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What Should Go into Your Farm Land Lease Agreement

Farming and agriculture in the U.S. rely heavily on lease agreements. It isn’t always possible or profitable for you to work your own land. Instead, you and your family might benefit from leasing portions of your land to operators. Developing a successful relationship with an operator takes time. It also takes putting your agreement into writing to avoid confusion and disputes. If you’re leasing your farmland for the first time or you’ve run into problems in the past, talk with Groves Law about what should go in your farmland lease agreement. Types of Farm Land Leases There are many ways to arrange the payment terms in a farm lease. Fixed Cash Rent Agreements Some landowners require a predetermined fee to use their land that does not depend on the yield or crop prices. The rental rate may be a certain amount per acre each year. This type of land lease agreement protects the landowner from market risk and lets the tenant control how they produce and market the crop. Flexible Cash Agreements In this type of farmland lease agreement, landowners use a formula to calculate rent. There’s a base cash rent amount, usually paid in advance. Then, there’s a possible bonus payment after the harvest. The bonus payment is based on the yield multiplied by the price. In this type of arrangement, landowners take on some of the risk, but the base rent ensures they receive something. Crop Share Agreements A crop share is a farm rental agreement through which the landowner and operator divide the income from the crops by a predetermined percentage or ratio. For example, the tenant might keep 75% of the proceeds while the landowner received 25%. For a landowner to receive a higher percentage, they usually have to pay for a portion of production costs. Fixed Bushel Agreements In this farm lease agreement, the rent is a predetermined number of bushels of grain per acre. The tenant delivers the bushels to the local elevator in the landowner’s name. Then, it’s up to the landowner to market and sell the grain. In this arrangement, the landowner doesn’t take on production responsibilities and risk, but it does take on marketing risk. Flex Leases Some agricultural land lease agreements are more complicated. For example, a landowner and operator can agree to a fixed price per bushel multiplied by the average yield of that field. This arrangement links the rent to the production capacity of the fields, and the landlord doesn’t take on any production or marketing risks. Which Arrangement Is Right for You? You have to decide the level of responsibility you want and the amount of risk you’re willing to take on. You can negotiate an agreement in which you receive fair compensation for the use of your land while the tenant takes on full responsibility for producing and marketing the crop. If you have a low risk tolerance, you may prefer an upfront cash payment. However, if you’re willing to accept some risk, you can tie your rent to the production and sale of the crop. Your ability to financially contribute to the arrangement also impacts your choices. You may be able to negotiate more revenue if you take on some of the financial risk during production and marketing. Basic Farmland Lease Agreement Terms Every farm lease needs specific provisions, even if it’s an informal agreement among family members or long-term neighbors. These may include: Defining the acreage involved in the lease; Houses, buildings, and structures on the land available to the tenant; The rental rate; When payments are due; Who receives USDA program benefits; The beginning and end dates; A renewal term; Crop restrictions; Pest control and other production restrictions; Conservation and land fertility requirements; Cost sharing; The landowner’s duties; The tenant’s duties; Equipment use; Drying and storage facilities; Building and equipment maintenance; Transportation; Stover removal; Property taxes; and Insurance coverage. The contract should state when and how you have a say in what goes on. Most landowners don’t have any input in cash-based leases, which is why this type of farm lease works best if you don’t want to be involved in decision-making and production. In other farm lease arrangements, the owner has a greater level of responsibility and risk. USDA Commodity Program Payments Your farmland lease agreement should address U.S. Department of Agriculture programs and who receives any payments. You or the tenant may receive the full payment, or you may split the payment. This depends not only on your preferences but on USDA regulations. The terms of the agreement dictate whom the Farm Service Agency will pay. Necessary Legal Provisions Every farmland lease agreement should have certain legal formalities, too: Right of entry: You should reserve the right to come onto the land. Mineral rights: The lease shouldn’t give the tenant any mineral rights unless you intend to do so. Recreational use: You should address whether the land can be used for hunting or other recreational uses without your express permission. Liability for injury: You should include provisions that limit your liability for harm caused by a farming hazard. Transfer of interest: You may want to prohibit the tenant from leasing or subletting any part of the land without your permission. Binding on heirs: Typically, you would make the agreement binding on the tenant’s heirs or executors. Liens and security interests: You can include provisions to give you a lien and security interest in the crops. Default: Address what happens if one of the parties breaches the contract, including the amount of interest you can charge the tenant on late payments. Arbitration: You can include an arbitration clause requiring you and the tenant to resolve disputes through arbitration instead of filing a lawsuit. Attorney fees and court costs: Address who is liable for paying attorney fees and court costs in the event of a dispute. Indemnification: In an indemnification clause, the tenant agrees to defend or indemnify the owner against any liabilities or damages from the tenant’s breach of the lease agreement.  […]

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Should I Agree to a Custom Farming Agreement?

