- Hemp producers are now receiving help from the federal government in the form of direct and guaranteed loans.
- The USDA provided guidance for hemp producers in a notice released last month.
- Currently, not many banks are working with hemp farms and businesses.
The U.S. Department of Agriculture (USDA) has provided guidance to hemp producers looking for direct and guaranteed federal loans. The approval of these loans also helps to solidify the legal status of hemp as a commodity throughout the United States and through the U.S. Department of Agriculture’s Farm Service Agency (FSA).
The guidance provided by the USDA was released through a notice last month and highlights all of the key legal parameters for growers looking to receive loans.
“While it’s understood that this new commodity will likely produce some servicing challenges because of state and federal regulations, it should be treated as closely as possible to any other agricultural commodity and serviced in the same manner,” the notice mentioned.
Some of the legal parameters for granting loans to hemp farmers mentioned in the notice include:
- Proper licensing under the USDA, an approved state or tribal production plan, or the 2014 pilot program.
- Accessibility to a banking institution for authorizing financial transactions.
- Planned acreage for production.
- A contract to sell crops that shows growers have the financials to repay loans (The FSA may grant loans without a contract if a grower is licensed and has positive cash flow without income from hemp).
- An agency-reviewed farm operating plan to provide information and guarantee that the practice is following local practices and is relative to historical performance.
The guidance also noted the stipulation that the FSA is not required to pay for the destruction of crops whose THC content is above the federal limit of 0.3%.
As it currently stands, a lot of banks are not working with hemp farms and businesses.
The entire hemp industry can momentarily exhale a sigh of relief as both hemp growers and CBD vendors are beginning to receive federal emergency loans to provide financial stability during the COVID-19 pandemic.
For the time being, the financial stability provided to growers and vendors will allow hemp production and CBD manufacturing to continue as normal. It can be assumed that more funding would be provided if the pandemic were to continue on long enough.
Recreational and medical marijuana dispensaries continue to be excluded from receiving federal emergency loans despite their approved legal status in several states across the country.