Since Colorado voters approved the sale of cannabis for recreational use in 2012, the industry has become a $1.5 billion behemoth, and the object of study by other states looking to boost jobs, tax revenue and even tourism. However, growing in the shadows of its gaudy, psychoactive sister, the industrial hemp industry is every bit as rooted in the state.
The U.S. Farm bill, passed by Congress in 2014, contained an amendment that allowed pilot programs and research to begin on industrial hemp. Many states, including Colorado, removed barriers to its production by distinguishing the plant as distinct from marijuana.
To date, there are 386 licensed growers in Colorado, with 12,042 outdoor acres, and 2.35 million square feet licensed for indoor cultivation. That’s encouraging to those invested in the crop, given hemp’s tumultuous history in the United States.
The Puritans grew hemp at Jamestown and the first two drafts of the Declaration of Independence were written on hemp paper. Settlers heading west in the 1800s traveled in Conestoga wagons and prairie schooners covered with hemp canvas, and by the 1930s Henry Ford had produced a prototype vehicle made and fueled by hemp compounds. However, by 1937, when the Marijuana Tax Act was enacted, hemp farming — viewed as a threat to timber and oil interests — was lumped with psychoactive cannabis and was curtailed until World War II, when farmers were encouraged to grow hemp for the war effort. Those permits were revoked after the war and by 1970, hemp was considered as illegal as cannabis.
Although industrial hemp and cannabis are related, hemp contains scant amounts of delta-9 tetrahydrocannabinol (THC), the mood-altering aspect of cannabis. Like all forms of Cannabis sativa L., it is classified as a Schedule I drug under the Controlled Substances Act. The Industrial Hemp Farming Bill, introduced in Congress in 2017, seeks to remove the plant from Schedule 1 classification. Currently, it is sitting in the House Subcommittee on Crime, Terrorism, Homeland Security and Investigations. The bill has 42 bipartisan sponsors.
AHEAD OF THE CURVE
Colorado leads the way when it comes to hemp. The state has “more acres in hemp, more farmers growing the crop, more processors extracting CBD from hemp and more market opportunities for selling the plant than any other state,” according to a Marijuana Business Daily story this month.
Last year, the state accounted for more than half of the nation’s hemp production. The success of the industry perhaps stems from the state’s “look the other way” stance on hemp seed acquisition. That flies in the face of federal direction to get approval from the U.S. Drug Enforcement Administration.
This “everything old is new again” cash crop is not all clear sailing, however. Though hemp can be used in myriad ways, from building materials to biofuel to rope, the money is in CBD oil, the compound in the plant that is used for a wide range of medicinal and nutritional purposes. CBD products are in hot demand, with consumers seeking the compound for everything from topical ointments, to pet medicine, to tinctures and other edible products meant for treating health issues like anxiety, inflammation and chronic pain. Currently, there is a bottleneck in that hemp supply exceeds the number of processors in business.
Scott Abrahams, founder and owner of Telluride Hydroponics and Organics, has expanded his business into Montezuma County where he created a new company, Kind Life Farm Institute. It’s a licensed hemp cultivation company that specializes in seed banking, breeding and tissue culture services.
“We’re trying to provide the picks and shovels the community would need to grow more,” Abrahams said. “There’s a low supply of seed. We want to create as much seed stock as possible.”
Even though the industry has established a strong foothold statewide, Abrahams said the option to grow hemp can be daunting for farmers.
“For the agricultural community, it’s like learning to walk again,” he says. “The ag community is naturally risk averse.”
WEST END REBOUND
In rural communities like Montrose County’s West End where the mining and power plant-driven economies have withered, hemp farming is taking early steps to help replace jobs and bolster the economy. With economic revitalization in mind, State Sen. Don Coram, R-Montrose, is betting on hemp and has established Paradox Ventures in the old Nucla schoolhouse where there will be processing machines for extracting medical-grade CBD oil from the plant. The company also plans to provide seedlings and to offer harvesting equipment, oil processing and fiber processing from the facility.
