Legal hemp has returned to Kentucky.
Will the Feds step aside and let the industry flourish?
Posted September 2nd, 2017 by Reason Foundation
In a former tobacco warehouse in Kentucky's horse country, a silver-haired seventh-generation hemp farmer sits with his business partners. As Andrew Graves, the chairman of Atalo Holdings, leads a discussion of seed varietals and soil consistencies, the group snacks on hemp nuts, grabbed in handfuls from a sack. In the warren of rooms just behind them, oils drip from stills as lab techs figure out formulas for supplements and vapors.
No one in the room is younger than 50. No one talks about marijuana, and honestly, they'd rather you not bring it up either.
Kentucky's new face of hemp looks remarkably like the old one. A really old one. For much of its history, the Bluegrass State grew hemp, otherwise known as Cannabis sativa—the same root that produces marijuana, though hemp doesn't share its psychoactive properties. (Marijuana's active ingredient is THC, which can get you high. Hemp's is cannabidiol, or CBD, which can't. The plant does contain a trace amount of THC, but not enough to get anyone stoned.) Kentucky grew more hemp than any other state; by 1850, it was producing more than 40,000 tons. Kentuckians spun the fibrous stalks into rope, clothing, shoes, and American flags. Hemp seeds became a food, and hemp oil became a base for medicines and salves. In 1938, Popular Mechanics touted hemp as a "billion dollar crop" and estimated it could produce more than 25,000 products.
A decade later, nearly all the hemp was gone. The Marihuana Tax Act of 1937 required farmers to buy an expensive "stamp" for the right to grow cannabis, whether or not it was the kind that can make you high. Most Kentucky farmers couldn't afford it and turned to tobacco; nationwide, farmers turned to corn, soybeans, and other commodity crops. (Popular Mechanics might have had an early deadline, or else they didn't get the memo about the tax.) A brief reprieve came in World War II, when the government lifted the tax because the Navy needed rope and sails for its ships. One government film, Hemp for Victory, declared it American farmers' patriotic duty to grow hemp. The U.S. Department of Agriculture even gave the seed to the prospective farmers, which it forced Graves' grandfather to sell to them at way below its value.
When the war ended, the stamp came back. By then DuPont was making synthetic fibers like Nylon for less than the labor costs to process and dry hemp, and the market went bust. In 1970, President Richard Nixon designated both hemp and marijuana Schedule I drugs, the government's category for the most dangerous controlled substances. There they remain today. Hemp, a plant as likely to produce a high as a cup of radishes, is as dangerous as heroin, according to the feds.
The Graves family hemp fields became tobacco farms. But Graves, who grew up hearing hemp stories from his father and grandfather, never lost hope that he would one day grow his own. He knew that there was a market for hemp products: Foreign-grown hemp was being used to produce door panels for BMWs, high-end clothing and housewares for Giorgio Armani and Ralph Lauren, and insulation for homebuilding. With a coalition of Kentuckians that included Tea Partiers, university researchers, Louisville businessmen, Lexington tobacco farmers, and Sierra Club activists, he pushed in Frankfurt and Washington for a law legalizing hemp.
Three years ago, they got it—sort of. The 2014 farm bill authorized state agriculture departments to create and commercialize industrial hemp research programs in partnerships with universities. The amendment allowing the hemp program was sponsored in the House by Republican Rep. Thomas Massie, a Kentucky cattle farmer, and two Democrats, Jared Polis of Colorado and Earl Blumenauer of Oregon. (Both Colorado and Oregon legalized hemp along with marijuana.) Massie had been skeptical the amendment would survive; the fact that it did, he says, meant that the libertarian-leaning Kentuckian had to hold his nose and vote for the full farm bill.
In the other house of Congress, Kentucky's two Republican senators—Rand Paul and Majority Leader Mitch McConnell—championed the amendment and protected it from add-ons that drug warriors tried to insert, such as a ban on commercializing the crop or a requirement that hemp growers install 24-hour surveillance cameras.
Once the new farm bill authorized hemp, James Comer didn't waste any time. The longtime Kentucky state representative had been elected agricultural commissioner in 2011 on a platform of legalizing hemp. Like Massie, Comer raises beef cattle; he didn't know much about hemp at the time, except that some farmers thought there might be a market for it. With the new law in place, he set up a program to register growers under a partnership with University of Kentucky and Murray State and to get hemp in the ground.
This year more than 200 Kentucky farmers will grow close to 13,000 acres of industrial hemp—more than all other states combined. Kentucky has about 40 processors, and the agriculture department has approved 525,000 square feet of greenhouse space for extraction and cultivation. Hemp, illegal just four years ago, is now a multimillion-dollar business that employs hundreds of people.
