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Hemp Check-off Programs Ripe for Abuse, Unconstitutional

got milk?”
Dancing California Raisins.
“Pork: the other white meat.”

Those are all promotional products of mandatory commodity industry check-off programs, which force farmers to pay ad agencies with a trade association skimming off the top. Many courts have ruled them unconstitutional.

Some are pushing such a check-off program for hemp. While no doubt it will be great for the handful of people running it, such a program would be bad for hemp farmers at this early stage. With large numbers of hemp farmers losing money by not being able to harvest and sell their crop, forcing them to also pay to promote their competition won’t go over well.

Soybean farmers pay 0.5% of the market price of soybeans sold each season, in 2014 that amounted to $109 million. At orders of magnitude less business in hemp than in other check-off commodities, it’s just way too early in the hemp industry’s lifecycle. Also, eggs, milk, and cotton are singular commodities whereas hemp infamously has “25,000 uses.”

The wide variety of primary hemp products makes a check-off program unworkable. Additionally, as we saw with hemp trade association HIA working to protect investments in Canadian hemp from US hemp farmers, farmers could conceivably directly fund efforts to actively hurt it.

Here is one view of check-off programs from The 10 Worst Checkoff Program Abuses by the Western Organization of Resource Councils:

A HISTORY OF INJUSTICE

Below are the 10 most egregious abuses of the checkoff programs, compiled by the Organization for Competitive Markets:

  1. In 1999, the Office of Inspector General (OIG) found that USDA had “relinquished too much authority to its primary contractor, the National Pork Producers Council (NPPC), and has placed the NPPC in a position to exert undue influence over Board budgets and grant proposals.”
  2. In 2000, the majority of American hog producers passed a referendum to end the pork checkoff, only to have USDA overturn their decision.
  3. In 2010, an independent audit of the equivalent of just nine days of beef checkoff program spending found more than $200,000 in improper spending by the primary beef checkoff contractor, the National Cattlemen’s Beef Association (NCBA), including the use of checkoff dollars for lobbying and overseas vacations.
  4. In 2014, after waiting more than 18 months to receive Freedom of Information Act records from USDA on expenditures of the Beef Checkoff Program, the Organization for Competitive Markets was forced to file a lawsuit to obtain public records relating to Beef Checkoff audit reports. NCBA has entered the case blocking the release of over 12,000 documents. This case has been ongoing for four years.
  5. In 2015, documents obtained under a Freedom of Information Act request showed that the American Egg Board illegally used checkoff dollars to attempt to halt sales of an egg-free mayonnaise product.
  6. In 2016, it was discovered that the Oklahoma Beef Council lost 2.6 million checkoff dollars to embezzlement by a staff member who wrote 790 fraudulent checks to herself during a 10-year period.
  7. In 2017, USDA came under fire for failing for more than four years to publish legally required annual financial reports on the $400 million per year dairy checkoff.
  8. In 2018, the Ohio Beef Council illegally used government property to promote a fundraiser for a gubernatorial campaign on behalf of the trade and lobbying group, Ohio Cattlemen’s Association. According to the Ohio Cattlemen’s Association’s brochure, the Ohio Beef Council is also actively engaged in soliciting campaign contributions on behalf of the Ohio Cattlemen’s Association’s Political Action Committee (PAC) through the state agency’s email domain.
  9. In 2018, a federal judge ruled that the USDA unlawfully approved spending $60 million of hog farmers’ checkoff money on a defunct promotional campaign.
  10. According to the NCBA’s 2015 IRS Form 990, beef checkoff funds make up approximately 73% of the lobbying group’s total annual budget. As much as 72% of the NCBA president’s nearly half a million dollar salary comes from beef checkoff funds. NCBA membership accounts for less than 4% of cattle producers.”

While a voluntary check-off program allows farmers to feel good by writing checks, making it mandatory is the constitutional problem. Will the CBD industry be subsidizing fiber? Will the fiber industry be subsidizing seed as food? Will patients be subsidizing hempcrete?

In 2019 the value of just US-grown soybean was $31 billion. In 2018 9 billion dozen eggs were produced in the US. Let’s learn to walk and build the currently minuscule hemp business before trying to run with the big boys and their check-off programs.

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