On December 27, 2019, the United States Department of Agriculture (“USDA”) approved the New Jersey Hemp Farming Act (“The Program”). This places New Jersey among the first three states to receive USDA approval. i The USDA approval grants New Jersey the responsibility for regulating hemp production within the state. As hemp is no longer on the controlled substances list, the USDA approval provides New Jersey with an exciting opportunity to promote and develop new markets for businesses and farmers through the sale of hemp products. The approval could prove to be an immense economic benefit, as some predict the hemp market could be worth twenty-two billion dollars in coming years. ii With great prospects on the horizon, it is important to understand the Program application process and requirements.
How Can You Apply?
Any individual, business entity, farmer, or higher educational institution can apply for a license under the program. Those involved in the hemp growing, processing, or handling processes are expected to be licensed in the state of New Jersey and to be compliant with all program requirements. The application is an annual application for licensure under the program. Applications must be submitted at least 30 days prior to the date that the applicant is to grow, handle, or process any hemp.iii The application should contain the following information for each applicant: (1) name and address, (2) business name, (3) legal description of the property, (4) geospatial location, (5) map of the licensed area in acres or square feet, and (6) a criminal background check from the New Jersey State Police Department.iv Applicants are responsible for obtaining and paying for the mandatory criminal background check. Additionally, the application includes a non-refundable $50 annual application fee and an annual licensing fee, the rate of which varies based on whether the applicant is a grower, processor, or handler. The annual licensing fee is refundable if the application is denied v. Applicants that receive approval for licensure should be aware of the various terms and conditions of licensure, including the conduct that could render the producer ineligible for further participation, and the requirements for what can be contained and altered in the growing area.vi This is essential for continued participation in the program because it is the hemp producers responsibility to understand with and comply with the Program rules and relevant laws.
What Are the Rules?
The Program rules span nearly 60 pages of detail. However, the main rules to be aware of are: (1) the federal THC concentration limit; (2) the criminal history regulation, (3) fee schedules; (4) reporting requirements; (5) sampling and testing procedures; (6) acquisition of hemp seed regulations; and (7) violations, penalties, and appeals procedures.
First, it is important that throughout participation in the program the producer is mindful of the federal requirement that hemp grown and processed must maintain a THC concentration limit of 0.3 percent on a dry weight basis. This complies with the 2018 Farm Bill, as all USDA approved hemp programs are required to do.vii Those found in violation of this requirement will be subject to the penalties described below.
Second, anyone with a criminal conviction that relates to controlled substances may not participate in the Program for a period of ten years following the date of the conviction.viii Those excepted from this rule are persons that were already participating in an industrial hemp pilot program and had a conviction that occurred prior to the passage of the 2018 Farm Bill. ix An applicant’s criminal history will be reviewed as part of the application process described above.
Third, the Program established fee schedules for hemp producers. However, fees vary based on whether the producer is growing, processing, or handling hemp.x There are annual fees that apply to each category and an acreage fee that applies to growers. xi
Fourth, the Program established reporting requirements that occur throughout the growing season. This includes: pre-planting reports, planting reports, pre-harvest reports, harvest and disposal reports, and an annual production report. Reports are submitted to the USDA Farm Service Agency. Additionally, the New Jersey Department of Agriculture (“The Department”) is required to submit various reports to the USDA. These include: hemp producer reports, hemp disposal reports, noncompliant hemp disposal notifications, and an annual report. xii
Fifth, the Program maintains various inspection, sampling, and testing procedures. These procedures are a mandatory condition to receive a license under the Program. Thus, all licensed producers and their agents must permit the Department and any other State or local law enforcement personnel to enter the premises. xiii
Sixth, producers must abide by the hemp seed acquisition requirements. Among the most important requirements, producers must receive written Department approval of the hemp variety before acquisition.xiv Producers are required to submit an acquisition plan, containing various information about the seed variety and THC concentration, to the Department.xv Further, shipments of hemp seeds, propagules, or plantlets must be accompanied by: (1) proof of authorization to engage in the commercial sale of hemp, and (2) a travel manifest that maintains the origin, destination, product description, and date of transport for that shipment.
Lastly, the Program provides various violations, penalties, and appeals processes. Importantly, negligent violations of the Program rules do not result in criminal enforcement actions. xvi Negligent violations include, but are not limited to, failing to provide a legal description of the land on which hemp is produced, failing to obtain a license from the Department, producing hemp with a THC concentration higher than 0.5 percent on a dry weight basis, or failing to comply with any reporting requirement in the Program. xvii It is important to note that if the producer violates Program rules three times in five years they will be ineligible to produce hemp for a period of five years. xviii Further, if the violating producer’s mental state is greater than negligence, the Department must order the person to suspend all hemp growing, processing, and/or handling immediately. A notice of the violation will be referred to the United States Attorney General, New Jersey Department of Law and Public Safety, and any other applicable state, federal, and/or local law enforcement. xix Further, the Department may issue civil administrative penalties that vary based on the seriousness of the misconduct. xx After a determination is made, a hemp producer has twenty days to appeal an adverse determination rendered by the Department.xxi
Want More Information?
If you are interested in participating in the New Jersey Hemp Program, please contact the Cannabis team at Bressler to discuss options and guidance throughout the process.
Caution and Disclaimer: Possessing, using, distributing and/or selling marijuana or marijuana-based products is illegal under federal law, regardless of any state law that may decriminalize such activity under certain circumstances. Interested businesses and individuals should be aware that the status of federal law presents an uncertain risk, which is not mitigated by compliance with state law. We do not provide any guidance or assistance in violating federal law.
iii New Jersey Hemp Farming Act Summary and Rules, N.J.A.C.2:25-1 et seq., 20-21 (2019).
iv Id. at 21.
v Id. at 22.
vi Id. at 22-26
vii Id. at 4.
viii Id. at 6.
ix Id. at 6.
x Id. at 4.
xii Id. at 19-20.
xiii Id. at 32.
xiv Id. at 27.
xvi Id. at 39.
xvii Id. at 38.
xviii Id. at 39.
xx Id. at 40.