Getting the most from your land may not mean farming it yourself. Instead, you might benefit from hiring someone else to work the land on your behalf. Though you have to pay an operator for their services, you can profit from the entire crop as long as you’re confident in your ability to store and market it. If you’re interested in hiring a farm operator, talk with Groves Law about creating a custom farming agreement. You should always put your plans into writing. It’ll help you avoid disputes and, hopefully, create a fruitful long-term relationship. What Is Custom Farming? Custom farming is where a landowner hires an operator to produce a crop on their land for a specific price. Typically, you pay the operator a certain rate per acre of land in one or multiple installments. You decide what happens on your land and pay for all the production costs, including seed, fertilizer, chemicals, fuel, and insurance. You retain control, receive all the grain produced on your land, and are responsible for storing and marketing it. Usually, the operator delivers the grain to your owned or rented storage facility or a predetermined grain elevator. In some cases, a custom farming agreement is for a specific service and not the entire production. You may lack the capital to invest in a particular piece of equipment, so it may be economical to rely on hiring out that particular task. How Custom Farming Differs From Farm Lease Agreements Custom farming allows you to control what happens on your land without doing the physical work. You pay the operator to do the physical labor but own the entire crop. Under a farm lease, the tenant determines what happens with the land and owns all or most of the crop. You receive payment for the use of your land.   The Pros and Cons of Custom Farms for Landowners There are many advantages to custom farming agreements. You can earn income from your land without coming up with the capital necessary to invest in farm machinery and equipment. Lack of capital consistently holds back farmers in the U.S. from taking full advantage of their land. Custom operators often have new, high-tech equipment, and it’s theirs to maintain. They also tend to have years of farming experience you can rely on. You might have a full-time job and not have the time or inclination to farm the land yourself. Some owners rely on leases. But if you use a farmland lease, you have to negotiate rates and worry about collecting payments. Not every owner wants the risk associated with being a landlord. Also, while USDA program payments may go to the operator under some farmland lease agreements, you typically receive all the USDA payments under a custom farm agreement. There are disadvantages, though. Timing is important in farming, and some owners find operators don’t perform tasks within the appropriate time. You might feel the operator doesn’t perform specific tasks on time or rushes other tasks. It’s also costly. You are responsible for all the costs, yet your profit depends on the yield and selling price. You take on all the market risk, but you benefit the most from the arrangement in a good year. The Pros and Cons for Farm Operators Famers who have the proper machinery and equipment may be able to cultivate more land than they own. They’ve already made the capital investment into machinery and equipment, which they should use to the fullest extent possible. By taking on custom farming contracts, they’re usually only dealing with additional fuel, lubricant, and repair costs. Working under a custom farm agreement provides them with a fixed income without worrying about yield or the market. However, rates for custom farming aren’t particularly high. It may not feel worth it depending on the effort required for the crop. Customizing Your Agreement Traditional custom farming agreements rely on fixed cash payments. That isn’t essential, though. You and an operator can form a different arrangement, one in which the operator receives a portion of the crop and USDA payments. Another option is for the operator to receive a bonus depending on the final profit. The benefit of this arrangement is that the operator has a more sincere interest in the crop and yield. Their income could be affected if they don’t handle production well. You’d have a slightly lower cash output, and if the yield or price isn’t particularly good, you would have paid the operator less. This isn’t an easy arrangement. You and an operator would have to come to a fair division agreement. However, an experienced agriculture lawyer can help negotiate a fair agreement using standard formulas and ratios for the industry in your region. What Should Go into Your Custom Farming Agreement Custom farming arrangements often come from casual circumstances. You may connect with an operator in your community or through friends or neighbors. But you should set out any custom farming agreement in writing to protect both parties’ interests. The contract should include several provisions including: The nature of the relationship—the operator is an independent contractor Description of the acreage the operator will work Description of work expectations Procurement of seed, fertilizer, chemicals, and other inputs Timing of planting and harvesting Pay rate per acre or operation performed Drying charges Incentive payments Payment dates Any cost-sharing Insurance coverage Production restrictions Any machinery, equipment, buildings, or structures the operator may use Consequences of delays Consequences of weather or other events Final delivery location The agreement should make it clear what your expectations are for the operator. This avoids any confusion or disputes. It also allows you to retain control over how your land is farmed—the operator shouldn’t make significant operations decisions unless you explicitly gave them this right. Have Questions About Custom Farming? If you have questions about custom farming or want to negotiate a contract, reach out to Groves Law. Kara Groves can help you negotiate a custom farming agreement that considers your individual needs and protects […]

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Starting a Solar Farm Business in Florida

