The 40 or so people gathered in conference room 502B at Los Angeles Convention Center came from starkly different backgrounds.
They included a San Joaquin Valley farmer, a Huntington Beach restaurateur, a Paramount fabric importer and a Denver attorney. Some were in suits and some were in shorts.
But as they networked and shared stories, the depth of their common commercial passion extended to the very fiber of the hemp business cards they exchanged.
Mention hemp to friends over dinner, and you might get stoner jokes from folks who see hemp as just another form of pot. Or you could arouse a zealot who’s convinced hemp is a miracle plant that can save the planet, if only The Man would stop suppressing the truth.
Check out even more news and information in our special report on cannabis and the environment.
Those divergent views are about to be tested anew in California.
Marijuana got all the attention last year when voters approved a landmark ballot measure to legalize recreational marijuana. But buried in the last few pages of the lengthy measure was less noticed language legalizing industrial hemp production.
It’s been a slow, low-profile roll out. But a new state regulatory panel has begun meeting to hammer out a path for farmers to start growing the first legal hemp in California in 80 years; a California Hemp Association is forming, with a retired Apple executive at the helm; and a few dozen aspiring “hempsters” from around the globe paid $299 and descended on Room 502B at the L.A. Convention Center on Sept. 13 to attend a Hemp MBA in a Day workshop during the Cannabis World Congress & Business Exposition.
The entrepreneurs want to be part of California’s emerging legal cannabis industry, though most have no interest in helping anyone get high.
Some want to grow hemp here, lured by the promise of a potentially valuable crop that requires almost no pesticides and absorbs enough atmospheric carbon it could possibly qualify for state tax credits.
Others want to buy California-grown hemp and use it to make energy-efficient construction materials, durable fabrics, nutritional foods and biodegradable plastics.
“We’ve got a billion-dollar industry, at a minimum, and probably tens of thousands of jobs,” said Wayne Richmond, the ex-Apple executive who now heads the fledgling state hemp association. “We’re just waiting for government to get the heck out of the way.”
There are some very real challenges for hemp to overcome, Richmond acknowledged, including uncertainty about the federal government’s posture toward hemp production and sales. The U.S. government has long classified hemp the same as marijuana, meaning it faces similar restrictions on access to banking services, international trade and raising capital. In addition, the domestic supply chain for hemp – connecting farmers, manufacturers, retailers and consumers – has been dormant for eight decades and must be rebuilt from the ground up.
Nevertheless, entrepreneurs and activists who’ve touted the benefits of the plant are confident California’s hemp market – and therefore the global industry, since California is the sixth largest economy in the world – will be thriving within a few years.
All it will take, supporters argue, is for a big retailer to start using hemp-based shopping bags, a leading home builder to start using hemp-based building materials or a major car company to incorporate hemp batteries into their vehicles.
And the expectations tend not to be understated. “Hemp is going to crush the marijuana industry,” said Dion Markgraaff of San Diego-based General Hemp, a private equity group that he says has arranged tens of millions of dollars in investments for hemp companies around the world. “It’s going to revolutionize the whole economy.”
A convoluted past
Tales of hemp use trace back to the nation’s forefathers – and some of them are even true.
Early drafts of the Declaration of Independence were indeed written on hemp paper. The first American flag was made from hemp. George Washington and Thomas Jefferson both farmed the crop.
Hemp remained an agricultural crop throughout the United States until the turn of the 20th century. That’s when popular belief in the dangers of marijuana began to mount, driven largely by rhetoric from community leaders who used the drug to demonize the new wave of Chinese and Mexican immigrants.
Hemp and marijuana are both strains of the cannabis plant. The only legal difference today is that hemp must have 0.3 percent or less THC, the compound in cannabis that makes people high. The plants are also cultivated differently, with marijuana given space to branch and flower while hemp is grown in dense rows to pack as much plant material as possible onto every acre.
With some quick training, that makes it pretty easy for law enforcement to tell the difference between fields of marijuana and fields of hemp, according to Kings County Sheriff David Robinson, who’s on the state’s new Industrial Hemp Advisory Board. And since pollen from hemp plants can travel for miles, ruining any strains of weed grown nearby, Robinson said there’s no need to fear farmers hiding marijuana plants inside their hemp fields.
“The two don’t grow hand in hand,” he said, explaining why he supports hemp farming even as he opposes marijuana legalization. “To me, the less marijuana that’s grown and the more hemp can be grown, that’s good for our farmers and good for the environment.”
The 1937 Marijuana Tax Act didn’t distinguish between the two, though, making all forms of cannabis federally illegal.
Court rulings later clarified that hemp products could legally be sold in the United States, though farming hemp generally remains illegal without a permit from the Drug Enforcement Administration since the agency argues it could still be grown to produce marijuana. That’s led to hundreds of millions of dollars in hemp products being imported to the United States each year from counties such as China, Canada, France and Estonia.
Perhaps the biggest importer of hemp products in the country is Lawrence Serbin, who runs Hemp Traders from a 7,000-square-foot warehouse in an industrial area of Paramount.
Serbin sells hemp rope and twine, plus aromatic oil pressed from hemp seed. But 70 percent of his business is pure hemp or hemp-blended fabrics imported from China, which he sells to companies that turn it into everything from furniture to wedding dresses to cloth diapers.
The business has grown steadily since he imported his first textiles in 1993, particularly as growers developed strains and methods to make finer fabrics than the type Woody Harrelson had fashioned into a tan tuxedo for the 1997 Golden Globes.
But Serbin has been waiting nearly three decades for the supply chain to reemerge in his home state of California.
