On October 29, 2019, the United States Department of Agriculture (USDA) issued a rule establishing the U.S. Domestic Hemp Production Program. States and Indian tribes must submit plans to the agency for approval to regulate hemp production in their areas through this new program. Additionally, the U.S. Domestic Hemp Production Program provides a federal plan for producers in states or territories without their own policies. We have some tips to help you navigate the emerging hemp CBD market.Continue reading
How to Get a License to Grow Hemp
A provision in the 2018 Farm Bill that was recently passed into law removes hemp from Schedule I of the Controlled Substances Act, making it a federally legal substance. Industrial hemp is the cannabis sativa plant that has been used extensively throughout history due to the plant’s various uses. Because both hemp and marijuana originate from the genus Cannabis, hemp suffered from the same stigma that surrounds its psychoactive cousin, marijuana. However, hemp has very low levels of tetrahydrocannabinol (THC), the chemical that causes marijuana’s psychological effects, or what is often described as a “high.” To remain legal, the hemp product must have a THC content of no more than 0.03%.
Because hemp is touted as a cash crop with over 25,000 applications, it’s easy to see why entrepreneurs are attracted to the many business opportunities in the production of industrial hemp. Many entrepreneurs looking into becoming industrial hemp growers look forward to creating more jobs for their local communities and enjoying the expected high return on investment.
However, while hemp is now legal on a federal level, each state still has its own laws and regulations on hemp cultivation. In this guide, we will discuss the national hemp program and hemp licensing application instructions to become a licensed industrial hemp grower.
Learn About Your State’s Local Hemp Production Program
The Agricultural Marketing Service of the U.S. Department of Agriculture (USDA) was set up to oversee and regulate the national hemp growing program. In October 2019, the USDA officially announced the Domestic Hemp Production Program, which outlined the federal framework allowing state departments of agriculture to submit their plans to produce and regulate the crop.
Before you can grow hemp, you need to be licensed under your state hemp program. Despite hemp being federally legal, some states still have a ban on the commercial growing of hemp; currently, the list of states with no hemp program are Idaho, Mississippi, New Hampshire, and South Dakota. As of writing, forty-six states have an industrial hemp law permitting industrial hemp production.
Because not all states have a hemp production plan, your first step should be to determine if your local department of agriculture has a hemp program approved by the USDA or has submitted one for review. You can find the list of contacts of growers by state at the National Association of State Departments of Agriculture (NASDA).
NASDA supports the production, processing, and commercialization of hemp and acts as an advisor for the U.S. Food and Drug Administration (FDA) on the regulatory framework for CBD products. Now that hemp is legal on a federal level, so are hemp-derived products, which include CBD products derived from hemp.
Applying for Your State’s Hemp Program
If your state’s hemp production program has been approved by the USDA or is in the process of developing and submitting a plan, you can apply for a license under its industrial hemp program. However, if your state does not have an approved or pending hemp production plan, you could still apply for a USDA hemp production plan. Unfortunately, the application window for licensing closed on November 30, 2019.
There are two ways to apply for a license – electronically through the USDA Domestic Hemp Production Program website or by traditional mail. For states that have approved or pending hemp production plans, the USDA accepts license applications year-round; licenses are valid for one calendar year.
One of the main requirements to apply for licensing to grow hemp is an FBI criminal history report. Hemp production licenses are not granted to applicants who have been convicted of a felony related to a controlled substance in the last decade.
The FBI can provide you with an Identity History Summary, more commonly known as a “rap sheet,” for a fee. If you’ve never been arrested, the FBI will give you a document that proves you do not have an arrest history. The summary lists all arrest information, if any – including the date, the charge, and disposition of the arrest.
There are three ways to submit a request for Identity History Summary – electronically via the FBI website, by traditional mail, or via an FBI-approved channeler. Currently, the cost to request an Identity History Summary is $18, regardless of which option you choose. Processing time for requests for an Identity History Summary is 3-5 days when request is submitted electronically, and 2-4 weeks when the request is submitted via mail. Whichever channel you choose to request an FBI criminal report, you must submit your fingerprints and any relevant data.
The other requirements to apply for licensing to grow or process hemp for industrial and commercial purposes may vary from state to state. However, most grower license and registration applications are the same. You will need to provide the following information on the application form:
Business and contact information – Basic information including the legal names of the applicants, business entity, name of business, business location, and contact numbers and emails.
