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Over-Hyped Hemp? Amid Price Drop And A Big Bankruptcy, Some Farmers Feel Burned

John Fuller is waiting for another farmer he’s never met before to talk about a situation he never imagined he would be in.

It’s an overcast January day on his farm in west Kentucky, where he grew 18 acres of hemp last year, investing more than $250,000 of his own cash. He’s one of nearly 1,000 licensed hemp growers in 2019 who helped grow Kentucky’s biggest hemp crop since the state reintroduced it, trying to cash in on what could be a $1 billion industry for CBD products made from hemp.

But now, Fuller is wondering how much of that investment he’ll get back.

“There’s some pirates that are out here. Just pirates. Us trying to get with a good, ethical processor has been a real, real challenge for us,” Fuller said.

Later that morning, Bobby Huff arrives after driving more than two hours from Clinton County. By coincidence, both men are pharmacists turned hemp farmers, who saw potential in the alleged medicinal properties of CBD.

John Fuller (left) and Bobby Huff (right) inside Fuller’s high tunnel.

Both men are also among dozens of hemp farmers who had contracted to grow the crop for the hemp processing company Bluegrass Bioextracts in Owensboro, Kentucky, owned by local businessmen who would dry the hemp and turn it into CBD oil.

But in November, the local business owners announced they were selling the company to a Nevada limited liability company, DTEC Ventures. The same month, Fuller received emails from the company saying the deal was off: the company said their crop tested positive for heavy metals and couldn’t be accepted. But Fuller was suspicious.

“We went back and tested our soil and tested our product…and our independent labs that we’re sending it to say ‘no heavy metals,’” Fuller said. “So what’s the deal? You know, Bluegrass has stopped accepting hemp?”

One of the new operators of the company in an email to Fuller then claimed the company couldn’t accept farmers’ hemp because of “increased scrutiny” from state and federal regulatory agencies. When Fuller reached out through email to the Kentucky Department of Agriculture to verify this claim, a KDA official said there had been no regulatory change.

The contracts that Huff, Fuller and dozens of other farmers had signed — promising potentially around $40 per pound of CBD-rich hemp for thousands of pounds of their harvest — were now just pieces of paper.

“It really makes me angry,” Fuller said. “I can get by with my day job if this whole farming thing tanked, but the farmers that used hemp in place of tobacco for last year, they’re not going to get paid for their crop.”

Huff (left) and Fuller (right), next to a small hemp processing machine.

The former local owners of the company now have sued DTEC Ventures for $69 million in part for failing to fulfill contracts to farmers. John Fuller held a press conference at his farm with several other contracted farmers to raise awareness about their situation. The former company owners declined to comment because of the litigation. Representatives for DTEC Ventures didn’t respond to several requests for comment.

For many other farmers in Kentucky and across the country, the hopes of a financial windfall from hemp to be a saving grace from faltering markets in tobacco, soybean and corn, has hit a harsh reality. Amid boundless rhetoric touting the potential of the new crop that many still see, some farmers suspect they’re facing unfair treatment and empty promises, wondering who and what they can trust.

Boom To Bust

With the federal government legalizing growing hemp in the latest Farm Bill, Kentucky saw a rush of interest in cultivating the crop, particularly to make CBD products. The 972 hemp growers licensed last year were over four times more growers than in 2018. The number of hemp acres harvested also quadrupled, up to 24,900 acres, and 92 percent of those acres were grown for CBD products.

Several states also grew hemp for the first time last year, with other leading hemp states including Colorado and Montana seeing a spike in their production. That large supply led to a nationwide glut of hemp. CBD-rich hemp is often sold by the percent of CBD measured in each pound of hemp.

“When we started out 2019, I had $5 per percent CBD. Fast forward to the end of 2019. Now, we’re looking at less than $1 per percent CBD. That’s a huge change,” said Tyler Mark, assistant professor of production economics at the University of Kentucky.

Mark said that glut has led to a subsequent price crash for CBD-rich hemp, and the substantial profit margins expected have now disappeared for many.

