Advocates: Kentucky would have potential hemp markets in nutrition, car parts, pharmaceuticals

jpatton1@herald-leader.comFebruary 16, 2013 

Industrial hemp in Manitoba, Canada. The yellow flowered plants are volunteer canola ( meaning the field was sown to canola the previous year and these are plants that grew from seed that fell on the ground at harvest.) Laura Rance/Manitoba Co-operator

  • What's next?

    The state House Agriculture and Small Business Committee meets Wednesday at 8 or 8:30 a.m., but it is unclear whether Senate Bill 50, which would license Kentucky farmers to grow industrial hemp and cleared the Senate on Thursday, will be heard. There also is a competing House bill on hemp, House Bill 33, which has been posted to the committee.

    JANET PATTON

Hemp doubters, including prominent Kentucky politicians and law enforcement, scoff at the idea that the market for the crop could mean much to Kentucky farmers. But they have not been answering the phones at the Kentucky Department of Agriculture, where Commissioner James Comer gets two or three calls a week.

"Industry leaders in automotive manufacturing, cosmetics, energy, processing and certified seed are all interested in Kentucky-grown industrial hemp," Comer told the Senate Agriculture Committee hearing Feb. 11.

U.S. Sen. Rand Paul, who testified in favor of Senate Bill 50 while wearing a shirt made of hemp, also alluded to Kentucky's automotive industry at the hearing, prompting a state senator to press Comer about Toyota's potential interest.

Citing economic development confidentiality, Comer finessed the question, confirming he's met with auto parts manufacturers but couldn't name names.

Toyota already uses kenaf, a hemp-like tropical plant grown in Indonesia, in some composite car parts. BMW and Mercedes make car parts in Europe from hemp-based composites, which are thought to be lighter and more "green."

Rick Hesterberg, spokesman for Toyota's Georgetown plant, said he was not aware of any direct conversations between Toyota executives and the Agriculture Department but couldn't speak for Toyota's parts subsidiaries.

"We're always looking to find better ways to make and build our products, so it's not out of the realm of possibility," Hesterberg said. "I'm not saying there's not going to be any interest. I just can't confirm anything from our side."

Others are less tentative.

'Super' omegas

Charles Brink, chairman of Full Spectrum Laboratories, wants Kentucky hemp. His is a private biotech company headquartered in Ireland with a subsidiary in British Columbia and Manitoba that tests Canadian hemp for purity and for levels of THC, the chemical that gives smokers of marijuana, hemp's botanical sibling, a high.

Brink's company is about to start a pilot processing facility in Canada to make "super" omega nutritional supplements.

Omega-enhanced products are huge: The supplements are in baby food and pet food and every food in between, or will be soon.

Market research firm Packaged Facts estimated last year the omegas market will swell from $25.4 billion to $34.7 billion in 2016, with a big boom coming in India, where there are millions of vegetarian Hindus who don't want fish-based omegas.

Brink is poised to tap into that market with his hemp-based supplement, which could outstrip the health benefits of flax, and he would love to make Kentucky a part of that picture if the licensing framework passes and if Paul and U.S. Sen. Mitch McConnell can find a way to end federal restrictions.

"If Kentucky can find a way to have a peace resolution with the DEA, we would not only come to Kentucky to build a hemp oil factory and employ Kentuckians, we would teach Kentucky farmers the differences in the cultivars of hemp and which have applications for various things and buy 5,000 acres of cultivated hemp every year, and possibly much more," Brink said. "This industry is exploding worldwide."

Brink said his company has been negotiating with food and beverage makers in Europe and Asia, and he wants to invest "a significant amount of money" in Kentucky.

Why Kentucky?

"We believe Senator Paul and Senator McConnell actually have the political girth to compel a rational discussion at the federal level," Brink said. "They are demonstrating political courage, and that should be rewarded."

His company already is negotiating to buy bulk hemp oil; by 2014, he said, it anticipates purchasing as much as 7,000 acres' worth of Canadian hemp oil.

Full Spectrum's product is undergoing testing on mice at the British Columbia Cancer Agency's Cancer Research Center, confirmed Dawn Waterhouse, director of non-clinical trials.

A preliminary study examining the ratio of omega-3 fatty acids to omega-6 fatty acids in the blood of mice that had regular hemp oil versus a version of Brink's product was "quite encouraging" to company officials, Waterhouse said.

She expects complete data on the larger study to be ready in three weeks; Full Spectrum already has filed a patent application for it. Soon, you might see photos of starlets dangling cans of drinks labeled as containing Full Spectrum's hemp omegas.

Research in Lexington

Brink said his company got into hemp omegas while doing research on cannabinoids, which also have generated pharmaceutical interest around the world — including in Kentucky, it turns out.

