Cashing in on hemp slowly but surely

State Capitol Room 443 — or at least a few corners of state Rep. Cynthia Thielen’s office — is a hemp haven. There’s an arid arrangement of dried stalks of the plant towering here, a block of “hempcrete” building material there, a couple packets of hemp health-food snacks on her desk.

These items have had time to accrue over the years the Kailua legislator has been the leading advocate for the cultivation of industrial hemp. She pulled out another item on her desk, a 1938 copy of Popular Mechanics.

“They were talking back then about hemp being the ‘billion-dollar crop’ — $1 billion in ‘38, and you extrapolate that today, and I’m not quite up to the math, but … ” Thielen said, trailing off with a laugh.

Hemp may soon get its day. After a two-year research project by the University of Hawaii College of Tropical Agriculture and Human Resources (CTAHR), Hawaii is poised to take its first baby steps toward piloting a new cash crop. Last week the state Department of Agriculture adopted rules allowing farmers to be licensed to grow the plant, a federal permit was issued and the first contracts to develop a seed bank locally were issued.

A bill smoothing the way for some of this activity was passed. Scott Enright, director of the state Department of Agriculture, expects Gov. David Ige to sign it.

Why all the hoops to jump through to put a new crop into the ground, especially considering that Hawaii agriculture needs replacements for sugar? The issue here is that hemp and marijuana are two varieties of the same species: cannabis sativa.

The difference is that hemp has lower concentrations of tetrahydrocannabinol (THC), the psychoactive component in marijuana, and more of the cannabidiol (CBD), which has more medicinal applications.

Hemp is classified as an illegal drug under federal law. However, the Drug Enforcement Administration has issued permits to Hawaii and 14 other states allowing commercial hemp cultivation by growers who secure licenses from the state overseers of the program.

Primarily, the state is responsible for ensuring that the crops are bred to contain THC below the regulated level — far too low to produce the high of marijuana. Enright said in meetings he’s attended with other state agricultural directors, he’s learned that managing this regulation has bedeviled other states, such as Colorado, that pioneered hemp production.

More recently, technology allowing testing to go on in the fields makes it easier to cultivate plants with accepted THC levels, he said.

“The main concern is being in compliance with federal regs as it pertains to hemp,” Enright said. “We need to get to a place where we can understand that the varietals that are grown in the state are staying below the threshold of THC.”

The timeline leading to this point in Hawaii goes back at least to 1999, when the DEA authorized the first test planting since World War II. That, Thielen said, occurred in Wahiawa, and Hawaii was one of the first states nationally to take up the hemp renaissance.

Since then, Hawaii lagged, with the exception of research cultivation by UH. Then in 2016, Act 228 was signed to establish an industrial hemp pilot program. The law allowed the Board of Agriculture to license farmers to grow hemp, under its rules.

The more recent advances included the federal approval of the DEA permit enabling the importing of the seed. And on Tuesday, the state agriculture board approved the rules governing the pilot program.

The new regulations set out the process for licensure; licenses will be issued to qualifying applicants on a quarterly basis each year. Licensees must agree to inspections and to file reports at various stages of cultivation, including notification of when the crop is moved.

Also among the rules are the establishment of licensing fees that are meant to help the program become self-sustaining, said Micah Munekata, Department of Agriculture legislative coordinator. Bill 773 was passed this year largely to establish a separate fund for those revenues, Munekata said, but that part ultimately was stripped from the final bill now sitting on the governor’s desk.

However, Thielen underscored that the measure does make some important changes to the pilot program of Act 228, including allowing licensees to apply throughout the year. The act had set a narrow annual application period, but that was modeled off a statute for Kentucky, where the growing season is much shorter than in Hawaii, she added.

Finally, last week three applicants were selected, each to receive $75,000 contracts funded by Act 228 to produce a bank of Hawaii-acclimated seed for the licensed farmers of the pilot project to use. The contracts are not finalized, Munekata said, but the entities are CTAHR, HIH Solutions on Maui and Green Hawaii Genetics LLC, on Hawaii island.

Melody Heidel, a research associate on the earlier CTAHR project who oversaw field work in Waimanalo, said the hope for the new contract is to get imported seed into the ground in July so that licensed farmers will have seed from at least two crops.

The potential uses for hemp are wide-ranging (see story, this page), but there are still a lot of questions about how the new industry will evolve and what products cultivation will yield.

Enright told agriculture board members last week before the rulemaking vote that the prospects look good for CDB oil because that’s “high-end.” But he added that some of the other manufactured products — fabric from hemp fiber, nutritional aids — may require infrastructure and an economy of scale larger than Hawaii could support.

Others are more bullish on the options opening up for hemp. Heidel said the Hawaii Farmers Union discussed the prospects for hemp growing at its 2016 convention in October.

“The question of infrastructure came up, there was a discussion that small farmers could hui up,” she said. “I think that’s a brilliant idea.”

At the board meeting, Maui representative Vincent Mina, president of the farmers union, said the state needs to be open-minded about the potential.

“I would like to see that hemp is given its fair day,” he said. “It could be very beneficial, not only to farmers but to other people.”

Lingering concerns about some other aspects should not become barriers to developing a new industry, Thielen said. For example, the psychoactive version of cannabis — “pot” plants, with high THC — are unlikely to be planted alongside with the hemp because industrial hemp cross-pollinates readily. And the product would be a pot crop that’s too low in THC to pass muster in medical marijuana labs, losing its value, she said.

The up side is difficult to ignore, she said.

“Farmers here could make between $1,200 and $4,000 an acre,” Thielen said. “In Kentucky they did the research. Other than tobacco, which they’re making them phase out, hemp is the most profitable.

“If you go to the CBD oil, you realize you’re only using a portion of that, the seed portion. You’ve got the leaves for animal forage; you don’t have to bring in the cattle feed, which is the big expensive thing the farmers have. Then you’ve got the rest of the plant, some of it for the hempcrete.

“You don’t need to be cautious about growing industrial hemp,” she continued. “What we need to do is enable the farmers to do it, and enable the entrepreneurs to step in, producing some of the 25,000 products and uses for this amazing crop. Nothing’s wasted in it.

“And the billion-dollar crop from the 1930s, nearly 100 years later, is going to be an incredibly valuable crop.”