Starting a hemp growing or processing business can be incredibly lucrative, especially while there is a heavy demand for CBD products. But while this cash crop can have a great bottom line, it’s important not to dive into the world of hemp farming without doing your research. You must first have a good grasp of the laws, licensing, challenges, costs, and options if you’re interested in breaking into the industry successfully.
Laws You Should Know Before Starting Your Hemp Farm in Georgia
Growing hemp, or Cannabis sativa L., in the United States has been legal on a federal level since 2018 with the passage of the United States Farm Bill. Though, many states — including Georgia — have been slow to get on board and create their plan of action for farmers interested in growing the legalized crop. But in 2019, Governor Brian Kemp signed the Georgia Hemp Farming Act into law, authorized the research, production, processing, and regulation in our state.
Then, in March 2020, the Georgia Department of Agriculture developed the Georgia Hemp Plan to regulate hemp production for farmers in our state. Now, anyone who wishes to start a hemp business must first become familiar with the rules and regulations set forth by the GDA.
Applications and Licensing
While the legalization of hemp production is great news for many farmers looking for a sustainable crop, there are specific steps you must follow to start your journey as a hemp farmer. Failure to follow the process correctly could result in serious legal repercussions. Not to mention, you could lose your entire crop.
To start, you must apply for your grower license with the GDA. It is illegal to cultivate or handle hemp without one. The state issues licenses for one calendar year at an annual fee of $50.00 per acre cultivated, with a maximum fee of $5,000.00.
Applicants must be qualified agricultural producers who can provide proof of the following:
- A current Georgia Agriculture Tax Exemption Certification (GATE Card)
- Select IRS Forms
- Any tax returns, forms, sales receipts, or other information requested or required by the Commissioner
Growers must also provide a copy of the deed or lease for each grow site property and show proof of legal authority to use the land for hemp cultivation. Another application requirement is an aerial map that indicates the boundaries of each grow site and any storage facilities.
Additionally, if you plan on processing instead of farming, you must apply for a Hemp Processor License. The GDA requires that you complete the application process and be issued a Permit before taking possession of or processing hemp. The initial hemp processor permit fee is $25,000.00.
If you plan on processing the crop, you must provide an affidavit showing your agreement with a licensed hemp grower. In the affidavit, both parties must affirm that they have entered into or intend to enter into such an agreement, and you must use the form provided by the GDA. Likewise, if you plan on growing the crop, you must provide an affidavit showing your agreement with a permitted processor.
Applications for either party must include written consent allowing the GDA, the GBI, and other related state and local law enforcement agencies to enter and inspect any areas where your crop is cultivated, harvested, or handled.
It’s also important to note that you must submit to a criminal background check with at least one set of electronically recorded fingerprints. Your information will go to the FBI and the Georgia Crime Information Center. They will create a report and send it to the GDA to review. If you have a misdemeanor or felony conviction involving the sale or trafficking of a controlled substance, the state will not issue you a grower license or a processing permit.
But, if you meet the requirements and the state issues you a grower license and/or a processing permit, it is critical to know and follow the rules and regulations carefully so you don’t end up having your license suspended.
Getting Your Product Tested
In order to avoid any penalties, another factor you should consider before launching a hemp farm is that the law requires you to test your crop before harvesting it.
Hemp growers are required to have a GDA-approved sampling agent collect their crop for testing. This agent must collect the flower material from each lot of cannabis plants within fifteen days of the anticipated harvest. You are not allowed to harvest any of your crops before a sample is collected. And, you only have fifteen days to harvest after the agent collects the sample.
The GDA will test your hemp for Tetrahydrocannabinol (THC) — the main psychoactive compound in cannabis that produces the high sensation in marijuana. Whether you are cultivating the crop or processing it, your licensing does not allow you to process or handle materials with a total THC concentration greater than 0.3 percent.
This rule exists because cannabis with a total concentration greater than 0.3 percent constitutes marijuana, a schedule I controlled substance. So if your crop falls into this category, it must be disposed of accordingly. You will be responsible for contacting a DEA-registered reverse distributor to have them destroy the crop in the presence of local law enforcement — at your own expense.
What You Should Know About “Hot Hemp”
Hemp with a high THC level (above .3%) is commonly referred to as “hot hemp.” It might occur when farmers work with new seeds or it could be caused by the growing environment and lengthy flowering periods. But in most cases, it’s caused by bad genetics.
One of the best ways to avoid hot hemp is by choosing known cultivars that have consistently tested below the .3% THC. However, the downside is that these plants will also produce less CBD. These conditions make it difficult to find a balance between a legal product and one that produces the desired amount of Cannabidiol — which is usually around 10%.