There is plenty of sunshine in Florida. Excitingly, Florida’s sunny sky gives you access to a business opportunity that can help the environment and boost your portfolio. Florida landowners have a unique opportunity to sell energy they generate on solar farms. To take advantage of this opportunity, you must understand how to start a solar farm business in Florida.  Florida’s Energy Needs Florida’s power use is higher than the national average. Though there are alternatives to generating electricity, Florida’s electricity production is majorly dependent on one source: natural gas. According to a November 19, 2020 report from the U.S. Energy Information Administration, natural gas fueled about 74% of Florida’s electricity net generation in 2019. Florida solar farms present great opportunities to diversify Florida’s energy sources and reduce its carbon footprint. Currently, only 3.5% of Florida’s electricity comes from renewable resources.  Solar power is Florida’s largest source of electricity from renewable resources, but solar power could have a greater presence in Florida’s energy grid. Using your land as one of the solar farms in Florida could be a boon for you and your community. How Do I Start a Solar Farm? Starting a solar farm can be complicated on the front end, but once you understand what you need and you have the proper permits, the task of running a solar farm isn’t as daunting.  Start with a Business Plan When starting solar farms, business plan formulation should be the first action item for an entrepreneur. Starting any business requires many steps, and a business plan can help you organize your needs and objectives and help you determine how to achieve each step of business formulation and maintenance. A business plan can also help you secure funding from financial institutions and investors. Once you understand your business needs, you can determine what kind of solar farm business you want to start. You can also determine how much help you will need from others.  What kind of capital do you need to start your solar farm business? The largest component of your solar farm business is the land. If your land is in a high-sun-intensity area, you generally need a minimum of two-and-a-half acres to produce one megawatt of electricity. One megawatt of electricity can power 650 homes per day. As sun intensity decreases, the amount of acres you need to generate sufficient power increases.  You may need as many as six acres of land to generate one megawatt of electricity. On six acres of land, you may need as many as 4,000 solar panels, which could cost you $3 million dollars to build. If the price of building your own solar farm is too steep, you can lease your land to a solar farm developer. Y ou could make hundreds to thousands of dollars in rent per acre. Once you determine what kind of capital you need to start your solar farm business, you need to determine the structure of your business. What kind of business entity should you form for your business? In Florida, you have many options for the kind of business entity you can form. There are five types of business entities you can form: A corporation,  A limited liability company (LLC), A general partnership,  A limited partnership, or  A sole proprietorship.  Each entity has its advantages and disadvantages. For example, if you choose to spend a large amount of money to build your own solar farm, you may want to choose an entity that limits your liability for debts and business mistakes. LLCs and corporations limit your liability for business debts and obligations. If you do not want to deal with the paperwork and formalities required to start and run a limited liability entity and you want to assume the risk of personal liability, you may want to start a sole proprietorship.  You should review your business entity options with an attorney during the developing stages of your business. An attorney can help you make the best choice for your unique business needs.  Your Business Needs Approval from Multiple Government Entities Once you determine your business structure and what your business needs are, you need to follow regulations and file for approval with multiple municipal, state, and federal agencies. Solar energy businesses must follow regulations and obtain permits related to zoning and building, environmental protection, public safety, and state and federal taxes. You may have to reach out to as many as 12 different government agencies to comply with municipal, state, and federal laws for renewable energy businesses.   Your Business Should Have the Backing of Financial and Legal Services As you can see, there are many intricate steps involved in starting solar farms in Florida. If you want to see a great return on your investment of time and money, you should seek the services of financial professionals and legal experts early.  While the sun is abundant in Florida, the weather is still unpredictable and equipment can break in unexpected ways. Having insurance to cover your business can protect you from a lot of misery on a rainy day (literally). Also, taking advantage of good interest rates for your business’s bank account can help you reap high yields for your business. Ask your bank for a more in-depth review of the different options it has for business accounts. You want as many professional buffers as possible to help your business succeed. An accountant can ensure your business complies with the necessary tax laws. An accountant can also help you find deductions and credits to boost your business’s profitability. An attorney can ensure that you follow the correct laws and regulations, and they can help you establish your business in the smartest and safest ways. If you choose to lease your land to a solar developer, an attorney can help you draft lease documents that properly protect your interests.  Contact an Attorney for Help Starting a solar farm in Florida is a great business opportunity. Do not let the many laws and regulations for renewable energy scare you […]

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8 Times to Hire an Agribusiness Lawyer

Agriculture is one of the most highly regulated industries worldwide, from planting seeds to stocking store shelves and everything in between. There is more to agriculture operations than just production, and this is where having a relationship with a dependable agribusiness lawyer can make a difference in your ability to succeed and prosper.  8 Time to Hire an Agribusiness Lawyer Whether you are a single grower, a cottage foods producer, a small family farm, or a large corporate entity, there are a plethora of situations where the guidance of an agribusiness lawyer could be beneficial, including: Labor and employment law Land use and zoning Environmental regulations Intellectual property Supply, distribution, and sale contracts Banking and finance Water rights Product liability These are just a handful of areas where an agribusiness lawyer can help you succeed and overcome specialized legal challenges.  Labor and Employment Law Virtually all agricultural employees are covered by the Fair Labor Standards Act (FLSA), but there are several exemptions regarding overtime and minimum wage regulations that could be relevant for your operation. Whether you are employing your seasonal workforce through the H2-A foreign labor visa program, hiring high school students to work after school, or have a full-time domestic labor force, there are many areas of employment that you need to consider to remain compliant.  Land Use and Zoning  How you use your land can be a point of contention. Zoning laws vary between counties and municipalities. What you may be able to do on one piece of property may not be allowed on another. Rezoning your property is a complex endeavor that could make or break your business plans. An agribusiness attorney with knowledge of land use and zoning laws could prevent lengthy battles for the right to use your property the way you see fit to benefit your operation.  Environmental Regulations No one wants to be the person that causes environmental damage for financial gain. There is a fine balance between conducting your business operations efficiently and following all regulations. It is not uncommon for environmental regulations to impact agricultural operations. When you are faced with complicated environmental regulations, a knowledgeable agribusiness firm can guide you through effective compliance or mount a defense for pending litigation.  Intellectual Property Intellectual property plays an important role in many aspects of the agriculture industry. From crop and livestock genetic breeding, to equipment design, to precision agriculture technology, trademark and copyrights can have a significant impact on what you can and cannot do with your operation and the way you market your products. Agricultural intellectual property is a specialized area of agribusiness law that requires careful attention to detail, whether you are the one applying for protection or defending against an alleged violation.  Supply, Distribution, and Sale Contracts There are very few areas of agriculture that operate without contractual negotiations. Even small cottage food farmers engage in transactions that implicate the buying and selling of goods. On a larger scale, corporate operations often maintain dozens to thousands of contracts for things such as supplies for products, distribution of products, sale of products, warehouse space, transportation, and so much more. If any parts of this well-oiled machine were to break down because of a breach of contract, you should seek help from an agribusiness lawyer who understands how to interpret the legal obligations of each party and find resolution through specific performance or compensation for damages.  Banking and Finance Despite modern technology and farming practices, there are some areas of agribusiness that remain unpredictable. Whether you are negotiating with crop insurance adjusters or evaluating the possibility of government subsidies, it is important to understand how these funds impact your business. Other areas of agrifinance that may require the help of an agribusiness lawyer include farm loans, restructuring, estate planning, mergers, and acquisitions. Water Rights Water is one of the fundamental elements of production agriculture. Approximately 80% of U.S. water consumption is allocated to agriculture. Ground and surface water rights are competitive among water users. Balancing the water needs of agriculture, environmental, and municipal interests is known to spark complex legal disputes. This is not an area of controversy that you want to face alone.  Product Liability Agricultural product recalls happen daily. Even with the most stringent quality control regulations, life happens. Though carrying product liability insurance is a great first step in preventing a detrimental experience, the size and scope of the issue could impact how your operation recovers. A knowledgeable agribusiness firm will negotiate with insurance companies on your behalf and can be there with you throughout the process should litigation arise.  Hiring an Agribusiness Lawyer The agribusiness law firm of Groves Law has a passion for the agriculture industry and helping clients succeed. We focus on all aspects of agribusiness law from planning and production, through growth and succession. Contact us today and let us help you keep your business moving forward.

