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Congress is set to legalize hemp

Lawmakers are poised to fully legalize hemp after a decades-long campaign.
Lawmakers are poised to fully legalize hemp after a decades-long campaign.

Lawmakers are poised to fully legalize hemp after a decades-long campaign, setting the stage for the resurgence of a once-common crop that disappeared during the war on drugs.

The legalization provision, championed by Senate Majority Leader Mitch McConnell, R-Ky., and included in the Senate's farm bill, would officially classify hemp as an agricultural commodity and remove it from the federal controlled substances list. Lawmakers are also expected to advance the measure when they meet next month to draft the final, bicameral version of the legislation.

Hemp landed on the list because it is, like marijuana, a form of the cannabis plant. But growers and farm-state politicians argue the two have been unfairly lumped together, depriving farmers of what could one day become a major commodity crop.

In Kentucky, in particular, hemp has been touted as a panacea for cratering tobacco sales and falling crop prices. Growers there have pinned their hopes for future profits on it. But as legalization looks ever more inevitable, the question now is whether industrial hemp can deliver on decades of hype and promises.

Advocates say the industry is poised for an explosion, particularly as new supply chains develop and researchers discover additional uses for cannabidiol oil, which can be derived from hemp. There are also concerns, however, that the industry may grow too quickly, forcing the price of hemp down to unsustainable levels before there's adequate demand for it.

"There's no question that industrial hemp is economically viable," said Rep. James Comer, R-Ky., an architect of the legalization plan. "I get a call from a farmer every other day. More and more farmers want to grow it."

The saga of American hemp is essentially one of mistaken identity, farmers say. The tall, weedy plant is botanically the same species as marijuana, but it contains only trace amounts of the psychoactive compound THC that causes a high in smokers.

Hemp has a wide range of other uses, however. George Washington and Thomas Jefferson both grew it, chiefly for use in cloth, ropes, sails and nets. The Agriculture Department also urged "patriotic farmers" to plant it during World War II for use in naval towlines, parachute webbing and other products.

But in the wake of World War II, when demand slackened, hemp began to fall out of vogue. In 1970, Congress passed the Controlled Substances Act, which effectively made it illegal to grow both hemp and marijuana.

Today, the roughly $688 million of hemp goods sold in the United States each year - products such as teas, T-shirts, car parts and supplements - are made largely with materials imported from Canada, where industrial hemp has been legal to grow since 1998. The current Senate legislation seeks to give U.S. farmers a piece of that market by removing hemp from the controlled substances list and reclassifying it as an agricultural commodity. Farmers will still have to meet certain requirements to purchase and grow hemp seeds.

"The ideal scenario is one in which farmers can grow this like any other crop," said Eric Steenstra, the president of the advocacy group Vote Hemp. Many lawmakers now understand, Steenstra added, that hemp has a long history in U.S. farming - and that hemp and marijuana are effectively different plants.

Congress has attempted to revive U.S. hemp before, though farmers and advocates say earlier efforts did not go far enough. The 2014 farm bill opened the door for some growers to plant the crop as part of experimental, state-run pilot programs. Under those pilots, farmers have already planted 25,000 acres of hemp in 19 states, from Kentucky to Oregon.

But growers say a true commercial industry remains impossible as long as hemp is classified as a controlled substance. That's because farmers face stringent regulations when importing seeds, and many banks won't loan to farms or processing facilities that work with hemp. The lack of capital has slowed the development of the supply chains and markets that will ultimately make hemp a viable crop.

"There are a lot of people who want to invest in hemp," said Comer, the Kentucky Republican. "There would be more if it weren't a controlled substance."

Comer says legalization has broad bipartisan support in both chambers, and has earned the vocal endorsement of both McConnell and Senate Minority Leader Charles Schumer, D-N.Y. Even U.S. Attorney General Jeff Sessions, an outspoken opponent of marijuana, told McConnell he would not "oppose" legalization, The Associated Press reported.

Many politicians - including McConnell - say they support hemp because farmers and farm groups have pushed for it. Advocates such as Steenstra have called hemp the next great commodity crop, suggesting it could one day blanket vast swaths of U.S. farmland. Farmers have clamored to grow it because of the potential to earn higher profits than they do on crops such as corn and soybeans, which are now plagued by low prices and trade disruption.

"I think over the last five years there's been enough discussion about cannabis that people now understand there is a difference," said Geoff Whaling, the chairman of the board of directors at the National Hemp Association, an industry group. "I see it in Congress. When I first started going, I did not get a great reception. But today if I go in to talk with the Senate Ag Committee, they want to know how quickly we can build a hemp industry to start helping local farmers."

But it's difficult to predict if hemp is really the next super-crop for farmers or consumers, said William Snell, an agricultural economist at the University of Kentucky who has studied the state's pilot programs.

Supply chains and markets for the crop don't readily exist in the United States yet, which could limit the amount of hemp that gets processed into actual products. And while farmers can earn large profits on hemp, Snell said, that's largely at specialized operations growing hemp for cannabidiol oil, a process that's both expensive and labor-intensive. Profits on hemp grown for seeds and fiber have been far lower, according to a 2017 report by Cornell University, ranging from $211 to $733 per acre.

"At this point we feel like the economics of growing hemp for grain and fiber will be similar economics of corn and soybeans," Snell said. "Some producers have been able to make several hundred dollars per acre. Others have lost money. It's kind of all over the board to be honest."

There's a trickier issue at play here, as well. If legalization prompts too many farmers to start growing hemp, prices could drop suddenly and destabilize the market. In late February, USDA undersecretary Greg Ibach warned that full legalization risked "overburdening the market with supply before there is demand for it."

And supply is already growing quickly: In Kentucky alone, farmers planted an estimated 7,000 acres of hemp last year, Snell said, more than twice what they planted the year before. The industry in Steenstra's state, Virginia, is smaller - 87 acres in 2017 - but more farmers have expressed interest in planting it.

Steenstra said he isn't worried the industry will grow too quickly. For hemp growers, he said, the priority is getting the crop legalized so the industry can grow, period.

That could happen as early as September, when lawmakers will meet to advance the farm bill.

"I think there may be more demand from farmers than there is market right off the bat," Steenstra said. "But I think over time hemp is going to be another major commodity crop. . . . There's real potential for it."

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