Farmers have a lot of questions about hemp, so we asked expert Michael Bowman, founding chair of the National Hemp Association, to answer a few. Bowman will share his tips on the rapidly expanding hemp industry at the Land Investment Expo on Friday, January 25, 2019, at the Iowa Events Center in Des Moines, Iowa. Tickets are still available.
SF: What is the history of hemp?
MB: Hemp was poised to be a billion-dollar crop in the 1930s with Henry Ford a big supporter, but the Marijuana Tax Act of 1937 killed the growth of the industry. We had a brief respite during WWII with the Hemp for Victory campaign, in which we grew hundreds of thousands of acres in six Midwestern states, but the tax was reenacted after the war. Then in 1970, President Nixon included hemp in Schedule I of the Controlled Substances Act as his middle finger to the anti-war people.
SF: What is the status today?
MB: In 2013, on the heels of Colorado being the first state to legalize industrial hemp, I wrote the language for Section 7606 of the 2014 Farm Bill, a provision that grants U.S. farmers the right to cultivate hemp in states where production is legal. Since that time, we’ve grown the industry from basically zero to 75,000 acres of hemp permitted in 2018.
SF: What can we expect in 2019?
MB: Production in 2019 will be limited by seed supply, but we could see 100,000 to 200,000 acres. The 2018 Farm Bill is the dawn of a new era, but we need infrastructure, education, and genetics. We have a lot of work ahead of us, but there is a very exciting future for those who want to be a part of that community.
SF: Which states have the most potential for hemp growth?
MB: Colorado has been the #1 state in production out of the gate, but long-term it will probably be more of a research state. Kentucky grows a lot of CBD [cannabidiol] plants for oil extraction. Montana came out of the gate last year with 22,000 acres permitted. Minnesota is gearing up for some pretty significant expansion in 2019. North Carolina is on the radar screen. Iowa will catch up in two or three years, once it solves permitting and legislative challenges. New York could end up being a big state. On January 14, Canopy Growth, a publicly-traded company out of Canada, announced a $150 million investment in a processing facility in New York. They must see opportunity for a lot of acreage in that state.
SF: Where do farmers get seed?
MB: Canada and Europe. The challenge is the .3 THC limit. There is a lot of seed available outside of the U.S., but we don’t know how acclimated it is to latitudes and longitudes here and how that correlates to THC limits at harvest. If farmers bring in seed and the crop busts the .3 limit at harvest, it becomes marijuana under the law and must be destroyed. That will keep a brake on some robust expansion until we get a good feel for how those genetics are going to express themselves in different environments. It will take another year.
SF: What is the difference between CBD and traditional hemp?
MB: CBD is an extract from the female plant that is a popular dietary supplement. The oil has an omega profile almost identical to fish oil. You grow those female plants much like you would a marijuana plant, with the difference being the amount of THC [active ingredient of cannabis]. It’s like O’Doul’s and Guinness. The CBD plant is nearly void in THC.
There is a lot of energy being put into the CBD space right now, both money and human capital. It reminds me of the internet craze in the late 1990s when money was flowing to ventures that may or may not be successful. The profit margins in the CBD world have been significant and may remain robust for several years. Like any other thing we raise in the U.S., it will be a commodity at some point. I think we’ve only touched the tip of the iceberg on demand. Those of us who have used CBD oil or have family members who have used it have seen some pretty amazing health responses. We are going to have a significant market demand that can’t be met yet by domestic production.
The second lane in the industrial hemp world, the traditional side, will be the mainstream agricultural side. Industrial hemp is going to be grown for food, feed, fuel, building materials, and more.
SF: How are these plants grown?
MB: Much differently. On the CBD side, you have 1,000 to 1,600 plants per acre, planted and tended to as separate plants. Traditional hemp, grown for mass market products such as textiles and bioplastics, has a planting rate of 400,000 per acre (roughly 100 plants/square meter), and is drilled in like wheat. It grows tall and you harvest the tops for seed production and then use the stalk for a number of industrial purposes.