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How to Grow Your Florida Hemp Business

The prospect of a new and lucrative business opportunity is exciting, and Florida has new opportunities in the industrial hemp market. Hemp cultivation opens the door for more jobs and business ventures in Florida, but a successful hemp business requires thorough preparation and strategizing to reap proper gains. If you want a piece of the pie in this emerging market, you must understand how to start a hemp business.  Why Hemp? Civilizations have used hemp for centuries in many practical ways. Hemp came to North America in the 1600s and has had a complicated legal identity in the United States. With changing laws surrounding hemp production, the industrial hemp market currently has a robust presence in the U.S. economy. Industrial hemp has many wonderful uses you can monetize in a new agribusiness. Industrial hemp plant uses include: Clothing Shoes Rope Nets Carpet Tarps Paper Building materials Mulch Composting Animal bedding Soap Beauty products Moisturizer Hemp-related business has a large market share in the United States. In 2016, the sales value of hemp-based products was over $688 million.  With so many uses for industrial hemp, you can carve out many places for your hemp business to thrive.    Is It Legal to Grow Hemp in Florida? Yes, it is legal to grow hemp in Florida. The United States recently passed the Agriculture Improvement Act of 2018, which authorized hemp production and removed hemp from the Drug Enforcement Administration’s schedule of Controlled substances. Florida followed the federal lead and authorized hemp cultivation in 2019. A cannabis plant or product is not legal hemp unless it is Cannabis sativa L. and has a total delta-9-tetrahydrocannabinol (THC) concentration that does not exceed 0.3% on a dry-weight basis.  Growing hemp and selling hemp-based products may be legal, but Florida hemp laws heavily regulate cultivation and sale. You must know the Florida hemp laws and have the proper equipment and capital to legally run a thriving hemp business.  How Do I Get Funding for My Hemp Business? As with any agricultural business, you need land, seeds, equipment, water, transportation, funds for crop testing, funds for licensing, and probably employees. You must determine if you can afford these business necessities before venturing into the industrial hemp business. If you are not independently wealthy, coming by funding can be hard.  United States banks are hesitant to provide any kind of banking services to hemp-based businesses. If a bank is willing to provide a bank account for a hemp-based business, it might still be hesitant to provide hemp-based loans. Without the financial backing of a bank, you may have to determine what you can sell to build your own capital, or you might have to seek independent investors to help you start your business. Once you have funding for your business, you must fulfill a number of legal requirements to start your business. What Are the Legal Requirements for a Hemp Business? There are many legal requirements to start and run an industrial hemp business. You need to keep up with licensing, permits, and multiple monitoring rules to keep your business viable. How to Get a Hemp Growing License One of the most important legal requirements for starting a hemp business is a hemp cultivation license. To qualify for a license, you cannot have a felony conviction that is less than 10 years old and is related to a controlled substance. You must also fulfill many licensing obligations, including: Providing fingerprints; Clearing a background check; Providing legal land description and global positioning coordinates of the farmland; and Developing a hemp containment and transportation plan. If you plan to sell packaged foods containing hemp extract or cannabidiol (CBD), you have additional permit requirements you must follow. You must also follow federal laws regarding CBD in foods.  Licensing is only the first step to growing hemp in Florida. There are many rules and regulations you must observe after you earn the proper licenses and permits. Your compliance with multiple laws can mean the difference between success and failure in the hemp industry.  What to Do After You Apply for Your License After you apply for a license, you will likely need to enroll in a Best Management Practices program to establish a presumption of compliance with Florida water quality standards. These practices seek to find balance between improving Florida water quality and maintaining agricultural productivity. Also, any hemp seeds you use must be certified by an agent of the Association of Official Seed Certifying Agencies or by universities conducting certain hemp pilot projects.   You must stay vigilant after you receive your license. You have to renew your hemp license annually, and you must regularly test the THC level of your crops to avoid growing crops that exceed the 0.3% THC threshold for hemp. Plants that exceed the THC threshold “run hot,” and Florida law requires you to destroy them.  The Florida Department of Agriculture and Consumer Services conducts random annual inspections of hemp licensees. If an inspection finds a violation and you violate a corrective action plan more than two times in five years, you are ineligible to cultivate hemp for five years. There are many ways to easily lose financial ground in the industrial hemp business, so it is crucial that you stay on top of all applicable laws and regulations. How Do I Protect Myself in the Industrial Hemp Business? Following all the rules and regulations is the most important measure to protect yourself in the hemp business. There are also other business measures you can employ for protection. Consider Forming a Limited Liability Company or Corporation With any business venture comes the possibility of a lawsuit or debt collection. If you do not want a lawsuit based on the actions of your hemp business to affect you personally, forming a limited liability company (LLC) or a corporation for your hemp business can protect you from personal suits or collections. LLCs and corporations have many state filing requirements, but the extra paperwork could save you from personal liability if your […]

