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While many states are legalizing medical and adult-use marijuana, the federal government has been quietly working to legalize industrial hemp. Hemp is a genetic cousin of marijuana and both are varieties of the cannabis plant, though hemp does not contain intoxicating amounts of the psychoactive compound THC (tetrahydrocannabinol). Hemp has been grown domestically for thousands of years to produce paper, rope, building materials, and clothing and is now used in health products and other consumer goods.

Former presidents George Washington, Thomas Jefferson and James Madison all grew hemp, as did famous statesman and inventor Benjamin Franklin. At the time, hemp was known throughout the world as a valuable crop and had yet to be deemed illegal by the US government. Hemp farming was taxed out of existence by the Marihuana Tax Act of 1937, which was enacted to eliminate competition for the paper and emerging plastics industry. All varieties of the cannabis plant were made illegal by the Controlled Substance Act in 1970 which grouped hemp (and marijuana) in Schedule I with other illegal substances like heroin, LSD and ecstasy.

More recently, the federal government has allowed limited farming of hemp if it is grown according to state-sanctioned research pilot programs. Due to those programs’ success and bipartisan congressional support, Congress is likely to pass legislation by Christmas removing hemp from the Controlled Substance Act and allowing its cultivation for industrial purposes. 

The 2018 Farm Bill legalizes industrial hemp and its derivatives and places its regulation as an agricultural commodity under the Department of Agriculture, rather than the Department of Justice. Other provisions require hemp to contain less than 0.3% THC and allow the FDA to continue regulating ingestible and topical hemp products. Lawmakers, farmers and manufacturers all see hemp as a potential mega-crop that needs to be reinstated as part of the country’s agro-economy.

Though farmers will benefit greatly from the legalization of this new cash crop, the real value in the supply chain will be in hemp processing.

“Hemp processing facilities, much like the cotton gins of old, are the key to this emerging market,” says Matthew McLaughlin in a recent article published by the Mississippi Business Journal. 

Hundreds of products can be derived from hemp but require technical expertise to obtain. This means employing highly skilled engineers, botanists, technicians and scientists to maximize crop yield and processing efficiency.

Innovations in manufacturing technology allow manufacturers to make a variety of commercial and industrial products from hemp. Hemp clothing has come a long way since Woodstock and is replacing linen as the definitive natural fiber. Major car companies are mixing hemp fiber with fiberglass to make composite panels that are strong and lightweight.

Hemp is also used to make environmentally-friendly and cost-effective construction materials such as particle board, composite blocks and insulation. CBD, or cannabidiol, is a hemp derivative that is gaining attention for its medicinal benefits such as aiding in sleep and reducing anxiety and chronic pain. When hemp becomes legal, CBD can be extracted for use in the rapidly-expanding dietary supplement and nutraceuticals markets.

Hemp is the next American cash crop. Compared to cotton, hemp is more versatile, requires less land and water to grow, and is arguably more profitable per acre.  As soon as the regulatory reigns are lifted, farmers and manufacturers should be prepared to pivot into this emerging market. The real winners will be economic developers who can bring hemp processing facilities and their highly skilled employees to town.

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