San Luis Obispo County supervisors have passed a temporary ban on new industrial hemp crops, just six months after the federal Farm Bill legalized hemp and paved the way for U.S. farmers to cash in on the multibillion dollar industry.
The local decision is seen as a major setback by local farmers and industry analysts who saw the county as a potential leader of California’s growth in the global industry. They now fear that the county’s action will scare away national and international investors.
“The Farm Bureau is very concerned about the signal this sends to potential investors in the industry. It’s unfortunate that our farmers here will not be able to take advantage of this new crop that’s sweeping across the nation,” Brent Burchett, executive director of the San Luis Obispo County Farm Bureau, said in a phone interview after the vote.
The Board of Supervisors voted four to one to pass an urgency ordinance that places a moratorium on industrial hemp to buy time to develop regulations for the crop, citing concerns over the potential impacts of odor to neighbors and cross-contamination with other crops, including commercial cannabis.
Local concerns and complaints about hemp came from residents who live next to potential or existing hemp crops. Several letters in support of the ordinance came from winery owners in Edna Valley in Supervisor Adam Hill’s district who are worried about the impact to quality of life and the value of their crops.
Hill voted with Supervisors Debbie Arnold, Lynn Compton and John Peschong to support the ordinance, saying that “a timeout is not the same as a ban.”
The moratorium does allow cultivation in the county to continue for research purposes and for existing registered crops approved before the moratorium. It does not, however, allow farmers who have not yet completed the application process to be approved.
As of June 18, the county had received 46 commercial grower applications and three commercial seed breeder applications. Sixteen of those have been approved, according to Marc Lea, assistant agricultural commissioner.
That means that farmers who do not already have approved hemp plants in the ground will miss out on this growing season and won’t be able to legally plant until the moratorium is lifted.
That won’t likely happen for several months, if not a year. While it’s a 45-day moratorium, supervisors will likely extend it multiple times as county staff negotiate the process of drafting and implementing new land use codes. Supervisors can extend the moratorium up to two years.
Hemp ban could mean financial loss
“It’s a real setback for agriculture in this county,” said Frank Brown, who operates an existing 300-acre hemp farm in North County.
He won’t be hurt by the ordinance, but he said, other “farmers started the process and were planning to grow and they have been hurt financially, significantly.”
He speculates that this year could have been a $200 million industry in San Luis Obispo County, with around one hundred million in investment in infrastructure.
Analysts say now is not the time for jurisdictions to pump the breaks on this industry. Hemp-derived CBD is a booming industry that has been estimated to be worth $22 billion by 2022, according to the Brightfield Group.
Hemp is different than cannabis in that it is non psychotropic. CBD products made from hemp are increasingly popular to relieve various health ailments. While hemp was a popular agricultural crop in America’s history — used for rope, cloth and paper — it was made illegal the same year as its demonized cousin, marijuana, in the 1930s.
With the legalization of hemp crops in December under the 2018 Farm Bill, many states are jumping at the chance to provide farmers a path to high-profit crops. Some paved the way by allowing research crops, allowed since the 2014 Farm Bill.
“People are looking to invest in processing, cultivation and the industry as a whole. These big players, national and international, are looking at California. We have the climate, we have the market,” said Jean Johnson, who has been tracking the market as California outreach director with VoteHemp.
The county led the state in hemp cultivation last year, she said, with hundreds of acres of the crop grown in research partnerships. That leading edge is now lost because of the supervisor’s vote.
“They’ve ruled out the current growing season, and they’re also potentially scaring away national and international investors,” Johnson said. “I have to say, I, along with many others, are surprised and disappointed. I would call it short-sighted.”
Do ‘we want to support small farmers, or not?’
Burchett saw the potential of hemp for farmers firsthand.
Before coming to the local Farm Bureau in February, he previously worked in the Kentucky Department of Agriculture overseeing the state’s industrial hemp program, which he said changed the opportunities for families to make a living on their farms.
“Anytime a new crop comes up, we should give farmers an opportunity to succeed. Hemp is one of the few crops that can make a small farm profitable,” Burchett said, adding that California is already behind several other states.
During the hearing, he warned supervisors about missing an opportunity.
“Let’s make a decision today if we want to support agriculture, if we want to support small farmers, or not?” he said.
Opponents of the ordinance agreed that the county needs regulations — and that they should have been drafted long ago. Many proposed creating a hemp working group to shape regulations while continuing to allow farmers to move forward with crops this year.
“We could have very easily started work today on regulations. What we got was a knee-jerk reaction that will set us back at least a year,” Burchett said.
Supervisors who voted for the moratorium did express optimism about the industry, locally.
Arnold said she does think that hemp “has a bright future here,” and Peschong said he didn’t believe a moratorium “is going to kill the industry.”
“We can take a time out and the industry can keep going,” Peschong said.
Supervisor Bruce Gibson was the lone vote against the ordinance, stating that he did not see any justification for urgency because the board does “not have evidence of harm to health, welfare or safety,” as is required for an urgency ordinance.
“We have a lot of speculation and fear, perhaps not surprising, but I don’t think it’s a good basis upon which to pass an ordinance,” Gibson said, adding that the process used was a “stretching of the urgency ordinance procedure, if not outright abuse.”