Colorado-based analytics firm PanXchange tracked the average selling price of hemp at $4.35 per percent CBD in each pound of hemp in July of 2019. By January, the price was at 74 cents. Mark said the crash is also partially because the true demand for CBD products and hemp isn’t yet known.

But because of that uncertainty, some hemp processing companies could be struggling to fulfill contracts signed with farmers when hemp markets were booming.

“If the processors did not have a contract locked in to sell those final products so that they could afford those types of contracts that they originally signed at the beginning of the year, they’ve got definite cash flow problems,” Mark said.

Another prominent Kentucky hemp processing company has struggled to pay its bills in what’s turned into a prolonged court dispute over an unfinished construction site.

An overview of GenCanna’s unfinished processing facility in Graves County, August of 2019.

GenCanna, based in Winchester, Kentucky, announced in late 2018 it was investing $40 million to build a second hemp processing facility in Graves County, signing up farmers throughout the state to grow hemp for the company.

As construction continued at the site, the first lien against the property was filed in early September: the Hannan Supply Company in Paducah alleged their company was owed over $250,000 for construction materials and labor.

Dozens of construction-related liens have been filed against the facility site since then, ballooning to more than $32 million combined as of late December. GenCanna also had to layoff 60 employees last year, after being a title sponsor of the Kentucky State Fair, buying billboard space across west Kentucky, and sponsoring a statewide tour for Kentucky Sports Radio.

In late January, construction company Pinnacle, Inc., based in Benton, Kentucky, pressed for GenCanna to enter Chapter 11 bankruptcy because of the overdue bills. GenCanna relented on Thursday, filing for bankruptcy in federal court.

“[GenCanna was] trying to float too much money and grow way too quickly. I think that is probably one of the biggest problems in the hemp industry is greed, and not working for what a company is worth,” said Tate Hall, President of the Kentucky Hemp Industries Association. “They should have never announced or upgraded that facility if it wasn’t going to be built in time or they couldn’t finance the building.”

Hall said GenCanna’s situation isn’t unique, as some processors in the state and elsewhere in the country expanded too fast for the hemp market to stabilize. He said that left contracted farmers in many instances out of luck in getting paid. In the case of GenCanna, he’s concerned construction companies with more resources may be paid back by GenCanna before contracted farmers.

“Just because they filed ‘Chapter 11’ don’t mean anything with GenCanna. That’s a long way from being over, and I can guarantee you those contractors are not going away. You can’t just wipe your debt off,” Hall said. “I’m 100 percent for those contractors and farmers.”

The unfinished construction site of GenCanna’s processing facility in Graves County, in August of 2019.

GenCanna representatives did not respond to several requests for comment. The Associated Press reported last month GenCanna said that contract payments to farmers were up to date.

Acela CBD in Maysville, Kentucky, is another hemp processor where farmers are concerned about their contracts.

“If I’m going to go down, they’re going to go with me,” said Marty Voiers, who grew two acres of hemp in Lewis County for Acela. “My dad said ‘you better be careful doing it.’ He warned a bunch about it. I didn’t listen to him.”

Voiers said he took out a line of credit to pay for labor and infrastructure to grow his hemp, including a new water line. While he said he did get paid for a single bag of hemp, because there isn’t any language in his contract on when farmers are required to get paid, he’s not sure when his full payment will come for the more than a dozen of other bags of hemp he harvested.

Kevin Burton, another farmer in Mason County who grew 1.5 acres of hemp for Acela, said he’s considering selling other parts of his farm if he doesn’t get the full payment he’s expecting.

Burton said in his experience raising cattle, stockyards have escrow accounts to pay farmers immediately when they bring cattle in, instead of waiting until cattle are marketed.

“I may have to sell some cows or sell some equipment. I got payments I have to make.” Burton said. “They contract you to raise the crop. You raise the crop and deliver it, and they say ‘well, you’re going to have to wait on your money.’”