Hemp field or Greenhouse locations – Location name, county, and the town or municipality of your hemp field or greenhouse location. You may also need to provide its exact location in terms of latitude and longitude. This section also includes the size of the hemp field or greenhouse, likely described in acres.
Applied Research – Applied research refers to industrial hemp research into harvesting techniques, cultivation equipment, nutrient inputs, storage, plant pest control, crop rotation, and so on.
You will also need to pay the applicable fees, which will likely include a grower license fee, an annual grower registration fee, processor registration fee, sampling/testing fee. You may also need to sign the research program agreement, an agreement between the department of agriculture and your state’s hemp pilot program.
ConclusionBecause hemp has been federally legalized, the application process is relatively straightforward. If your state does not have an approved or pending industrial hemp and marijuana program, you can still apply to become a licensed hemp grower via the USDA production plan. However, if your state has a ban on hemp cultivation, it will still be considered illegal for you to grow industrial hemp. Before making any plans, contact your local department of agriculture to better understand your options and business opportunities.
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The How-To Guide to Cannabis Licensing
The increasing number of states passing legislation for the legalization of marijuana and the removal of hemp from the Controlled Substances Act has led to heightened interest in participating in the cannabis industry.
As the cannabis marketplace evolves, stigma surrounding the plant fades, and consumer demand continues to rise. There has never been a better time to participate in what is predicted to be a multi-billion marketplace. However, because marijuana legalization varies from state to state, you will need to familiarize yourself with your state’s specific cannabis program and its rules and regulations. State laws establish who may cultivate or sell cannabis without prosecution under federal law.
Before you get started, you will need to determine the type of licensing, permitting, and documents your marijuana business requires. The different types of cannabis businesses will have their own set of requirements and application processes. In this guide, we will discuss the types of medical marijuana business licenses, how to apply for a cannabis license, and the benefits of working with cannabis consultants to get a license. We will also discuss the business opportunities in the industrial hemp space.
Types of Marijuana Business Licenses
There are various types of marijuana businesses and therefore, different license types. Before you begin the cannabis application process, you need to determine the type of cannabis business you are planning to launch. If your state has both a recreational and medical marijuana program, you have more opportunities to explore. Investing in the recreational cannabis space means access to a broader audience and not having to deal with the paperwork and regulations associated with medical cannabis.
However, if your state does not have a recreational or adult-use marijuana program, an investment in medical marijuana also comes with its benefits. As a medical marijuana business, you would be providing patients with qualifying conditions access to cannabis products that will improve their quality of life.
While you may want to start a cannabis business that deals in both medical and recreational marijuana, you may also have to refine your decision by choosing the specific type of business. Keep in mind that the terms for marijuana businesses are different from state to state. For example, a growing facility may be called a cultivation center in a different state, while a dispensary will be referred to as a retail store by another state. The following are the most common types of cannabis business licenses:
Dispensary – Consumers are most familiar with marijuana dispensaries because they are the brick and mortar establishments or retail stores where they can physically purchase marijuana products. A cannabis dispensary or retail marijuana business is ideal for the entrepreneur who enjoys facing the consumers. Keep in mind that most states have strict regulations for dispensaries, such as locations that must be more than 500-1000 feet from schools, churches, etc.
Cultivation – There are outdoor and indoor growing facilities, also known as cultivation centers. However, outdoor growing facilities are only established in states where the climate and state restrictions allow for outdoor marijuana production. Whether indoors or outdoors, growing facilities are usually required to be located away from schools, parks, libraries, or any other establishments that cater to minors.
Because most state laws typically require that cultivation operations or cannabis production facilities be in remote locations, you can enjoy benefits like security and potential for future expansions. Cannabis production facilities require a significant investment because space, infrastructure, equipment, and soil costs can add up. The growing facility will also need proper ventilation, climate control, irrigation control systems, and the right lighting.
Extraction – Currently, the majority of marijuana sales are concentrates and cannabis extracts. With this kind of demand, starting an extraction operation is a good way to enter the cannabis industry.
Using special extraction systems and skilled extraction technicians, extraction labs take the marijuana plant and apply industrial solvents, heat, and pressure to the plant to extract pure compounds. You will also need to decide which of the many extraction and refinement methods your extraction lab will focus on; this will determine your equipment, labor, laboratory, and licensing requirements.
