Pioneers of Hawaii’s latent hemp industry are selling off land, laying off staff and no longer planting after years of waiting for the state to ease regulations that they consider overly restrictive and expensive.

The resignation hemp farmers feel comes after years of investment and soliciting funders on a premise that the state would ease its rules and ensure Hawaii would have the lucrative hemp market it had been anticipating since 1999.

But farmers say the last minute gutting of Senate Bill 2986, which would have eased state regulation of the crop, during the latest legislative session is a death knell for the early adopters as they struggle to access Hawaii’s hemp market, valued at up to $54 million. And now, the proposed permanent rules that the bill would have erased face a June 30 deadline, which means yet another year of over-regulation, the farmers say.

SB 2986 would have addressed several issues hemp farmers say they face: access to the local market through processing and online sales, easing three-day notice periods for crop transport, testing and inspection. The bill in its final form would ensure hemp remains legal in Hawaii until 2025, but did not address state regulations.

Lawmakers and hemp farmers have been at odds for years over the best way to regulate the federally legal crop, as growers want more freedom to access the local market, while agencies, lawmakers and the current state administration want to ensure the industry does not become a proxy for an illicit marijuana trade.

Hawaii Hemp Farmers Association President Ray Maki says this year’s legislative result is not surprising. Past efforts were “constantly shredded at the last minute every year,” he said. “Gut and replace.”

At the heart of the issue is how Hawaii regulates hemp, as the state turned over control of its cultivation to the U.S. Department of Agriculture in 2020 but maintains control over its processing and transport around the state through Hawaii’s health and agriculture departments.

The state sees its regulation as necessary to fill gaps in federal regulations, while many of Hawaii’s 91 USDA-licensed hemp farmers believe it is burdensome and expensive to deal with.

Maki, who runs Hawaii Nexus Hemp on Kauai, says the early adopters’ optimistic attitude of “we’ll build it and they’ll catch up” has waned. He didn’t even plant this year.

A Fear Of Cannabis

Hemp production ramped up in the continental U.S. following the passing of the 2014 Farm Bill, which allowed states to run pilot programs. Then in 2016, Hawaii passed legislation to allow hemp cropping and license croppers but nothing happened until two years later when the federal government fully legalized hemp.

Hawaii’s farmers were placed under USDA jurisdiction but the state mandated Hawaii’s Department of Agriculture and Department of Health create interim rules to regulate hemp off the farm, dealing with everything from transport to processing.

Last September, a proposed set of permanent rules was submitted to the state Board of Agriculture. They are awaiting public consultation and gubernatorial sign-off, among other things, by June 30, according to Morris Atta, deputy to DOA Chair Phyllis Shimabukuro-Geiser.

The regulations include rules that call for three days notice before transportation of hemp from farms, a prohibition from planting hemp within 500 feet of property boundaries, authorizing state officials to inspect hemp at the farmers’ cost and imposing an up to $10,000 fine for breaches of the regulations.

Virtually every rule, according to the farmers, is prohibitive and expensive, because their crops are already tested and held in a federal database, which the state has access to.

The bill would have addressed this, as well as other rules under DOH, allowing for greater market access and smaller buffer zones of 100 feet.

The Attorney General’s office said in its testimony that the bill sought “to significantly diminish the state’s ability to regulate hemp,” and could inadvertently facilitate illegal marijuana growth and distribution. Law enforcement did not have the capacity to discern hemp from marijuana.

“Any federal license holder would have the capacity to grow, transport, and distribute illicit marijuana while potentially avoiding any government detection,” the AG said.

Crops are already monitored and tested by USDA to ensure the plants have less than 0.3% THC, the psychoactive element that in higher quantities is defined as marijuana. However, USDA does not monitor post-harvest processes, such as transport or processing hemp into CBD oils or textiles.

Farmers say states with successful hemp programs, such as Oregon, California and Washington, do not have the same issues because the USDA already has all that information available to states.

“If something doesn’t change rather quickly, I’m not overly optimistic for the future of hemp in Hawaii.” — Beau Whitney, cannabis economist.

