Hemp License Application and the “Bona Fide Farmer”: Is There a Minimum Farm Income Requirement?

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A not uncommon question persists regarding the use of the term “Bona Fide Farmer” in the hemp license application:  “Is there a minimum farm income threshold to qualify as a ‘Bona Fide Farmer’?”  

It is a legitimate question considering the use of the term – related to zoning in the North Carolina General Statutes – is linked to minimum farm income requirements. However, the short answer – based on review of relevant administrative rules and a basic understanding of agency legal authority – is “no” (though the context as “evidence of income” indicates more than zero.) The use of the term “Bona Fide Farmer” – which is printed on the hemp license application as “#13” but is no where mentioned in the hemp program administrative rules – has been easily confused with the term “Bona Fide Farm” as used in the farm zoning exemption context that has links to a farm income threshold.

The hemp license application, pursuant to North Carolina Administrative Rule (NCAC) 02 NCAC 62 .0107(a)(9), requires a certification – supported by attached copy of filed tax form (either Schedule F or other entity form) – that the applicant is a “bona fide farmer.”  This term has been used to simply describe an administrative intent (not expressed in the enabling legislation) that only legitimate farm producers avail themselves of a hemp license with a filed farm tax form serving as the evidence of legitimacy. The words “bona fide farm” have been borrowed from elsewhere in the General Statutes, thus causing some confusion. The term itself appears no where in the hemp program authorizing statute ((N.C.G.S. § 106-568.50 et seq.)

In the zoning context, the term “Bona Fide Farm” as used in North Carolina General Statute (N.C.G.S.) § 153A-340(b)(2) is the legal term applied to a parcel of land that enjoys special status as engaged in farm and/or forestry use regardless whether such use is inconsistent with the particular zoning overlay on that parcel. To secure this legal status and accompanying zoning exemption, the statute lays out four safe harbors to qualify. One of these – the farm sales tax exemption certificate issued by North Carolina Department of Revenue under N.C.G.S. §105-164.28A – comes with an income requirement of $10,000. (Note that Bona Fide Farm zoning status is not per se dependent on an income threshold, as there is a safe harbor not directly tied to income – having a forest management plan. Another safe harbor is – like the hemp program – a copy of a Schedule F, although no statement is made regarding “evidence of income.”  The other safe harbor – qualification for Present Use Value property tax – carries an inherent income threshold of $1000 annual farm income.)

In the search for evidence of an income requirement attached to the “Bona Fide Farmer” certification on the hemp license application, the NCDOR sales tax exemption $10,000 threshold sometimes emerges as a link. This threshold – given that it applies in a specific legal context related to the zoning term “Bona Fide Farm” should in no way be linked to the term “Bona Fide Farmer” on the hemp license application. Arguably, because an income amount is not specified in the statute or administrative rules, the hemp licensing program – itself a legal creation of statute – would have no authority to require one.

The requirement of a filed tax document supporting “evidence of income” might be interpreted as a requirement of “more then zero” income – a filed Schedule F showing an income value of $0.00 – and is theoretically not impossible for a first year farmer wishing only to document start up expenses (though no such occurrence has been reported).