He believes something similar should be set up for the hemp, and that farmers shouldn’t have to wait for payment. “That’s a bad job. That should not happen,” he said.

Acela CEO Andrew Culbertson confirmed that contracts with their more than 100 growers did not have language on when payments have to be made. He said their company is still paying out contracts to farmers.

But he said a reason the payments to farmers might be delayed is because of the glut in supply. Other competitors to Acela are also trying to sell hemp in an already flooded market, making it difficult to sell Acela’s hemp and reimburse farmers.

“We cut checks last week, we’re cutting checks this week, and I’m sure we’ll be cutting checks next week,” Culbertson said.

Over-Hyped?

As contract disputes and court battles continue, some farmers feel led on by processors, the Kentucky Department of Agriculture, and other stakeholders in the industry.

“Ain’t that one hell of a selling point for your industry if you’re going to go out here and spout off all this stuff about how it’s gonna be the agricultural savior of the state,” said Jamie Shaddock, a Shelby County farmer contracted with Bluegrass Bioextracts. “And then at the end of it you say ‘but don’t invest more than you can lose.’ Now what kind of bullshit is that?”

Shaddock said he doesn’t raise burley tobacco anymore because the prices for the crop have stagnated for decades, and he isn’t sure what he can raise now that will be profitable. He’s currently sitting on 25,000 pounds of harvested hemp that he’s invested at least $140,000, weighing his options.

The Burley Tobacco Growers’ Cooperative in August voted to purchase $1 million in hemp to sell CBD oil, as a way to diversify and save the faltering organization. Now, an attorney is pushing to have the cooperative dissolved and $30 million of its assets distributed to growers.

Others in the turbulent industry also believe hemp’s financial potential was overhyped and the risk underplayed, but the answer of who is responsible is less clear.

“That hype came from all over the place. I mean, even Kentucky legislators and regulators who were excited about hemp maybe inflated the value of what the crops would be,” said Katie Moyer, owner of hemp processor Kentucky Hemp Works and member of the state industrial hemp advisory board.

Moyer believes that farmers, processors, and the Kentucky Department of Agriculture all had a role to play in overhyping the industry.

Huff (left) and Fuller (right), next to some of the thousands of pounds of hemp that Fuller has been struggling to sell.

She said many farmers came into the industry without having backup plans or an idea of what to do with the crop when it was harvested. While she considers some processors like herself acting in good faith in building honest relationships with farmers, other companies did not. She said certain regulations, like the prohibition against selling raw hemp, also hampered options for farmers.

“Some of that fault does lie with the regulators and KDA, who forced us into having to sell to processors,” Moyer said. “Because we can’t take that crop straight to market, we can’t just go sell hemp as flower, as animal feed. There’s no backup plan.”

Sale of raw hemp is prohibited because police are concerned the crop may be mistaken for its botanical cousin, marijuana. But Moyer said she still is optimistic the industry has a positive future ahead of it, and that the industry will stabilize on its own.

“In the free market, those processors that screw over one farmer, or they dropped the ball for one farmer, they won’t ever get another contract,” she said. “I think if we saw less government regulation and less intervention in the market, we would have less of these problems to begin with.”

Kentucky Agriculture Commissioner Ryan Quarles said he understands the anger that hemp farmers are feeling, and that his department is considering ways regulators could force processors to obligate contracts. Quarles instead puts the blame for industry turmoil on federal regulators.

The U.S. Food and Drug Administration has been in the process of considering how to categorize CBD, whether as a more tightly regulated pharmaceutical or as a nutritional supplement. That decision has substantial financial implications for the industry.

“The biggest cause of this is the federal government’s lack of response towards giving an indication of how they’re going to regulate this product,” Quarles said. “We’re entering year number seven of products being on the shelf, and the FDA has yet to give us a framework in which our processors, innovators and entrepreneurs can expect to operate.”

