How to Finance Your Industrial Hemp Farm

At FarmRaise, a lot of the producers we serve ask about funding to farm and process hemp.

Thanks to the 2018 Farm Bill, growing industrial hemp is legal in 46 states and all territories. Cannabis enthusiasts around the nation celebrate! But before you get too excited, there are a few nuances you need to know about Mary Jane before you begin cultivation.

In this hemp farm funding guide, we outline:

Where you can grow hemp in the United States
What hemp is used for and why that matters for your chances of securing funding
How to get funding for an industrial hemp farm business plan
Why you need and how to secure a hemp license
How FarmRaise can support hemp cultivators

So let’s get into the weeds, shall we?

Where Can I Grow Hemp Legally?

Since the 2018 Farm Bill outlines federal regulations about industrial hemp, it’s up to individual states to decide the rules. Right now, it’s legal to grow in every state except Idaho, Mississippi, New Hampshire and South Dakota. It’s also legalized in American Samoa, Guam, Northern Mariana Islands, Puerto Rico and the U.S. Virgin Islands. You’ll need to check the specifications for your locality, but we’ll get to that later.

And remember, hemp may be legal to grow in most of the U.S., but it’s not legal to recreationally consume in most states, as it is still considered a Schedule 1 controlled substance by the Drug Enforcement Administration (DEA).

What Can Hemp Be Used For?

Not everyone in every state can freely sell or purchase recreational cannabis. But there are many options for hemp growers who want to sell their products for other reasons.

The Farm Service Agency (FSA) outlines four uses for hemp:

Fiber – like clothing, ropes, paper, biofuel, etc.
CBD - this one is subject to Food and Drug Administration (FDA) regulation
Grain - like hemp hearts or supplements
Hemp seed - to propagate

How you want to use your hemp is key for acreage reporting which we talk about in a later section.

Generally, if you’re using it as a commodity (raw material that still needs to be turned into a final product) or as part of research, you’ll tend to have more funding options at your disposal. As long as you have a license and you follow your locality’s regulations, you’re good to grow!

Funding for Hemp Growers

Getting funding for hemp won’t be cannabliss. Most grants and loans aren’t designed specifically for hemp, but rather the practices you’ll use as a cultivator. There are several federal options out there that are great for hemp farmers.

Value Added Producer Grant (VAPG)

VAPG is a grant that awards funding for projects that “add value” to a farm operation. In short, VAPG funds can be used to help you turn what you grow into a marketable product. But can VAPG be used for hemp growers?

Yes! Here’s a summary of what the U.S. Department of Agriculture (USDA) says:

If you want to propose a project that involves the “production, procurement or marketing of hemp” you’ll need a license.

Environmental Quality Incentives Program (EQIP)

EQIP is a competitive USDA farm funding program that helps you adopt conservation practices on your farm. The average farmer receives about $30,000 if the USDA approves their application. With EQIP you can try practices like planting cover crops to protect your hemp, executing a nutrient management plan to fertilize your hemp crops or transition to organic hemp farming.

FarmRaise specializes in helping farmers with EQIP applications. In fact, we do all the paperwork for you. You can check if you’re eligible for EQIP with our two-minute quiz, then work with a FarmRaise team member who can make you a more competitive applicant.

Sustainable Agriculture Research and Education Grant (SARE)

If neither VAPG nor EQIP quite fits your needs, you do have another option. SARE is essentially a grant that helps you fund research projects or projects that will help you educate others in your community about agriculture. It could be used to help producers conduct industrial hemp research. Here’s an example of a hemp SARE grantee from a research program in Wisconsin.

Farm Service Agency (FSA) Loans

There are a number of types of FSA loans that vary based on your experience. You can apply for a loan to create a hemp growing business plan, to financially support your operations or even to help you buy farmland with no down payment. If you’re interested in learning more about FSA loans, here’s your Two Minute Briefing on Farm Loans.

Other Grant and Loan Options for Hemp Production

There are many ways to find federal, state or private financial assistance to start or support a hemp farm. The FarmRaise Funding Library is a database that holds many of those grants, loans and cost-share programs for hemp farmers and includes information like how to apply and when deadlines are coming up.

The Specialty Crop Block Grant and Hemp Plants

There’s a buzzword going around the hemp industry: Specialty Crop Block Grant Program (SCBPG). The program is designed to boost the competitiveness of farmers who grow specialty crops. It sounds like a dream for hemp farmers looking for financial support, right?

Unfortunately, the USDA does not consider hemp to be a specialty crop which means SCBPG is off the table for most hemp farmers - at least for now. Organizations like the National Association of State Departments of Agriculture are advocating for the USDA to categorize hemp as a specialty crop on the federal level. However, some states like Pennsylvania consider hemp to be a specialty crop. Be sure to check the SCBPG in your state to see if hemp qualifies as a specialty crop.

How to Get a Hemp Growing License

You’ll need to have a valid license from an approved state or tribal government before you can grow or apply for funding to start your hemp growing business. In fact, you’ll also need to be compliant with the FDA, USDA and DEA.

Start by visiting your state, territory or tribe’s website to see license requirements and how to apply, or you can reach out to your locality’s grower contact. Find your state production plan’s website or grower contact here. You’ll likely find there’s a deadline to apply each year so make sure you’re staying up to date on that timeline.

You Need to Report Your Acreage

Once you’ve secured your license and have a product plan, you’ll need to file acreage reports with the FSA. To do that you’ll need your license number and to know in which fields your hemp is planted. You’ll also need to report what your hemp will be used for. You can reference the previous section called “What Can Be Hemp Be Used For” to see which of FSA’s four hemp use categories you fit.

Stay Updated on Hemp Regulations

Legally growing hemp is very new to the U.S. agricultural landscape. It’s a budding industry so there will continue to be new developments in regulations and market share.

FarmRaise’s Funding Library helps you stay updated about the federal funding programs we covered in this post and sends you funding alerts so you don’t miss a deadline. It also has a database of state funding programs that we didn’t mention in this post.

If you’re ready to look for funding, sign up for FarmRaise and let’s make your hemp journey a joint effort!

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