SF: How can a farmer get into the hemp business?
MB: First, you have to be in a state where it is legal. There are nine states that have not legalized it yet, including Iowa. Once the USDA comes up with federal standards through the 2018 Farm Bill, each state will submit a plan for approval. States like Colorado and Kentucky, which already have systems in place, will just keep going. Section 7606 as written and implemented in the last farm bill remains the law of the land while we are enacting provisions of the 2018 bill.
Because of the federal government furlough, there hasn’t been any activity on this since the signing of the bill. This could drag on for months.
Farmers in states that have legalized it and have a permit system in place are in a pretty good position in 2019. The old rules will allow the industry to grow rapidly.
SF: Where can farmers get production information?
MB: Education is our big challenge. We have national organizations targeting advocacy and policy, but we have work to do on the educational side. We are reaching out to the national corn and soybean associations, because if we are going to have significant acreage it’s going to come from those camps.
SF: Are you working with the Cooperative Extension service?
MB: Colorado State University has been an incredible partner. They embraced hemp early and had the first certified seed program. That hasn’t been replicated much nationwide, because universities have concerns over possible violation of the federal Drug-Free Workplace Act. We had this gray area where we were allowed to operate legally under the Farm Bill even though we were a Schedule I drug. Kentucky State University and the University of Minnesota are starting to engage.
SF: Where do you see this industry in five years?
MB: I hope we will see acreage reach that million range. If we are going to do textiles and bioplastics, we need that scale. I think hemp protein will become an aggressive competitor to soybean protein. It’s being used in animal agriculture around the world. Colorado State University is doing studies on beef and chickens.
Farmers are looking for ways to diversify and create new markets. Hemp produces high-quality oil and protein products, plus we get the bonus of textiles. We produce fiber, oil, and protein. There is a growing consumer market, even a preferential market, for hemp-derived products. If we make the necessary investments in infrastructure to grow these acres, I am convinced the market demand is there for a hemp-based suite of products.
SF: Where is the market today?
MB: I don’t want hemp to be a Jerusalem artichoke. Some activists have created an irrational exuberance about where we are at today. We are at the starting gate. Now the hard work of infrastructure, market development, and branding begins.
I’m really optimistic about the future, but we are still at square one. We will build these domestic and international export opportunities for hemp, but we have a lot of work ahead of us.
SF: What is the low-hanging fruit?
MB: Hemp oil. Hemp cake as a protein. There is a significant opportunity in the baler twine industry. That is an industry served almost exclusively by plastic twine. We can displace something that is oil-based with something that is degradable and grown in your backyard.
The fascinating portion of this is the bioplastics world. We need significant supply to draw in the GE Plastics, Boeing, DuPont, and any of those larger entities.
SF: Besides supply, what is holding up the industry?
MB: We must get insurance and banking in place. The banking community is still not really sure about this. We are not going to get out of the gate without having those problems solved. The farm bill instructs risk-management agencies to get an insurance product in place. So, the insurance piece needs to be solved and we need to make the banking world comfortable.
About Michael Bowman
Bowman is the author of Section 7606 of the 2014 Farm Bill, a provision that grants U.S. farmers the right to cultivate hemp in states where hemp production is legal. He has been instrumental in shaping the state of Colorado’s hemp policy as chair of Colorado’s New Energy Future. He has served as a board member of the Rocky Mountain Hemp Association, Colorado Industrial Hemp Commission, the American Renewable Energy Institute, and the Sustainable Biodiesel Alliance. About 400 acres of hemp are cultivated on the Bowman Family Farm in Wray, Colorado. It is the only U.S. farm in 2018 to plant a field commemorating the 80th anniversary of the enactment of the Marijuana Tax Act of 1937.
Source: Betsy Freese, Successful Farming
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