Quarles also said the dramatic crash in hemp price is a part of the “price discovery” process that comes with a new industry. Once the true demand is found for CBD, then the industry can more easily stabilize. He said his department did emphasize risk appropriately, particularly in orientation sessions he said that licensed farmers and processors take.

But little of that matters to farmer Bobby Huff, who’s looking at the potential for big losses.

When Quarles ran for re-election as Agriculture Commissioner last year, he advocated repeatedly for the potential of hemp. Huff feels like that campaign rhetoric led on farmers like him.

For now, he’s done with it.

“It’s going to shit,” Huff said. “I’m not gonna make anything. There’s no doubt about it.”

This story has been updated to clarify Marty Voiers has received partial payment from Acela.

Hemp Farmers Form Cooperatives Amid Growth And Uncertainty

Tony Silvernail swings a heavy machete at a stalk of bushy hemp and chops the plant near the root, grabbing the five-foot-tall shoot with his sun-weathered hand.

It’s an unusually hot October day on his farm, Beyond The Bridge LLC, tucked in the hills outside of Frankfort, Kentucky. But the heat doesn’t faze Silvernail, sporting a sweat-soaked shirt, a huge smile, and a fat cigar between his teeth.

Silvernail and hundreds of others of farmers across the Ohio Valley are finally getting to harvest thousands of acres of hemp, the first harvest since the federal government legalized hemp cultivation last December.

“Oh, I’m happy as hell,” he said with a laugh. “We’re all like little kids, Shawn and I, getting all excited when we’re sitting here harvesting and talking. This is actually the glory part of being a farmer, as anybody whose livelihood depends on this. When you’re harvesting, it’s a happy time.”

Tony Silvernail picks up a stalk of hemp he chopped during the harvest.

He’s been an organic farmer for decades in Kentucky, and it wasn’t until last fall when he and his business partner, Kentucky State University professor Shawn Lucas, decided to try their luck at growing organic hemp for cannabidiol, or CBD. Silvernail said when he first became an organic farmer in the ‘90s, he appreciated the advice experienced farmers shared with newcomers in the industry. But he said that hasn’t been the case with hemp.

“I’ve really adopted that sense of helping, and you didn’t really get that with the hemp industry. The hemp industry is still very closed,” he said. “So, I got in a bad mood and sitting there eating lunch with Shawn downtown, and I really came into a moment of ‘you know, we just got to do our own thing.’”

They co-founded an organic hemp cooperative for smaller hemp farmers. The cooperative purchases hemp seed and other supplies in bulk to get a better deal. It sells the members’ collective hemp harvest to processors, using the strength in numbers to bargain for better prices. And the cooperative helps farmers figure out how to even grow the crop in the first place.

Their cooperative is starting out small – 15 farmers in central Kentucky growing about 30 acres – and has already seen some challenges. They unknowingly purchased faulty seed and have had thieves stealing the crop right out of the fields. But Silvernail said it’s all part of the learning process.

“Ask us in November where our sales were at, how we all did,” Silvernail said. “We can cry on each others’ shoulders over a beer when we realized how badly we may have screwed up or what we didn’t do, but hopefully next year will be better.”

Cooperatives aren’t a new idea in farming. But they’re new in the hemp industry, and many Ohio Valley hemp growers are choosing to join cooperatives to share supplies and give small growers a better shot in an increasingly competitive marketplace. Regional agriculture leaders are championing hemp’s potential for farms of all sizes. But these hemp farmers worry that the sort of corporate consolidation they’ve seen in other agriculture sectors will soon come to the new hemp industry.

Consolidation Concerns

Hemp farmer J. Morgan Leach has already seen attempts by larger corporations to corner the hemp and CBD market.

Leach, founder of the West Virginia Farmers Cooperative, said he testified in 2017 against initial versions of a state bill, that he said would have prevented the sale of CBD products in the state unless the product was approved by the Food and Drug Administration.

That portion of the bill was supported by lobbyists from the British company GW Pharmaceuticals, the proprietor ofEpidiolex, used to treat epilepsy-caused seizures. It is currently the only CBD-derived drug approved by the FDA. Other CBD advocates that year in other states also worried about similar state legislation being pushed by the company.