AllTranz, a Lexington company founded by Audra Stinchcomb, a former professor at the University of Kentucky College of Pharmacy, expects to begin clinical trials in September on a transdermal patch to deliver a THC-based compound. If all goes well, it could be available for doctors to prescribe in four years, said Stan Banks, senior scientist at AllTranz and a former student under Stinchcomb, who is now at the University of Maryland. They have another product in the pipeline based on cannabinoids, as well as two others, and are expected to have applications for osteoarthritis, neuro-degeneration and pain management — basically anything that anti-inflammatories and opiates are used to treat now.

The THC patch also could be used to treat nausea and stimulate appetite.

Transdermal drug delivery products of all kinds are also big business; sales in 2015 are projected at $32 billion, with 57 percent of the market in pain management products, Banks said.

Drugs for osteoarthritis, which cannabidiol could treat, are themselves nearly a $6 billion market, with half of that in the United States.

Right now, AllTranz uses synthetic cannabidiol in its research, but that's highly regulated by the DEA and very expensive.

If Kentucky grew industrial hemp, the state, which already has top-level pharmacy and medical research and has done research in this area, could become a magnet for others working on cannabinoids and looking for a natural alternative.

Hemp is rich in cannabidiol, a non-euphoric precursor to THC that can be extracted to make the compounds, Banks said.

"That cannabidiol from plants would give us a great starting point for looking at other molecules as well as the cannabidiol," Banks said. "In terms of hemp production, I think there's a lot of applications beyond the textiles and paper ... and that includes medical and pharmaceutical research. That would benefit farmers as well as scientists, and eventually patients. We could set a standard for other states trying to increase economic development."

Car parts, food supplements and pharmaceuticals are just a few of the potential uses for hemp if federal restrictions are lifted, hemp advocates including Comer say.

Potential vs. existing

Are these ideas pie-in-the-sky? Or could Kentucky carve out a small, lucrative niche?

It is difficult to gauge the potential markets versus the existing market, said two UK economists who are working on a study for the Kentucky Industrial Hemp Commission that should be ready in April. The study likely will be used by Kentucky's congressional delegation to lobby for passage of the hemp legalization, or to press for a waiver for the state.

"Currently the market is small, but there's no reason to think it will remain small," said Leigh Maynard, one of the economists. "The difficulty is making a guess as to what it might become."

Canadian market researchers estimate that the country's 39,000 acres in 2011 "translates to estimated gross revenue of between $30.75 million to $34.17 million ($990 to $1,100 per acre)."

About $11.5 million in hemp products was imported in 2012 from Canada; hemp advocates say that all imports collectively total about $400 million.

But Canadian acreage has been growing, to 50,000 last year; the Canadian Hemp Trade Alliance predicts 100,000 acres by 2015.

Not everyone is convinced

Kentucky House Speaker Greg Stumbo, D-Prestonsburg, several state senators, and Gov. Steve Beshear pointed to numbers like $11.5 million in imports and said they don't know whether hemp is worth the potential extra trouble for law enforcement, which argues that illegal marijuana will flourish with legal hemp.

Stumbo and others say they find it hard to believe that hemp will create the "thousands of jobs" that Comer has talked about. They also argue that Canada subsidizes hemp and Kentucky doesn't need more of that.

Maynard said it is a fallacy that Canada subsidizes hemp. European subsidies also appear to have been phased out, he said. Canada has invested in processing facilities, which Kentucky would need to add value to the crop.

"The growth of fiber processing is promising," Maynard said. "Canada is not strong in that at all. And the potential use (of hemp) for horse bedding has some promise."

But "thousands of jobs"?

"It seems unlikely in the short run," Maynard said.

Will Snell, an economist also working on the study at UK, predicted their research will raise more questions than provide answers about the market.

"I think we would have some producers, just like with switchgrass and canola, who would give it a shot. But as long as the grain market is as strong as it is, you're not going to sacrifice grain acres for hemp," Snell said. "The way I visualize it, they're still going to have pastures, cattle and crops. They may apply for 10 acres and give it a shot. If it works, then the next year their neighbors might try it. It will grow slowly."

The key will be what can be done with it; the economists are well aware of the myriad uses for hemp, from food to fiber to car parts to a construction material called "hempcrete." But how do you put a value to something that doesn't exist yet?

"It depends on the demand side, and that we just don't have a good feeling for," Snell said. "We can't look at data and predict what entrepreneurs will do."


What's next?

The state House Agriculture and Small Business Committee meets at 8 or 8:30 a.m. Wednesday, but it is unclear whether Senate Bill 50, which would license Kentucky farmers to grow industrial hemp and cleared the Senate on Thursday, will be heard. There also is a competing House bill on hemp, House Bill 33, which has been posted to the committee.

JANET PATTON

Janet Patton: (859) 231-3265. Twitter: janetpattonhl

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