Hemp and CBD Industry Growing Rapidly in Vermont

By Michael Maharrey

Hemp production is starting to boom in Vermont, despite federal prohibition.

In 2013, the Vermont legislature passed a law legalizing and licensing hemp production at the state level. The Vermont law does not limit hemp cultivation to research purposes, as required under federal law. When Gov. Peter Shumlin signed the Vermont hemp bill, he emphasized that cultivation was still illegal under federal law.

Although the growing of hemp will now be legal under Vermont law, it remains subject to federal anti-drug statutes. That means that farmers who choose to grow hemp do so at their own risk and need to be aware of the possible consequences.

The minimal possibility of federal prosecution has not stopped some growers from taking advantage of the opportunities they see with the door now cracked open to develop a hemp market in the state. And there have been no consequences.

Hemp cultivation in Vermont has grown each year since the state legalized the plant. In 2014, Netaka White planted 8×8 foot plot of hemp with seed she obtained illegally from France. Several other growers planted small plots that year. By 2016, Vermont had about 60 acres of hemp growing in 12 locations. According to the Vermont Agency of Agriculture, this year the state has more than 400 registered growers cultivating nearly 3,000 acres of industrial hemp.

Carl Christianson is in the process of turning an old Hostess Twinkie plant in Battleboro into a CBD processing facility. His company has invested more than $150,000 into renovating the space.

“We see hemp as being something that could be quite advantageous to the state because the state needs new revenue. It needs new industry. But it doesn’t want to abandon who it is,” he said in an NPR interview.

And what is Vermont? As the NPR host put it:

It’s the Green Mountain State, dotted with picturesque small towns, food co-ops, farmers markets and some of the best craft breweries in the country. And now, fields once used for hay are now filled with lush, green hemp plants 10-feet tall.

Joe and Rebecca Pimentel started growing hemp on their farm last year. They also opened a commercial kitchen in a nearby town where they produce CBD-infused honey and ointment.

It’s not just small farmers getting into hemp. Outside money is flowing into the state. According to NPR, the Green Mountain CBD farm in Hardwick got a $5 million investment from an out-of-state venture capital firm. And Alejandro Bergad’s company has ramped up CBD production to an industrial scale. He said his factory currently produces 60,000 CBD capsules per day. He projects his company will produce upwards of 1 million capsules per day by next year.

CBD has proven effective in treating a number of medical conditions, including seizures, pain and anxiety. The NPR report notes that the FDA forbids CBD producers from making health claims. It doesn’t mention that the DEA considers all CBD sales in the U.S. illegal. As the rapidly growing hemp industry in Vermont indicates, federal prohibition has virtually zero effect at this point.

People in the cannabis industry who argue that CBD is legal over the counter rely on the “hemp amendment” in the 2014 farm bill. But the law only legalized hemp production for limited purposes. It “allows State Agriculture Departments, colleges and universities to grow hemp, defined as the non-drug oilseed and fiber varieties of Cannabis, for academic or agricultural research purposes, but it applies only to states where industrial hemp farming is already legal under state law.”

In 2016, the U.S. Department of Agriculture and Drug Enforcement Agency released a “statement of principles” to guide interpretation of the hemp section in the Farm Bill. It states, “The growth and cultivation of industrial hemp may only take place in accordance with an agricultural pilot program to study the growth, cultivation, or marketing of industrial hemp established by a State department of agriculture or State agency responsible for agriculture in a State where the production of industrial hemp is otherwise legal under State law.”

In short, the current federal law authorizes farming of hemp – by research institutions, or within state pilot programs – for research only. Farming for commercial purposes by individuals and businesses remains prohibited.

The definition of “commercial” remains murky and has created significant confusion.

The statement of principles also asserted that industrial hemp programs are limited to fiber and seed. It didn’t mention CBD oil or other edible hemp products. The DEA has interpreted that to mean they remain illegal. According to the DEA, CBD cannot be sold under any circumstances.

An Indiana TV station interviewed DEA spokesman Rusty Payne.

“It’s not legal. It’s just not.”

Payne says cannabis plants are considered a Schedule I controlled substance, and medicinal oils derived from cannabis plants are illegal according to two federal laws: the Controlled Substance Act and the Food, Drug and Cosmetic Act. He said confusion surrounding the Agricultural Act of 2014 (better known as the “Farm Bill”) is frequently cited as legal justification by those who want to manufacture, sell or use CBD oil. The DEA believes the Farm Bill permits only CBD research — not CBD marketing and sales.

“Anybody who’s in violation [of the federal laws] always runs that risk of arrest and prosecution,” he said.

Nevertheless, people across Vermont are producing, selling, buying and using CBD – nullifying the federal law in practice and effect.

When the state ignored federal law and legalized industrial hemp, it in effect stepped out of the way. The market is beginning to respond. When you remove barriers, markets grow – or in this case, thousands of acres of hemp.