Getty Images Agriculture hopes hemp legislation will finally go through

After years of trying to get laws changed, hemp advocates and would-be farmers are on the cusp of gaining new legal standing via the 2018 farm bill. The question now will be: How do they ramp up production of a formerly illegal crop to the point where they’re competitive on a world scale?

The Senate version of the farm bill passed on June 28, S. 3042 (115), includes a provision that would put hemp — marijuana’s non-psychoactive relative — on the same standing as any other commodity crop. With regulation handled by state agriculture departments, hemp researchers will be able to apply for USDA grants and hemp growers can be covered by crop insurance programs.


For decades, the federal government, led by the Drug Enforcement Administration, has ardently fought efforts to weaken drug laws. But as POLITICO Magazine recently reported, Senate Majority Leader Mitch McConnell and Rep. James Comer (R-Ky.) have been pushing hard to exclude hemp from the list of controlled substances.

The bipartisan amendment championed by McConnell and Comer is not included in the version of the farm bill passed by the House, H.R. 2 (115), but the language is widely expected to find its way into a bill that clears conference. Both legislators have gained seats on the conference committee, which may help their hemp act make it into the final language of the bill.

Much of the acceptance of industrial hemp boils down to economics. The U.S. hemp market pulled in $820 million in sales in 2017, according to Hemp Business Journal. Because selling American hemp is still largely restricted, parts of the market are highly reliant on products imported from China and Canada. With growth projected at almost $2 billion by 2022, optimism that American growers can take a chunk of this market share is abundant.

“You talk to some folks and they think this is the next miracle crop,” Zack Clark, government relations director for National Farmers Union, told POLITICO.

While Clark shares much of this optimism, he said he’s quick to advise farmers that the road for hemp after legalization will likely not be smooth.

“It's like any sort of new industry, it will certainly go in fits and starts,” he said. “I can't imagine that it takes off and stays going unchecked.”

Industry experts say the biggest hurdle standing in front of large-scale growth in the sector is the lack of manufacturing capacity.

Hemp can be used in everything from the production of fiber, to skin care products, to food. However, the only product that can currently be produced at a level that meets demand is cannabidiol — referred to as CBD — oil, a supplement that makes up the highest percentage of the current sales of hemp in the U.S. market.

Hemp fiber has been used widely in the U.S. historically. The product was temporarily taken off the controlled substance list to manufacture rope during World War II and the first American flag was made out of it.

According to National Hemp Association Chairman Geoff Whaling, there’s demand for millions of acres of hemp fiber for use in auto manufacturing and clothing, but a lack of infrastructure and investment leaves the industry nowhere close to meeting it.

"I had a major women's apparel company saying that it would like to find American-sourced hemp, but they’re looking for 25 million yards of fabric,” Whaling said. “No one spins, weaves that amount of fiber in the United States."

Annie Rouse, co-founder of third-party CBD retailer Anavii Market, said she’s seen 40 new fiber, grain and CBD processors rise up in Kentucky since farmers in the state started growing hemp under a pilot program authorized in the 2014 farm bill.

Despite this flurry of growth, Rouse, who studied the Canadian hemp market as a Fulbright Scholar in 2013, said that while she believes CBD will be so widespread in a decade that it could be featured in products like Coca-Cola, fiber and grain production will likely lag behind.

"With things like fiber, the markets need to develop a lot more, there needs to be much more investment into those operations because they're so capital intensive,” she said.

Another potential barrier to the hemp industry quickly sizing up is the drawn out process that often accompanies the creation of federal regulation.

Dale Moore, vice president of public affairs for the American Farm Bureau Federation, points to the Organic Foods Production Act as an example of how long it can take to finalize agriculture legislation. The act, which established uniform standards for producing and handling organic food, was enacted in the 1990 farm bill, but didn't become active law until 2001.

Hemp growers and processors believe having the backing of McConnell — along with Democratic senators like Ron Wyden of Oregon — will help iron out some of these regulatory headaches. They hope their fledgling industry can sustain growth similar to that of the U.S. organic market, which has ballooned to around $50 billion in annual sales over the last two decades.

“Growth will be double digits for years just by virtue of how small of a place that [hemp] holds in the marketplace,” Clark said. “We're excited about farmers getting a good price for something like this, and we're also excited about the economic activity it could generate in rural America.”

Both Clark and Whaling say the hemp industry is in a chicken and egg scenario: Growers are waiting for investment from processors and vice-versa. But now large corporations like John Deere and Scott’s Miracle-Gro are developing industrial hemp-specific products.

Hemp has a unique ability to grow in most climates, requires much less water than commodity crops like corn and soybeans, and can be cultivated with minimal use of herbicides and pesticides.

Since the 2014 farm bill created a pilot program, hemp legislation has been enacted by 39 states, with 19 of those growing the crop as of 2017. In the top three hemp-producing states — Colorado, Oregon and Kentucky — hundreds of growing licenses have been issued and more than 16,000 acres were grown last year, according to Vote Hemp, a nonprofit advocacy group.

"Hemp is what I see for the future of Kentucky. It's definitely going to replace tobacco, it already has,” Joseph Hickey, director of corporate relations for Atalo Holdings, a hemp product manufacturer, told POLITICO. “There hasn’t been a new crop introduced since soybeans back in the 1920s and 30s, and I don't see another crop that will ever be introduced into the lexicon of the farming industry.”

Hemp fetches a premium on the market at a time when the value of other commodity crops is plummeting. That has farmers from Maine to Hawaii hopeful about profitability.

According to Whaling, who helped Canadian Prime Minister Jean Chrétien legalize industrial hemp in 1998, 110,000 acres of hemp in Canada generates about 2,400 jobs and $2.5 billion.

"There's potential for $9, $10, $11,000 an acre,” Whaling said about American hemp production.

By contrast, the average value for farm real estate in 2017 was $3,080 per acre. The highest-value land in the Corn Belt topping out at $6,260 per acre.

The value of an acre of hemp land will inevitably drop as production expands, but this potential is why 26-year-old Tate Hall moved back home to Kentucky, from Washington, to help start a CBD-production company called Terra Farma. While the average age of American farmers continues to rise into the mid-50s, Hall says he’s part of a youth movement in the hemp landscape.

"You look at a company like ours, the oldest member is 31,” Hall told POLITICO.

Hall believes the hemp industry is in a unique position where a younger generation of growers and producers can work with traditional commodity crop farmers to turn American hemp into a powerhouse.

"I think we're very much poised to be the world leader in this and that export potential alone should be a no-brainer for why people get behind hemp,” he said.



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