Hemp Contracts: What Business Can Learn from Oregon State’s New Research Facility

Last Thursday, Oregon State University (“OSU”) officials announced plans to launch the Global Hemp Innovation Center (“Hemp Center”). The Hemp Center will be based in OSU’s College of Agricultural Sciences and intends to serve “as a research hub connecting faculty and researchers engaged in plant research, food innovation, pharmacy, public health, public policy, business and engineering.” You can read all about it here.

This is good news for folks in the hemp industry for a number of reasons as highlighted in this article about the Hemp Center by the Oregonian. The article notes the lack of standard units of measurement and seed certification programs, noting a case where Oregon farmers purchased hemp seeds having THC levels too high to be legal hemp. Professor of Crop and Soil Science, Jay Noller, who will head the Hemp Center, points out other goals that will benefit industry such as “how to efficiently and sustainably grow hemp for seeds, for hemp fiber materials that can be used in textiles and construction materials, including as an alternate to gravel in concrete, for hemp essential oils that have popular health and wellness uses, and for hemp grain for use in foods and feed.”

Let me add a few more reasons why the hemp industry should be thrilled about the Hemp Center. As regular readers know, we are writing more and more posts about hemp litigation and we have started publishing a 50-state survey of Hemp-CBD laws (first post: Alabama). Underlying these posts is our view that boilerplate contracts don’t work for hemp, just like they don’t work for marijuana. In our view, the work contemplated by the Hemp Center may lead to better hemp-CBD contracts, including on the issues such as:

• What are best farming practices?
• What is the quality of the seed?
• What kinds of hemp have less than .3% THC?
• What kinds of hemp have less than .3% “total THC”? (This is not a repeat.)
• What CBD content might one expect at harvest from a particular strain?
• What is a reasonable estimate for the cost per acre of cultivation for a particular hemp strain, in a particular geographic region?

These are not just research issues, but contract issues.  Other hemp-related contract issues we’ve mentioned include, to name a few:

• Who is responsible for maintaining the hemp chain-of-custody?
• Who is responsible for procuring insurance (if any)?
• Who is responsible for testing of hemp for human consumption or hemp items for other industries and to what standards?
• Who bears what risk of regulatory changes?

Alright …  the Hemp Center may not solve every contract issue 😊 Lastly, I think an exciting part about the Hemp Center is the promise of strategic global research; the future of hemp looks even brighter with the launch of the Hemp Center. Kudos to Oregon State for being a first mover in this very promising space.