Docket No. 20-R-1
WISCONSIN DEPARTMENT OF AGRICULTURE,
TRADE AND CONSUMER PROTECTION
EMERGENCY RULE
The Wisconsin Department of Agriculture, Trade and Consumer Protection hereby adopts the following emergency rule to repeal and recreate ch. ATCP 22 relating to hemp and affecting small businesses. ______________________________________________________________________________
Analysis Prepared by the Department
of Agriculture, Trade and Consumer Protection
This emergency rule implements the hemp pilot program created under Wis. Stat. s. 94.55, by 2017 Act 100 as modified by 2019 Act 68. Under Wis. Stat. ss. 94.55 (3) and (3w), the Department of Agriculture, Trade and Consumer Protection (Department) is required to promulgate rules establishing a state hemp research pilot program (Pilot Program). This emergency rule specifies the application process for obtaining a license to grow and a license to process hemp for research purposes under the Pilot Program administered by the Department.
Pursuant to 2019 Act 68, Section 38, the Department is not required to provide a finding of emergency or prepare a statement of scope of the rules. The Department is also not required to submit the final draft to the Governor for approval. This rule repeals and replaces emergency rule EmR1807, which was published and effective on March 2, 2018, and emergency rule EmR1808, which was published and effective on March 5, 2018. The repeal and replacement was necessary as the emergency rules expire July 1, 2020. This emergency rule takes effect upon publication and remains in effect until the expiration of the Pilot Program pursuant to Section 7605 (b) of the Agricultural Improvement Act of 2018, or the date on which emergency rules implementing an U.S. Department of Agriculture (USDA) approved state plan, promulgated pursuant to 2019 Act 68, section 38, take effect, whichever is sooner. Statutes Interpreted
Statutory Authority
Explanation of Statutory Authority
Wis. Stat. s. 94.55 (3) creates the Pilot Program for the state of Wisconsin. The Department is required under Wis. Stat. ss. 94.55 (3) and (3w), to promulgate rules to create and implement a Pilot Program. Related Rules or Statutes
Wis. Stat. s. 961.32 (3) relates to the Pilot Program as it creates authorized possession of hemp within the Wisconsin Controlled Substances Act and details when referrals from the Department are necessary for criminal prosecution in relation to the Pilot Program. Plain Language Analysis
The Pilot Program is designed to study the growth, cultivation, and marketing of hemp in Wisconsin. Growers and Processors will provide information to the Department related to hemp production. This was the intent of the original emergency rule and continues to be the foundation of this revised rule.
This rule provides the necessary regulatory framework to continue to allow Wisconsin’s hemp growers to plant, grow, and process hemp under the Pilot Program with minimal but necessary changes to align the rule with 2019 Wisconsin Act 68 and the Agricultural Improvement Act of 2018 (2018 Farm Bill). The 2018 Farm Bill extended the authority provided in Section 7606 of the Agricultural Act of 2014 (2014 Farm Bill) for states to engage in hemp research as a pilot program. However, this is a temporary authorization as USDA has issued an Interim Final Rule (IFR) 7 C.F.R. Part 990 which outlines provisions for USDA to approve plans submitted by states and tribes to produce hemp. The IFR became effective on October 31, 2019. All hemp pilot programs will expire on October 31, 2020, pursuant to Section 7605 (b) of the 2018 Farm Bill. States and tribes who want to have authority over a hemp program in their state or territory must have a plan approved by USDA by October 31, 2020. This rule is necessary to maintain the Pilot Program from the expiration of the current rule on July 1, 2020, until the expiration of the Department’s authority to operate the Pilot Program. As such this rule maintains the existing Pilot Program, updates terms and provisions to be consistent with changes in state and federal law, provides more detail to reflect current program practices, and updates references regarding the expiration of licenses to address the end date of the Department’s authority to operate the Pilot Program.
To meet current state and federal law, the definition of hemp is expanded to include all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers. Also required by state and federal law and consistent with the testing requirements of EmR1807 and EmR1808, the updated definition of hemp clarifies that tetrahydrocannabinol (THC) content is tested using post-decarboxylation or similarly reliable methods. THC is clearly defined to include tetrahydrocannabinolic acid (THC-A), and the testing methodology requires the analysis of hemp samples to include THC-A in the regulatory test results. This rule also clarifies the circumstances for revoking or suspending a license, actions the Department may take for persons operating without a license, and enforcement penalties for violations that reflect a negligent or culpable mental state.
Language to reflect current practice clarifies the required annual registration time period and what
activities the licensee may perform once the licensee is registered. Reporting and recordkeeping are similarly updated.
Furthermore, language has been updated to accurately distinguish between a growing location, a lot, and a crop. In addition, this rule clearly explains the Department’s authority to inspect elements of growing locations. The Department’s inspection authority is not changed by this rule.
Regulatory sampling must occur prior to harvest but the testing does not have to be completed before harvest. If the initial regulatory test fails, the grower must destroy the lot within 10 days after service of the order or request a new sample to be taken before the end of the 10-day period.
The updated provisions and new language in this rule do not make substantial changes to the implementation of the program for the 2020 growing season and the regulated industry will not experience significant change. The functionality of this rule remains consistent with the current rule.
Fiscal Impact
This emergency rule creates rules related to growing hemp, and applies to those who wish to participate in the Pilot Program. Individuals or businesses choosing to grow or process hemp must pay all applicable program fees—one-time grower license and acreage ($150-$1000), annual registration ($350), sampling and testing ($250 per lot), and processor license ($100). These program fees generate the program revenue that supports the implementation of the program. The Pilot Program began operations in 2018. Numbers of participants have been similar in 2019 and 2020. In 2019, there were 1251 licensed and registered growers with total fees of $626,000 ($500 per grower) and 560 licensed processors with total fees of $56,000 ($100 per processor). In 2020, as of June 2, there are 1189 licensed and registered growers with total fees of $594,500 ($500 per grower) and 564 licensed processors with total fees of $56,400. In 2019, an estimated 2200 samples were collected and tested at a cost of $250 per sample, generating total fees of $550,000. Based on these grower numbers and samples previously collected, an estimate of 2000 samples collected and tested at $250 for a total of $500,000 in fees may be expected during the time that this rule is in effect. Therefore the estimated economic impact of the implementation and compliance with this rule, as identified in the Fiscal Estimate & Economic Impact Analysis, is $1,150,900. This number is a total cost of licenses and registrations issued to date, and an estimate of expected samples that may be collected and tested during the time that this rule is in effect.
