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Millions on the table: The potential of industrial hemp in Kansas

Posted: 11:45 AM, Aug 01, 2018
Updated: 2018-12-12 17:44:57Z
 

Growing up in Kansas, it’s common to drive two-lane highways — slowing for the shoulder-hugging combines with the kind driver who tips his hat as you pass. The view is typically one of corn and wheat fields stretching over hills and horizons.

 
From corn to hemp: What fields could look like in Kansas.

Starting in 2019, the same drive might take you past fields of industrial hemp, and there’s a whole lot of potential money to be made. 

Kansas Gov. Jeff Colyer signed a bill earlier this year which enacted the Alternative Crop Research Act. It paves the way for Kansas to start giving farmers the opportunity to cultivate industrial hemp -- grow great big row crops of it or smaller bushes spread out over acreage.

There’s hope it will be a huge economic boost for the state and its farmers, some of whom have struggled to make traditional crops profitable. But, there’s a problem. 

The problem is something you may have pondered reading the first few lines of this story. Contrary to popular belief, industrial hemp is not marijuana. And that, my friends, is the biggest hurdle for this crop nationally and here in the Midwest. 

What is industrial hemp?

“All marijuana is hemp, but not all hemp is marijuana,” said long-time medicinal chemist Larry Norder. 

Some types of marijuana can have more than 30 percent THC. Industrial hemp has less than 0.3 percent.

The compound in marijuana which makes the user get high is called delta-9 tetrahydrocannabinol — more commonly known as THC. Some types of marijuana can have upwards of 30 percent THC. By comparison, industrial hemp must have less than 0.3 percent THC. Marijuana is legal in some states, but not in Kansas.

Most states are at least talking about industrial hemp. Industrial hemp is an agricultural commodity, much like corn or hay.

According to the Congressional Research Service , it’s cultivated for thousands of products like food, cosmetics, fabrics, papers and construction materials. While THC is practically non-existent in industrial hemp, the crop does still contain CBD. CBD stands for cannabidiol (pronounced can-uh-bih-dial). CBD is non-psychoactive, which means it won’t get the user high. 

The list of potential health benefits of CBD is long and growing:

  • Anxiety
  • Epilepsy
  • Acne
  • Cancer side effects
  • Depression
  • Pain
  • Chronic pain (non-addictive alternative to opioids)
Hemp imports for the U.S. reached $67.3 million last year.

More than 30 nations grow industrial hemp as an agricultural commodity. Hemp imports for the U.S. reached $67.3 million last year; the majority of imports were hemp seeds used mostly as ingredients in hemp-based products. The U.S. is importing almost all of it from Canada.

What's happening now in Kansas?

Currently, Kansas Secretary of Agriculture Jackie McClaskey is working with an advisory committee to draft rules and regulations. These will be the guidelines for issuing licenses, regulating the seeds and crops, and enforcement. They hope to have those done by the end of 2018.

If this stays on track, which is an ambitious track, Kansans could start seeing the state’s first industrial hemp crops growing along highways in spring 2019. 

Here is the current draft , which is subject to change. 

Some business owners and farmers are preparing now in hopes of being ready sooner than competitors.

Joe Bisogno is a local entrepreneur. He's the founder of Mr. Goodcents, owns several other businesses including Custom Foods in De Soto, and his latest venture is hemp.

“For me, I'm getting a big head start because we are a big manufacture of food products and we’re making hemp cookie dough and we're making hemp cookies as we speak,” Bisogno said.

 
A look inside a local hemp food processing plant.

Right now, Bisogno’s dough has hemp seed in it, which is already sold in local stores. There is no CBD in the current hemp seed he’s using, but that could soon change.

Kansas Gov. Jeff Colyer signed the legislation in April 2018, legalizing the cultivation of industrial hemp in the state with a license. Once the rules and regulations are approved, the state will be ready to start accepting applications for licenses. They are anticipating being ready for applications in mid-January 2019.

When asked for comment, the Kansas Department of Agriculture sent a statement to 41 Action News saying that it's still conducting research to see what is needed to make industrial hemp a commercial opportunity. 

