

 of, at a minimum, a random sample of hemp producers to 

 verify that hemp is not produced in violation of this 

 subtitle; and

 “(F) such other practices or procedures as the 

 Secretary considers to be appropriate, to the extent 

 that the practice or procedure is consistent with this 

 subtitle. 

 “(b) Licensing. --The Secretary shall establish a procedure to issue 

licenses to hemp producers in accordance with a plan established under 

subsection (a). 

 “(c) Violations. --

 “(1) In general. --In the case of a State or Indian tribe 

 for which a State or Tribal plan is not approved under section 

 297B, it shall be unlawful to produce hemp in that State or the 

 territory of that Indian tribe without a license issued by the 

 Secretary under subsection (b). 

 “(2) Negligent and other violations. --A violation of a plan 

 established under subsection (a) shall be subject to enforcement 

 in accordance with paragraphs (2) and (3) of section 297B(e), 

 except that the Secretary shall carry out that enforcement 

 instead of a State department of agriculture or Tribal 

 government. 

 “(3) Reporting to attorney general. --In the case of a State 

 or Indian tribe covered by paragraph (1), the Secretary shall 

 report the production of hemp without a license issued by the 

 Secretary under subsection (b) to the Attorney General. 

 “(d) Information Sharing for Law Enforcement. --

 “(1) In general. --The Secretary shall--

 “(A) collect the information described in paragraph 

 (2); and

 “(B) make the information collected under 

 subparagraph (A) accessible in real time to Federal, 

 State, territorial, and local law enforcement. 

 “(2) Content. --The information collected by the Secretary 

 under paragraph (1) shall include--

 “(A) contact information for each hemp producer in 

 a State or the territory of an Indian tribe for which--

 “(i) a State or Tribal plan is approved under 

 section 297B(b); or

 “(ii) a plan is established by the Secretary 
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 under this section;

 “(B) a legal description of the land on which hemp 

 is grown by each hemp producer described in subparagraph 

 (A); and

 “(C) for each hemp producer described in 

 subparagraph (A)--

 “(i) the status of--

 “(I) a license or other required 

 authorization from the State department 

 of agriculture or Tribal government, as 

 applicable; or

 “(II) a license from the Secretary; 

 and

 ``(ii) any changes to the status. 

“SEC. 297D. <<NOTE: 7 USC 1639r.>> REGULATIONS AND GUIDELINES; 

 EFFECT ON OTHER LAW. 

 “(a) Promulgation of Regulations and Guidelines; Report. --

 “(1) Regulations and guidelines. --

 “(A) In general. --The Secretary shall promulgate 

 regulations and guidelines to implement this subtitle as 

 expeditiously as practicable. 

 “(B) Consultation with attorney general. --The 

 Secretary shall consult with the Attorney General on the 

 promulgation of regulations and guidelines under 

 subparagraph (A). 

 “(2) Report. --The Secretary shall annually submit to the 

 Committee on Agriculture of the House of Representatives and the 

 Committee on Agriculture, Nutrition, and Forestry of the Senate 

 a report containing updates on the implementation of this 

 subtitle. 

 “(b) Authority. --Subject to subsection (c)(3)(B), the Secretary 

shall have sole authority to promulgate Federal regulations and 

guidelines that relate to the production of hemp, including Federal 

regulations and guidelines that relate to the implementation of sections 

297B and 297C. 

 “(c) Effect on Other Law. --Nothing in this subtitle shall affect or 

modify--

 “(1) the Federal Food, Drug, and Cosmetic Act (21 U. S. C. 

 301 et seq.);

 “(2) section 351 of the Public Health Service Act (42 

 U. S. C. 262); or

 “(3) the authority of the Commissioner of Food and Drugs 

 and the Secretary of Health and Human Services--

 “(A) under--

 “(i) the Federal Food, Drug, and Cosmetic Act 

 (21 U. S. C. 301 et seq.); or

 “(ii) section 351 of the Public Health 

 Service Act (42 U. S. C. 262); or

 “(B) to promulgate Federal regulations and 

 guidelines that relate to the production of hemp under 

 the Act described in subparagraph (A)(i) or the section 

 described in subparagraph (A)(ii). 

``SEC. 297E. <<NOTE: 7 USC 1639s.>> AUTHORIZATION OF 

 APPROPRIATIONS. 

 “There are authorized to be appropriated such sums as are necessary 
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to carry out this subtitle.”. 

SEC. 10114. <<NOTE: 7 USC 1639o note.>> INTERSTATE COMMERCE. 

 (a) Rule of Construction. --Nothing in this title or an amendment 

made by this title prohibits the interstate commerce of hemp (as defined 

in section 297A of the Agricultural Marketing Act of 1946 (as added by 

section 10113)) or hemp products. 