Processing and Manufacturing – Processors and manufacturers are licensed to purchase marijuana to process it and manufacture it into marijuana products like oils, tinctures, ointments, edibles, and so on.
Distributor – Marijuana distributors are licensed to transport cannabis products from a marijuana establishment to another marijuana establishment. For example, a distributor may transport marijuana from a cultivation facility to a dispensary.
Vertically Integrated Cannabis Business – Vertical integration in the cannabis industry refers to a cannabis company that controls more than one stage of the cannabis supply chain. Achieving vertical integration means consolidating the cannabis production processes by not only growing and processing the product but also distributing it to other businesses or individual consumers.
The Industrial Hemp Program
Hemp has been removed from the Controlled Substances Act, making it legal on a federal level under the 2018 Farm Bill or Agriculture Improvement Act of 2018. Industrial hemp is used for over 25,000 industrial and commercial products, which makes it a cash crop with the potential to be a highly lucrative industry. However, hemp, like marijuana, is regulated by states, and farmers, researchers, and entrepreneurs will still need a license to operate.
How to Get a License to Grow Hemp
The Agricultural Marketing Service of the U.S. Department of Agriculture (USDA) has set up the national hemp growing program. While you can apply for a federal license at the USDA, they won’t be available in the states that ban the commercial growing of hemp. As of the time this article was written, South Dakota, Mississippi, Idaho, and New Hampshire are states with these laws.
The USDA will be accepting license applications year-round, with licenses valid for one calendar year. The USDA has also established a rule that all hemp plants will be tested at a Drug Enforcement Administration-registered laboratory to ensure their THC levels remain within legal limits.
Basic Requirements for a Cannabis License Application
While marijuana legalization and industrial hemp laws vary from state to state, those that have cannabis programs typically have an application process that involves some common factors that application “judges” will require. The following are the more common requirements for cannabis business application:
Business Plan – Marijuana program regulators will need to determine your readiness to operate a legal cannabis business. Therefore, your business plan should be a document that demonstrates your ability to run a productive and profitable marijuana business that follows relevant regulations.
A cannabis business plan follows the outline of traditional business plans. They will have sections like the executive summary, industry overview, market analysis, competitive analysis, sales and marketing plan, ownership structure, operating plan, and financials.
For a cannabis business, your business plan should also include any information that supports your marijuana business idea, such as cannabis market studies and descriptions of your products. This is why it’s crucial to study state-specific cannabis regulations.
Standard Operating Procedures (SOPs) – The application reviewers and analysts will need to determine your ability to maintain a safe and secure facility. You’ll need to create clear and actionable SOPs that outline your processes, explain why they are performed, and who is expected to execute the processes. The goal is to prove that you can stay on top of the constantly shifting rules and regulations of the cannabis industry.
Your SOPs should also detail your procedures for health and safety issues, equipment and supplies, and emergencies. Each procedure should be mapped out in detail. Pay attention to any language or wording that may cause miscommunication, which may lead to accidents or legal action.
Financial Plan and Proof of Funding – The application process itself can be costly, with some states requiring thousands of dollars in application and license fees. Therefore, you need to demonstrate that you have strong financials to not only proceed with the application process but to also build and launch your intended cannabis business.
The costs of launching and operating a fully licensed marijuana business requires strong financials and a legal source of funding. Beyond the hefty application fee and renewal fee that range between $5,000 – $10,000, there are the real estate costs, ongoing costs to operate, and staffing. You also need to factor in business equipment, security and surveillance systems, marketing, and capital requirements.
Cannabis Real Estate – Know your local regulations before investing in real estate. Before applying for a license, you will need to have secured cannabis-friendly property that meets all the requirements of your type of cannabis business. For example, your dispensary should be in a location that complies with the state’s zoning restrictions, which likely involve operating at a specified distance from a school.
Keep in mind that not all properties are considered “cannabis friendly.” While your state may approve your location, there’s the reality that your landlord may not approve. If you intend to rent a space, be upfront with the building owner about the nature of your business. This will help avoid problems in the future. Higher Yields has an in-house cannabis real estate team that can help you find the perfect property.
Background Checks – You will need to provide proof that you don’t have any felony convictions. Whether you are applying as the owner, or you are an investor, licenses are typically not granted to those with a criminal past.