Return of American hemp farming
The door started to crack open for American hemp farmers five years ago. When Colorado and Washington legalized marijuana in 2012 in defiance of federal law, they also voted to allow hemp cultivation. The first open hemp harvest in nearly eight decades took place in Colorado in 2013, with Kentucky and a few other states not far behind.
Gov. Jerry Brown signed the California Industrial Hemp Farming Act in 2013. But the bill included a line that said farming could only take place if “authorized under federal law,” rendering it essentially moot.
In 2014, the federal government passed a new Farm Bill. It permitted hemp cultivation in states that limit growing to agricultural agencies and university studies or marketplace research. Under the latter provision, several states are allowing commercial cultivation and are shipping raw hemp across state lines, so far without federal interference.
Serbin received his first shipment of American hemp products from Kentucky in 2016. And just last week, he got a 6-foot-tall bale of unprocessed hemp fiber from Colorado.
Now, California is joining the movement.
Proposition 64 approved in November allowed, as of January of this year, hemp to be grown as an agricultural product and for research without the strict regulations applied to marijuana. One catch was the state Department of Food and Agriculture, working with a new 11-member Industrial Hemp Advisory Board, had to establish a registration system for hemp farmers. But the measure did not set a deadline to get that system up and running.
Some eager farmers already have started growing small fields of hemp. That includes George Bianchini, CEO of Medi-Cone, who’s growing 25 acres in the San Joaquin Valley now for research.
Though they note that no other crop in California faces such restrictions, most big players are waiting for the state to approve registration fees and send needed paperwork to county agricultural commissioners before they start putting hemp seed in the ground.
The hemp advisory board has met once so far. Chairman Eric Carlson, who’s with International Hemp Solutions, said he’s hopeful they’ll get the registration system established in time for farmers to plant their first legal hemp crops in the spring. Other members said it won’t happen until 2019.
“I get calls weekly from all over the county and all over the state wanting to know when this is going to happen,” said Tehama County Agricultural Commissioner Rick Gurrola. “Unfortunately, the wheels of government turn very slowly.”
Industry representatives on the state board are pushing for an annual registration fee of $100 plus $1 per acre. That would be substantially lower than Colorado’s rate, which is $500 plus $5 per acre.
There’s also confusion about whether farmers would be applying to grow hemp, which would mean they could get turned down, or if they would simply be registering so authorities would know they’re there. The state agriculture department says nothing in the law precludes local authorities from banning or otherwise regulating hemp cultivation. But prospective growers and manufacturers say they’ll fight back if cities or counties try to shut out hemp farms.
It’s also not yet clear how California’s program will fit within the federal Farm Bill’s research mandate.
Graduate student Tony DeVeyra, who’s studying plant science at Cal Poly Ponoma, said he secured permits from the DEA for a hemp research project. But before it started, university administrators halted the project, he said.
Cal Poly Pomona spokesman Tim Lynch said the project hadn’t been vetted through a formal approval processes.
Jeannette Warnert, spokeswoman for the UC Agriculture and Natural Resources extension program, said the program’s attorney is reviewing the matter, but she’s confident hemp research will be approved once the state’s regulatory framework is in place.
Check out even more news and information in our special report on cannabis and the environment.
The combination of regulatory and economic hurdles may limit hemp production in some agricultural counties. That’s why most Ventura County farmers are sitting on the sidelines, according to John Krist, CEO of the Farm Bureau of Ventura County.
“Right now there are just too many unknowns about the market for growers to make practical plans and investment decisions,” Krist said. “They deal with it all the time, but growers really dislike uncertainty.”
Also, the cost of water, land and energy also works against hemp farming in the area, he said.
“It might be like trying to grow cotton – we could do it here, but the per-acre value is so low, it would never pencil out,” he said.
He predicted hemp production would be more viable in the state’s Central Valley or Imperial County, where water and land are more affordable.
From farm to factory
Serbin is eyeing the Central Valley for a factory he hopes to build to make hemp-based particle board.
He’s passionate about the benefits of hemp fabric. But he noted most textile production has left the U.S., and he always wanted to make a product that could save trees.
He spent eight years working with farmers and factories in China developing his hemp particle board, which he insists is more durable, less flammable and less destructive than traditional wood. He said he’s sold small batches of the boards, but found it wasn’t cost-effective to do on a large scale while the hemp had to be grown in China.
Now Serbin hopes to contract with farmers to grow 4,000 acres of hemp in the Central Valley, adjacent to his planned factory.
In San Diego, Markgraaff said his company is close to locking down property near the airport to build a factory where they plan to manufacture tiny homes, dog houses and other structures made with hempcrete, a cement-like product processed from hemp, lime and water.
Experiments with building hempcrete structures in Europe and Australia show they are extremely energy efficient, a growing number of studies show, with the porous material absorbing heat, cold and humidity. That also makes the material resistant to fire and decay from water damage, which is why Markgraaff said owners of a hemp home built in North Carolina got a break on their insurance rate.
One of the fastest-growing segments of the hemp industry may also be the most uncertain. It’s not yet clear how the state plans to regulate hemp-derived CBD, the compound in cannabis that’s thought to have therapeutic benefits without making consumers high. The state’s Bureau of Cannabis Control will regulate CBD from marijuana, but that authority may or may not extend to hemp going forward. For now, CBD made from hemp is readily available online and in a number of mainstream stores.
Shops such as Whole Foods and Trader Joe’s also sell hemp seeds, hemp milk, hemp lotion and other products known to have health benefits. Those products are primarily coming from Canada and Europe. But regulators and would-be leaders of a new California hemp industry say there’s plenty of room in the market for locally sourced food and personal care products – as well as broader commercial opportunities, despite the challenges.
Said Robinson, the Kings County sheriff: “I really think industrial hemp could be a sustainable crop for many, many years to come.”
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