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The Inspection and Consumer Services division held a public information meeting on April 18th about Industrial Hemp. If you missed the meeting, you can view the PowerPoint or watch the YouTube video for more information.
The Farm Products and Commodity Handler are two programs within the Colorado Department of Agriculture (CDA) Division of Inspection & Consumer Services. They are similar regulatory programs that protect Colorado producers by regulating individuals who purchase farm products or commodities for processing, resale, or storage for others. The programs are designed to provide financial protection to the producers or owners when they sell their farm products and commodities to another person.
The Farm Products and Commodity Handlers Acts require licensure and bonding of any person purchasing Colorado farm products or commodities for the purpose of resale or processing. Exceptions are restaurants, retail grocery stores, small feedlots, and any person or company that is purchasing farm products or commodities for their own consumption do not need to be license.
A farm product includes the following unprocessed products produced in Colorado or owned by any Colorado resident, dealer, or small-volume dealer: Agricultural, horticultural, viticultural, fruit, and vegetable products of the soil. This would include hemp stocks, leaves, clones, and flowers.
Commodities are unprocessed small, hard seeds or fruits such as wheat, corn, oats, barley, rye, sunflower seeds, soybeans, beans, grain sorghum, and such other seeds or fruits as may be determined by the commissioner.
Unprocessed industrial hemp seed purchased for resale or processing will fall under the commodity hander license, while the rest of the industrial hemp plant would fall under the farm products license.
No, licensure as a farm products small volume dealer will allow you purchase both farm products and commodities.
No, a commodity handler may purchase farm products under a commodity handler license without having to obtain an additional license or bond.
A Dealer or Commodity Handler does not include:
Person includes an individual, a firm, an association, a partnership, a corporation, or the commissioner.
Owner means any person in whom legal title to any farm product or commodity is vested, whether produced by the owner or acquired by purchase.
Processing means the operation of drying, canning, fermenting, distilling, extracting, preserving, grinding, crushing, flaking, mixing, or otherwise changing the form of a farm product or commodity for the purpose of selling any of the resulting products.
No, the Farm Products and Commodity Handlers Acts do not enforce the quality of the product that is purchased. The programs encourage the purchaser to inspect the farm product or commodity prior to accepting it.
However, it is unlawful to intentionally make false or misleading statements as to the market conditions for farm products or commodities, or false or misleading statements as to the condition, quality, or quantity of farm products or commodities received, handled, sold, or stored. This violation is a class 6 felony.
The Farm Products Act and the Commodity Handlers Act regulate the storage of farm products and commodities. The Acts do not regulate the processed product. Hemp oil and processed hemp fiber are not covered under the Farm Products or Commodity Handlers Acts because they are hemp products that have already been processed.
No, there is a sub-group of licensees referred to as “small volume dealer” or “cash dealer”. These licensees are not required to be bonded but still need to be licensed.
A small volume dealer is any person who:
A cash buyer is any person who pays for farm products in cash or with a bank-certified check, a bank cashier's check, an irrevocable electronic funds transfer, or a money order at the time the dealer obtains from the owner possession or control of the farm products.
Farm Products and Commodity Handlers licenses are valid for one calendar year and are not transferable.
The fees for 2017 are:
Farm Products Dealer $275
Commodity Handler $150 + a commodity inspection fee of $50 to $750. Commodity inspection fees are based on the annual dollar amount purchased by a commodity handler.
An additional warehouse fee may apply if commodities are stored for others. Warehouse inspection fees range from $155 to $1,840 and have additional financial requirements to be licensed. Please contact the Commodity Handler Program prior to licensing as a warehouse.
Bonds you get from an insurance company, letters of credit you get through a bank.
The Farm Products and Commodity Handler programs have been assured industrial hemp dealers and commodity handlers will be able to obtain a bond.
Make sure your agent knows:
You are applying for a SURETY BOND.
The bond is a regulatory requirement for a Farm Products Dealers or Commodity Handlers license (for industrial hemp).
Your agent is using the approved Colorado Department of Agriculture surety bond form.
Yes, if the transaction happens within the state of Colorado.
Restaurants, retail grocery stores, small feedlots, and any person or company that is purchasing industrial hemp for their own use need not license.
Industrial Hemp farmers are not required to be licensed under these Acts to sell the product they produce.
The law requires that dealers and brokers of hemp license and bond with the CDA. When a complaint is filed against a licensee, the department investigates the complaint determine if the licensee is in default of any outstanding obligation to any farm product owner. If the complaint is deemed to be valid, a claim will be made against the licensee’s bond and paid to any farm product owner owed.
A dealer or commodity handler that is operating without a license or a bond (if required) is committing a class 6 felony.
Document the transaction by obtaining evidence of sale. Scale tickets, bills of lading, or delivery receipts can be used.
Yes, one of the major problems the CDA incurs in trying to settle disputes is trying to determine what the buyer and seller agreed to. Get a contract in writing.
Not always, your claim may exceed the amount of the licensee’s bond, and there may be competing claims for the bond. In that event, you will receive a pro-rata share of the bond proceeds. This will not prevent you from seeking relief in the court system.