Hemp industry groups join to explore checkoff program, but have long way to go

National hemp groups are organizing a campaign to establish a checkoff program – a sometimes-acrimonious system designed to raise money for industry research and promotion by taxing those who profit from the plant.

Checkoffs exist for nearly a dozen U.S. commodities, and in the case of the dairy industry, the money it raised helped launch the now-famous “Got Milk?” campaign.

Supporters of checkoffs point to such an example as one promotional benefit, and sometimes industry players agree with the tax’s purpose – but that doesn’t mean there’s never grumbling or controversy over how funds are managed.

The Hemp Industries Association and the National Industrial Hemp Council announced earlier this month they would explore setting up a program by getting feedback about how a checkoff should work before proposing a plan to the U.S. Department of Agriculture, which would approve or deny it.

“It should be stated real clearly that we’re very much in the preliminary and planning stages right now,” said Jody McGinness, executive director of the HIA.

“We’re really about trying to build the coalition for qualifying for a checkoff program, partnering with some affinity organizations to use our collective reach to really get a sampling and demonstrate the need for the checkoff program.”

USDA’s position

The USDA is on record saying it will not institute a checkoff tax unless stakeholders at all levels of the supply chain are in favor. The USDA’s Agricultural Marketing Service currently promotes 21 different agricultural industries with checkoffs. Federal marketing programs, once in place, are mandatory assessments.

Throughout the years, there have been instances of organizations in charge of checkoff accounts inappropriately spending money on lobbying or exorbitant salaries for executives who control funds. A bill pending in Congress would require audits of the different agriculture boards that control checkoff funds and public disclosure of financial records.

Jamie Campbell Petty, the executive director of the Midwest Hemp Council, said it’s too soon to have a checkoff program for such a new industry.

“Our growers are barely making money, if making money in hemp now – whether it’s cannabinoids, fiber, grain – and I just believe it’s premature,” she said.

“And of the associations and the entities who would be awarded this money …. I don’t believe that the associations are mature enough because the industry isn’t mature enough.”

Caren Wilcox, the executive director and chief operating officer of the U.S. Hemp Growers Association, said she has yet to take the idea of a checkoff program to her board, but she senses there is support.

“I’m certainly planning to discuss with my board soon, and we’ll see what they decide to do, but I know that there’s a quite a bit of a favorability about a checkoff (program),” she said.

“So we just have to work through what is the proposal that NIHC and HIA have put forward and does it meet what our growers think should be discussed, but I have no reason to believe that it doesn’t.”

Meanwhile, states like Colorado and Pennsylvania, to name a few, are looking at creating state-run programs, trying to follow in the footsteps of Montana, which became the first to establish a checkoff this year.

The first fees in Montana will be collected this harvest season, around fall, and will consist of a 1% levy on a grower’s profit. The fee will be the same regardless of what segment of the industry a farmer is in, and it’s voluntary to participate, which some in the hemp industry believe is the way to go.

“My position is that there needs to be mass education, there needs to be mass input, and there needs to be mass regulations to make sure that it doesn’t get ugly because it can get so ugly,” said Gus Hanger, CEO of Industrial Hemp Farms in Colorado Springs, Colorado.

Hanger said he believes the HIA and NIHC have good intentions, but that a checkoff program should be optional for those in the business.

NIHC board member John Johnson, who previously served as the chief operating officer for the National Pork Board in Des Moines, Iowa, said that “checkoffs have a very good track record of returning value back to the farmers.”

He emphasized that the timetable to take a proposal to the USDA may take at least a year and that NIHC and HIA want to make sure they hear from a lot of people.

“We want everybody to have a seat at the table and have a transparent process where everybody can ask their questions, get their concerns addressed and get answers and raise concerns,” he said.

The USDA said in a statement that it has provided the hemp industry with information on how to pursue a research and promotion program, but do not yet have a proposal from them.

For Jay Berry, founder, CEO and president of Central Industrial Fiber, in Marion, Indiana, there is never a right time for a checkoff, but he would have no problem with one if it was voluntary.

“Well, let me ask you this,” he said. “Would you be willing for me to take a portion of your check out of your check every time you get it and I can use it however I want to?”

Ivan Moreno can be reached at [email protected]