Iowans hope to cash in big on hemp. But they need lawmakers' help to make it happen
Kyle Owen, a tobacco farmer in Carthage, Tennessee, is starting to focus on hemp instead. And he's not alone. The Tennessean
Angie Rieck-Hinz's phone and email have been blowing up.
Dozens of Iowa farmers and entrepreneurs want to know when they can begin growing marijuana's cousin, industrial hemp, a new possibility under the 2018 Farm Bill.
"A couple of things have to happen before this can take off in Iowa," says Rieck-Hinz, an Iowa State University Extension agronomist in north central Iowa.
The farm bill's hemp provision opens up production of a plant that can be used for food and animal bedding, as well as to make cloth, high-protein feed, fuel and plastics that are biodegradable, said Christopher Disbro, the Iowa Hemp Association's board president.
For example, North Face and Patagonia already use hemp fiber in their winter gear. And BMW uses it as a composite fiber in its doors, Disbro said.
"The real exciting part for Iowa farmers is that we can be the center of the next economic boom," Disbro said.
But legislative leaders must consider a raft of issues before hemp seeds hit Iowa soil, decisions that could set up Iowa to cash in — or risk missing out on billions of dollars in the hemp industry, experts say.
The choices lawmakers face include deciding whether to allow hemp to be used to make increasingly popular and lucrative cannabidiols — the non-psychoactive compound that's in everything from chocolates to body creams and dog treats to relieve a host of maladies.
"There will be a windfall of investment coming into this industry, from every direction, and we need to make Iowa a magnet," said Ethan Vorhes, a northeast Iowa cattle producer who wants to grow hemp as a feed supplement. "Or those investment dollars will go somewhere."
Iowa is one of 11 states with no hemp production laws.
The Iowa Senate passed a bill unanimously last year, but the session ended before the House could consider it. Leaders plan to reintroduce legislation in the coming session, where supporters expect bipartisan support.
Even then, state officials will need to write administrative rules and regulations that the U.S. Department of Agriculture will accept.
Iowa farmers likely will need to get licenses, register their fields and have their crops tested to ensure the plants contain no more than 0.3 percent THC — the compound in cannabis plants that gives users a high.
Without state legislative approval, Iowa farmers still could plant hemp under federal regulations. "We would obviously like to submit our own plans," Disbro said, "and have the primary regulatory authority here in Iowa, and not in D.C."
Expect a 'wave of chaos'
Iowa's march to adding a new crop to its 30 million farm acres comes with a big question mark: Will legislators allow farmers to produce hemp-derived cannabidiols, commonly called CBDs?
Sales in the fast-growing market are projected to grow from $591 million this year to $22 billion in 2022, according to the Brightfield Group, a Chicago-based cannabis market research company.
"Now that everything has been changed at the federal level, we're going to see a wave of chaos as a lot of states start figuring out their regulations," says Bethany Gomez, Brightfield's research director.
The farm bill allows for hemp-derived CBDs, but Iowa leaders might not want it to compete with the state's medical marijuana bill, which doesn't allow CBD to be processed from industrial hemp.
The state's medical marijuana law "only allows production and distribution of cannabidiols" — or CBDs — through the Iowa Department of Public Health licensing program, the Iowa Department of Agriculture said in an email.
Only two companies have permits to grow marijuana in Iowa and manufacture the medications. The THC is capped at 3 percent.
"Industrial hemp could potentially be used to produce CBD should the Legislature change Iowa code," agency officials said in their email.
The medical marijuana law allows people with maladies such as epilepsy, cancer, multiple sclerosis, Lou Gehrig's disease or intractable pain to buy marijuana-derived CBDs and THC products.
The attorney general and state agriculture officials plan to meet in January to discuss Iowa's laws in light of the farm bill's hemp provisions.
Is Iowa at risk of missing out?
With the current structure, Iowa could miss out on a "massive investment boon" taking place nationally in CBDs, Disbro said.
"It restricts that entire chunk of the industrial hemp industry," Disbro said, adding that Iowa farmers already are being contacted by CBD companies looking to grow hemp.
Even if farmers are prohibited from processing cannabidiols in their states, they can still grow hemp for the market, shipping it to processors in other states, said Brightfield's Gomez.
"There will be a huge demand for these products," she said. "There will absolutely be a supply shortage" of hemp-derived CBDs.
Coca-Cola and PepsiCo both say they're watching the industry for an opportunity to produce CBD-infused drinks.
But Gomez said large food and beverage companies are more likely to jump into the CBD market after the U.S. Food and Drug Administration signs off on their use.
Until then, Gomez expects CBD product sales will gradually move from specialty stores and online to more mainstream retailers, eventually reaching Walmart, CVS and other large retailers' shelves.
Gomez said consumers are interested in CBD's functional health benefits, which advocates say relieve everything from anxiety and minor aches and pains to insomnia.
Some California restaurants use CBDs in drinks to help eliminate hangovers.
"A state like Iowa, with its agricultural expertise, could certainly benefit from this crop," she said. "… That's why Mitch McConnell pushed for it, why Kentucky pushed for it and many other red states, because it's such a big win for farmers."
As corn and soybean prices sag, farmers need third crop
Rieck-Hinz said hemp's economic potential for Iowa is less than clear.
Right now, Iowa lacks the infrastructure to produce hemp — from sourcing seeds to herbicides to storage facilities, processing plants and markets.
Some Iowa manufacturers might be able to use hemp in production, but that will likely require more research.
"I understand the need for a third crop," Rieck-Hinz said. "Corn and soybeans are not that profitable."
But "we don’t have an established market for hemp seed or fiber in Iowa," unlike the markets for corn and soybean, Iowa's two largest commodities.
"And we don’t have any plants that are processing anything," she said.
Even with hemp's potential, it will take quite a bit of growth to reach the $12 billion Iowa farmers received from corn, soybean and other grain production last year, said Dave Miller, the Iowa Farm Bureau Federation's research director.
"Industrial hemp has the potential to be that third crop" in Iowa, Miller said. "But how quickly that develops remains to be seen."
Rieck-Hinz said some farmers already have purchased hemp seeds.
"The best piece of advice we can give to people: Have a contract in hand — or an identified market to take their product before they do this," she said.
'We can't sit another year'
Vorhes, who farms near Marble Rock in northeast Iowa, is excited about the potential to grow hemp, primarily to create nutritional oil and high-protein feed for his cattle.
He belongs to a national group of producers that wants the federal government to approve hemp's use as a feed supplement. But a lot more research is needed.
A law allowing hemp production in Iowa would let him grow the crop and participate in state and national studies.
"We really can't sit another year," said Vorhes, 35, who sees the hemp products improving his high-value Wagyu beef, a deeply marbled product that comes from Japanese cattle.
Vorhes said that without action in Iowa, he may move to another state that's backing hemp production.
"This is a great opportunity for farmers."
Follow the Register on Facebook and Twitter for more news. Donnelle Eller can be contacted at email@example.com.