Colorado is on the short list of states whose farmers will soon be eligible for federal crop insurance.
Hemp had been barred from eligibility for protection through the Federal Crop Insurance Corporation because of its similarities to marijuana. With the passage of 2018's Farm Bill, however, hemp officially became a legal crop for farmers — if their respective states choose to legalize hemp farming. Colorado has been allowing farmers to grow the crop without insurance for five years, after the late 2012 passage of Amendment 64 and an earlier version of the Farm Bill that okayed farmers in certain states growing hemp for research purposes as part of a 2014 pilot program.
Only farmers registered under that 2014 pilot program will now be eligible for insurance approved by the United States Department of Agriculture's Whole-Farm Revenue Protection program, according to an August 27 USDA announcement. The insurance, which will be available in 2020, will cover hemp fiber, flower and seeds up to $8.5 million.
“Numerous producers are anxious for a way to protect their hemp crops from natural disasters,” USDA Risk Management Agency administrator Martin Barbe said in a statement announcing the insurance plan. “The WFRP policy will provide a safety net for them."
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Attorney Jonathan Miller, general counsel of hemp trade organization U.S. Hemp Roundtable, calls the news "step one" in protecting hemp farmers, pointing out that the "vast majority" of farmers won't be covered because they registered their hemp crops under language that came after the 2014 pilot program; those farmers will have to wait while the USDA finalizes the rest of its hemp regulations. States that allowed farmers to join the 2014 pilot program include Colorado, Kentucky, Oregon and Tennessee.
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Many of Miller's clients are based in Colorado, and he says that they're pleased with the recent development. "It's been a really big challenge for farmers, considering the risk they must deal with, without hemp insurance," he says. "It was really critical that we worked on getting language into the Farm Bill, to make sure crop insurance would be available."
Under these policies, hemp will be covered against weather, disease and other factors out of a farmer's control. Whether THC content — the deciding difference between marijuana and hemp — is considered something that a farmer can control is still up for debate as the USDA finishes writing its regulations, Miller says. Currently, mature hemp plants with more than 0.3 percent THC, also know as hot hemp, are destroyed through state agricultural programs.
In the announcement of the new hemp insurance, Barbe mentioned plans "to offer additional hemp coverage options as USDA continues implementing the 2018 Farm Bill," but only listed natural disasters as situations that would be covered by the insurance.
Hemp businesses further down the supply chain, such as processors, extractors and infused-product manufacturers, will not be eligible for the USDA insurance. But according to Miller, they can generally obtain liability insurance from standard commercial providers, although "that can be a big challenge, considering the industry."