"The opportunity to grow a new specialty oilseed crop in Kansas offers potential for diversification for Kansas farmers looking for an alternative crop, or for new farming enterprises interested in cultivating industrial hemp. The Kansas agriculture industry has developed a statewide strategic growth plan in recent years, and is committed to pursuing new and innovative opportunities to grow agriculture. The research generated by participants of this new industrial hemp program will be valuable data in identifying the growth potential offered in this sector. After we have seen some results from this research program, we will have a better idea of the potential economic impact of industrial hemp in Kansas. The research will also help in identifying what steps would be needed to make cultivation of industrial hemp a commercial opportunity, rather than a research program."

If we build it, will they come?

Most interested farmers are expected to grow either a tall row crop for fiber and seeds or a short bushy plant for the flowers and CBD.

Congressional research done to help legislators understand industrial hemp cites a major concern about whether or not farmers will have buyers. 

Brad Claus is CEO of Heisenberg Enterprises, a Colorado-based business already investing in industrial hemp in Kansas. He said demand is huge right now.

“The demand is so high. You’re looking at maybe 50,000 kilograms worth of product in the United States grown – enough product for that. Our demand is over 1.2 to 1.5 million kilograms of CBD a month, right now,” Claus said.

He said right now the buzzword is CBD, but he said the crop is so much more than that.

An industrial hemp crop can be grown twice in a year. 

It has a negative carbon footprint.

Currently, farmers can earn three to four times more per acre than with traditional crops. 

That’s according to current farmer Brent Boman, who's been growing organic tomatoes and lettuce for local grocers for a few years now.

Boman and his wife have been USDA certified organic farmers for five years. They are now preparing to cultivate industrial hemp for flowers and CBD.

"With our relationships that we've established with the CBD extraction labs and looking at the supply and demand ratios, we felt comfortable going out and securing several thousand acres of land to be able to produce for our clients in 2019," Boman said.

He said the most important step for a farmer to take if they're considering getting into the industrial hemp business is to make sure they're getting seed or transplants with less than trace amounts of THC. If a farmer spends money on the wrong kind of seed, and the crop develops with too much THC, the crop will be destroyed at a huge loss for the farmer.

Boman is looking to educate and partner with other farmers interested in industrial hemp.

Right now, even those looking for potential negatives to this crop are struggling to find one.

“One of the worst things you can have are no negatives because it’s not believable. Right?” Claus said before adding, “The biggest negative to the hemp industry is the lack of education around hemp.”

Potential downsides?

The hemp market in the U.S. is projected to hit $1.65 billion in 2021.

The hemp market in the U.S. is projected to hit $1.65 billion in 2021, six times what it is now according to the Marijuana Business Journal. Nearly every state is making changes, but there are concerns.

With so many states diving into the industrial hemp market, many of which are further along than Kansas, will there be too many hemp farmers?

Congressional research shows a few concerns about hemp:

  • The Drug Enforcement Administration has concerns about enforcing the THC levels. Levels have to be checked in seeds by testing a sample size, as well as in the plant itself once it’s grown.
  • China and Canada are already ahead in production. They could influence markets here.
  • And, again, will there be buyers?

Boman’s ready to farm industrial hemp as soon as he has his license from the state of Kansas. As a matter of fact, he’s already leased land to do so. However, he doubts prices next year will be as high as they are now. He’s planning his budget accordingly.

Claus is traveling to make deals now because he believes it’s only a matter of time before big pharmaceutical companies, major makeup companies, and big product players get into the business of industrial hemp. 

He said currently, big companies are anxiously waiting until the federal government makes it clear industrial hemp is officially no longer a banned substance. 

For years it’s been lumped in with marijuana. Claus said, for now, that’s keeping the big dogs at bay.

“It is federally legal in the farm bill, but the DEA’s bill is a little ambiguous,” Claus said.

That’s expected to officially change in the coming months, which is when Claus said he expects major companies to jump with both feet. 

“Wall Street, pharma, and tobacco are sitting on the sidelines but at the same time you have global commodity demand, but none of the major players that would’ve filled being able to fill it,” he said. 

Claus is trying to take advantage of this time. He’s investing in industrial hemp. As for why he’s doing business in Kansas, he said that’s simple.

“We wanted to go to the place in the world that had the best farmers in the world. The best resources for accommodating a commodity market and the best people we could work with,” he said.

The state expects to have rules and regulations finalized by Jan. 14, 2019, when the Kansas legislature reconvenes. It’s expected the first industrial hemp crops are in the ground in spring of 2019.

Missouri is also in the process of drafting rules and regulations for industrial hemp. Former  Gov. Eric Greitens quickly approved the legislation in the hours before he left office after resigning on June 1, 2018.

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