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Florida Cottage Laws: Food Sales That Don’t Need a Permit

If you have found your niche in creating or baking something delicious, and people are telling you they would gladly pay for what you do, you may be considering creating your own small business.  With most food products, you must obtain proper licensing and permits to sell your goods. But Florida cottage laws offer a way to work around those requirements. It is important to know the basics about food operators that do not need permits in Florida.  What Are Cottage Foods? Cottage foods are a select group of homemade foods legally sellable directly to informed consumers. They do not require licensing or inspection from the Florida Department of Agriculture and Consumer Services (FDACS). These foods are generally at a lower risk for causing foodborne illnesses.  How to Start a Cottage Foods Business in Florida The first step to take when determining how to start a cottage food business in Florida is to understand what products you may actually sell without a license. There are a number of lists available to identify food operators that do not need permits in Florida. If your passion for producing a certain product falls within those available categories, you are on the right track. Understanding Florida cottage laws will help you formulate a reasonable business plan and expectations for growth.  Food Operators That Do Not Need Permits in Florida There are a handful of foods and food products that make the list to be produced and sold within the state of Florida. One of the biggest factors in deciding what can and can’t be sold is whether the items need to be temperature controlled. Permissible products include items such as: Loaf of bread, rolls, and biscuits; Cakes, pastries, and cookies; Candies and confections; Personally produced honey; Jams, jellies, and preserves; Fruit pies and dried fruits; Dry herbs, seasonings, and mixtures; Homemade pasta; Cereals, trail mixes, and granola; Coated or uncoated nuts; Vinegar and flavored vinegars; and Popcorn and popcorn balls. Many of these products are derived from home-grown produce, giving farmers an additional source of income and a creative outlet. However, using home-grown products is not a necessary requirement for Florida cottage food sellers.  Florida Cottage Laws Florida cottage laws focus largely on how and where products can be sold. These laws are governed by Florida Statute 500.80. But keep in mind that other states or individual municipalities may have different regulations than the State of Florida has. Selling in Florida Cottage food operators can sell cottage foods only within the State of Florida. Once the products enter into interstate commerce, they must follow the cottage laws of other states, which may or may not allow similar sales.  Maximum Sales Gross annual sales for cottage foods may not exceed $50,000 according to Florida cottage laws. Sales are taxable income.  Cottage Food Production Food produced for sale has to be prepared in the kitchen of your primary residence. It cannot be made in a summer home, motor home, vacation home, or outdoor cooking environment.  E-Commerce Sales Many people search for and purchase products online. Cottage food operators may sell their food products online, but they must hand-deliver them. This is also a deterrent for interstate or international commerce.  Private Events  Cupcakes, wedding cakes, and birthday cookies are all great common examples of cottage foods that may be produced specifically for an event. Cottage food products must be delivered directly to the consumer or to the consumer’s private event.  No Wholesale  According to Florida cottage food laws, cottage foods cannot be stocked on store shelves. There are additional requirements for wholesale products.   Local Laws A cottage food operation must comply with all applicable county and municipal laws and ordinances regulating the preparation, processing, storage, and sale of cottage food products. These may differ from statewide Florida cottage laws.  Florida Cottage Food Law Labeling Requirements Cottage foods must be properly packaged and labeled for consumer safety and include the statement, “Made in a cottage food operation that is not subject to Florida’s food safety regulations.”  A cottage food operation may only sell prepackaged cottage food products. The label must be printed in English and contain the following information: The name and address of the cottage food operation;  The name of the cottage food product;  The ingredients of the cottage food product in descending order of predominance by weight;  The net weight or net volume of the cottage food product;  Allergen information as specified by federal labeling requirements; and Appropriate nutritional information as specified by federal labeling requirements.  Cottage food operators can serve free samples for tasting, but the samples must be prepackaged. Lab testing for an official ingredient list is not required.  If you have a secret ingredient that you want to keep to yourself, that may be permissible. According to federal regulations (Food and Drug Administration (FDA), 21CFR 101.100g(1)(2)), exceptions to labeling can be made. If the Commissioner of Food and Drugs determines that the alleged secret ingredients are harmless, you may receive an exemption. It is safer to make sure that you and the commissioner are in agreement before choosing to omit the ingredient, and you should contact the FDA to discuss the potential exemption.  Selling Florida Cottage Foods at Farmers’ Markets Cottage food sales are permitted at farmers’ markets, flea markets, and roadside stands. This is only true if you have no other food items in your space that require a food permit.  Depending on local regulations, some farmers’ markets and similar direct marketing venues may still require a food establishment license even if you meet the cottage food requirements. Local farmers’ markets and local municipalities often have their own policies.  Florida Cottage Foods Law Violations Whether you have accidentally or knowingly violated Florida cottage law, you may face penalties and be required to pay fines pursuant to Florida Statute 500.121. If you are concerned about compliance for your existing cottage food business or would like to explore how to start a cottage food business in Florida, you may want to have a chat […]

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Changing Your Land’s Zoning from Residential to Agricultural

