KENTUCKY — Kentucky Hemp is coming back. Fiber, seed, fuel, oil, and artisan products are simmering in the recently revived hemp industry.
Research and debate about bringing hemp back has circulated since the 1990s, when other countries like Canada and Australia re-legalized hemp production. Finally, last year, the 2014 Farm Bill provided a framework for U.S. state agricultural departments and universities to plant hemp seed on U.S. soil as long as individual state law allows it.
Now, Kentuckians are turning their research and theories into a promising hemp industry.
Building a New Industry
“We don’t want to put the cart before the horse,” said Josh Hendrix of the newly formed Kentucky Hemp Industries Association (KYHIA). “We haven’t had a hemp industry for over 70 years.”
He says research is necessary to reduce risk to farmers. His organization and others, who have participated in hemp trials, are testing for the best seeds to plant, and the best way to harvest and process hemp crops. Part of KYHIA’s mission is to disseminate its research and provide education about the hemp industry.
Hemp production was deterred in the 1937 Marijuana Tax Act. Then, in 1970, the Controlled Substance Act coupled hemp with the drug, marijuana, making hemp illegal as a narcotic. Hemp does not hold the drug’s THC properties, but the plant is from the same genus, cannabis, and looks similar.
Learn more about THC.
Before 1937, 98% of hemp seed used in the U.S. came from Kentucky. Now, they have no seeds. Hemp trials have used seeds imported from other countries.
“2014 was a celebratory year, just to get seed in the ground,” said Hendrix. “2015 has seen a nice expansion, with 326 applications.”
Kentucky farmers can submit applications to the Kentucky Department of Agriculture to participate in the hemp revival. They must provide production plans to be approved, and pass a background check to appease the Drug Enforcement Agency (DEA).
Kentucky U.S. Senators Mitch McConnell and Rand Paul, along with two Oregon senators, submitted a bill on January 8, 2015, to decouple hemp from marijuana, and remove hemp production from DEA enforcement.
“We don’t know if or when it might become a legal crop,” said David Williams, of the University of Kentucky. “We also do not know how large an industry the market will support. We extrapolate based on data from other markets, but we cannot know exactly what the market will be in the U.S.”
A Promising Market
Kentuckians have deep roots with the hemp plant, and have grand plans for bringing the industry back. Industries, like tobacco and coal, are facing hard times, and hemp may offer both profitable alternatives.
Hemp advocates, like Hendrix, also see hemp as a crop to sustain dwindling family farms, and increase young and new farmers. Artisans can use hemp for cloth, beauty products, teas, and countless other items. The organic market for hemp is also highly profitable and growing.
Seventh generation family farmer, Andy Graves, grows conventional grains like soy, wheat, and corn. His generation is the first in his family to not grow hemp. The Graves family was the top hemp seed producer when hemp was legal, and is set on renewing that legacy.
“The market is so big,” Graves said. “We haven’t even scratched the surface.”
Graves is also the CEO of Atalo Holdings, Inc. The group contracted 5 farms to grow hemp in 2014 and for 2015 they’ve expanded to 26 farms. Atalo has three subsidiaries: Hemp Oil Kentucky, Kenex, and Kentucky Hemp Research and Development — each focuses on seed, fiber, and research and development, respectively.
Oil from seed, Graves said, has a quick return. Once Atalo has a revenue stream from oil, it will invest in fiber operations. Fiber operations have a higher barrier to entry because of the cost of new machinery.
Hemp seed can be harvested using the same equipment as conventional grain. As far as processing, Graves said that seed pressing equipment that is currently used for chia and sesame seeds can also be used for hemp. He will add chia and sesame to his portfolio as well.
Graves is using the most popular hemp seed for oil: Finola, from Finland. Atalo has guaranteed a no loss crop by securing a deal with Hemp Oil Canada to buy any seed Atalo cannot sell.
Shaun Crew, the owner of Hemp Oil Canada started crushing seeds in his basement a decade ago. Now, he is the second largest hemp oil producer in Canada. His company has grown 50 percent a year, every year, and now has over $100 million per year in revenue. Hemp Oil Canada can’t sell their product fast enough, which is why they agreed to buy any product Hemp Oil Kentucky has to sell.
Atalo has been approved for 356 acres of hemp, and is hoping for up to 500. 10-12 acres will be devoted to organic hemp seed production. Their research and development subsidiary aims to be an educational asset to the hemp industry in the U.S., Graves says.
Hendrix, Graves, and Williams all emphasize that they are building a new industry from the ground up. It will take research and time, but, Hendrix believes they have “the right people, the right place, and the right time” to build the industry and create jobs.
The Hemp Capital of the U.S.
Other groups germinating in the Kentucky hemp industry include Sunstrand LLC, which focuses on industrial fiber. There are many others cropping up. Stay tuned, says Graves, new developments are breaking on Kentucky soil.
The laws may not be set yet, but hemp advocates in Kentucky are confident that their state will soon be known for more than bourbon, and re-claim their name as the ‘Hemp Capital of the U.S.’
Editor’s note: The article previously said the Kentucky Hemp Growers Cooperative Association was among the growing groups in the hemp industry. A source told the reporter of this article that the organization has been retired.