Fewer hemp applicants in Minnesota this year due to cannabis legalization, but program is still progressing
May 11—EAST GRAND FORKS — The number of hemp license applications in Minnesota has nearly halved in the last year, a dip the state's hemp program coordinator attributes to last spring's legalization of adult recreational use of cannabis.
Katy Mutschler said she isn't surprised by the dip, and says the hemp industry is still going strong. There is a misconception that hemp is only used for its cannabinoid properties, she said, but there is a growing focus in using the plant's fibers for a multitude of purposes.
"In the fiber realm, which is very unique for cannabis, it can be used for various different purposes like clothing," she said. "It can be an alternative to wood flooring, it can be used in batteries, it can be used in vehicle panels, so many different cool things. And we are seeing some fiber processing facilities in Minnesota getting up and running and starting, which is what we've been waiting for."
The hemp license application period was open from November 2023 to April 30. In that time, there were 181 applicants for hemp licenses — 76 interested in growing hemp, 41 for processing and 64 for both. This is a decline from the 312 in 2023.
Mutschler isn't surprised by the number — she saw a similar pattern after hemp cultivation was legalized in 2018.
The 2018 Farm Bill legalized hemp cultivation, causing an explosion of cannabinoid production. This caused a saturation of the hemp market, dropping prices and making it difficult to sell the product, Mutschler said, but the market is stabilizing now.
She foresees something similar happening with cannabis.
The process for becoming licensed for hemp growing and processing is cheaper and simpler than cannabis. There are two steps to the process, Mutschler said. An application asks for basic contact information and where the planned growing and/or processing location is. Law dictates hemp cannot be grown inside a person's house, and there is no personal use exemption. Growing licenses start at $400 and can increase based on how many growing locations the applicant wants. Processing licenses are similar, but start at $500. The second step is a criminal history background check at both the state and federal levels, focused on determining if the applicant has any drug-related felonies in the last 10 years.
Cannabis licenses will require a more expensive and extensive process, Mutschler said. Applicants will have to have a business plan, have no bankruptcies, get local approval and fulfill other requirements. There also might be a lottery system put in place, so only a limited number of people can obtain a license for cannabis, unlike hemp, which is unlimited.
Mutschler has heard some established growers say they're sticking with hemp over cannabis because it is federally legal, and thus has more protections. Others say they will stick with hemp because they're growing it for its non-cannabinoid properties, and see the long-term longevity of it and its multiple uses, from its fibers to its grain, which can make products like hemp protein or hemp milk. Hemp also has more established infrastructure up and running, she said, and with the 2018 Farm Bill up for review, there could be changes in the allowable percentage of THC, the legal definition of hemp and a possible exemption for hemp grain and fiber from testing of the plants.
Mutschler said she is interested in seeing how things progress with hemp and cannabis.
"It will be interesting to see how it all plays out," she said.
