CDFA has hit a roadblock the second season into its Industrial Hemp Program, with a $2 million deficit. According to Josh Chase, a Salinas hemp grower who serves on the department’s hemp advisory board, the program is “digging the hole deeper.”
“We’re operating at what is almost twice what the revenue is coming in right now,” he said at a board meeting this week.
Wayne Richman, head of the California Hemp Association, pushed back on the option to raise fees to cover the shortfall.
“When you ask for these kinds of fees from farmers,” he said, “you're going to kill any social equity outcomes and you're going to hurt the small farmer.”
Richman called the program “an experiment in how much [the state] can charge [farmers] before they just give up.” The 2019 harvest was “a complete disaster,” he added, describing how leftover material couldn’t be sold due to a lack of infrastructure for processing it. He attributed the problem to the industry growing too quickly.
Others worried how California growers could remain competitive, when the state already levies high taxes on businesses.
CDFA scientist Michelle Phillips explained the deficit is a result of the program being industry funded. It launched in 2017, began collecting registration revenues in 2019 and has not gathered enough to recoup all the costs, and registrations are now declining.