Obtaining the perfect piece of land for your agricultural operation is one of the most important aspects of a solid business foundation. Unfortunately, if your property is not zoned for that particular use, you could find yourself stuck.  Changing your land’s zoning from residential to agricultural may not be an easy process, but depending on your intention, it could be well worth the effort.  The Importance of Zoning Zoning dictates various land use activities by classification for the purposes of planning and safety. Though zoning types may vary, most municipalities will zone land in the following general categories: Residential, Commercial, Industrial, Agricultural, Recreational, and Historical. There are often subcategories that provide more detailed specifics on how the land can and cannot be used in each zone.  Florida Ag Zoning Zoned agricultural lands are areas that have been designated by local jurisdictions with the intention to guard farming land use against incompatible non-farming activities. One of the primary uses of this type of zone is to prevent conflicts between urban and agricultural land use. An ag zoned property does not necessarily have to be used for agricultural operations.  How to Change Zoning from Residential to Agricultural All requests for rezoning must be processed through the county or municipality where the specific property is located. Before considering changing your land’s zoning from residential to agricultural, you may want to consider speaking to a county planner to determine the likelihood of success given the exact location of the property in relation to other similarly zoned parcels. You may also choose to employ the help of an agriculture property attorney to help in this process.  Types of Zoning Changes Rezoning may not be the only option available to you. In some cases, it may be easier to apply for a temporary change to the ag zoning such as a special exception permit or zone variance permit. A variance grants a property owner the legal right to use the property in a way that is contrary to local zoning for that property. Special exception zoning decisions are often made before the zoning process is completed. The third option is getting the property legally and permanently rezoned.  Zoning Variance A zoning variance is granted when a property owner demonstrates an undue hardship. The hardship must exist because of unique circumstances not created by the property owner. Ignorance of the zoning law does not equal hardship.  There are two different types of zoning variances. A use variance allows the property to be used in a way that is prohibited in that zoning district. An area variance provides leniency on dimensional restrictions. This variance is used primarily for height restrictions or setback requirements.  Special Exception or Special Use Permit A special exception or use permit is applicable when using the property outside of zoning restrictions would adversely affect public health, safety, or any other concerns specified by the county. Exceptions are only available if specific limitations are set in place and conditions are met to address the concerns. Property Rezoning  Counties and municipalities have significant discretion on a rezoning approval. Proposals must follow procedures outlined by each local government. Rezoning typically requires evaluation by local officials such as the city planning commission, agriculture commissioner, and others. Community members may put pressure on elected officials to confirm or deny the land owner’s application. Rezoning may be considered under certain circumstances which include: The original property zoning contained an error or oversight, Geographical changes in the surrounding area prevent use of the property under its current zoning, or The rezoning request is consistent with the local government’s long-term land use plan.  It is important to have substantial evidence to support the rezoning. Seeking assistance from an experienced Florida property lawyer is a good way to increase your chance of success in changing your land’s zoning from residential to agricultural. Florida Rezoning Procedures Speaking to local officials responsible for land management is a great place to start the process. Often, local officials will be able to give you a better understanding of the potential success of an application for ag zoning. An attorney can also help you with this initial step prior to starting the official application process. The process of changing your land’s zoning from residential to agricultural differs between counties, though most follow similar general guidelines. Application Filing First you will need to obtain an application for rezoning from the county or municipality’s zoning office or department. You will also have to pay the application fee.  Review of the Application Next, the zoning staff will review your application. They will then make a written recommendation to the county board of commissioners.  Public Hearing The community has a right to weigh in on zoning decisions. Public notice is posted in advance of the hearing. The applicant may be required to make a statement about their request or respond to questions from the public and elected officials.  Rezoning Decisions Finally, the board of county commissioners receives the recommendation and renders a decision on the rezoning application. Appeal is unlikely for most decisions.  Should You Hire a Property Lawyer for Ag Zoning? The rezoning application process alone requires strict attention to detail and the ability to provide a convincing argument that conveys the benefit of rezoning for all parties potentially impacted. Rezoning can also have crucial tax implications that you should consider before making a decision on the specific type of zone you would like your property to be classified as. The worst mistake you could make for your property would be to underestimate the implications of your decision. Groves Law understands the nuances of Florida property law and can advise you on the best strategy for how to change zoning from residential to agricultural, whether that is through a zoning variance, a special exemption, or rezoning. Contact us today to begin the process of changing your land’s zoning from residential to agricultural, so you can get one important step closer to using your property in a meaningful way.

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Florida Overtime Laws for Agricultural Workers

