Farm Products & Commodity Handler Programs FAQ's

Q: What are the Farm Products and Commodity Handler Programs?

The Farm Products and Commodity Handler are two programs within the Colorado Department of Agriculture (CDA) Division of Inspection & Consumer Services.They are similar regulatory programs that protect Colorado producers by regulating individuals who purchase farm products or commodities for processing, resale, or storage for others. The programs are designed to provide financial protection to the producers or owners when they sell their farm products and commodities to another person.

Q: Who is required to be licensed?

The Farm Products and Commodity Handlers Acts require licensure and bonding of any person purchasing Colorado farm products or commodities for the purpose of resale or processing. Exceptions are restaurants, retail grocery stores, small feedlots, and any person or company that is purchasing farm products or commodities for their own consumption do not need to be license.

Q: What is the difference between Farm Product and Commodity?

A farm product includes the following unprocessed products produced in Colorado or owned by any Colorado resident, dealer, or small-volume dealer:Agricultural, horticultural, viticultural, fruit, and vegetable products of the soil.This would include hemp stocks, leaves, clones, and flowers.

Commodities are unprocessed small, hard seeds or fruits such as wheat, corn, oats, barley, rye, sunflower seeds, soybeans, beans, grain sorghum, and such other seeds or fruits as may be determined by the commissioner.

Unprocessed industrial hemp seed purchased for resale or processing will fall under the commodity hander license, while the rest of the industrial hemp plant would fall under the farm products license.

Q: I will purchase both Farm Products and Commodities.Do I need two licenses and two bonds? Which license should I get?

No, licensure as a farm products small volume dealer will allow you purchase both farm products and commodities.

No, a commodity handler may purchase farm products under a commodity handler license without having to obtain an additional license or bond.

Q: What type of actions fall under the Acts?
  • Any person engaged in buying any farm products or commodity from the owner for processing or resale;
  • Any person engaged in receiving and taking possession of any farm products or commodity from the owner for storage or safekeeping;
  • Any person engaged in soliciting or negotiating sales of farm products or commodity between the vendor and purchaser respectively;
  • Any person who receives on consignment or solicits from the owner any kind of farm product or commodity for sale on commission on behalf of such owner, or who accepts any farm product or commodity in trust from the owner for the purpose of resale, or who sells or offers for sale on commission any farm product or commodity or in any way handles any farm product or commodity for the account of, or as an agent of, the owner; or
  • Any person engaged in buying any farm products or commodity from the owner for the commercial feeding of livestock that are owned wholly or in part by another, at an animal feeding operation with a capacity of more than 2,500 head of livestock.

A Dealer or Commodity Handler does not include:

  • A bona fide retail grocery merchant or restaurateur having a fixed or established place of business in Colorado as long as the use of farm products or commodity by any such person is directly related to the operation of the person's retail grocery or restaurant; or
  • A producer under the "Colorado Cottage Foods Act", section 25-4-1614 (9) (c), C.R.S., who earns net revenues of $10,000 or less per calendar year from the sale of each eligible food product.
Q: What is a person?

Person includes an individual, a firm, an association, a partnership, a corporation, or the commissioner.

Q: Who is an “owner”?

Owner means any person in whom legal title to any farm product or commodity is vested, whether produced by the owner or acquired by purchase.

Q: What is processed?

Processing means the operation of drying, canning, fermenting, distilling, extracting, preserving, grinding, crushing, flaking, mixing, or otherwise changing the form of a farm product or commodity for the purpose of selling any of the resulting products.

Q: Does the Farm Products or Commodity Handlers Act enforce quality?

No, the Farm Products and Commodity Handlers Acts do not enforce the quality of the product that is purchased.The programs encourage the purchaser to inspect the farm product or commodity prior to accepting it.

However, it is unlawful to intentionally make false or misleading statements as to the market conditions for farm products or commodities, or false or misleading statements as to the condition, quality, or quantity of farm products or commodities received, handled, sold, or stored. This violation is a class 6 felony.

Q: Do the Farm Products or Commodity Handlers Acts regulate any action of the dealer beyond the financial purchase of the farm product or commodity?