In 2016, Kentucky's First District elected Comer to Congress by a wide margin. Comer and Massie, along with Polis and Rep. Bob Goodlatte (R–Va.), sponsored a bill in July that would remove hemp from the drug schedule, making it more like corn or soybeans. (Hemp enthusiasts say it's not a perfect bill, but they're willing to work with it.) The proposed law has failed twice before, but Massie is optimistic. The farm bill amendment, he jokes, was "gateway legislation." Now Congress may be willing to pass something more sweeping.
Hemp—a plant as likely to produce a high as a cup of radishes—is as dangerous as heroin, according to the feds. In 1970, Richard Nixon designated it as a Schedule I drug.
"It's a narrow path of opportunity that we have given farmers," Massie says. "They are creative, they are entrepreneurial, and they have found ways to maximize this amendment for the good of society. And it makes me wonder, how much more could they do if we widen the path? We have every advantage, and the only thing that's holding us back is the federal legislation."
The Kentucky Hemp Experiment
Kentucky's fields may have once grown hemp, and its politicians may have been eager for the crop to take hold. But the state was still starting from scratch. No seeds remained from the days before World War II; no agronomists in the state had been working on the plant. Fortunately, several were ready to dive in.
Hemp's chief uses fall into four categories: fiber, fuel, food, and medicine.
For fiber production, the plant's stalks rot in the field, a process called "retting." They break down and become separated into bast fibers and woody hurds, also known as pulp. The hurd can be used to make building materials, absorbents for wastewater plant spills, cement, and animal bedding.
Fuel production centers around hemp oil, which can become biodiesel to run tractors and automobiles (though this use seems less promising than hemp's many other ones, in part because of the energy needed to extract the fuel). For food, the hemp seeds are crushed to make meal for birds, livestock, or human beings. They can be shelled into a trail mix snack, or pressed into oils for cooking or salad dressings. (The seed oils are also used for soaps and balms.)
The medicinal uses involve CBD: Researchers are looking into its capacity to treat inflammation, nausea, and anxiety; particularly promising is its proven ability to reduce seizures in epileptics.
Kentucky's hemp entrepreneurs are exploring all four paths. Graves' Atalo (Greek for "new beginning" ) is a co-op of farmers growing hemp for CBD oil, which the company processes and markets nationwide. In Louisville, Trey Riddle, the founder of Sunstrand, processes hemp fiber that will become raw material for sporting goods, building material for the construction industry, and plastic moldings for coffee cups, while the wood core will become animal bedding and absorbents for wastewater spills. Sharing his 25,000-square-foot space is Chad Rosen of Victory Hemp Foods, whose protein powder and oils are now in Whole Foods stores across the state. On the smaller scale is Katie Moyer of rural Christian County, who is making salve and lip balm from hemp in a small kitchen with her mother and husband.
There is no ConAgra, no Archer-Daniels-Midland. Massie thinks those companies may come looking to buy out what's already there. But they're risk-averse. They're willing to let the current crop of entrepreneurs make the mistakes.
Rosen agrees. "Hemp lends itself really well to a cottage industry," he says. "It serves so many different agendas."
A Drug War in the Way
Decades of foolish drug-war policies have put hemp advocates in a strange position: They need more regulation to be less regulated. One over-arching federal law that removed hemp from the dangerous drug list and made it legal everywhere would, as Comer says, keep the feds off the farm.
Creative CommonsCreative CommonsOn June 30, five senators, including Rand Paul, sent a letter to Attorney General Jeff Sessions asking him to clarify the federal government's position on industrial hemp. Farmers were having difficulty getting bank loans, because those are backed by a federal government that currently regards hemp as a dangerous drug. Paul's staff declined to comment; at press time, Sessions had not responded.
Since the farm bill amendment passed, 15 states have established research programs allowing farmers to grow hemp legally. A new nonprofit group, Vote Hemp, is encouraging more of them to do so. But even in those 15 states, hemp growers still face serious artificial barriers.
Consider the case of Kim Phillips. The state of Montana authorized her to grow hemp, but then the federal Bureau of Reclamation denied her request for irrigation. More precisely, she was allowed to spend her own money to grow a crop and then helplessly watch it die.
Farmers can't get crop insurance for hemp, thanks to the plant's ambiguous status. Bankers won't lend hemp farmers money, prompting the senators' letter. In North Dakota, Drug Enforcement Administration (DEA) agents told state officials that farmers who grew hemp could not ship it out of state. In Virginia, a hemp farmer had to tell his Mennonite family that they would all need to be fingerprinted—a tall order for a group of people who prefer minimal contact with government. Even in hemp-friendly Kentucky, this year officials confiscated some growers' seed because its THC levels were higher than the .003 percent the current law allows. (Comer is looking at what limits may be possible in his new legislation; he'd like to keep the permitted THC levels low, but even in the confiscated seed, there wasn't enough THC to produce a high. It can be difficult to keep seed varieties at precise levels, however, especially for CBD crops.)