As an agriculture employer, you have a responsibility to ensure that your employees have proper and safe working conditions and are fairly compensated. Under the Fair Labor Standards Act (FLSA) agriculture exemption, your obligations may vary from those of a standard employer. Understanding Florida agriculture overtime laws will help keep you compliant and in good standing with your employees.  Florida Agriculture Overtime Laws The FLSA exists to provide a fair wage standard to all employees. This includes requiring minimum wage payment and overtime of time and a half when employees work over 40 hours in a week. However, some employers are exempt from these rules, and that is where Florida agriculture overtime laws require a closer look.  FLSA Agriculture Exemption The agriculture industry has a lot of moving parts, and not all industries fall under the FLSA agriculture exemption. Several types of employees fall under the agriculture overtime exemption. Piece-Rate Employees Employees compensated on a piece-rate scale are exempt under the FLSA. Suchy employees are non-migrant workers employed in agriculture as hand-harvest laborers for fewer than 13 weeks during the previous year who commute to work daily.  Any agriculture employee who is 16 years of age or younger and employed as a hand-harvest laborer is also exempt. These employees are paid a piece-rate in an operation that is recognized as a piece-rate employer. They must be employed by the same operation as their family and paid the same rate as adult employees.  Livestock Range Production Employees primarily engaged in livestock range production and needing to be available at all hours to care for livestock are also exempt. This applies only if the nature of the work would make computing exact labor hours very difficult. Family Members  Members of the employer’s immediate family are excluded from minimum wage and agriculture overtime laws.  Small Farms Employees whose employer did not use more than 500 man-days of agricultural labor during any calendar quarter of the previous year are exempt from the minimum wage requirements but not overtime. The FLSA agriculture exemption defines a “man-day” as a day during which an employee worked a minimum of one hour. 500 man-days equal approximately seven full-time employees working five days a week.  Florida-Specific Agriculture Overtime Laws A state mandate for labor laws typically supersedes federal law if it provides additional protections. In the case of Florida agriculture overtime laws, the state does not have any specific regulations. This means that Florida agriculture employers should refer to the FLSA rules. The same is true for minimum wage exemptions.  Agriculture Payroll Record Keeping  Though an employee may fall under the FLSA agriculture exemption for overtime, they must still be compensated for each hour worked at their normal rate. It is important for employers to keep accurate and complete records for payroll. Records must include the employee’s: Full name, Social security number, Full address, Date of birth if under 19 years of age, Occupation,  Total hours worked every week, Regular hourly rate, Method of payment, Total weekly earnings,  Deductions or additions from the paycheck,  Total wages for the pay period, and Date of payment.  These records could change on a weekly basis, and the duties of the employee are especially important when it comes to determining exemption. The FLSA has a “look back” period that extends for three years, so it is important to keep records for at least that period of time.  When Employees Are Both Exempt and Non-Exempt One of the biggest pain points of Florida agriculture overtime exemption is reclassification of the employee from an exempt position to non-exempt. Because of the dynamic nature of many agriculture operations, it is easy for an employee to be re-assigned temporarily or permanently to a non-exempt position without even realizing it.  This happens often when the operation handles products that are not their own such as shipping or processing commodities produced by other companies. A hand-harvest laborer who meets the requirements of agriculture overtime exemption is no longer exempt if they are asked to load and unload commodities that they did not harvest. Their exemption becomes nullified, and they are owed time-and-a-half for any time over 40 hours in the week.  H2-A Worker Overtime Exemption The H2-A visa program allows employers to hire temporary foreign laborers to make up for the lack of domestic labor. It is a common assumption that all H2-A workers fall under the FLSA agricultural exemption. This is not necessarily true. Workers must still fit into one of the standards for exemption depending on their duties. Otherwise, the employer must pay minimum wage and overtime.  Liability for Lack of Compliance Agriculture employers who fail to comply with FLSA regulations may face audits or administrative actions by the United States Labor Department and potentially lawsuits filed by employees. Many employers work with farm labor contractors to obtain employees. Employers and contractors may be jointly liable for lack of compliance.  Talk to an Agricultural Business Lawyer About Your Obligations Agriculture overtime exemption laws can become complicated depending on the nature of your agriculture operation. Kara Groves is an experienced agriculture attorney who knows how difficult it can be to balance running a business and navigating legal compliance. Kara is based in Mount Dora, Florida, and accepts clients from across the state. Let her help you set up a system for compliance and fight for your rights as an agriculture employer so that you can focus on what you do best. Contact Groves Law for a consultation.

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Obtaining a Florida Marijuana Growing License

It’s been almost five years since Florida voters passed Amendment 2, the bill legalizing medical marijuana. Since then, over 30,000 cannabis-related jobs have been created, and cannabis sales across Florida now surpass $1.2 billion.  Unfortunately, the process for obtaining a Florida marijuana growing license is anything but straightforward. In fact, the whole process has been virtually ground to a halt by constantly changing legislation, confusing regulations, and endless litigation.  The good news is that there are promising signs that Florida will issue more licenses in the near future.  There’s more good news: You can take definite steps now to prepare your application for a Florida medical marijuana grower’s license.  After you read this article, your best bet is to give us a call. No matter how tricky your situation, we’ll do our best to help you prepare your business for success.  First Things First: Know the Current Situation  If you want to grow medical marijuana in Florida, a grower’s license is a must. First, you need to understand the current legal landscape regarding medical marijuana. Unlike other areas of law, the only constant in Florida’s medical marijuana industry has been change.  A Brief History of Florida’s Medical Marijuana Laws Florida Statute § 381.986 is the state’s medical marijuana law. This statute requires anyone growing marijuana to be licensed as a Medical Marijuana Treatment Center (MMTC). Without an MMTC license, growing marijuana is illegal.  Originally, any business involved in growing or selling marijuana could obtain an MMTC license. Shortly after the passage of Amendment 2, however, Florida’s state legislature passed a bill that required all MMTCs to have “vertical integration.”  This meant that the MMTC couldn’t just grow marijuana and sell it to a distributor. Instead, each MMTC had to be able to grow, process, market, and sell the drug itself. In other words, it had to manage the marijuana “from seed to sale.” Obviously, this bill made it way more difficult for small businesses to get an MMTC license. Various groups sued the state to change the licensure process. Right now, these lawsuits are still ongoing.  A Shortage of Licenses Another difficulty of the process has to do with the group that issues licenses. Florida’s medical marijuana statute states that only the Florida Department of Health (DOH) can issue MMTC licenses.  Unfortunately, the DOH hasn’t been great about issuing licenses. In fact, they’ve issued only 22 MMTC licenses to date. This already complex situation became even more complicated when the COVID-19 pandemic struck.  Now, you might be thinking about simply buying a license. And technically, you could do that. But because of the critical shortage of MMTC licenses, the going rate for an MMTC with a license is in the millions of dollars.  In fact, a Mount Dora nursery with a medical marijuana license sold for $14 million last year! Upcoming Changes While this news may seem discouraging, change is on the horizon. There is at least one ongoing lawsuit that could result in many more MMTC licenses. Members of Florida’s state legislature proposed at least one bill to legalize marijuana for recreational use in 2020. Also, it appears likely that Florida will vote on full marijuana legalization in 2022.   Until then, you can take important steps to prepare and submit your MMTC license.  How to Get a Grower’s License In Florida The first step in obtaining a Florida marijuana growing license is to meet the minimum requirements listed in Florida’s medical marijuana law. Next, you should prepare additional information that might be required. The third and final step is to pay any required fees.  Step #1: Meet the Basic Legal Requirements  Florida law states that all applicants for an MMTC must demonstrate that they have: A business that has been registered in Florida for the past five years; A valid nursery certificate of registration from Florida’s Department of Agriculture;  The technical and technological ability to cultivate and produce marijuana, including low-THC cannabis; The ability to secure the premises, resources, and personnel necessary to operate as an MMTC; The ability to control all any and all cannabis products, including the raw cannabis plant parts and any byproducts; The infrastructure to dispense marijuana to registered qualified Florida medical marijuana patients; The financial resources to keep operations going during the two-year approval cycle;  A medical director to supervise the MMTC’s activities; and A diversity plan that ensures the involvement of minority- and veteran-owned businesses.  Applicants must also obtain level 2 background checks for all owners, managers, officers, and board members.  This requires each individual to give a full set of fingerprints to the Florida Department of Law Enforcement. The best way to get a required set of fingerprints is to visit an approved fingerprint service provider. We’ve added a directory of current service providers here.  Step #2: Prepare Additional Detailed Information About Your Business In 2018, the DOH proposed an administrative rule that expanded the requirements to get an MMTC license. With that rule, the DOH released an Application for Medical Marijuana Treatment Center Registration. The supporting administrative rule was withdrawn last month, so these exact rules don’t apply at this point. However, it’s possible that future MMTC applications will use similar factors to determine whether a business should receive an MMTC. For that reason, it’s worth reviewing the information in the 2018 MMTC application to look for extra information you can prepare now.  Sixteen Key Areas In the 2018 application, applicants had to provide written responses demonstrating their knowledge and capabilities in sixteen areas. The DOH then judged those responses and assigned each one a point value.  The maximum points for each section ranged from 50 to 100. The higher the points the applicant received, the more likely their application would be approved.  The whole process was kind of like a high school test.  The sixteen areas listed in the MMTC application, along with the maximum number of points, were: Cultivation Knowledge and Experience (50 Points); Medical Marijuana Cultivation Plan (50 points); Description of the Planned Cultivation Infrastructure (50 points); Processing, […]

