The Australian hemp industry is estimated to be worth $17.7 million. In comparison, the U.S. market – which is currently one of the world’s leading hemp production markets – boasts a booming hemp sector worth more than $150 million, and estimated to hit $26.6 billion by 2025.
So, why the huge difference?
In Australia, hemp fiber/stalk is increasingly being used as a raw material in the manufacture of building materials and textiles. The hemp seeds, on the other hand, are gaining popularity as an ingredient in food preparation.
However, these are the only hemp parts that Australian growers can make use of. There are strict legal restrictions on the sale of the CBD-rich hemp products. In this guideline, we delve deeper into hemp growing in Australia and the legal framework that applies to this emerging sector.
Is Hemp Illegal to Grow in Australia?
No. However, you must have the proper licensing from both the federal and state government. Until three years ago, hemp could only be legally grown in Australia for medicinal purposes.
However, in 2017, the Food Standards Australia New Zealand (FSANZ) legalized hemp for public consumption as food. However, it’s subject to various food safety regulations.
Federal Legal Requirements for Growing Hemp in Australia
If you’re an aspiring hemp grower in Australia, you’ll have to seek government approval in the form of a License to Cultivate and Produce Medicinal Cannabis to legally grow your crop. Apart from the federal permit, you’ll also need state government licensing (depending on the particular state/territory in which you intend to grow the hemp).
There are two types of hemp growers’ permits, including:
- Medicinal cannabis license: This permits the growing, production, and supply of hemp for medicinal purposes only.
- Cannabis research license: This permits the growing/production of hemp for research purposes into its medicinal qualities.
Federal Eligibility Requirements to Grow Hemp
To be eligible for any of the above licenses, you must meet the following eligibility requirements:
- You must be considered a fit and sane person by the government.
- You must be able to prove that there’s a legitimate hemp products manufacturer who’s willing to buy your raw material once cultivation and production start.
- You must provide details on the farmland where the hemp crop is to be cultivated, including its location and size.
- You must fill in and submit the license application form, which is available on the federal government’s website.
- You must pay the license fee, which varies depending on the exact type of licensing/permit you’re seeking. For instance, a medicinal cannabis license will cost you more than a medicinal cannabis research permit.
State/Territorial Legal Requirements for Growing Hemp in Australia
In addition to the federal requirements, you’ll also need to meet the state/territorial stipulations if you want to legally grow hemp in any Australian state. It’s at the state level that the THC-concentration cap is set. Different hemp varieties contain varying levels of the psychoactive cannabis compound. Different states have different THC-concentration requirements.
For instance, in New South Wales (NSW), South Australia, and Queensland, licenses are only granted to farmers whose hemp’s THC-content levels don’t exceed 1%. Meanwhile, in Victoria, Tasmania, and Western Australia, you should only grow hemp varieties with a THC concentration of not more than 0.35%.
Simply put, you can only legally grow low-THC hemp in Australia.
Are Hemp Products Legal in Australia? The Current State of the Hemp Industry
Currently, hemp demand exceeds supply in Australia as the population is increasingly becoming aware of the plant’s numerous health benefits. With more than 30,000 citizens having sought and legally acquired medical cannabis approvals as patients in 2019, more has to be done from the growers’ side to achieve market equilibrium.
So, why can’t Australia meet its medical hemp demand?
The most probable answer is “fear of crop failure.”
Potential investors into the hemp sector are shying away from the industry due to fear of losing their financial investments should their licenses get revoked because their crops don’t meet the required THC-concentration limits. As of the last day of 2019, there were only 92 licensed hemp cultivators in Australia, with eight of them being inactive.
To meet the hemp demand deficits, Australia imports most of its hemp from notable hemp-growing regions globally, including Europe, Asia, and Canada. According to a local hemp industry stakeholder group, Medicinal Cannabis Industry Australia (MCIA), the current domestic hemp supply only accounts for 5% of medical hemp products that are legally prescribed to the approved patients. The rest is imported.
The Australian government’s legal requirements for imported hemp requires that the total cannabidiol (CBD) content shouldn’t exceed 75 milligrams per kilogram, and the total THC content shouldn’t exceed 50 milligrams per kilogram.
From a business perspective, it makes more sense for a domestic investor to venture into the hemp imports business rather than to try and grow the plant themselves – given the seemingly hard-to-meet licensing requirements.
Despite these setbacks, industry stakeholders are committed to attracting more long-term investment in the domestic hemp cultivation sector. This is by championing partnerships in which growers can acquire the necessary advice and guidance to acquire and maintain their licensing accreditations.
By doing this, they can get more farmers dedicated to growing high-quality, low-THC hemp that meets all the required federal and state guidelines. This will then encourage more investment into the budding sector.
What is the Future of the Industrial Hemp Sector in Australia?
So far, various private lobby groups across Australia have been pressuring the government to reconsider the legal framework surrounding hemp cultivation and production in the country to streamline the growing sector.
For instance, the Australian Industrial Hemp Alliance (AIHA) has continually been lobbying for the federal government to put an end to the differing licensing regimes within the various states/territories and establish a uniform licensing framework. This will limit confusion for new entrants in the sector and eliminate frustrations from the already heavily regulated hemp-growing businesses.
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