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Federal Prohibition Prevents Billion-Dollar Industry from Helping Economy

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Farmers can yield, at most, $1,000 per acre from corn. Moonrise Extracts, an industrial hemp operation in Colorado, expects to reap tens of thousands per acre, from what started as a few dozen feral hemp plants.

Moonrise Extracts was lucky to obtain local hemp seeds to start their plants. Seed procurement and local adaptation from foreign seeds are a big hurdle for the industrial hemp market. The dozens of plants harvested in the summer of 2014 became 12,500 square feet of greenhouse production and 15-20 varieties of native seeds for development.

Moonrise Extract’s high crop value is thanks to the cannabinoid, cannabidiol (CBD), found in the cannabis plant. CBD is used for cancer, HIV, anorexia treatments, controlling seizures, and pain relief. It works by interacting with cannabinoid receptors in the brain, nervous system, organs, connective tissues, glands, and immune cells.

Consumers can buy a month’s supply of CBD from Moonrise Extracts for about $100.

Zev Paiss, executive director of the Rocky Mountain Hemp Association, says Colorado hemp production is well suited for the extraction of CBDs for nutraceuticals, which are concentrated in the flowers of hemp plants. The soil conditions, higher elevation, abundant sunshine, and smaller amount of annual rainfall, however, may limit hemp fiber production.

Paiss said that experimentation is underway to determine the best cultivars for Colorado, but hemp in the state may be best used for seed, flower, and oil production.

Industrial hemp grown for cannabinol is different than the medical marijuana that is legal in 23 U.S. states. Both crops contain dozens of cannabinoids. The difference is that medical marijuana has high levels of THC, which produces psychoactive effects, along with various therapeutic effects.

 

Do You Know the Difference between Marijuana and Hemp?

 

In 2015, Moonrise Extracts will plant 293 acres of industrial hemp — mostly for CBD and food production — on organic soil. The company’s seed is considered organic because of its wild origins.

According to Rick Trojan, director of marketing and sales at Moonrise Extracts, organic branding increases the crop’s value. He added in an interview for IVN that it also guarantees a clean, healthy medicine for people whose bodies are already sick.

Non-organic CBD oils, Trojan says, can be contaminated with heavy metals, potentially complicating health issues. He expects their crop to bring in millions in 2015.

While medical marijuana is legal in 23 states, only 13 states allow industrial hemp production. Of those, only 3 states have planted hemp crops: Kentucky, Colorado, and Vermont.

Some, like Moonrise Extracts and Atalo Holdings, Inc., in Kentucky, have been very successful breaking into the U.S. hemp industry. However, a few key issues are holding the market back.

The most pressing issue is decoupling hemp production from federal DEA regulations.

Federal regulations prohibit seed from crossing state and national borders. Some hemp growers, like those in Vermont, are at risk of federal prosecution, even if states allow hemp production. Hemp seed has been illegal in the U.S. for decades. This, along with the prohibition of seed transportation, makes it difficult to start a crop.

One model, which is being used by farmers in Kentucky, is to import and plant seeds from other countries, with coordinated DEA permits.

Infrastructure is another barrier that will come down slowly. Few have equipment to harvest and process fiber at economies of scale, and procuring new equipment is expensive. Hemp oil is the breakout product for U.S. hemp, because harvesting and extraction can be done with available technology.

Bill Billings and Jim Bramer founded the Colorado Hemp Project and planted 2 acres of hemp in 2014. They hand harvested and processed their hemp into hemp oil products, like soaps and lotions. Billing’s daughter sells the products through her company, Nature’s Root. They also sold their hemp flowers to local beer makers.

Colorado Hemp Project currently has a cooperative of 4 farmers, but Bramer, who is 77, says he is not interested in trying another hemp crop in 2015.

“It will be a hard crop to pursue, until they come up with something,” he said.

He explained that the DEA restrictions are prohibitive, and the industry needs infrastructure for harvesting and processing hemp fibers.

Vermont grew less than an acre of hemp last year, largely because seeds cannot be transported over state lines unless they are crushed or sterilized, thus making them useless for planting. In an interview for IVN, Tim Schmalz of Vermont’s Department of Agriculture said that Vermont would like to add hemp oil to its state brand, but prospects are hard to gauge under federal prohibition.

It is clear that hemp can be a high value crop, but for many farmers, the path to profits remains a bit tangled.

Photo Credit: Moonrise Extracts