For example, applicants for the USDA Hemp program need to provide an FBI criminal history report. You cannot receive a hemp production license if you have been convicted of a controlled substance-related felony in the last 10 years.
Why Work with Cannabis Consultants to Help Get Your Cannabis Business License?
What makes the cannabis business license so rigorous and time-consuming is the dozens of pages and sections that you will need to fill out. However, completing all the sections of the application form isn’t the only challenge. Some states only have a limited number of licenses to award. The state licensing authority may use a scoring methodology that ranks applications and awards licenses to those that perform the highest. This means that meeting the minimum requirements is typically not enough for you to win a coveted license; you need to ensure your application stands out.
Cannabis consulting services provide you with everything you need to accomplish your cannabis application. Here’s what you can expect when you leverage the skills of an experienced team of cannabis application writers:
Meet Deadlines – Some marijuana license applications are massive documents composed of dozens or hundreds of sections. Completing and submitting an application is something that cannot possibly be done overnight. On average, you will need at least 4-6 weeks to complete the application.
Cannabis consultants help you avoid common mistakes that many make when tackling the complex cannabis license application process. Because cannabis licensing consultants have vast experience in winning marijuana business licenses, they know to never underestimate the time it takes to finish the application.
From the moment you ask for their help, they will create a timeline that plans out every aspect of the application. Meeting deadlines is one of the most impressive qualities of expert cannabis application writers. The ability to complete applications in a timely manner comes from years of experience and detailed knowledge of state cannabis laws and regulations.
Competitive Content Thanks to Specialized Skills – Cannabis business applications are massive compilations of documents that require the expertise of all aspects of a cannabis business, from the business plan and SOPs to facility design and financials. Therefore, the best way to approach cannabis licensing is to leverage the expertise of consultants who make it their mission to ensure you’re awarded a license.
Cannabis consulting companies have a team of marijuana experts that specialize in different fields of the cannabis industry, including tax accounting, compliance, real estate, facility design, and so on. Because they have in-depth knowledge of each state’s licensing system and approval process, they have the skill to complete each section of your application properly. This minimizes the risk of getting your application rejected over a technicality.
Expert Writing and Research Skills – Some applications have word limits for each section. This is where the services of an expert cannabis technical writer bring the most value. They will use clear, concise language that will demonstrate in-depth cannabis expertise and your business’s potential to have a positive economic impact.
Qualified technical writers are not only skilled writers but also thorough researchers and diligent proofreaders. As experienced cannabis application writers that are knowledgeable in your state’s marijuana business rules and regulations, they will be careful to write in a manner that meets the expectations of your city or state. And as meticulous proofreaders, they will double- and even triple-check each section for inconsistencies, grammar and punctuation errors, and to ensure nothing is missed.
Demonstrate Profitability and Compliance – The goal of any good cannabis application writer is to prove that you will be a productive and profitable marijuana business operator. They will answer the tough questions surrounding your business in areas like security, storage, taxes, accounting, compliance, insurance, marketing, legal protections, and so on.
Cannabis application writers will also ensure that the content is free of any biases. Many people who attempt to accomplish the application on their own may not realize that answers that are too passionate may hurt their chances of being awarded a license. While it’s done with good intentions, the panel reviewing the applications don’t want biased opinions or humor; they want your application to demonstrate your technical understanding of the processes and operations of running a cannabis business. More than anything, they want to determine your business’s potential for profitability while remaining compliant to state marijuana policies and regulations.
Competitive Edge – If your state is still in the process of legalizing recreational marijuana or still refining its medical marijuana program, a cannabis consultant can help you get a headstart on the competition. A pre-license assessment can help you identify your gaps, weaknesses, and areas where you can improve to ensure you’re ready when your state opens the application window for business licensing.
Each state will have its own rules, policies, regulations, and restrictions when it comes to the cannabis licensing process. Lack of understanding of state-specific laws, licensing information, and the complexities of the marijuana business application process can lead people to underestimate the required timelines and resources.
It’s beneficial to seek the expertise of professional consultants who have a comprehensive understanding of the industry. Many don’t realize that business license applications may be dismissed due to a technicality, such as an incomplete section or missing documents. Because the application process itself can be time-consuming and expensive, it would be a shame to lose what may be your only shot at winning a license because you attempted to do it on your own. Therefore, working with a cannabis consultant when applying for a marijuana license should be approached as an investment.