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117th Congress Preview: Agriculture

By Zack Marshall

Now that 2020 is behind us, we look ahead to what 2021 has in store.  There is a new Congress and a new administration, with Democrats holding full power for the first time in a decade.

Filling political positions within the USDA will dominate the early part of the year.  President-elect Biden has already tapped former Secretary Tom Vilsack to reprise his role leading USDA.  Vilsack was unanimously confirmed by the Senate in 2009 and sworn in on January 21.  As control of the Senate remained in the balance until January 5, nominations have yet to be acted upon, and it’s unlikely that Sec. Vilsack will be confirmed and sworn in for some time.

While there had been many names that surfaced for the role, Biden went for continuity, bringing back the lone member of the Obama cabinet that served all eight years.  The Biden transition team highlights the investments in rural communities, school lunch program improvements, and heightened food safety standards that occurred during Vilsack’s tenure under President Obama.

The COVID pandemic and resulting economic collapse has highlighted the challenges facing rural America.  Secretary Vilsack will have his hands full addressing those challenges.  He will also have to navigate a more vociferous liberal wing of the Democratic Party that has been skeptical of Vilsack and pushed for Rep. Marcia Fudge for the position.  The incoming administration has also expressed a desire to focus on climate change mitigation efforts, asking that agencies take actions within their purview, so Vilsack will undoubtedly address the climate change impacts of agriculture – actions that the sector should be prepared for in the years ahead.

There will also be new leadership in Congress’ agriculture committees.  House Chairman Collin Peterson lost his bid for re-election in November, opening the position.  The chairmanship was filled in December when Speaker Pelosi announced that Rep. David Scott would take the Agriculture Committee gavel.  The nine-term Congressman represents donut counties around Atlanta and was the Chairman of the Commodity Exchanges, Energy, and Credit Subcommittee in the last Congress.  He has served on the Committee since coming to Congress in 2003 and becomes the first African American to chair the Committee.

The Chairmanship wasn’t the only leadership position that changed, as former Chairman Mike Conaway retired, leaving the Ranking Member spot vacant.  Pennsylvania’s Glenn “GT” Thompson was announced as the new Ranking Member.  There seems to be confidence among the agriculture community in both new leaders.

On the other side of the Capitol, the change to Democratic control and retirement of Chairman Pat Roberts will usher in new leadership in the Senate as well.  It is widely believed that Arkansas Sen. John Boozman will replace Roberts as the top Republican on the Agriculture, Nutrition, and Forestry Committee, while Michigan Sen. Debbie Stabenow will reprise her role as Chairwoman, which she served as from 2011 to 2015.

These new leaders will oversee continued efforts to regulate the burgeoning hemp market and will likely look to continue efforts to rein in tobacco use.  There could also be additional efforts to legalize or decriminalize cannabis.

The COVID pandemic wreaked havoc on industries across the economy, and the nascent hemp industry wasn’t spared.  While it is still likely to see growth in the future, the hemp and CBD markets have felt similar COVID impacts that other segments of the economy have since March.  However, regulatory uncertainty continues to cause headaches in the industry.  This summer’s Interim Final Rule from the DEA, while ostensibly done to align their existing regulations with the 2018 Farm Bill, essentially criminalizes CBD production by considering any “cannabis derivative, extract, or product that exceeds the 0.3% delta-9 THC limit…a Schedule I controlled substance.”  At different times through the CBD extraction process it is quite easy to exceed that THC limit, even if the final product is well below it.  Congress expressed their concerns with this rule, but didn’t go so far as to legislate a different standard, so we are likely to see continued efforts within the industry to pressure DEA and USDA to better reflect the intent of Congress as expressed in the 2018 Farm Bill.

At the end of 2019, Congress took action to limit youth access to tobacco by increasing the age of legal purchase tobacco products to 21.  Those efforts continued in 2020 as Congress took additional action to mitigate the rise in youth tobacco use.  In February, the House passed a bill that would ban flavored tobacco use.  Though the Senate did not act on the bill, a new Democratic Senate majority might be more amenable to such a bill should the House act again.  One area where Congress did come to agreement was including language in the year-end spending and COVID relief bill that would prohibit the United States Postal Service from delivering vaping products.  The USPS has four months to promulgate regulations to carry out this prohibition.

While many industries were hampered by the pandemic, the cannabis industry was able to weather the storm a little better than most, as many dispensaries were considered “essential services” that were allowed to remain open while many other businesses were restricted.  Additionally, citizens of five additional states voted to approve ballot measures legalizing either recreational or medicinal cannabis.  This brings to fifteen the number of states that allow for adult recreational cannabis use.  Thirty-six states have now legalized medical use cannabis.

In Congress, the House passed the MORE Act which would decriminalize cannabis on the federal level.  The House also tried including the SAFE Banking Act to COVID relief packages in an effort to provide some banking certainty to companies that operate legal cannabis companies in states that have legalized cannabis use.  However, continued opposition by Sen. Mike Crapo leaves the issue still unresolved into 2021.  Again, with Democrats controlling both chambers, congressional action may be more likely in the 117th Congress.

On the ag-adjacent front, the alcoholic beverage industry won its much-desired permanent extension of the excise tax reduction from the 2017 tax law.  However, alcohol producers continue to experience uncertainty as the Treasury Department and Department of Health and Human Services battle over whether to tax distilleries who used their production capabilities to create additional hand sanitizer during the COVID pandemic.  This will remain an issue to watch as 2021 continues.

While 2020 was a year that many will want to forget, 2021 is bound to be exciting as Democrats grab the reins of power in Washington, DC.