Leach said initial versions of bill could have closed off a lucrative market for West Virginia hemp farmers.

“So that was one of the, I think, apparent instances where you get kind of these bigger companies that come in and try to monopolize the market,” Leach said. “We were able to overcome that and preserve this market opportunity.”

Leach doesn’t want the new hemp business to follow the route some other agricultural sectors have, such as the poultry industry.

Large poultry companies often have extensive control over a farmer’s production and pricing. That has led to amassive class-action lawsuit alleging that large firms use data to keep prices for poultry high while payment for farmers remains low.

Leach sees that as a cautionary tale about the effect larger corporations can have.

“The company owns those birds from the time they hatch to the time they purchase them, and then the farmer is stuck with the bill for raising those and the chicken house to do it. I think that’s a poor example,” Leach said. “Some are making money, but they’re totally hamstrung to the price that the company gives them, because it’s just how it goes in that industry. [Hemp] is a new frontier.”

Hemp sprouts from the ground at a farm near Frankfort, Kentucky.

Leach founded his co-op in 2015 in part because he doesn’t want a similar situation to happen with hemp.

“That’s our goal, is to be able to keep the five-acre farmer in business even when the bigger companies move into this space,” Leach said. “A co-op is a one member, one vote organization, so all of my members hold shares of stock. That stock is restricted only to farming members. So, farmers are the entirety of the makeup of our organization.”

Leach said it’s ultimately up to the individual farmer whether they want to grow in a co-op, grow independently, or grow under contract for one of many hemp processing companies entering the business.

“I think it’s just kind of a difference in philosophy,” Leach said. “I’d just rather be part of a farming co-op where I have a voice and I have a vote.”

But Leach said he’s worried about the potential for future large-scale hemp production that could push smaller hemp growers out. By banding together, small farmers can compete with larger-scale production.

Booming Growth

Jeffery Young is an agriculture economist with Murray State University’s Center for Agricultural Hemp in west Kentucky. He agrees the potential is there for future hemp consolidation.

“I don’t want to say ‘join or die,’ but it would definitely be in a smaller operator’s best interest to join in on that,” Young said. “They wouldn’t have the acreage, or the volume or the clout that a larger operator would have.”

Young said the new industry is still years away from reaching a level of large-scale production that would pressure smaller hemp farmers. But the nascent industry is booming, and the amount of hemp grown in the Ohio Valley continues to skyrocket.

The number of hemp acres planted in Kentucky this year, compared to last year, nearly quadrupled to about 26,500 acres. West Virginia saw a similar jump with 641 acres planted, according to state agriculture officials. With zooming demand for hemp to turn into products like CBD, prices for the crop are far from set in stone.

“It depends on things like geography, what kind of processors are there nearby, how many are nearby, what variety is being grown, what quality of product is being produced,” Young said. “The market is still trying to get its sea legs, if you will. There’s a great deal more risk with hemp…and so through sharing of risk, that would would be a key benefit from forming a cooperative.”

Much of the risk comes from the learning curve many new growers face. Pesticides are still being tested to control weeds and insects, federal crop insurance for hemp won’t be available until next year, and in some cases, THC levels in hemp can spike above the federal limit that classifies the crop as hemp. THC is the psychoactive compound in marijuana, and is also present in trace amounts in hemp. Hemp with THC levels above 0.3 percent is reclassified as the crop’s illegal cannabis cousin, and has to be thrown out.

While cooperatives can shelter hemp farmers from some risk, the set-ups can bring on new perils for farmers as well. Aleta Botts, Executive Director of the Kentucky Center for Agriculture and Rural Development, works with cooperatives of all kinds to help them become sustainable.

She said because most hemp farmers are still learning how to consistently grow the crop, there’s a chance that a co-op might promise a hemp processor to grow a certain amount of hemp and fall short because of crop failures.

