Docket No. 20-R-09
WISCONSIN DEPARTMENT OF AGRICULTURE,
TRADE AND CONSUMER PROTECTION
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 converts the existing hemp pilot program (Pilot Program) created under Wis. Stat. s. 94.55 (3), by 2017 Act 100 as modified by 2019 Act 68, to a hemp research program (Hemp Program) created under Wis. Stat. s. 94.55 (2). Under Wis. Stat. ss. 94.55 (2) and (3w), the Department of Agriculture, Trade and Consumer Protection (Department) is required to promulgate rules regulating hemp activities.
This emergency rule specifies the application process for obtaining a license to grow and a license to process hemp for research purposes under the Hemp Program administered by the Department.
Pursuant to Wis. Stat. s. 94.55 (3w), 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 EmR2016, which was published and effective on June 27, 2020. The repeal and replacement was necessary as the previous Pilot Program was operated pursuant to Wis. Stat. s. 94.55 (3). The Department’s authority to operate the pilot program is repealed by 2019 Act 68, Section 87, one year after the U.S. Department of Agriculture (USDA) established an approval process of state and tribal plans to produce hemp. After the repeal of Wis. Stat. s. 94.55 (3), the Department retains authority to operate a hemp program under s. 94.55 (2). Wis. Stat. s. 94.55 (2) (b) 2. requires the Department to regulate hemp production only to the extent required under federal law and in a manner that allows “…the greatest possible opportunity to engage in those activities.” Operating under a 2014 Farm Bill research program provides Wisconsin hemp growers the greatest opportunity to produce hemp. This emergency rule takes effect upon publication and remains in effect until the date on which rules promulgated pursuant to Wis. Stat. s. 94.55 (3w) take effect.
Explanation of Statutory Authority
Wis. Stat. s. 94.55 (2) requires the Department to promulgate administrative rules to regulate hemp activities. Wis. Stat. s. 94.55 (2) (b) 2. requires the Department to regulate hemp activities only to the extent required under federal law and in a manner that allows “…the greatest possible opportunity to engage in those activities.” Pursuant to Wis. Stat. s. 94.55 (3w), the Department may use the emergency rulemaking procedures under Wis. Stat. s. 227.24 to promulgate rules under Wis. Stat. s. 94.55.
Related Rules or Statutes
Wis. Stat. s. 961.32 (3) relates to the Hemp 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 Hemp Program.
Plain Language Analysis
The Department currently operates the Pilot Program, a hemp pilot research program authorized by the 2014 Farm Bill. The Pilot Program is designed to study the growth, cultivation, and marketing of hemp in Wisconsin. Growers and processors provide information to the Department related to hemp production. This rule converts the Pilot Program to the Hemp Program, consistent with the parameters of the Pilot Program, and thus provides the necessary regulatory framework to continue to allow Wisconsin’s hemp growers to plant, grow, and process hemp pursuant to the Section 7606 of the Agricultural Act of 2014 (2014 Farm Bill) and Wis. Stat. s. 94.55 (2), instead of transitioning to the more restrictive framework established by the Agricultural Improvement Act of 2018 (2018 Farm Bill). The 2018 Farm Bill sunsetted the 2014 Farm Bill’s authorization of states to operate hemp pilot research programs, effective one year after the USDA established an approval process of state and tribal plans to produce hemp. The USDA issued Interim Final Rule (IFR), 7 C.F.R. Part 990, effective October 31, 2019, and thus all state hemp pilot research programs were set to expire pursuant to Section 7605 (b) of the 2018 Farm Bill.
However, on October 1, 2020, Section 122 of the Continuing Appropriations Act, 2021 and Other Extensions Act extended the authority of states to operate hemp pilot research programs until September 30, 2021. In order to continue primary jurisdiction over hemp programs after that date, states and tribes now must have a plan approved by USDA by September 30, 2021.
The Department’s Pilot Program currently operates under the state authority of Wis. Stat. s. 94.55 (3); this authority is repealed by 2019 Wis. Act 68, Section 87, one year after the USDA published 7 C.F.R. 990. After the repeal of Wis. Stat. s. 94.55 (3), the Department retains authority to operate a hemp program under s. 94.55 (2). Sub. (2) (am) allows the Department to operate a hemp program if federal law requires hemp licenses, and if USDA approves the state’s program. Section 7606 of the 2014 Farm Bill requires licensed hemp production. Section 122 of the Act requires the USDA to approve the continuation of state hemp research programs through September 30, 2021. Wis. Stat. s. 94.55 (2) (b) 2. requires the Department to regulate hemp production only to the extent required under federal law and in a manner that allows “…the greatest possible opportunity to engage in those activities.” Continuing to operate under a 2014 Farm Bill research program provides participants the greatest opportunity to produce hemp.
For example, the 2014 Farm Bill allows participants and the Department to schedule sampling and testing at times most efficient for both parties while ensuring lawful production of hemp. In contrast, the 2018 Farm Bill contains strict timelines on the collection of samples and harvesting of crops. Under a 2018 Farm Bill program, regulatory sampling must be completed within 15 days of anticipated harvest. Participants may not have received regulatory test results by the anticipated harvest date and may face the expense of harvesting a crop that they are subsequently required to destroy if it exceeds the acceptable THC content.
In addition, the 2018 Farm Bill requires testing laboratories to calculate and apply a stringent measurement of uncertainty (MU) for THC content testing methodologies. The USDA provides guidance and resources to states to develop and establish an MU. In contrast, the 2014 Farm Bill allows the state to develop its own method to account for testing variabilities. The Department currently rounds down from 0.399 percent to account for laboratory variability. Consequently, the 2018 Farm Bill results in a narrower range in which a participant can produce hemp with acceptable THC content.
Because the current emergency rule was promulgated pursuant to expiring statutory authority, continuing to operate a program after that date requires the Department to repeal and replace emergency rule EmR2016. The updated rule converts the program and incorporates minor changes to reflect updated statutory authority. This emergency rule also incorporates the felony conviction standard disqualifying persons from participating in the program to reflect the standards required for a program operated under Wis. Stat. s. 94.55 (2) versus a program operated under Wis. Stat. s. 94.55 (3). As a result, new participants in the program will not be issued a license if in the 10 years preceding, the person was convicted of a felony relating to a controlled substance under state or federal law. Wis. Stat. s. 94.55 (2p). Conversely, in a program operated under Wis. Stat. s. 94.55 (3), participants were not issued a license if the applicant has “ever been convicted of a criminal violation of the federal Controlled Substances Act under 21 USC 801 to 971, the Uniform Controlled Substances Act under ch. 961, or any controlled substances law of another state, as indicated in the information obtained from the criminal history search.” State law requires applicants to a program operated under Wis. Stat. s. 94.55 (2) to submit to a fingerprint-based background check conducted on behalf of the Department by the Wisconsin Department of Justice utilizing criminal history information from the Federal Bureau of Investigation. Therefore, the emergency rule adds a requirement that applicants shall bear all costs associated with the criminal background check as determined by the Department of Justice, the Federal Bureau of Investigation, and by any agency with authority to charge a fee for fingerprint impressions. These costs are a $7.75 payment to the entity responsible for capturing fingerprint impressions and a $21.25 fee to the Department which is then paid to the Wisconsin Department of Justice to conduct the applicant’s background check.