THE GAZETTE:

By: Bill Radford – January 17, 2019

Gordon is president of the board of the Colorado Hemp Industries Association. Some have called the passage last month of the U.S. farm bill, which takes hemp from a Schedule 1 controlled substance to an agricultural commodity, as a game-changer.

But Gordon calls it “a game starter” for the fledgling hemp industry.

“I see this as the start of the race,” he said in an interview with The Gazette.

If so, it’s a race where Colorado has a head start over many states. Colorado voters legalized hemp production in 2012 as part of Amendment 64, which allowed for recreational marijuana sales.

Hemp and marijuana, its close cousin, are varieties of cannabis sativa, but hemp won’t get you high; to be classified as hemp, it must have no more than 0.3 percent of THC, the main psychoactive ingredient in pot. Hemp has a long history in the United States for a variety of uses, but production was curtailed by a tax on cannabis in 1937 and it was banned in 1970 under the federal Controlled Substances Act.

An earlier federal farm bill, in 2014, approved the cultivation of hemp for research purposes and within state agricultural pilot programs.

With Colorado voters having already approved hemp production, “we were kind of ahead of the farm bill,” said Duane Sinning, director of the plant industry division of the state Department of Agriculture. “When the farm bill actually authorized it, we had all the rules in place that we needed; they just needed some tweaking.”

But the industry was still hampered by the classification of hemp as a controlled substance. So farmers, for example, couldn’t get federal crop insurance, Sinning said. Under the latest farm bill, hemp farmers will have access to “the same benefits that you see at the federal level if they were growing corn or wheat or anything else. … There are a lot of upsides for the farmers.”

Those farmers have already been busy, with 31,000 registered acres of hemp in the state. While that’s a fraction of the acreage devoted to corn, the state’s top crop, “there’s already more hemp grown than there are Rocky Ford melons,” Sinning said. “There is more than there are Palisade peaches, and more than Colorado’s first agricultural crop, which was sugar beets.”

During Colorado’s first couple of years in the hemp market, the state was responsible for more than half of the nation’s production. That percentage has fallen as more states have authorized hemp programs, but Colorado remains “one of the top states, if not the top,” Sinning said.

Challenges still ahead

So, what’s next?

More rules, says Shawn Hauser, who helps marijuana and hemp businesses navigate the law as chair of the Hemp and Cannabinoids Practice Group for Denver-based Vicente Sederberg.

“The United States Department of Agriculture will start engaging in rule making to determine what the minimum federal standards are for hemp production in the U.S.,” Hauser said. The law, she said, gives states the option for primary regulatory authority over hemp; those states that choose to do so will work to update and submit their plans to the USDA.

“We are passing the proverbial baton from legislation to regulation,” Gordon said. “We can expect up to 18 months of regulatory process around hemp.”

One challenge for the industry: the Food and Drug Administration’s view of hemp-derived cannabidiol, or CBD. CBD, touted as having a wealth of medical benefits, has become the cornerstone of the hemp industry. FDA Commissioner Scott Gottlieb issued a statement after President Donald Trump’s signing of the farm bill cautioning that the agency continues to regard CBD as a drug and that it can’t be added to, or marketed as, a food or dietary supplement. (The FDA in June approved Epidiolex, a drug that contains cannabis-derived CBD, for the treatment of seizures associated with two rare and severe forms of epilepsy.)

In addition, the statement said, “we continue to be concerned at the number of drug claims being made about products not approved by the FDA that claim to contain CBD or other cannabis-derived compounds.” The FDA has issued several warning letters, including to Colorado’s Stanley Brothers Social Enterprises, which does business as CW Hemp and whose Charlotte’s Web oil helped propel CBD into the national consciousness.

With a wealth of CBD supplements already on the market, the industry hopes to nudge the FDA into a greater acceptance of CBD, Hauser said. “It’s going to be a primary focus of the industry to work toward getting some kind of resolution on the FDA side,” she said. The FDA statement offered some hope, saying that “pathways remain available for the FDA to consider whether there are circumstances in which certain cannabis-derived compounds might be permitted in a food or dietary supplement.”

Kashif Shan, CEO of Colorado Springs-based Folium Biosciences, expects that CBD “certainly is going to be regarded as a pharmaceutical, but not only as a pharmaceutical.”

The company, which Shan started in 2013, calls itself “the largest vertically-integrated producer, manufacturer and distributor of hemp-derived phytocannabinoids in the USA, if not the world.” It employs more than 200 people and grows most of its hemp in the La Junta area. It’s working to launch a pharmaceutical division that will include partnerships with hospitals and universities.

Folium’s CBD-based products range from balms to gels to dog treats, with a hemp oil that is touted as completely free of THC. “The farm bill really opens the doors to mainstream adoption of CBD,” Shan said.

It also opens the doors for Folium to serve a wealth of other companies with its CBD. “There’s no question,” Shan said, “that there are large companies, Fortune 500  companies, that have been waiting in the wings in anticipation of the farm bill passing so that they can bring this active ingredient into their portfolio.”

One believer in the company’s potential: John P. Bilbrey, past president, CEO and chairman of The Hershey Co. Folium announced last month that Bilbrey had joined Folium’s board of directors. In a news release, Bilbrey said he looked forward to “being involved with this significant growth opportunity.”

CW Hemp is another company demonstrating that growth potential. The company has expanded from a Teller County grow operation to a multimillion-dollar, publicly traded company, with its products in approximately 3,000 retail locations, according to its website. It maintains an 18,000-square-foot lab, warehouse and office space in Boulder and aimed to produce 250,000 to 300,000 pounds of hemp in fiscal year 2018, with company-operated farms in Colorado and contract farming in Kentucky and Oregon.

Beyond CBD

The hemp industry is not all about CBD. According to a report by the Congressional Research Service, the global market for hemp consists of more than 25,000 products. Hemp fibers are used in fabrics and textiles, insulation, auto parts and more. Oil from the crushed hemp seed is used in soap, shampoo, bath gels and cosmetics. Hempcrete, a mixture of hemp hurds and lime, is used as a building material.

“The most versatile crop to man is about to be nationally recognized,” said Gordon, of the Colorado Hemp Industries Association. “CBD is the tip of the iceberg. Hemp will feed the world.” (While the FDA hasn’t signed off on CBD in foods, it has approved the use of hemp-seed derived food ingredients, including hulled hemp seed, hemp seed protein powder and hemp seed oil.)

Colorado Springs-based Colorado Gold Distillery produces Colorado High Vodka, “the first and only hemp-distilled vodka in the United States.” Fermenting the vodka with hemp imparts different characteristics, “just like potato-based vodka is different from corn-based,” said Peter Caciola, president of Colorado Gold Distillery; it’s billed as “an easy-drinking vodka that delivers a luxurious mouthfeel from the natural oiliness of the hemp.”

Colorado Gold gets its hemp from Canada. That’s because “even though there are people growing industrial hemp in valleys in and around Colorado, there’s not much processing of the hemp,” Caciola said. While the focus in the U.S. has been on extracting the CBD, he said Canada’s hemp industry provides a fully processed plant — separating seeds, fiber, etc. The distillery could turn to Colorado-grown hemp as the industry evolves, though Caciola doesn’t expect things to change quickly.

As change does happen, Colorado is expected to help lead the way. Shan, of Folium Biosciences, points to the support of the state’s leaders and notes that Colorado’s arid climate provides “almost ideal conditions” for growing hemp.

Hauser, the attorney, agrees. “I think we will continue to be a model for other states,” she said.

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