Posted on August 15, 2014 by Peter Clausi
Ah, Kentucky: thank you for bourbon and The Derby and good basketball. Now, surprisingly, add industrial hemp to that list.
Hemp is a versatile wonder herb, currently used in food, consumer textiles, building materials, plastics, biofuel, industrial products, fuel, personal care … the list goes on and on. And unlike its cousin cannabis, it contains less than 0.1% THC, so it’s not possible to get high using hemp. It would be like expecting to get drunk by chewing barley!
Agriculturally, it’s a welcome addition to a farm, as it suppresses weed growth, does not require much care, can withstand cold temperatures down to about 23F, aerates the soil as part of a crop rotation, and is an efficient oxygen / carbon dioxide exchanger.
Hemp was a major contributor to the economy. For example, until 1883, roughly 75% of all paper in the world was made from hemp fiber. Back home, the 1850 U.S. census documented approximately 8,400 hemp plantations of at least 2000 acres. Hemp was a large supporter of the US economy, right up until 1937 when under the Marijuana Tax Act, 1937 Congress effectively banned the growing of hemp, in hysterical hearings that contained incorrect facts and or unfounded arguments.
Some blame this on Mr. Andrew Mellon (Ambassador to Great Britain, Secretary of the Treasury, and one of the wealthiest people in the country) who had large timber holdings that were subject to possible loss of market share from hemp. We’ll never know the exact politics behind the hearings, but the government (mainly through the Drug Enforcement Agency) has since had a near-maniacal opposition to hemp. And that’s a shame for the economy and the struggling farmers.
Enter Kentucky. It was once the country’s leading producer of hemp, making about 40,000 tons a year just before the Civil War. This year, Kentucky’s Agriculture Department planned to import and distribute hemp seeds for use in pilot projects at four Kentucky universities, as a stepping stone to commercializing hemp product under a federal Farm Bill and reinvigorating the state economy. The DEA seized the seeds. Kentucky immediately sued for their return, and in May, 2014, reached an agreement with the DEA to get the seeds.
The seeds are in the ground, and as of August 1 are thriving, without fertilizer or herbicides. “It’s doing just fine so far,” said Dave Williams, an agronomist at University of Kentucky. “We’ve had enough rain to keep it growing and enough heat to make it grow.” (quote courtesy of The Daily Chronic). The crops should be ready for harvest in late September or early October.
Nine states have now passed bills allowing for hemp production. Eight more have passed bills calling for its study. Hemp is booming.
As a retail product in the USA, over half a billion dollars of hemp products were sold at the retail level alone in 2012, and this at a time when the growing of hemp was still unlawful! One can only imagine the explosive growth when farmers across the country begin harvesting hemp. And as social attitudes and legislation governing cannabis become more permissive, it is not unreasonable to expect the restrictions on growing hemp to ease off as well.
Hemp is poised to be one of the biggest stories over the next decade. Find a way to safely be part of it. And remember to tip your corn mash to the Bluegrass State in thanks.
About Peter Clausi
Mr. Clausi is an experienced investment banker and corporate director. A graduate of Osgoode Hall Law School and called to Ontario’s bar in 1990, Mr. Clausi has extensive experience in finance, shareholder rights and corporate growth. Mr. Clausi has been a guest lecturer at three Ontario MBA programs, and was an instructor at the Law Society of Upper Canada’s bar admission course for over 10 years. He is scheduled to speak at the 2nd Securities Compliance for Mining Conference in September, 2014. He is executive vice-president of corporate affairs and general counsel of GTA Resources and Mining Inc.; an independent director and audit committee member of Baja Mining Corp.; and an independent director of Aldrin Resources Corp.