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Oregon hemp industry poised for big growth after feds sign off
By Jeff Manning | The Oregonian
  Saturday December 22, 2018 - 12:58 AM
 
Hemp now has something marijuana doesn't: federal approval.

A provision of the $867 billion farm bill Congress approved this week removes hemp from the list of federally controlled substances and treats the low-THC version of the cannabis plant like any other agricultural crop. If President Donald Trump signs the legislation as expected, it's projected to rev up already-explosive growth in an industry that has a footprint in 23 states.

The curious only have to look to Oregon to see the potential. Hemp production was effectively legalized here in 2015 as part of a pilot project authorized by that year's farm bill. Since then, the number of licensed growers has climbed from 13 to 584, and hemp acreage has swelled from essentially zero to more than 11,000 acres, said Sunny Summers, the resident cannabis expert at the Oregon Department of Agriculture.

The state's hemp farmers are excited about their prospects, said Courtney Moran, a Portland lawyer who has long lobbied for legalization. "We've been living under prohibition for 81 years," she said.

Because it was early to the hemp market, Oregon has consistently been one of the top hemp-producing states in the country. In 2017, only Colorado produced more. "They're two to three years ahead of the rest of the market," said Beau Whitney, a market analyst with New Frontier Data, a cannabis market research firm.

New Frontier projects federal legalization will supercharge that growth rate. The U.S. hemp market is projected to triple, to $2.5 billion, by 2022, the firm predicts. More than half of those sales are tied to growing demand for cannabidiol, or CBD, a non-psychoactive compound that many see as a way to better health.

"People are smoking it, not because they get high, but because they get healed," said Bruce Cohen, chief executive officer of Hemp Inc., a large processor and grower in Medford.

Legalization will end the underground characteristics of the business. Hemp farmers will be able to buy crop insurance, apply for loans and grants and write off their business expenses on their taxes like any other farmer. Mainstream banks will make financing available. Credit card processors will get involved and mass retailers like Target and Wal-Mart will sell CBD products.

Some old-line Oregon farm families are making the switch. Coleman Agriculture in Gervais, which has been around for decades, has formed a new company, SweetSoil, to pursue the hemp business. They replaced 17 acres of grass seed land with hemp last year and will plant 100 acres of hemp in 2019. "The farm bill really opens things up," said SweetSoil's David Henze. "The pricing seems to be holding even with the big increase in production."

Federal legalization means those who sell dried flower or CBD-infused products made from hemp can now ship across state lines without fear of prosecution as long as they are careful not to run afoul of the U.S. Food and Drug Administration.

Many did so before, but always looked over their shoulder because the law was unclear.

Michelle and Scott Fields, who run an organic hemp farm outside Grants Pass, include a detailed letter to law enforcement in each package they ship that explains the dried flowers inside may look a lot like pot, but actually can't get anyone high.

"Probably the best part of this is that everybody can take a sigh of relief and not worry about that gray area anymore," said Michelle Fields, who worked in real estate until three years ago, when she and her husband started Fields of Hemp LLC.

Hemp generally refers to cannabis plants that have little if any THC, the psychoactive substance in marijuana that gets people high. Hemp has been used to make clothing, paper and a host of other products, but the market showing impressive growth is health and wellness. Hemp extracts – specifically CBD -- can be processed into powder, oil or cream and incorporated into products like anti-anxiety compounds, stress relievers and analgesics for chronic pain.

Oregon Sens. Ron Wyden and Jeff Merkley helped push through the legalization. They worked with Senate Majority Leader Mitch McConnell, R-Kentucky, to ensure the bipartisan Hemp Farming Act of 2018 was included in the final version of the farm bill.

The Hemp Farming Act clearly defines hemp as an agricultural commodity and removes it from the list of controlled substances. It also gives states the opportunity to become the primary regulators of hemp production and normalizes the crop.

Oregon legalized cannabis three years ago. The market has since bifurcated into two major parts: recreational and medical marijuana that contains THC, and hemp, that is rich in CBD but has negligible levels of THC.

The Oregon Liquor Control Commission regulates the recreational market, which includes more than 1,100 growers, 22 labs, 207 processors and 605 retailers.

The Oregon Department of Agriculture registers the hemp sector, where rapid growth is partly attributed to falling prices and too much competition in the recreational market, Summers said.

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