By Elaine Kub
DTN Consulting Analyst

NEW ORLEANS (DTN) -- Hemp was a big deal at the American Farm Bureau Federation annual meeting.

U.S. Rep. James Comer, R-Ky., who began advocating for industrial hemp while he was Kentucky's agriculture secretary, talked about the crop and the 2018 farm bill, which removes hemp from being classified as a controlled substance. Comer spoke at a workshop Sunday to a standing-room only crowd.

"There's a lot of interest in it, and that shows to me there is a huge demand for farmers to find an alternative crop, especially with the price of corn and the price of soybeans right now are making it hard to live on."

Talking to reporters afterward, Comer said he wasn't worried that a new spate of farmers would overwhelm the new market created in the 2014 farm bill -- which allowed states to create pilot programs -- as everybody and their dog now wants to get into hemp.

"I'm a farmer and I think every farmer would say this," he said. "We in agriculture are very good at overproducing. In any emerging industry there are risks."

Comer said he gets messages every day from farmers asking about hemp. He and others in the workshop cautioned farmers not to grow hemp unless they have a place to sell it through a contract. "It's risky. You need to make sure you have confidence in the person you are signing the contract with. If you do not sign a contract then I would not grow it."

In Kentucky, there are companies coming in right now that are well-capitalized and will endure challenges that come their way, Comer said. "Then there are companies that I probably wouldn't buy the stock in that are in Kentucky. And I think that's the case with any emerging industry or start-up, because most of these companies are startups."

You can still only grow hemp that has passed a regulatory framework for the crop. There are still states that have not passed it so they will not be able to grow it.

"There were a lot of myths when we were first pushing the hemp bill. A lot of people were saying you could grow hemp on a rock in a desert. Somebody used that expression earlier. That's not correct. It's like every other crop. You have to have proper soil type, proper water and plant it at the right time, harvest it at the right time."

He has concerns about overproduction and companies that may not have good business plan, but Comer said the industry is economically viable. "I don't go into any retail store where they don't have hemp products, especially in Kentucky. The CBD (cannabidiol) oil is in every pharmacy, every independent pharmacy, in the state."

CBD products are hot right now in Appalachian states, Comer said, because of alternative products for pain to counter the opioid problem, he said. "CBD is, I think, one of the options to look at pain relief. So that product is growing by leaps and bounds. The companies in that business are seeing sales go up every day."

Hemp is distinguished from its cousin marijuana based on the level of tetrahydrocannibinal (THC) the compound that provides the "high." Marijuana can average roughly 20% THC while legal hemp is only allowed to have 0.3% THC in the harvested crop.

The next battle for CBD products, however, may be with the Food and Drug Administration. Pharmaceutical companies started asking questions about CBD towards the end of the farm-bill process, Comer said. CBD is classified as a nutraceutical -- a product claiming to have some health benefits, but not regulated by FDA. Comer said pharmaceutical companies, seeing the growing market for CBD products, are pushing for FDA to insert more control over CBD oils. "Pharmaceutical companies, in my opinion, are going start pushing to see that CBD is approved by FDA because the sales are so high. I think in the beginning they thought it was going to be a fad."

After the 2014 farm bill, 35 states created some form of regulatory oversight for hemp to allow pilot projects by farmers or university researchers. But out of roughly 80,000 acres of commercial production, Kentucky, Montana, Colorado and Oregon make up about 75% of acreage, according to analysis from a cannabis research firm, New Frontier Data.

Comer and others see different hemp varieties being grown in different parts of the country. Some regions may grow for CBD, while others may grow hemp for fiber or food.

Farmers and regulators in other states right now are just trying to catch up. The Illinois Department of Agriculture just released a proposed rule to license hemp production. There are no laws or rules allowing production in Connecticut, Georgia, Idaho, Iowa, Louisiana, Mississippi, New Jersey, Ohio, South Dakota and Texas. Several other states may have research or cultivation laws on the books but they are so stringent that it has been impossible to start farming the crop.

Selling CBD also varies from state to state. Comer notes CBD can be found almost anywhere in Kentucky. Yet, the owners of a small shop in Nebraska were arrested last month for trying to open a CBD shop, but the prosecutors declined to pursue felony drug charges against the mother and son who started the business.

There are also some questions, because of the government shutdown, whether USDA and the Drug Enforcement Agency are ready to promulgate rules to remove hemp as a Schedule I drug and approve state plans for allowing production of the crop.

USDA officials were reluctant to write regulatory policies on hemp. "I'm not going to stand here and exaggerate and say they were enthusiastic or happy about having to do all of this for hemp. But it's in the farm bill and they are going to abide by the farm bill," Comer said.

Comer also was not enthusiastic himself about the crop being eligible for crop insurance. "If there is overproduction, I don't want there to be massive losses in hemp and have bad stories on hemp. Again, we need to make sure the people who grow hemp have a contract to sell their hemp. That would be a good regulation with USDA."

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN)

(BAS/SK)

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