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Hot Dogs & CBD

Are you an antique and collectibles dealer with dreams of operating a hot dog stand alongside CBD products? Probably not. But the regulation of hemp-derived CBD in the Sunshine state makes it possible. That’s because Florida is among a small number of states boldly recognizing hemp-derived CBD as food. And that’s a big deal. To be frank, the federal government tends to disagree.  Still, businesses across Florida are wading into murky waters for the opportunity to become a destination of sorts for CBD-infused commodities, well ahead of the national market. FDACPS Regulations for Selling CBD That said, potential CBD retailers would do well to be mindful of the regulatory framework that the Department of Agriculture Consumer Protection Services (FDACPS) continues to expand. See generally F.A.C. Rule 5K-4.034 and F.S. 581.217. For now, FDACPS treats a storefront hopeful to sell ingestible CBD much like any other similarly-situated food business, but with its own special “Hemp Food Establishment Permit” at a cost of $650.  Otherwise, the process mirrors that of any other food vendor–depending on how you intend to handle and sell the CBD oil or CBD-infused product, you’ll have to sort through sanitation and wastewater needs, meet the minimum construction standards for your business type, and make sure local authorities are on board. More than likely you’ll also be subject to a few more FDACPS inspections than your non-CBD neighbors. In practical terms then, so much as a CBD gummy bear renders your business a food retailer subject to the rules and regulations of a similarly-situated food establishment (in that case, prepackaged foods, like hot dogs!). While your storefront may already meet many of those requirements, it’s important to recognize that falling under FDACPS’ regulatory authority is much more than a fee and some inspections.  CBD products must follow certain labelling requirements and be sourced from FDACPS-approved manufacturers (CBD is very clearly excluded from Florida’s cottage laws). And, again, be sure to keep track of the ever-changing CBD landscape. Since the federal government still isn’t totally on board, watch what you say about the benefits of CBD and understand that any future financing needs may be affected by your new CBD-infused treats.  But every new hoop to jump is an opportunity to expand the business. Developing a small coffee shop, showcasing other local food products, or making room for some hot dogs, the choice is yours–if you’re going to be treated like a food establishment, you might as well act like one.  Contact Groves Law Today Questions about ingestible CBD? Let’s chat. CBD products have many regulations and Groves Law can help you navigate them to expand your business. Contact us at contact@groveslaw.ag to schedule a consultation. Because we’re attorneys: This blog post is provided on an “as is” and “as available” basis as of the date of publication. We disclaim any duty to update or correct any information contained in this blog post, including errors, even if we are notified about them. To the fullest extent permitted by law, we disclaim all representations or warranties of any kind, express or implied with respect to the information contained in this blog post, including, but not limited to, warranties of merchantability, fitness for a particular purpose, title, non-infringement, accuracy, completeness, and timeliness. We will not be liable for damages of any kind arising from or in connection with your use of or reliance on this blog post, including, but not limited to, direct, indirect, incidental, consequential, and punitive damages. You agree to use this blog post at your own risk. Regarding your particular circumstances, we recommend that you consult your own legal counsel (hopefully Groves Law).

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