Kentucky Archives - Green Market Report

On Monday, the hemp industry received a big boost from U.S. Senate Majority Leader Mitch McConnell (R-KY) and Kentucky Commissioner of Agriculture Ryan Quarles (R-KY) as the two politicians announced they would be introducing legislation to support Kentucky’s hemp industry. The most important piece of the legislation is that hemp would be removed from the list of controlled substances and legalized as an agricultural commodity.

“Hemp has played a foundational role in Kentucky’s agricultural heritage, and I believe that it can be an important part of our future,” Senator McConnell said. “I am grateful to join our Agriculture Commissioner Ryan Quarles in this effort. He and his predecessor, Jamie Comer, have been real champions for the research and development of industrial hemp in the Commonwealth. The work of Commissioner Quarles here in Kentucky has become a nationwide example for the right way to cultivate hemp. I am proud to stand here with him today because I believe that we are ready to take the next step and build upon the successes we’ve seen with Kentucky’s hemp pilot program.”

The original Farm Bill said that it was okay to grow cannabis plants that had little ability to get people high. The DEA (Drug Enforcement Administration) did not agree with this definition and has consistently pointed out that both plants come from the same genus and are therefore they are same plant and so subject to the Controlled Substances Act. A court case ruled against the DEA’s stance, but it continues to insist it is in the right.

Declining cigarette sales have caused tobacco crops to become less profitable as sales drop. Kentucky farmers had been searching for a replacement commodity and found it in hemp. In 2014, McConnell spearheaded a provision to legalize hemp pilot programs in the Farm Bill. The program has proved to be popular among farmers who have pressured McConnell to make it easier to farm hemp.

If the U.S. Department of Agriculture approves the plan, the Hemp Farming Act of 2018 will help Kentucky take the lead on hemp production by removing the current barriers to full-fledged farming. In addition to opening the fields for hemp, it will give researchers the chance to apply for federal grants from the Department of Agriculture.

“Here in Kentucky, we have built the best Industrial Hemp Research Pilot Program in the country and have established a model for how other states can do the same with buy-in from growers, processors, and law enforcement,” Commissioner Quarles said. “I want to thank Leader McConnell for introducing this legislation which allows us to harness the economic viability of this crop and presents the best opportunity to put hemp on a path to commercialization.”

The Hemp Market

The Hemp Industries Association (HIA) reported that in 2015, retail sales for hemp products reached $600 million, which is much lower than the $5.4 billion for marijuana sales in 2015 as reported by Arcview. HIA says that hemp sales on average grow by 15% each year and that most of that growth can be attributed to more people buying hemp-based body products and supplements.

Congress has blocked the DEA from interfering with state agencies and hemp growers with regards to hemp. The USDA has been blocked from prohibiting the transportation, sales or use of industrial hemp. Despite these measures, hemp was still subject to drug laws and hemp growers have to get permission from the DEA. In addition to that, harvesting and processing is labor intensive, which can drive up costs. Since the U.S. has been out of the hemp game for some time, harvesting innovations haven’t occurred.

A study by the University of Wisconsin-Madison concluded that hemp production “is not likely to generate sizeable profits” and also noted that international competition would affect the U.S. Most of the hemp for these sales was imported from China and Canada. Hemp imports for 2015 were nearly $78.2 million according to U.S. trade statistics.