Local/Regional News
2:02 pm
Wed October 9, 2013

Canadian Company Eyeing Kentucky For Possible Hemp Factory

A Canadian hemp processor looking to expand operations south of the border sees Kentucky as fertile territory for production and processing.

However, its top executive said Wednesday that questions about the crop's legality have to be resolved first.

Hemp Oil Canada Inc. President and CEO Shaun Crew said the Bluegrass state is in the running for a possible plant in the U.S. to process hemp seeds. The company would look to contract with area farmers to supply seeds to the plant, he said.

The company, based in a town south of Winnipeg, is looking at other states including North Dakota, Minnesota, Colorado and California for the potential expansion, he said.

Crew, who visited Kentucky recently to meet with officials, said the state's central location and heritage of hemp production would be advantages.

"This underscores what's out there potentially," said Holly Harris VonLuehrte, chief of staff to state Agriculture Commissioner James Comer.

The crop flourished in Kentucky until it was banned decades ago when the federal government classified it as a controlled substance related to marijuana. Hemp has a negligible content of THC, the psychoactive compound that gives marijuana users a high.

Before the company expands production into the U.S., there needs to be certainty that the plant is legal, Crew said.

"The whole situation on the political end, until that's resolved it's difficult to make any commitments at this stage of the game," he said in a phone interview.

"We need to have the legal framework in place for not only ourselves but so the growers have some confidence that if they put in a crop, they're not going to have the DEA (Drug Enforcement Administration) swoop in and cut it down and burn it."

Kentucky lawmakers passed a bill this year to allow industrial hemp to be reintroduced, but only if the federal government lifts its ban.

The state's attorney general, Jack Conway, recently warned that if farmers plant industrial hemp in Kentucky next spring, they would be violating federal law and could be criminally prosecuted. Conway indicated he issued the advisory to state leaders, largely to protect farmers who might mistakenly believe it's OK to grow the plant.

Comer, a leading industrial hemp supporter, argues that Kentucky law allows the crop and that the federal government doesn't plan to prosecute to enforce its law. Comer says hemp could give an economist boost for Kentucky. The plant's fiber and seeds can be turned into products ranging from paper to biofuels.

"Why in the world everybody wouldn't want to jump on board for this is beyond Commissioner Comer," VonLuehrte said Wednesday.

Hemp supporters say their efforts to reintroduce the crop were strengthened by the federal government's response to Washington and Colorado, which legalized the recreational use of marijuana last fall. The U.S. Department of Justice recently said it would not interfere as long as the states create tight rules.

Hemp Oil Canada's products include hemp seed oil, toasted hemp seeds and hemp powders and flours. Its top markets are in Canada and the U.S., Crew said.

A new processing plant would likely start with about a half-dozen employees with the goal of expanding, Crew said. The plan would be to contract with area farmers to supply hemp seeds, he said. The company's contract farmers in Canada typically net about $300 to $500 per acre, after production costs, he said.

Comer doesn't expect large-scale grain farmers to shift to industrial hemp, but the crop holds potential for farmers with smaller operations, VonLuehrte said.

Crew said he sees tremendous growth potential for hemp products in the U.S. if the legal issues about the plant are resolved.

"U.S. legalization of growing industrial hemp brings so much more legitimacy to the market," he said. "I think the opportunities would flourish after that."