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Hemp production ramping up in Tennessee

Barriers remain, but Shelby County fertile ground for growers

By Updated: March 04, 2019 6:47 AM CT | Published: March 01, 2019 11:58 AM CT

With the passage of the 2018 Farm Bill in Tennessee, the controlled-substance designation for industrial hemp was lifted, creating widespread interest in growing opportunities.

Developing farming best practices and identifying processors and customers for the new crop pose challenges for entry into the market, but there is promise for Shelby County growers and more are taking the plunge and considering hemp production as an option.

Hemp has been legal to grow in Tennessee since 2014, when the federal Farm Bill Act made it legal, as long as it was grown on federally regulated farms from regulated sources for research purposes.

But after the 2018 Farm Bill in Tennessee, hemp growth in the state grew from 130 acres to nearly 5,000 acres in 2018, according to the Tennessee Department of Agriculture.

One West Tennessee company capitalizing on the new growing opportunity is Green Acres Ventures, a partnership between Memphian Steven Medlock and Adam Knapp, a native of Steamboat Springs, Colorado.

Medlock is a Memphis attorney familiar with the state’s regulatory environment. Knapp is currently working with a company in Colorado that has grown from small beginnings in 2009 to a 90,000-square-foot facility with 36 growing rooms and 70 employees, bringing crop expertise to Green Acres Ventures, although there is a learning curve in developing the crop in a new, Southern climate. 

Green Acres started growing hemp on outdoor land, but is now refurbishing an old milk barn on the edge of Fayette and Shelby counties to create a convertible growing environment that will protect the hemp plants in their infant stages. That will provide higher yields of cannabidiol (CBD) oil, which the company uses to produce a retail line of topical products, tinctures and bath bombs called Pure Naturals.

Officially launched this year, the products are currently available online and in Memphis retail locations, including The Sweat House at 4615 Poplar near Perkins Road, and Flow Therapy on Sanderlin Avenue.

“There is still a very negative connotation by people who are uneducated about the industry,” Medlock said. “That is one of the biggest challenges with acceptance in the South.”

CBD oil is one of the primary end products for hemp. 

“Hemp is grown for three purposes: fiber; seed and food-grade oil; and cannabidiol, or CBD, oil, which people are most excited about,” said Aaron Smith, University of Tennessee crop marketing specialist and assistant agriculture and resource economics professor.

“What’s challenging is that the production methods for different products are different,” Smith said.

Hemp for fiber is usually produced in row crops, hemp for seed is produced similarly to wheat, and hemp for CBD oil is grown more like tobacco and tomatoes, Smith said.

Producing CBD oil, which is garnering the most excitement because of its touted medicinal properties for humans and animals, is “extremely labor intensive and space intensive and a very expensive crop to produce,” Smith said.

Other growing pains

Growing industrial hemp in Tennessee is legal, but still requires a state license.

“Right now, we have over 1,600 applications for hemp growers’ licenses,” said Eric Walker, University of Tennessee tobacco and specialty crop specialist. “They’re not all approved, but I expect there should be well over 1,000 in Tennessee.”

Applications for the 2019 Industrial Hemp Pilot Program just closed, but the 2020 licensing period will open in late fall of 2019, and officials encourage people interested to do their homework before the application period opens.

Another challenge to the burgeoning hemp-growing industry in Tennessee is that there is not much research-based evidence about how the crop performs here, Smith said.

Because of that, many growers are starting with ¼- to 1-acre plots while they figure out what works and what doesn’t.

In West Tennessee, where row crop agriculture is more prevalent, the current infrastructure is better suited to the production of hemp for fiber and seed, but there are lower returns per acre for those products than hemp for CBD oil.

“The increased demand for CBD oil is what’s really driving the hemp train right now,” Walker said. “Right now, in the U.S. and especially the Southeast, it is produced differently. There are less plants per acre and more flowers and buds per unit of surface area because that’s what produces the resins that provide the CBD oil.”

2018 was the first year Tennessee mass-produced hemp for CBD oil, and it has been profitable for most producers, but not all.

It takes three times the labor as producing tobacco and three to five times the amount of storage space to cure it, according to Walker.

“Not everyone has that infrastructure in place or the experience in production,” Walker said. “So, you can start small, but if you’re scaling up for an economically viable way to add income, it will require a significant investment in infrastructure. That said, I think we’ll see it evolve pretty rapidly.

“We’re getting people who are efficient producers from different states, and anytime you can reduce physical labor it will add to the bottom line,” he added. “I think people are getting involved now who have the resources and knowledge to make a difference.”

Hemp production and growing are regulated separately and both require state licenses. There are 120 hemp processors licensed in Tennessee, but only 10 are currently operating, Smith said.

“My concern, with all the interest, is our true processing capacity, which could be problematic,” he said.

A potential solution, should there be a huge spike in hemp production that state-licensed processors can’t handle, would be for growers to transfer their crops to Kentucky and North Carolina where there is more infrastructure for processing tobacco-like crops. Such crop transfers across state lines is legal, but regulated.

Other challenges for the growing hemp market include the stigma hemp carries as a relative of the marijuana plant.

There are misconceptions, said Memphian Paula Robinson, co-owner of Simply Hemp, a web-based wholesaler of CBD products since 2017. The two plants are cousins, but hemp does not have the psychoactive properties found in tetrahydrocannabinol, or THC, that marijuana does. Industrial hemp produces less than 0.3 percent THC but a high concentration of CBD, according to Robinson, while marijuana has a low concentration of CBD and is 3-15 percent THC.

State lawmakers have been debating various bills that could make production of medical marijuana legal, in some form, while it remains to be seen if and when such a bill might become law. How such a law will affect the hemp market is not clear.

The two industries are vastly different, Walker said. They will be regulated differently and cannot be grown near each other because marijuana has the ability to cross pollinate if grown in even distant proximity, which could increase the THC percentage in a crop of hemp and therefore destroy the viability of the industrial hemp.

The Tennessee Department of Agriculture administers hemp grown in Tennessee from seed to harvest.

“It would be difficult to pinpoint what direct impacts medical marijuana legalization would have on Tennessee hemp growers,” said William Freeman, public information officer at TDA. “But hemp producers are learning more, innovating, and increasing their efficiency with this crop, and we expect that to continue in 2019.”

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Green Acres Ventures Steven Medlock

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