Another strategy farmers can implement to avoid high levels of THC is harvesting their crops early. THC spikes at the end of the season, so you can create more of a safety margin by not letting it grow too long. Unfortunately, this will also decrease the amount of CBD. But it is better to be short on your CBD levels than to lose your entire crop because it goes hot.
Overall, it’s important to purchase your seeds from reputable sources. While plant certification programs are still fairly new in the hemp industry, buying qualified seeds is one step you can take to have better odds of producing a crop with lower levels of THC.
How much money do you need to start a hemp farm?
In addition to licensing, regulations, and risk assessment, you also should become familiar with the expenses before starting a hemp business. While the licensing fee is relatively affordable for growing the crop, the fee for a hemp processing permit is significantly more costly at $25,000 for the first year and $10,000 for renewals. And processors must be bonded for up to $100,000.
Meanwhile, farmers have to consider the cost of land, seeds, labor, processing fees and creating a healthy environment for growth. As soil quality will also affect the level of THC in your product, it’s vital that you avoid growing on land that was used to grow other crops for long periods or soil that has been neglected for years.
You must also factor in the cost of having your crop tested by a qualified agent who is approved by the state department of agriculture. And, if it tests hot, you are responsible for the cost of destroying that crop – – in addition to losing any time and profits you had in your investment.
However, hemp requires much less work to thrive than many alternative crops. This low-maintenance crop requires few chemical inputs and less water than other plants. Additionally, if you leave the outer stalks and leaves in the field, the nitrogen from these plant parts goes back into the ground and creates a healthy soil where food crops can be grown immediately after harvesting the hemp.
Overall, despite the risks, the rewards are pretty significant because a legally harvestable hemp crop can be incredibly lucrative. According to the US Department of Labor, hemp farmers make approximately double the salary of the average agricultural workers, seeing an ROI of $20,000 to $40,000 per acre and up. This statistic is further demonstrated in the research conducted by Hemp Industry Daily, which shows the annual salary for a hemp farm director comes in around $150,000, while farmers with other crops average $68,000 per year.
And, not only do the growth trends predict a continued rise in the sale of cannabidiol products, but there are numerous other uses and applications for this cash crop. For example, the market for hemp grain and fiber is very stable and in-demand.
Plus, alternative products are growing in popularity since hemp is known to offer several health and environmentally-friendly benefits. Even better, these alternative uses allow farmers to add additional streams of revenue from the same crop instead of only harvesting for one part of the plant.
What can I do with hemp?
CBD (Cannabidiol) might be the most well-known bi-product of hemp because of its reputation for a wide variety of health benefits. It has become popular for the treatment of childhood epilepsy, and it’s used to help those who suffer from anxiety, insomnia, and chronic pain. While the legal landscape of permissible uses of CBD is still in flux, it is good to know that there are many legal options if you’re considering producing hemp fiber, seed, or oil.
The entire plant offers practical uses – from the stalks to the seeds. This factor creates so many markets that you can tap into from just one crop. All of which are growing in popularity as the plant becomes more heavily produced by farmers seeking more sustainable and profitable options.
One increasingly popular option is growing hemp for construction materials. One of those materials, hempcrete, is similar to concrete. It is made by wet-mixing hemp fibers from the plant’s core with a lime-based binder and water. Hempcrete can be used to build walls and floors and for roof insulation. This environmentally friendly product also reduces construction costs, making it an appealing option.
You can also turn hemp fibers into a variety of commercial and industrial products with less fuss and better ROI than similar items. For example, it makes a great alternative to growing cotton for clothing because hemp plants require much less water — and you get a higher yield. Other commonly produced products include ropes, textiles, shoes, and paper.
Food products are another option for this crop. Hemp seeds are full of nutrients and can be eaten raw or turned into milk, oil, cheese substitutes, and protein powder. All of which are commonly found at health food stores.
Finally, you can also turn hemp oil into a wide array of products. It is becoming increasingly popular for making things like soaps, shampoos, and detergents. It is also used to develop more environmentally-friendly biodiesel that can be used in any conventional diesel engine. While CBD oil is developed from the leaves, flowers, and stalks of a hemp plant, the hemp oil comes from the plant’s seeds, and it usually has little to no CBD content.
Overall, the numerous uses, high ROI, and comparatively low growth requirements make this plant a sustainable and profitable option when grown and harvested correctly. But, whether growing or processing, you should check state and federal laws and make sure you adhere to their regulations carefully. You should also take some time to become familiar with the process and understand the risks and expenses involved.
If you need assistance getting started with your hemp farm in Georgia, contact EHG Law Firm for a consultation. We can walk you through the process to make sure you comply with the legal requirements and start your business on a solid foundation.