“We’re going to get to harvest and not have those pounds to market. So we’ve built our financials on a level that we’re not gonna be able to achieve,” said Botts.

Unlike in the rest of the Ohio Valley, Ohio farmers aren’t harvesting hemp this fall because the state only legalized growing hemp in July. But that hasn’t stopped widespread interest in growing hemp, something that was apparent at arecent summit for potential hemp farmers in southern Ohio.

Tony Silvernail with a handful of crumbled hemp, on his farm near Frankfort, Kentucky.

“I printed off, I think, 480 some lunch tickets, and they were all gone. So the interest is huge,” said Julie Doran, who founded the Ohio Hemp Farmers Cooperative in December.

She was also one of the few critics who panned parts of the state legislation legalizing hemp cultivation in Ohio. She feared that the bill’s language setting “financial responsibility” standards could limit in-state participation in the state’s hemp program and instead favor out-of-state companies with more experience and access to capital.

Doran said she believes there’s a place for smaller farmers alongside larger investors, but she also cautions that farmers need to learn how to grow the new crop reliably before working with bigger companies that might want to grow larger acreages more quickly.

“It’s not like any other crop that they farmed,” Doran said. “Yes, corporate is going to come in and we are going to need them for an outlet to sell all this stuff, too. But we need to learn ourselves first. And, you know, get our feet wet before we jump in.”

U.S. Attorney Sues West Virginia Hemp Farm Over Seeds’ Origin

A U.S. attorney is suing a West Virginia hemp farm and others, saying they violating the federal Controlled Substances Act.

U.S. Attorney Mike Stuart has sued Matthew Mallory of CAMO Hemp WV, and Gary Kale of Grassy Run Farms. Grassy Run Farms owns the land, The Charleston Gazette-Mail reported Saturday.

The lawsuit charges the farmers with manufacturing, cultivation, possession, and intent to distribute marijuana and not hemp, the newspaper said. Hemp and marijuana come from the cannabis sativa plant, but by state law hemp must be comprised of less than 1 percent THC, the psychoactive compound that gives marijuana users a high.

The complaint says the farmers purchased their hemp seeds in Kentucky and brought them over the West Virginia state line. A state pilot program only allows hemp producers to obtain seeds internationally, via the state Department of Agriculture, the lawsuit said.

The complaint also said the defendants indicated they would install security measures around the farm. However, that allegedly hasn’t happened.

If Stuart prevails in the lawsuit, the farmers’ plants, property, equipment and seeds could all be seized and forfeited to the government. His complaint says the federal government could receive either $250,000 in civil penalties or twice the sum of the defendants’ gross receipts.

The farmers’ attorneys argue the Agricultural Act of 2014 protects their right to grow hemp under state laws. Also, the Farm Bill and related provisions of a federal appropriations bill together state that no congressional appropriated funds can prevent the transportation, processing or sale of hemp under a state program authorized under the federal legislation.

Norman Bailey, chief of staff to the state agriculture commissioner, said in a written statement that West Virginia’s laws and regulations are silent as to the source of seeds for participation in the program.

Bailey said Kentucky and North Carolina have both concluded that buying seeds over state lines isn’t a violation of federal law. The department is monitoring the situation and has not yet decided whether it will intervene in the case, he said.

Stuart said the lawsuit isn’t a statement of a position for or against hemp, but really is about an issue of lax regulatory oversight from the West Virginia Department of Agriculture.

“Based on the action we filed, I think it’s plain that this dispute doesn’t center on a public policy debate about industrial hemp, but on the dangers of lax regulation (and) oversight by a state agency which is trusted by the people of West Virginia to enforce its regulatory scheme,” he said.

J. Morgan Leach is the CEO of the West Virginia Farmers Cooperative, which includes the defendants in the lawsuit.

“We are confused on why the U.S. Attorney’s Office is working so diligently to thwart a growing agricultural industry in the state,” he said. “Especially, one that Congress has clearly shown its support for, and when there are so many other serious issues affecting West Virginia.”