Deputy Attorney General Brian Yee says the AG has consulted with some of these states, but their cases are different: recreational marijuana is legal there, so confusion over whether one is a drug is not an issue.

Economist Beau Whitney, who specializes in the cannabis industry, said an idea that hemp had become a proxy for illegal drug activity has proliferated almost countrywide.

“But in all of my research and all of my data, that’s just a completely false narrative,” he said.

He has found in his research that those who grew marijuana illegally did not jump through USDA hoops to do so.

“There may be some bad actors but they would be the rare, rare, rare exception, rather than the rule,” Whitney said.

Regardless, the divide between the AG and farmers was too great to find common ground in this year’s legislative session, which wrapped up earlier this month, according to House Agriculture Committee Chair Mark Hashem.

The only option was to gut the bill to keep it from being vetoed by Gov. David Ige, he said. If it were killed, it would have rendered hemp farmers’ licenses illegitimate.

“Some said we should have just played chicken,” Hashem said.

But the legality of hemp was just too important to risk Ige’s rejection, so they opted to try find a solution before the next legislative session.

“We just need to educate everybody and get on the same page,” Hashem said.

Early Growers

Former Democratic Gov. Ben Cayetano passed a bill to plant a test crop of hemp on Oahu in 1999 after a successful push from former Republican Rep. Cynthia Thielen, who saw potential in the proliferation of hemp as an environmentally friendly replacement for sugar cane.

Thielen became a leading voice in the effort to develop a hemp industry in Hawaii but she says the state ultimately squandered its opportunity to be a leader.

Hemp’s thousands of uses in food, agriculture, construction, therapeutics and other applications were seen as a potential means to both relieve Hawaii’s reliance on imports and increase its own food security.

Thielen believes the current administration still associates marijuana with hemp, which has led to these issues and the early adopters of hemp to run into trouble. For the record, she says hemp and pot are “as similar as a giraffe and a mouse.”

Ige’s veto of a bill in 2019, which would have created a commercial hemp program, was one example of the current administration’s cannabis-based fears, she said. At the time, Ige said he was not against hemp, but cited concerns over marijuana in his veto.

“Why would educated people be so opposed to this? I just can’t figure it out,” Thielen said.

Pioneering Vision

This year’s bill was not just about hemp transport. It had new rules or removed rules relating to labeling and processing. It cut down restrictions on where crops can be planted, and it allowed producers to sell products online.

The measure would have helped farmers to address some of the issues posed by Department of Health regulations too, which Big Island farmer and Hawaii Royal Hemp co-owner Gail Byrne Baber says DOH was open to addressing before the bill was overhauled late in the legislative session.

While there is money to be made by selling hemp to mainland companies, the financial benefits pale in comparison to what could be earned if production, processing and sales were done in Hawaii by farmers, akin to Kona coffee.

“It’s been a tremendous frustration that this incredible asset and the vision of these pioneers of how we could help build food security and create financial stability for farmers in the state has been completely smothered,” Byrne Baber said. “And in the meantime, we have a $56 million CBD market in Hawaii, almost all imports.”

Finances are wearing thin for Byrne Baber and husband Clarence Baber, who founded the Hawaii Island Hemp Council in the early 1990s and later worked with lawmakers to launch the state’s first program.

Whitney, the economist, says time is running out for hemp farmers to be able to survive and try to compete for their place in the greater U.S. hemp market. The crop was valued at $842 million last year.

“If something doesn’t change rather quickly, I’m not overly optimistic for the future of hemp in Hawaii,” he said.

Sen. Mike Gabbard said that the conversation over how best to regulate the crop is ongoing and will be addressed in the interim before the 2023 legislative session starts in January.

But the Kapolei senator says while there might be a lack of understanding on the lawmakers’ behalf, farmers should take the role of educators before the session begins to avoid dramatic situations such as those surrounding SB 2986.

“I’m not giving up; I’m just hoping these guys don’t give up either,” Gabbard said.

“Hawaii Grown” is funded in part by grants from the Ulupono Fund at the Hawaii Community Foundation and the Frost Family Foundation.