Association statement on veto of HB1209
The SD Industrial Hemp Association issues the following statement regarding the veto of HB1209, an act to revise provisions regarding industrial hemp, and address a few points that were made in the veto letter.
HB1209 aims at changing the "product in process" definition to allow the THC content of up to 5% (currently 1%) during processing and allow for the transportation of this intermediate oil from licensed processor to licensed processor for the production of final consumer products. This bill DOES NOT allow crops in the field nor end consumer products (lotion, chapstick, etc.) to be at 5% THC. The only change proposed in HB1209 is during the intermediate stage after harvest and before CBD products hit the retail market. This is an intermediate product, not a product ready for consumer use. To clarify this further, language was added in HB1209 during the legislative process adding labeling requirements during the transport. Moreover, our processors must submit an application, undergo background checks, and agree to inspection at any time before a license is even granted. The safeguards for this intermediate step in the processing are in place. Travel documentation and the proposed labeling requirements add to the guardrails. The Department of Agriculture and Natural Resources, who oversees the hemp program, and law enforcement have all the tools necessary if a problem arises.
The letter references two states that currently allow for 5% THC during product in process. The reality is many other states, including states around South Dakota, understand the spike in THC happens during processing and choose to look the other way as long as the field test before harvest is compliant (0.3% THC or less) and the end product for retail sale is also compliant (0.3% THC or less). The industry in South Dakota is asking for a line in the sand because our members are not willing to risk their licenses transporting these intermediate products from one licensee to another during the processing and formulation of the consumer CBD products.
The compromise of 1% THC in the current definition of product in process was made during the 2022 legislative session because the bill contained many other provisions regarding the hemp program, a lot of them updates from the USDA that were a necessity for the industry. We were not willing to throw the baby out with the bath water, so we settled on 1% at that time. Over the past year, the industry found again the 1% cutoff doesn't adequately reflect what happens during the processing which is why we asked for the increase in HB1209.
Currently, industrial hemp varieties grown for CBD in South Dakota are taken out of state for their processing and formulation of products. We would love to grow the processing and manufacturing in state and with HB1209 we are confident we could. CBD products are sold at retail locations throughout the state, but none are manufactured here. The industry wants the opportunity to change that.
The veto letter acknowledges the successful hemp program in the state which has also been highlighted by the USDA. In 2022, South Dakota’s second growing season, no state grew more acres of industrial hemp but Montana, who has been growing the crop for over a decade. The industry couldn’t agree more that grain and fiber hemp in the state has been successful, even in its infancy. But we are committed to promoting the industry in its entirety, not just certain segments of it, with common sense modifications to state statute, which HB1209 is one. The bill eases regulation on the manufacturing of consumer products but does not change the allowable level for THC of the crop in the field nor the products on the retail shelf.
The Association is hopeful the Legislature will override the Governor’s veto of HB1209 on Monday.