Hemp Farmers Face Rocky Road in Diversifying Eastern Kentucky’s Economy

As the number of coal mining jobs continues to decline in central Appalachia, hemp is getting a lot of attention as one way to diversify eastern Kentucky’s post-coal economy. But the region’s burgeoning hemp industry is also riddled with uncertainty. The lack of land suitable for growing hemp, and its association with marijuana pose some significant challenges.

Neil Spears is a resident of Pikeville, Kentucky. He’s one of the pioneers in Kentucky’s burgeoning hemp industry.

On a hot Friday afternoon in September, Spears drives off a paved road, through a creek, and up to his friend’s hemp farm near Pikeville. It’s nestled among the ancient mountains of Appalachia.

“I used to tell everyone in Colorado, they’d talk about the mountains in Colorado, well, you all got majestic mountains, we’ve got beautiful mountains. That’s two different things. Awe-inspiring and beautiful are two different things,” he says.

Spears has a goatee and hair that brushes his shoulders. He walks through the five-acre plot in his beat-up straw hat, watching out for rattlesnakes.

Hemp grown for CBD production and testing is seen at the Robinson Center for Appalachian Resource Sustainability in Quicksand, Ky., on Monday, September 25, 2017.

It’s not easy to see the hemp plants. Most of this year’s crop has been choked out by weeds.

“It’s not what I dreamed of,” Spears said as he walked through the field. “But first year out, you’ve got a crop up. Albeit a small crop, we’ve got a crop up.”

Spears grew up in Pikeville, pursued a career as a singer-songwriter, and eventually left to work in the marijuana industry in Colorado.

“A good friend of mine said, ‘Do you want to come home and get ready for what’s coming and start growing hemp?’ I said yeah. So came back last November and here we are.”

Hemp can be used for a wide range of products — plastics, health foods, biofuels. Spears and his friend plan on selling the fiber part of the crop to a processing facility in North Carolina later this fall.

But the most lucrative product is cannabidiol oil, or CBD oil. Spears is excited about their plan to build a 10,000 square-foot greenhouse to start growing hemp specifically for CBD oil.

CBD is different from THC, or tetrahydrocannabinol, the chemical in marijuana that gets you high. But some studies suggest it can be used to treat epilepsy, anxiety and depression. All these claims need more scientific research, but in the meantime, there’s a growing market for CBD oil.

“I’d like to see eastern Kentucky to be a big grower of hemp, you know, as a whole. This is something that can start making some people some money. I’m interested in helping whoever in eastern Kentucky wants to grow hemp, grow hemp,” Spears said.

But for hemp growers wanting to cash in on CBD oil, there’s risk involved. The hemp strains with the highest CBD levels also have higher levels of THC. And if the THC content is more than three-tenths of one percent, state law requires the grower to burn the crop.

A highway is seen from the top of a mountain in Pike County, Ky., on Wednesday, September 27, 2017.

About an hour and a half away from Pikeville, in Jackson, researchers at the University of Kentucky are experimenting with creating hemp varieties more suitable for growing in the state.

University of Kentucky agronomist David Williams inspects one of his hemp research plots at the Robinson Center for Appalachian Resource Sustainability. The spindly, green stalks and the arrow-shaped leaves give off an earthy, slightly sweet smell.

“I don’t know how tall this plant is, but it was planted at the end of June. How tall would it be if it were planted 60 days earlier? We’ll find out next year,” Williams says as he examines a hemp plant. “The most important part about our work is determining which varieties are best adapted to our latitudes and our climate for optimum yields.”

This research would have been illegal a few years ago.

Hemp has a long history in the United States.

From the sails and rigging on the USS Constitution — America’s oldest naval ship — to the canvas on covered wagons heading out west, hemp is deeply tied to our nation’s past.

And Kentucky has played a vital role in that. While some was originally grown on small family farms, the majority of the nation’s hemp was produced in the Bluegrass Region of central Kentucky as a plantation crop.

