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5 Legal Considerations When Starting a Hemp Business

One of this year’s hemp trends to watch was an increase in hemp farming. Hemp offers many benefits that make it an appealing crop for farmers to begin to grow, especially as climate change, trade wars, and other factors make farming traditional crops more difficult. If you’re thinking about starting a hemp business, either in […]

5 Legal Considerations When Starting a Hemp Business

One of this year’s hemp trends to watch was an increase in hemp farming. Hemp offers many benefits that make it an appealing crop for farmers to begin to grow, especially as climate change, trade wars, and other factors make farming traditional crops more difficult.

If you’re thinking about starting a hemp business, either in farming or crafting items made from hemp, make sure you first take into account the many important legal considerations.

What is Hemp?

The terms hemp and marijuana are often used interchangeably. However, although they are similar in some ways, they are different. For starters, hemp is a variety of Cannabis sativa L and is dioecious, meaning it can be separated into male and female plants, a unique trait.

The hemp plant can be used to make a variety of materials and products. You’ve likely seen hemp t-shirts and other clothing items, hemp bags, hemp oil, hemp rope, and even paper made from hemp. Hemp can also be used to make building materials. All these products are made using different parts of the plant, from seeds to fibers.

This plant’s versatility and the fact that it is ecologically friendly are two of the biggest reasons hemp farming and hemp products are slowly growing in popularity and demand.

Today, hemp can also refer to marijuana that contains less than 0.3 percent THC, which makes CBD products that fall into this category legal in the United States.

Why Start a Hemp Business

Why Start a Hemp Business?

Before we get into the legal considerations you need to take, why would you even want to start a hemp business or begin hemp farming? There are many reasons.

  • Hemp can be grown in almost any state in the U.S. This plant is hardy, making it easy to grow in different terrains. The only places it will struggle to grow are in the desert or high, mountainous areas. But, let’s face it, not many people farm in these areas, anyway.
  • It’s a versatile product, offering you many ways to capitalize on it. As mentioned above, hemp can be used to make a variety of different products; in fact, it has more than 25,000 different uses! With all these ways to use hemp, hemp businesses have options when it comes to how to capitalize on their product.
  • Hemp is good for the earth. Traditional crops can strip the soil they are grown in. This is why farmers often rotate crops, may have a field that is empty occasionally, or use large amounts of chemicals on their fields. But, hemp is actually good for the soil and can, in fact, revitalize it. So, farmers may choose to use hemp in their empty fields as a way to earn money and revitalize their soil for the next crop.

Legal Considerations When Starting a Hemp Business

  1. Understand its legality and the rules around it. Thanks to the Farm Act of 2018, hemp is legal for use in the United States, however, different states and different levels of government regulate its use. For example, the FDA does not allow hemp to be used in food and beverages, yet CBD products that contain 0.3 percent or less THC can be sold in states. Before starting a hemp business, read up on the various laws and restrictions in place. You’ll need to research the laws for your state and any state you plan to sell in. You may want to seek the advice of an attorney knowledgeable in this area to help you. 
  2. Cover your intellectual property. Though this isn’t specific to hemp products, but rather something all businesses should consider, it’s still important. If you plan to use your hemp crop to make products yourself or simply plan to use your business to sell hemp products, you want to make sure your name, logo, slogan, and even the process you use to make your products are legally protected. You will again need the assistance of an attorney for this.
  3. Understand banking laws and regulations. Though hemp is technically legal, some banks are not willing to provide services to any business that is related to the cannabis industry—including hemp businesses. This can make it difficult to process payments and get a business banking account. You will need to look for a bank willing to work with you. There are some resources out there that can help connect hemp businesses with a bank willing to work with companies in that industry.
  4. Understand regulations each state has and stay in compliance. Having a compliance expert on your team will be beneficial. Each state has its own requirements for packaging any product in the cannabis or hemp industry. Consider utilizing outside help that specializes in design and compliance, and hire someone to monitor any changes that are introduced so you can stay in compliance.
  5. Transportation across state lines. With each state having its own restrictions about how hemp can and cannot be used, transporting your product across state lines can be challenging. You don’t want your driver getting in trouble in one state for hauling a product that is illegal there but legal in its destination, for example. Familiarize yourself with the best transportation methods when it comes to transporting hemp and hemp products around the country.

Legal Considerations When Starting a Hemp Business

In Conclusion

There are many benefits to growing hemp or creating a business that sells hemp products. However, starting a hemp business comes with a unique set of challenges.

Before starting a hemp business, it is a good idea to consult with legal experts in the field. They can provide you with information on how to stay compliant, pitfalls to watch out for, and more. Their information and knowledge will be invaluable as you launch your hemp business.

You should also utilize designers and other team members with experience working in the hemp and cannabis industry. They can help you create logos and other business materials that will be compliant wherever you hope to sell your products.