The Farm Products Act and the Commodity Handlers Act regulate the storage of farm products and commodities. The Acts do not regulate the processed product.Hemp oil and processed hemp fiber are not covered under the Farm Products or Commodity Handlers Acts because they are hemp products that have already been processed.

Q: Are all Farm Products Dealers and Commodity Handlers required to be bonded?

No, there is a sub-group of licensees referred to as “small volume dealer” or “cash dealer”. These licensees are not required to be bonded but still need to be licensed.

A small volume dealer is any person who:

  • has a fixed or established place of business in Colorado;
  • buys less than $20,000 worth of farm products or commodities, in aggregate, per year from the owners for processing or resale;
  • does not purchase in a single transaction more than $2,500 of farm products or commodities, in aggregate;
  • and does not purchase farm products for commercial feeding of livestock.

A cash buyer is any person who pays for farm products in cash or with a bank-certified check, a bank cashier's check, an irrevocable electronic funds transfer, or a money order at the time the dealer obtains from the owner possession or control of the farm products.

Q: What is the license period and what are the fees?

Farm Products and Commodity Handlers licenses are valid for one calendar year and are not transferable.

The fees for 2017 are:
Farm Products Dealer $275
Commodity Handler $150 + a commodity inspection fee of $50 to $750. Commodity inspection fees are based on the annual dollar amount purchased by a commodity handler.

An additional warehouse fee may apply if commodities are stored for others.Warehouse inspection fees range from $155 to $1,840 and have additional financial requirements to be licensed. Please contact the Commodity Handler Program prior to licensing as a warehouse.

Q: Where do I get a bond or a letter of credit?

Bonds you get from an insurance company, letters of credit you get through a bank.

The Farm Products and Commodity Handler programs have been assured industrial hemp dealers and commodity handlers will be able to obtain a bond.

Make sure your agent knows:

You are applying for a SURETY BOND.
The bond is a regulatory requirement for a Farm Products Dealers or Commodity Handlers license (for industrial hemp).
Your agent is using the approved Colorado Department of Agriculture surety bond form.

Q: Are out of state dealers/brokers required to be licensed?

Yes, if the transaction happens within the state of Colorado.

Q: Are there any exceptions to the requirement to license?

Restaurants, retail grocery stores, small feedlots, and any person or company that is purchasing industrial hemp for their own use need not license.

Industrial Hemp farmers are not required to be licensed under these Acts to sell the product they produce.

Q: How does it work?

The law requires that dealers and brokers of hemp license and bond with the CDA.When a complaint is filed against a licensee, the department investigates the complaint determine if the licensee is in default of any outstanding obligation to any farm product owner.If the complaint is deemed to be valid, a claim will be made against the licensee’s bond and paid to any farm product owner owed.

Q: How is the Act enforced?

A dealer or commodity handler that is operating without a license or a bond (if required) is committing a class 6 felony.

Q: As a producer, how can I protect myself?

Document the transaction by obtaining evidence of sale.Scale tickets, bills of lading, or delivery receipts can be used.

Q: Should I use a contract?

Yes, one of the major problems the CDA incurs in trying to settle disputes is trying to determine what the buyer and seller agreed to. Get a contract in writing.

Q: Will doing business with a bonded dealer insure that I get paid?

Not always, your claim may exceed the amount of the licensee’s bond, and there may be competing claims for the bond. In that event, you will receive a pro-rata share of the bond proceeds. This will not prevent you from seeking relief in the court system.

Q: Where can I find more information about the program?
  1. You can find more information on the CDA’s website under the tab for the Division of Inspection and Consumer services.
  2. Sign up as an interested party if you would like to receive additional information on industrial hemp and the CDA Farm Products Program.
  3. The Farm Products Program is within CDA’s Inspection & Consumer Services Division, which is committed to promoting an honest, equitable marketplace and to encouraging integrity in agriculture and industry. For more information or if you question about licensure please contact Leif Jacobsen at leif.jacobsen@state.co.us, or (303) 869-9095.