On July 8, 2020, the Michigan Industrial Hemp Growers Act (“IHGA”), 2020 PA 137, MCL 333.28101-333.28701, went into effect (which was somewhat surprising since the legislation was reported from committee only a few weeks beforehand). The new law creates a regulatory scheme for industrial hemp that should allow Michigan to obtain approval from the United States Department of Agriculture (“USDA”) of its plan to administer an industrial hemp program under the 2018 Farm Bill. Currently, the Michigan Department of Agriculture and Rural Development (“MDARD”) administers an industrial hemp pilot program under the Industrial Hemp Research and Development Act (“IHRDA”), MCL 286.841-286.859, pursuant to the 2014 Farm Bill.
Generally speaking, IHGA contains many of the same restrictions and requirements for growing hemp in Michigan as IHRDA. Namely, a person must be licensed by MDARD to grow hemp, must have their hemp tested for compliance, and must destroy non-compliant hemp. Furthermore, hemp growers can sell harvested hemp directly to marihuana processors licensed under the Medical Marihuana Facilities Licensing Act (“MMFLA”). MCL 333.28313.
Licensed growers are also still prohibited from growing hemp with a THC concentration greater than 0.3%. MCL 333.28601(1)(c). However, the IHGA now sets this limit in relation to “total delta-9-THC,” which means the sum of all delta-9-THC and 87.7% of delta-9-THC acid reported on a dry weight basis. See MCL 333.28103(a), (aa). While this is in line with the testing approach used in USDA’s interim rules, it has been criticized as too onerous and beyond what is required by the 2018 Farm Bill.
There are also a few additional notable differences between IHGA and IHRDA. For instance, IHGA expands the list of activities in which a licensed grower may engage to include “drying and storing harvested industrial hemp, possessing live industrial hemp plants or viable seed on a premises where the live industrial hemp plants or viable seed are grown, and selling harvested industrial hemp to a processor or [MMFLA] processor.” MCL 333.28103(l). This definition expressly excludes “selling an industrial hemp product or smokable hemp flower,” though neither term is defined under the Act. IHGA also removes the requirement under IHRDA that a grower obtain a special designation on their license in order to sell hemp to a MMFLA-licensed processor, but it includes an as-of-now ambiguous restriction on growers selling industrial hemp “to a person in [Michigan] that is not authorized by [MDARD] to receive industrial hemp.” MCL 333.28303(h).
Perhaps most interestingly, IHGA does not repeal IHRDA nor does it contain any provisions regulating industrial hemp processors, although it appears to contemplate such licenses by apparently referencing them. See MCL 333.28103(1). Thus, as of now, hemp processors continue to be regulated under IHRDA. That said, it appears from the committee hearings and legislative analyses on the legislation that once Michigan receives USDA approval to administer its hemp program, IHGA will be amended and IHRDA repealed. Given that the IHGA legislation was introduced in duplicate (see SB 850 and SB 852), any amendments could be made to the still-pending SB 852 and enacted this fall once the Legislature returns to Lansing.
Another issue that arises with the enactment of IHGA is how it will affect marijuana businesses that want to obtain hemp and use and sell hemp and hemp-derived products in combination with marijuana. The Marijuana Regulatory Agency has the authority to regulate industrial hemp in the marijuana market, see MCL 333.27001, and recently promulgated rules for marihuana processors and safety compliance facilities that process and test hemp. However, these rules largely incorporate by reference the requirements provided in IHRDA. But if IHRDA is repealed, then these rules would need to be amended.
With more changes on the horizon to Michigan’s regulation of industrial hemp, be sure to check in with Dykema’s Cannabis Law Blog for updates.