“Hemp production is very tedious, very labor-intensive. One needs not look very deeply to understand that, that history is inextricably connected to slavery,” Williams said.

Hemp production in Kentucky dropped off after slavery was abolished and cheaper imported fibers became available. Except for a short-lived revival during World War II, hemp production was discouraged and finally banned because of its connection to marijuana.

Although CBD oil from hemp cannot get you high, it was still grouped in the same category as marijuana and heroin.

Then came the 2014 Farm Bill, which allowed certain states to grow hemp for the first time in about six decades. A number of Kentucky lawmakers said hemp would create thousands of jobs, and the Kentucky Department of Agriculture launched an aggressive research program.

“By most measures, Kentucky leads the nation in industrial hemp research,” said David Williams, the University of Kentucky agronomist. “The Kentucky Department of Agriculture has done a fantastic job managing what anyone would consider a very complex situation.”

And it is complex.

Those who want to grow or process hemp need a license from the Drug Enforcement Administration. And hemp seeds and plants cannot be taken across state lines.

Still, there were about 200 approved growers this year in Kentucky who – in total – planted almost 3,000 acres of industrial hemp. Some was for fiber, which includes everything from T-shirts to dashboards, but most of it was for CBD oil.

Almost all the hemp production was in central and western Kentucky, where the average farm is much larger — 100 acres or more. In the eastern, more mountainous side of the state, farms are smaller than 10 acres.

“We can’t expect eastern Kentucky and West Virginia to become major contributors to hemp as a commodity crop,” Williams said. “That being said, plant breeding or certified seed production [create] situations where you don’t have to have hundreds of acres to be profitable.”

In other words, Williams says eastern Kentucky doesn’t have the terrain to grow hemp for large-scale industrial products. But producers in the region could potentially grow hemp for the seeds or seedlings, and sell those to farmers in the central and western part of the state.

The remains of a strip mine are seen from a mountain top in Pike County, Ky., on Wednesday, September 27, 2017.

With limited flat land, some entrepreneurs thought former strip mines could become farms.

Nathan Hall is president of Reclaim Appalachia – a nonprofit working to develop economic opportunities on former coal mining land.

“Hemp has this reputation of being a hardy plant that grows just about anywhere … there’s a big difference between a plant that will technically grow anywhere versus a plant that you can get profitable production per acre anywhere based on the type of soils you’re working with,” Hall said.

He tried growing hemp on an old strip mine site, but it didn’t go well.

“There is no topsoil at all. You’re planting into rock,” he said.

Hall says despite the small size of farms in mountainous eastern Kentucky, growing hemp for CBD oil in the fertile valleys could be economically viable … with a couple of caveats.

“We need to get clarity around the legal issues surrounding CBD; that still seems to be a bit undecided in terms of whether we can sell across state lines, with the current Administration where things like CBD might be deemed illegal at some point, there’s just a lot of uncertainty. There’s a lot of risk,” he said.

Despite those risks, Neal Spears from Pikeville is willing to bet on it.

“This is about helping people,” he said. “This is about making people better and making this region better.”

This story came to us from Crossing the Divide, a cross-country reporting road trip from WGBH and The GroundTruth Project. Rachel’s on a team of five reporters exploring issues that divide us and stories that unite us. Follow their trip across America at xthedivide.org.

Hemp Seeds Distributed to W.Va. Growers

Hemp seeds are being distributed to approved growers in West Virginia for a research project on the crop.

State officials say it took two years to create rules governing the project. Applicants must pass background checks before being licensed to participate.

The planting of hemp seeds moved forward this year after Gov. Earl Ray Tomblin vetoed a bill that would have prevented individuals from growing industrial hemp for research projects.

J. Morgan Leach is executive director of the West Virginia Hemp Farmers Cooperative. He told the News and Sentinel in Parkersburg that his father, Jim Leach, and Dave Hawkins are among the members of the cooperative who have been approved by the state to plant hemp seeds in the project.