Industrial Hemp Revival

While hemp has gained recent popularity among U.S. farmers, it is by no means new to the territory. Hemp has a rich history in North America dating back to the 1600s when the first European settlers arrived. Some may even argue that our nation was founded on hemp, or at least written on it, as the first drafts of the Declaration of Independence were written on hemp paper

Industrial-Hemp-Production-United-States.jpgThe crop has not been without controversy and complications, however. In 1937, the Marijuana Tax Act virtually prohibited hemp, requiring federal registration of hemp crops and purchase of an exceptionally expensive tax stamp. A few decades later, the 1970 Controlled Substances Act classified marijuana as a Schedule 1 Controlled Substance, making no exception or differentiation for industrial hemp. Thanks to a provision in the 2014 farm bill, state departments of agriculture and universities can now conduct industrial hemp research, and states like Kentucky have extended that research authorization to farmers through pilot programs that allow for cultivation and marketing of industrial hemp.

Despite muddy federal regulatory environment, Kentucky set to grow 12,000 acres of hemp in 2017

Undeterred by federal government restrictions and regulatory uncertainty, industrial hemp is booming in Kentucky. In 2017, the state tripled its hemp acreage over the previous year, with the Kentucky Department of Agriculture’s (KDA) approval of 209 farmers to grow 12,800 acres of industrial hemp.

Harrison County, Kentucky grain farmer Ben Furnish is one of those approved growers. He grew 40 acres of hemp, including 10 acres of a Canadian grain variety, CRS1, in 2016 with an estimated yield of 1600 pounds of clean, dry seed per acre, one of Kentucky’s highest reported hemp grain yields.

“Industrial hemp is still a Schedule 1 controlled substance,” Furnish explained, “so we can only operate by applying to the KDA each year, submitting a background check, and GPS coordinates for all our fields.” Furnish said apart from the paperwork, the greatest challenge to growing hemp is the lack of any approved herbicide. “Weeds are a big problem, and we cannot spray any pesticides on the hemp because no chemical companies have added hemp to the label of their products.”    

According to public presentations made by KDA, some grain farmers are contracting hemp grain at 65 cents a pound with a Kentucky-based processor. While some farmers like Furnish have seen promising yields, other grain growers experienced total crop failures.

Three hemp markets: grain, fiber and plant extracts

Grain is among three primary applications of industrial hemp to emerge over Kentucky’s four years of pilot programs – grain for crushing into seed oil and protein, hemp stalks for fiber applications, and the extraction of compounds from hemp roots, stalks or floral material.

KDA limits sales or movement of certain products like viable seed, plants, and loose leaf material to only approved processors in the state or to a licensed participant in another state’s industrial hemp program. Other materials like cannabinoid extracts and dehulled seed or seed oil can be sold to the general public, according to KDA. Cannabinoids are compounds extracted primarily from the hemp floral material.

One cannabinoid is the federal benchmark for determining if a cannabis plant is classified as marijuana or industrial hemp – delta-9 THC, the compound in cannabis that imparts a “high” if consumed. Under the 2014 farm bill, industrial hemp was defined as containing no more than 0.3 percent (that’s three tenths of one percent) THC on dry matter basis.

Over 60 percent of Kentucky’s 2,300 hemp acres in 2016 were grown for cannabinoid extraction. A particular cannabinoid believed to have therapeutic or nutraceutical applications, cannabidiol (CBD), accounted for $65 million of the overall $573 million U.S. industrial hemp market in 2015.  

Federal government complicates hemp production

But 2016 wasn’t all good news for the hemp industry. In August of 2016, a “Statement of Principles on Industrial Hemp” issued by three federal agencies, the Drug Enforcement Administration (DEA), the Food and Drug Administration (FDA), and the U.S. Department of Agriculture, attempted to narrow the definition of industrial hemp to be “exclusively for industrial purposes (fiber and seed).” 

KDA Commissioner Ryan Quarles responded to the agencies in a letter, “…I am concerned that some of the positions set forth in your agency’s Statement of Principles could hinder industrial hemp’s economic potential by imposing restrictions narrower than the parameters defined by Congress.”  

The non-binding statement did not carry the force of law, but it raised further questions about the legality of industrial hemp extract products and the ability to transport hemp seeds between pilot program participants in different states. In December of 2016, the DEA told the North Dakota Department of Agriculture that it could not allow a hemp food processor in its state, Healthy Oilseeds LLC, to move its food products containing industrial hemp seed oil and protein outside of North Dakota. A U.S. hemp industry trade group, the Hemp Industries Association has filed a lawsuit against DEA, arguing the agency is violating earlier court decisions on hemp products. 

As states weigh different approaches to hemp research, all eyes are on feds

State legislatures and departments of agriculture across the country have taken different approaches to hemp, some allowing only university research, others with pilot programs to license private farmers. More than 30 states have industrial hemp laws, a dozen of those states allow hemp to be grown and sold by licensed farmers and processors

In February, the agriculture committee of Nebraska’s state legislature held a hearing on a bill to legalize and regulate industrial hemp. Nebraska Senator and Agriculture Committee member Lydia Brasch cautioned in a weekly column that, “[a]lthough there seems to be increasing desire to grow industrial hemp as an alternative crop, there is concern that the Kentucky industrial hemp program, replicated by LB 617, allows commercial hemp production beyond what is allowed under the 2014 Farm Bill.”  

Currently, there’s a bill in Congress to relax federal restrictions on industrial hemp, the Industrial Hemp Farming Act. A similar bill had 100 cosponsors in 2016, including Kentucky’s U.S. Senate Majority Leader Mitch McConnell, but the measure did not advance. Even if new federal hemp legislation is not passed anytime soon, Congress will have to revisit industrial hemp during work on the next farm bill in 2018. It also remains unclear how President Trump and new U.S. Attorney Jeff Sessions will direct the DEA to treat state industrial hemp programs.

Despite industry restrictions and slight uncertainties moving forward, Kentucky farm leaders remain optimistic. KDA Commissioner Quarles holds that, “Hemp is a crop that bridges Kentucky’s past with Kentucky’s future.” Kentucky has historically been a leading state for hemp production and continues to be at the forefront of industrial hemp’s revival in American agriculture.

The views expressed in this article are the author's alone and not those of Farmer's Business Network, Inc., its affiliates or members.