Industrial hemp (IH) could be a big winner if the House and Senate are able to resolve their differences and pass a farm bill before - or soon after - the 2014 version expires Sept. 30.
That’s because the conference committee includes a couple of key advocates, including one very powerful one: Senate Majority Leader Mitch McConnell, R-Ky.
Kentucky-based attorney David Cameron, McConnell’s former legal counsel who now represents the non-profit U.S. Hemp Roundtable trade group, is confident that McConnell will succeed in having full IH legalization included in the new farm bill. Cameron warns that delays caused by the House’s proposed new work requirements for SNAP (food stamps) may require “a brief extension" of the 2014 farm bill. But he expects conferees to agree on the new farm bill, with IH legalization included, because “there is overwhelming, bipartisan support among conferees to get this done in the late fall push before the November midterms.”
McConnell made sure that the Senate version of the farm bill includes his bipartisan full legalization for IH (S. 2667) legislation, co-sponsored by a bipartisan coalition of more than two-dozen Senators, including Senate Minority Leader Chuck Schumer, D-N.Y. And even though the House version does not include any IH language, the conference committee gained a key House advocate with the appointment of first-term Kentucky Republican James Comer, a former ag secretary in the state who helped launch its hemp program.
If IH legislation makes it into the farm bill, expect a surge in hemp industry plantings and infrastructure investment. Legalization would open the federal floodgates for providing a full range of financial, market development and advisory services including federal crop insurance, research, and small-business loans.
These key federal services, along with support from the banking and private-sector equity industries, have been blocked because industrial hemp has been listed as a controlled substance for decades, as though it posed the same risks as opium or heroin.
Speaking on the Senate floor, McConnell said, “Consumers across America buy hundreds of millions in retail products every year that contain hemp. But due to outdated federal regulations that do not sufficiently distinguish this industrial crop from its illicit cousin marijuana, American farmers have been mostly unable to meet that multimillion-dollar revenue for themselves. It has left consumers with little choice but to buy imported hemp products from foreign-produced hemp.”
Some law enforcement interests and their supporters in Congress continue to charge that non-psychoactive IH is “indistinguishable” from its botanical cousin marijuana, which has high levels of THC (tetrahydrocannabinol) while IH has 0.3 percent or less THC. But veteran IH advocate Michael Bowman tells Agri-Pulse that “if your goal is to eliminate marijuana, you should plant industrial hemp everywhere.” That’s because cross-pollination from an IH field can ruin the potency of marijuana grown even miles away – an effect that helps explain the marijuana industry’s hostility toward IH.
Bowman is chair of the Hemp for Victory Campaign, a board member of the North American Industrial Hemp Council (NAIHC), and founding board chair of the National Hemp Association. He's confident that if the House and Senate conferees agree on a final 2018 farm bill that resolves their sharp differences over Supplemental Nutrition Assistance Program (SNAP) work requirements, the final bill will include full IH legalization.
Bowman notes that Sen. Chuck Grassley, R-Iowa, failed in his attempt to water down legalization by placing restrictions on the medicinal CBD oil (cannabidiol) extracted from IH. Pointing out that “right now, CBD is the most economically viable opportunity for developing industrial hemp,” Bowman expects that soaring CBD sales will help finance the development of other IH products ranging from animal feed to car parts.
In a possible measure of how much support could come from CBD sales, research analysts at Brightfield Group forecast that the CBD market will grow from an estimated $467 million for 2017 ($291 million from hemp CBD and $176 million from marijuana CBD) to $1 billion within five years.
Bowman notes that his home state of Colorado has led efforts to legalize IH, with triple the acreage of Kentucky, the number-two contender. He says Colorado’s lead is thanks to years of educating state and federal officials about IH and gaining strong support from Colorado’s legislature, Colorado’s Department of Agriculture and Colorado State University.
Other states have been following Colorado’s lead, which makes Bowman optimistic about the prospects of legalization through the farm bill. “We’ve got 39 states now that are legal, and so clearly the pressure from the states was going to cause Congress to have to do something” beyond the state-administered but still restrictive IH research programs authorized by the 2014 Farm Bill, Bowman says.
Vote Hemp analysis shows that despite continuing restrictions, the 19 leading states planted 25,712 acres of hemp in 2017, with 1,456 state hemp licenses issued to growers. The acreage number is up considerably from 2016 plantings on 9,770 acres.
Although CBD has been the profit generator so far, Bowman says that with full legalization, “it’s going to be bio-composites and building materials, and substitute protein feed for animals, and high omega oils, just a sundry of products from industrial hemp.”
While betting that Colorado will maintain its IH lead, Bowman says other states “doing really well now” include Kentucky, Minnesota, North Dakota, North Carolina, Washington, Oregon, and Wisconsin, which has “a really friendly registration program for its farmers.” He cautions that growth in Oregon and California is constrained by “the tension between the hemp and the marijuana growers over distance and set-backs.”
Bowman sees very positive signs from his recent meetings with international investors. He says these investors aim to tap U.S. ingenuity “to break the stalk down into four or five value components from the hurd and the fiber, for non-CBD-related opportunities.” One group, he says, wants “to put their first plant in Texas, but of course Texas is not legal yet. So it’s probably going to be Colorado or North Carolina first off for them.”
Pointing to the current tariff wars, which threaten exports of a broad range of agricultural commodities, Bowman concludes that “having a more diverse agriculture is in everybody’s interest.”
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NAIHC Board Member Andy Kerr, a long-time forest conservation advocate, also expects full IH legalization to be part of the final 2018 farm bill. He tells Agri-Pulse that the even better news is that “we know that many major Fortune 500 companies have already done their research on using industrial hemp fiber as a raw material to make paper and construction materials, plastics, car parts, but it hasn’t been legal, so they haven’t done it.”
“The removal of the legal barriers will allow entrepreneurial spirit and technological innovation to proceed,” Kerr says, in order to “develop a market in industrial hemp fiber as we have long suspected there could be.”
But those who have grown other "promising" crops understand that the demand has to be somewhat inline with supply, otherwise growers will be dealing with a hemp surplus. And sometimes there can be a steep learning curve about growing the crop, as reported by the North Dakota Department of Agriculture during the 2017 growing season.
NAIHC vice chair Gale Glenn tells Agri-Pulse that “until hemp is federally legalized, the banks and financial institutions will not touch any hemp initiative.” She forecasts that “If the farm bill passes with industrial hemp removed from Schedule I and hemp blessed by Congress, I believe the composite, construction, food, medicinal, and other R&D will blossom.”
Schedule I is for controlled substances that “have no currently accepted medical use in the United States, a lack of accepted safety for use under medical supervision, and a high potential for abuse,” according to DEA. Other substances on the schedule include LSD, heroin and peyote.
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