Montana’s Hemp Checkoff Program Offers Model for the Commodity’s Future

By Trevor Yahn-Grode, Data Analyst, New Frontier Data

Montana this month became the first state to establish a commodity checkoff program for hemp, through a 1% levy issued on hemp farmers’ profits. The intention is to employ the small tax to fund collective marketing and research programs, per the notion that a rising tide will lift all boats. Checkoff programs are common among other agricultural commodities, perhaps the best-known being the dairy industry’s iconic “Got Milk?” campaign, which was funded by shared fees from dairy producers.

There are primarily two goals among checkoff programs: collective marketing, and research. Collective marketing programs are important for commodities: Since no individual producer has incentive to invest in its own marketing, little progress is otherwise to be expected regarding consumer education. For its part, research funded by checkoff programs is generally performed through state-funded universities, and offer benefits to the industry at large by facilitating innovation in genetics, harvesting techniques and equipment, and finding novel uses for all parts of the hemp plant.

Other states will be keenly interested observers of Montana’s checkoff program, as they respectively continue developing and refining their own USDA-approved hemp programs. While the industry seems set on investment for collective marketing and research, no consensus exists about whether the initiative should be managed on individual state levels (i.e., under the purview of state agriculture departments) or on a national level, managed by the USDA’s Agricultural Marketing Service (AMS).

Either way, the establishment of a government checkoff program for hemp – set for launch this fall – represents a significant milestone in the maturation of American cannabis, with some stakeholders calling it a necessary step towards the commoditization of hemp.