Paradox resident Mark Goldfogel is a longtime advocate for all things cannabis and hemp. He is the co-founder of the first seed-to-sale tracking system, MJ Freeway, and was instrumental in the establishment of winning conditional federal approval for Fourth Corner Credit Union to bank with businesses ancillary to the cannabis industry. He serves as Fourth Corner’s executive vice president.
When it comes to hemp, the possibilities of the many uses of the plant excite him, including fiber, fuel and food.
“We’re going to go crazy with hemp in the next decade,” he predicts. “Hemp makes sense.”
He said that having processing facilities near where hemp is farmed can maximize the return on a farmer’s investment, and noted that there is currently nothing in the region. So far.
Dove Creek is home to a shuttered mill that once processed sunflower seeds for biofuel. It’s been out of use since 2010, but presents a potentially golden opportunity if investors can be found to get the plant up and running once again.
“It was built as a sunflower seed biodiesel plant and was mothballed in 2010 when government subsidies stopped,” Goldfogel’s investor pitch reads in part. “The plant is unique in that it is already outfitted with most of the industrial equipment to process food, fiber and fuel. This equipment can be retrofitted for food.
“Also, the plant is uniquely outfitted with fiber processing equipment that would make it one of the first hemp fiber plants in the United States in 77 years,” the pitch adds. “This is one of the fastest-growing segments for hemp. Today most hemp fiber is destroyed instead of processed. The facility does not currently have the equipment to process flower, but that can be added and there is room for expansion.”
Hemp flower is required for CBD oil, a substance that is thought to be beneficial for numerous health concerns including anxiety, inflammation, and chronic pain.
NEED MORE PROCESSORS
Both Goldfogel and Abrahams agree that more end users will make hemp truly valuable, thereby encouraging more farmers to give it a go. Goldfogel mentioned RXCBD, a Ridgway-based company that specializes in CBD-infused products specifically for pets.
Abrahams cited Mary Jane’s Medicinals, based in Telluride, as an example of the kind of end user that the industry needs to create more demand for the plant and its many uses. “We need more Dahlia Mertens (Mary Jane’s Medicinals’ owner),” Abrahams said. “More processors are needed. We need more value-added resellers, otherwise we’ll create a back stock of material.”
Overall, Abrahams is optimistic. “There’s a very positive future for the plant in Colorado and globally. And, there are huge opportunities for the local region.”
BIG PHARMA WANTS CBD
GW Pharmaceuticals, a British pharmaceutical company, and its American subsidiary, Greenwich BioSciences, have been quietly lobbying for bills in a number of states that could create a monopoly on legal CBD products, including Colorado.
Lobbyists for GW Pharma are moving in anticipation of the FDA’s expected approval of Epidiolex, a CBD-based drug that has been developed by GW/Greenwich for the treatment of several rare childhood-onset epilepsy disorders.
There are a number of concerns should the current bill winding through the Colorado General Assembly (HB18-1187) gain favor with state lawmakers, according to Veronica Carpio, of the industrial hemp education and advocacy group, Grow Hemp Colorado. Colorado Capitol Watch’s description of the proposed measure is this: The bill makes it clear that if the U.S. Food and Drug Administration approves a prescription medicine that contains cannabidiol, thereafter, prescribing, dispensing, transporting, possessing, and using that prescription drug is legal in Colorado.
At a recent hemp stakeholder meeting hosted by GHC to discuss the bill, numerous issues were discussed. Among them were concerns about Colorado hemp industry’s investments being jeopardized by an out-of-country pharma company, and worries that the patents on CBD being sought by the company would threaten the industry as a whole in the future.
Other issues raised included unease with potentially classifying CBD as a drug, rather than a food.
“Our legislators love hemp in Colorado,” Carpio said. “Their intentions are good. But we need to know what this bill will mean and how will it affect us.”
Right now, GHC would like to see the bill killed, so that, in a year’s time, “We can see if we can come to terms and see how federal regulations will impact us,” Carpio said.
“It’s better to be conservative and protect our hemp industry in our state,” she added. “I don’t see anything wrong with a protectionist position.”
The bill was introduced in early February and has been assigned to the House Public Health Care and Human Services committee.