The state Division of Agriculture is back up and running after the “pause” button was hit during the state budget chaos this spring when funds for state agriculture programs were cut by Gov. Mike Dunleavy, restored by the Legislature, cut again by the governor through budget veto actions, and restored once again by legislators.

Dunleavy let the division’s money stand the second time around, in his final budget approval and vetoes, after Mat-Su legislators lobbied hard for the division.

The repeated cuts were mainly the work of officials in the Office of Management and Budget who are new to the state and unfamiliar with the on-the-ground effects of their actions. Dunleavy made the final decision himself to keep the funding, sources familiar the final budget deliberations said.

Seventeen positions were eliminated and eight staff had to be laid off as the budget cuts unfurled, and with most of the money back the division is scrambling to hire its staff back, said Dave Schade, the state agriculture director. As of Monday, Aug. 26, five of the employees who were laid off have agreed to return.

All funding was restored except money to administer the state Agricultural Revolving Loan Fund, said Schade. The fund itself still exists at about $20 million and is managed by the Board of Agriculture and Conservation, but two positions to administer the loans were eliminated from the division, Schade said.

Loans are typically made for the purchase of agricultural lands and the manufacture of products, and agricultural-related operating expenses.

There are 53 active state agricultural loans, and typically there are about seven new applications a year, Schade said.

Meanwhile, the state’s core agricultural programs are back up and functioning near to normal including those at the state Plant Materials Center, which does inspections to ensure seeds are disease-free, works on programs to eradicate invasive species and conducts research including on suitable native vegetation for erosion control and land reclamation, which are important to the state’s highways program and mining operators.

One promising new project that appeared near death during the budget controversies is a pilot program to allow growing of commercial hemp, which can be used in the manufacture of CBD oils which are popularly used to relieve various human ailments.

Alaska farmers are keenly interested in growing commercial hemp, and the industry has already taken off in the Lower 48 where it is expected to become a $22 billion new farm industry in a few years, Schade said. However, hemp is a Cannabis sativa species just as recreational “marijuana,” but differs genetically to contain less than 0.3 percent Tetrahydrocannabinol, or THC. That is the ingredient that creates a “high” among users. Although hemp contains very little THC it was still illegal until passage of the 2018 federal Farm Act.

But the federal law also requires commercial hemp and its products, like CBD oils, to be regulated and tested by a state agriculture division, or the U.S. Department of Agriculture once federal regulations are developed. In the meantime, states still operate under the 2014 farm bill’s pilot programs, which require state regulation. CBD, or Cannabidiol or CBD oil, is one of many compounds, known as cannabinoids, in the cannabis or marijuana plant.

To be legal under the federal farm act hemp plants and products like CBD oils must have 0.3 percent THC content or lower. Traditional marijuana, now legal under Alaska law, typically has THC content of 15 percent to 20 percent, and some products sold in stores have up to 30 percent.

Legislation authorizing an Alaska hemp program passed the Legislature unanimously, and the Division of Agriculture was gearing up last year with a major program to test hemp plant varieties to certify a 0.3 percent THC content, the maximum allowed, and to develop regulations for the new industry. The program had to be suspended this summer, however, when state budget officials disallowed “program receipts,” authorization, or the approval for the division to receive fees paid by would-be hemp programs to support the testing program.

Without that the program couldn’t operate. “We had to destroy about 1,000 plants and shut down greenhouses that were being used for testing,” Schade said. Luckily, 15 plants were saved, which is enough, just barely, to restart the testing program.

Meanwhile, regulations needed to carry out the program had been drafted and in late winter and sent out for public comment before things were suspended. The division is now back at work to complete the regulations.

About four months have been lost, but Schade believes the division can get things back in gear to be able to do registrations for hemp growers and distribute certified seeds, those tested to confirm the low THC content, next spring.

The important thing for a new hemp industry in the state is that having a program in the agriculture division not only makes hemp and its products fully legal under the new federal farms act — currently they are not – but that the state will do the inspections needed to certify that hemp products for human consumption or use, like CBD oils, do not contain contaminants. Marijuana plants have shown a tendency to absorb heavy metals and other harmful compounds.

CBD products are now sold widely in retail stores and they are technically still illegal in Alaska, Schade said, but what’s important for consumers to know is that there is now no way of verifying the purity or safely of these products, Schade said. The CBD products will be safe if they are U.S.-produced and in states with hemp testing programs, but there is no way for consumers to know if the hemp comes from a state that does test or is imported from a foreign origin where there is no testing.

An Alaska inspection program would ensure the safety of these products, and because of that hemp could become an important new niche industry for farmers if they use the “Alaska Grown” logo. It can be used to show the products are legal as well as “Alaska clean,” Schade said.

The inspections are less important for hemp used for the manufacture of clothing because there is no human ingestion. Clothing products with hemp are popular because the long fibers in the plant offer important advantages for fabric.

Schade believes hemp growing in greenhouses could get up and running quickly for plants used in the making of CBD products, and the profitability of those could support the higher production costs.

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