 (b) Transportation of Hemp and Hemp Products. --No State or Indian 

Tribe shall prohibit the transportation or shipment of hemp or hemp 

products produced in accordance with subtitle G of the Agricultural 

Marketing Act of 1946 (as added by section 10113) through the State or 

the territory of the Indian Tribe, as applicable. 

TITLE XI--CROP INSURANCE

SEC. 11101. DEFINITIONS. 

 Section 502(b) of the Federal Crop Insurance Act (7 U.S.C. 1502(b)) 

is amended--

 (1) by redesignating paragraphs (6), (7), (8), (9), (10), 

 and (11) as paragraphs (7), (8), (10), (11), (12), and (13) 

 respectively;

 (2) by inserting after paragraph (5) the following:

 “(6) Cover crop termination. --The term `cover crop 

 termination’ means a practice that historically and under 

 reasonable circumstances results in the termination of the 

 growth of a cover crop.”; and

 (3) by inserting after paragraph (8) (as so redesignated) 

 the following:

 “(9) Hemp. --The term `hemp’ has the meaning given the term 

 in section 297A of the Agricultural Marketing Act of 1946.”. 

SEC. 11106. INSURANCE PERIOD. 

 Section 508(a)(2) of the Federal Crop Insurance Act (7 U. S. C. 

1508(a)(2)) is amended by striking “and sweet potatoes” and inserting 

”sweet potatoes, and hemp”. 

SEC. 11113. SUBMISSION OF POLICIES AND MATERIALS TO BOARD. 

 Section 508(h) of the Federal Crop Insurance Act (7 U.S.C. 1508(h)) 

is amended--

 (1) in paragraph (1)(B)--

 (A) by redesignating clauses (i) through (iii) as 

 subclauses (I) through (III), respectively, and 

 indenting appropriately;

 (B) in the matter preceding subclause (I) (as so 

 redesignated), by striking ``The Corporation shall” and 

 inserting the following:

 “(i) In general. --The Corporation shall”;

 (C) in clause (i)(I) (as so redesignated), by 

 inserting “subject to clause (ii),” before “will 

 likely”; and

 (D) by adding at the end the following:

 “(ii) Waiver for hemp. --The Corporation may 

 waive the viability and marketability requirement 

 under clause (i)(I) in the case of a policy or 

 pilot program relating to the production of 

 hemp.”; and

 (2) in paragraph (3)(C)--

 (A) in clause (ii), by striking “and” at the end;

 (B) in clause (iii), by striking the period at the 

 end and inserting ”; and”; and
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 (C) by adding at the end the following:

 “(iv) in the case of reviewing policies and 

 other materials relating to the production of 

 hemp, may waive the viability and marketability 

 requirement under subparagraph (A)(ii)(I).”

SEC. 11119. AGRICULTURAL COMMODITY. 

Section 518 of the Federal Crop Insurance Act (7 U. S. C. 1518) is 

amended by inserting “hemp,” before “aquacultural species”. 

SEC. 11121. REIMBURSEMENT OF RESEARCH, DEVELOPMENT, AND 

 MAINTENANCE COSTS. 

 Section 522(b) of the Federal Crop Insurance Act (7 U. S. C. 1522(b)) 

is amended--

 (1) in paragraph (2), by adding at the end the following:

 “(K) Waiver for hemp. --The Board may waive the 

 viability and marketability requirements under this 

 paragraph in the case of research and development 

 relating to a policy to insure the production of 

 hemp.”; and

 (2) in paragraph (3)--

 (A) by striking “The Corporation” and inserting 

 the following:

 “(A) In general. --Subject to subparagraph (B), the 

 Corporation”; and

 (B) by adding at the end the following:

 “(B) Waiver for hemp. --The Corporation may waive 

 the marketability requirement under subparagraph (A) in 

 the case of research and development relating to a 

 policy to insure the production of hemp.“. 

SEC. 12619. CONFORMING CHANGES TO CONTROLLED SUBSTANCES ACT. 

 (a) In General. --Section 102(16) of the Controlled Substances Act 

(21 U.S.C. 802(16)) is amended--

 (1) by striking “(16) The “and inserting ”(16)(A) Subject 

 to subparagraph (B), the”; and

 (2) by striking “Such term does not include the” and 

 inserting the following:

 ”(B) The term `marihuana’ does not include--

 “(i) hemp, as defined in section 297A of the Agricultural 

 Marketing Act of 1946; or

 “(ii) the”. 

 (b) Tetrahydrocannabinol. --Schedule I, as set forth in section 

202(c) of the Controlled Substances Act (21 U.S.C. 812(c)), is amended 

in subsection (c)(17) by inserting after ”Tetrahydrocannabinols” the 

following: ”, except for tetrahydrocannabinols in hemp (as defined 

under section 297A of the Agricultural Marketing Act of 1946)”.