The federal government is on the verge of legalizing hemp, potentially unlocking a multibillion-dollar industry that could help Massachusetts farmers.
“This industry is going to blow up,” predicted Kristen Nichols, editor of Hemp Industry Daily, a Denver-based trade publication. “There are some of the biggest brands in the world that have expressed interest in joining the CBD boom.”
Hemp is made from the cannabis plant, the same plant that provides marijuana. But it does not contain a significant amount of THC, the psychoactive ingredient that gets people high. It is used to make fabrics and fibers and also to extract CBD oil, which has some therapeutic qualities.
Hemp has been federally illegal and labeled as a controlled substance since 1970.
In 2014, the U.S. Farm Bill allowed states to start pilot projects to research hemp, and different states have interpreted that differently. Today, 42 states, including Massachusetts, allow some form of hemp research or cultivation.
This past week, Congress approved the 2018 U.S. Farm Bill with a provision that would make hemp federally legal, a policy advocated by Senate Majority Leader Mitch McConnell, a Kentucky Republican, as a way to help Kentucky farmers. The bill is sitting on President Donald Trump’s desk.
Massachusetts legalized growing and selling hemp as part of the 2016 ballot question that legalized marijuana.
In 2018, the state Department of Agricultural Resources issued 14 licenses to farmers to allow them to grow hemp. For 2019, 13 of those farmers have applied for renewal, and 15 new applications have been submitted.
A spokeswoman for the Executive Office of Energy and Environmental Affairs said the administration is monitoring the federal legislation.
Even though growing hemp is already legal on the state level, making it federally legal would make it vastly easier for hemp farmers to grow and sell their crop.
“This will assure farmers interested in a new commodity that they will not endanger their other lines of business by experimenting with hemp,” Nichols said.
For one, it would allow hemp farmers to access the federal agricultural programs that today exist for other crops. This could include federal loan programs, technical assistance and grant money to help farmers comply with environmental regulations. It also opens up access to crop insurance, in case a natural disaster wipes out a crop.
If it is legalized, hemp seeds would be allowed to be shipped from state to state, making it easier for farmers to obtain seeds suitable for their climate. Hemp would be able to be transported out of state for processing and sale, without committing a crime of interstate shipping of a controlled substance.
Mark Amato, president of the Massachusetts Farm Bureau, said until now, federally chartered banks have been hesitant to deal with hemp farmers, and farmers have had limited sources of capital.
Now, that is likely to change. “There are many folks who are looking at this from an investment perspective, folks who are interested in investing money and see a real opportunity here,” Amato said. “This could really open up opportunities for them to invest in the production, and we expect that to happen.”
State officials also said previously that farms receiving federal money could jeopardize those funds by growing hemp, and land with a federally funded Agricultural Preservation Restriction could not be used to grow hemp. Both those restrictions could be lifted under federal legalization.
In other parts of the country where dairy farmers are struggling economically, Amato said, some are looking at hemp as a way to diversify their operations. “Dairies that are under distress in New England, they may look at it,” he said.
And growing hemp is expected to be lucrative.
Bruce Perlowin is the CEO of Hemp Inc., which built the largest hemp processing facility in the western hemisphere, in North Carolina, as well as a local processing center in Oregon and a village in Arizona where veterans can learn to grow hemp.
Perlowin said farmers can earn $100,000 to $200,000 an acre from hemp, and CBD is the fastest-growing industry out there today.
If it is legalized, Perlowin said, “You can grow it like corn or rye or wheat or tobacco, except you get a heck of a lot more money.”
Major brands are looking to get into CBD sales. Soda company Coca-Cola and beer manufacturer Molson Coors have both said they are considering making CBD-infused beverages. Estee Lauder is creating a face mask with a type of cannabis oil from hemp.
Target briefly sold 1-ounce bottles of hemp extract oil for $75 each before pulling the product from its shelves, Hemp Industry Daily reported. The publication also reported that a Colorado 7-Eleven franchiser planned to sell CBD oils at 4,500 convenience stores until officials at 7-Eleven’s corporate headquarters objected. Walmart is considering selling CBD products in Canada.
The 2018 "Hemp & CBD Industry Factbook” projected that under the current patchwork of state regulations, without federal action, hemp sales in 2019 will be between $760 million and $930 million. By 2022, sales are expected to grow to between $2.5 billion and $3.1 billion.
With federal legalization, Perlowin said the industry has “untold billions in potential.”
“You’re talking about the richest crop on planet Earth,” he said.