Meanwhile, the Food and Drug Administration will not bestow upon hemp food products the coveted "generally regarded as safe" designation. Such approval would broaden the customer base for hemp protein powder, seeds, and oils and make them legal to produce everywhere. In states where it's not legal to grow hemp, importing it to make products is also somewhat tricky. The hemp hearts I buy originate in Canada and travel to California for distribution before I pick them up at a Trader Joe's in Maryland. When I met Rosen in Louisville, by contrast, he handed me a bottle of nutty-flavored oil made from hemp grown a few hours away and processed five miles from where we stood. Such a thing would not be possible in my home state. In Maryland, that hemp is not legal to grow; it's unclear if it could be imported, and in what form; and no one is licensed to manufacture products from it in the state under current law.
"It's not being treated like any other crop," says Eric Steenstra, Vote Hemp's president. "It's being treated like some sort of scary controlled substance. Ultimately, the industry is not going to take off until we remove the chains that have kept it in this box."
Comer learned that the hard way when DEA agents seized the state's first batch of hemp seeds en route to Louisville researchers from Canada. Time was of the essence: They needed to plant for growing season. The agriculture commissioner felt he had no choice but to take the DEA to court.
"In my 17 years of public service, that was the biggest government overreach that I've been witness to," Comer says. A judge agreed, and the seeds were released. Paul and McConnell worked on legislation forbidding the DEA to use any of its money to enforce prohibitions on hemp; it became law in December 2014, part of a budget bill.
That did not make the agency soften its stance. Last year, the DEA attempted to classify CBD oil and marijuana extract as controlled substances, though it later hair-split that, saying legality would depend on which part of the plant the oil came from. The Hemp Industries Association, which represents growers and processors, has filed suit over that and several other hemp-related issues.
In 2013, Colorado hemp farmer Michael Bowman got a hemp flag flown over the U.S. Capitol on the Fourth of July to celebrate hope for the hemp amendment. Then–DEA chief Michele Leonhart declared it the "worst day of my 33-year career." She stepped down from the job two years later, after some DEA agents in Colombia were accused of joining cartel-financed sex parties.
Comer came to Congress in January hopeful about hemp. A businessman president pledging to rescind regulations would understand impediments to a beneficial industry, he reasoned. And surely the old drug warriors could be brought around—they had convinced Mitch McConnell, after all. It had only taken Comer five months to get seed in the ground after the 2014 farm bill became law; the energetic newcomer figured he'd have a bipartisan hemp bill passed by spring.
But Washington isn't Frankfort. "It seems like 99 percent of what we do here is a party-line vote," Comer says. "It's a good thing we don't have to vote to adjourn."
Comer has talked to new Agriculture Secretary Sonny Perdue, who has come around on the issue. He plans to reach out to Sessions, who wants to recriminalize even small amounts of marijuana but has not made any public statements on industrial hemp. (The Department of Justice declined to answer my hemp questions.) Graves and his fellow Kentucky farmers aren't worried about Sessions; Steenstra is, saying the new attorney general is "definitely not going to be our friend."
Massie thinks Sessions may be less of an obstacle as attorney general than he would have been if he'd stayed in the Senate. "It's the House and Senate's job to make the laws, not the attorney general," he says. "I do not anticipate Sessions being adversarial toward an agricultural crop that's going to help the red states."
As for Trump, Comer recently spent a couple of hours with the president on Air Force One and Marine One. He wanted to bring up hemp, but decided to wait.
"This is going to come as a surprise to you, but he did most of the talking," Comer says. "I didn't want to do anything to spook him on the first date."
Hemp Beyond the Hype
Hemp enthusiasts sometimes oversell the plant's benefits, claiming that it will stop climate change or cure cancer. But it is a genuinely useful plant, and its return to its old Kentucky home has unquestionably been good for the state. Graves, who never felt good about growing tobacco, reports that he feels great about the Kentucky hemp experiment. Now, he says, it's time to let everyone in.
"For me, I have it in my craw to not only raise that seed again, but to put it in the hands of the growers for the good of all the citizens, and not for some war, and for some government that wanted us to understand they were in total control," he says. "It feels good, for once in my life, that we are growing something on our own land that helps people to feel better."
Photo Credit: Creative Commons
Rona Kobell is the author of "Hope for Hemp: A Misunderstood Plant Prepares for its Comeback," a report published this year by the Abell Foundation.