Hemp taking over Kentucky’s tobacco resources; 22 companies investing so far

Image result for farm, 27 acres of hemp grew all summer

By Janet Patton

jpatton1@herald-leader.com

October 25, 2015

WINCHESTER — Tucked away off a narrow country road in Clark County, in the middle of a farm, 27 acres of hemp grew all summer. Now, the plants will be harvested and processed.

Kentucky, hailed as a leader by industrial hemp advocates, has grown the hemp. Now the state is working on growing the industry.

“In two years, we’ve come a long way,” said Agriculture Commissioner James Comer, who is now running for Congress. “We’ve proven first of all that it’s not a drug, which was very important for the opposition to realize. And we’ve proven it’s economically viable, or there wouldn’t be 22 companies that have made an investment in the state. … What we’re doing now is working with the companies that want to go to the next step to commercialize the product. ”

The plants in Winchester are part of the 100 acres of hemp — high in cannabidiol and low in tetrahydrocannabinol (the high-inducing chemical in marijuana) — grown this year for GenCanna, which moved from Canada to Kentucky to be in the heart of the hemp revolution. It deliberately chose to come to Kentucky over other states, including Colorado, because of the agricultural resources and the climate, both meteorological and political.

“We have been in this industry for many years, and we are setting a new bar in Kentucky,” GenCanna CEO Matty Mangone- Miranda said. “Kentucky’s kept the focus on industrial hemp” rather than cloud the issue with other forms of cannabis cultivation, as Colorado has permitted.

Mangone-Miranda, who estimates that hemp could become a billion-dollar industry, said his group is in hemp for the long run.

“The industry is likely to have a bubble, then stabilize with a market of diversified products,” he said, citing potential uses in sports drinks, nutritional products, supplements and more.

GenCanna has invested more than $5 million in Kentucky, according to company officials, although it has yet to see any revenue. That will come once the company is able to deliver a stable source of low-THC/high-CBD hemp.

“The only way to have hemp become an agricultural commodity is to grow lots of it and see what happens,” said Steve Bean, GenCanna’s chief operating officer.

Coming to Kentucky had other benefits, too. Many farmers were eager to get into the crop, which decades ago proliferated in the Bluegrass; hundreds applied to be part of pilot projects to grow hemp. The crop still can legally be grown only in affiliation with the state Department of Agriculture and entities that sign detailed memos of understanding.

Kentucky also has resources that in the past were used for tobacco that have converted well to hemp cultivation.

In fact, GenCanna’s headquarters is now in part of a former Philip Morris office building stuffed with former labs. The place was practically abandoned as the cigarette maker began retreating from Central Kentucky.

And next door is a processing center in a former tobacco seed plant, where GenCanna built a system to turn the chopped-up hemp plants into a sort of dried powder to sell as a nutritional supplement.

The Shell Farm and Greenhouses in Lancaster is turning its fields away from tobacco, growing 157,000 hemp plants on 40 acres outdoors and 3,500 plants in a greenhouse.

“And we’ll be growing it indoors all winter,” Giles Shell said. Shell’s greenhouses once raised flowers; now he’s working on hemp genetics.

“There’s no seed crop, so we have to take cuttings to get the plants in the field. So I’m selecting genetics, for a hardier plant — bigger, fuller,” Shell said. “We’ve got a problem with variegation or chimera, so I trying to select away from it.”

Next year, Shell intends to grow even more hemp.

“We’re going to quit raising our tobacco crop, and if we do any flowers, it will be downsized,” Shell said. “Last year, we raised 120 acres of tobacco. This year, we dropped to 80. Next year, we will drop to none. There’s not a market any more for tobacco and not enough money once you factor in labor and chemical costs.”

Both the offices and the processing center are shared with Atalo Holdings, another hemp entrepreneur company, this one formed by Andy Graves and other Kentuckians working on crushing hemp seed for oil and other fiber production. Graves also grew the 27 acres of hemp for GenCanna.

Other groups, including the Stanley Brothers of Charlotte’s Web CBD oil fame, also are pursuing the hemp’s potential.

Kentucky could be on the cusp of a green revolution — a hemp boom that could go in myriad directions or spiral into a bubble of speculation.

“It could,” Comer acknowledged. But, assuming that sometime in the next two years, Congress makes it legal for anyone to grow hemp, he said Kentucky should be well-positioned, with a jump-start on the infrastructure.

“We get requests every day for companies that want to start processing hemp. I worry that some may not have the credibility of some of the others, and that’s why its taking longer to certify, to get more background info,” Comer said. “We’re not picking winners and losers, but those that have credibility. Our reputations are on the line here, too.”

GenCanna has more contracts with farmers than any other company at this point, Comer said. It’s the only one in the cannabidiol business with signed contracts with national chains to buy their hemp product, he said.

“GenCanna is the real deal,” he said. “And they’ve given me assurances everyone will be paid, and all the farmers are happy.”

The Shell family, which has a three-year contract with GenCanna, certainly is now.

“We were very leery — I was the most reserved in my family of starting to do this,” Giles Shell said. “But … I felt like we were the best route to help commercialize this crop. Demand is really high, and supply isn’t there. Basic economics will tell you that’s profit.

“We’ve got a year ahead of everybody else that’s going to get into the game.”

Janet Patton: (859) 231-3264. Twitter; @janetpattonhl.

Read more here: http://www.kentucky.com/2015/10/25/4104501/hemp-taking-over-kentuckys-tobacco.html#storylink=cpy

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