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‘Hemp has exploded’ in Kentucky. What that means for new jobs, investment.

Hemp or pot: What’s the difference?

The hemp industry is no stranger to Kentucky. How well do you know your cannabis?
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The hemp industry is no stranger to Kentucky. How well do you know your cannabis?

Hemp fields in Kentucky are multiplying. So, too, is the field of hemp-related jobs — both inside and outside the agricultural sector.

At 60,000 acres, Kentucky has the most hemp acreage of any state, besting even Colorado, a known hemp (and marijuana) production giant. That is just one reason Hemp Industry Daily named Kentucky the second most prominent state in hemp production in 2018.

Another reason: Since December 2015, almost 1,000 Kentucky jobs have been created in the hemp industry. According to the Kentucky Cabinet for Economic Development, over 250 of those jobs were generated in the first half of 2019 alone.

Many of those jobs are in farming — the traditional idea of what employment in the hemp industry looks like — but the majority aren’t. For example, employees in the hemp industry may also be delivery managers, lab technicians, quality graders and sales representatives.

Kentucky jobs in hemp have steadily increased since 2014, when the federal farm bill cautiously legalized hemp production. Those opportunities have taken off since the passage of the 2018 Farm Bill, which removed hemp from the list of controlled substances. Both bills led to more hemp farming, which led to a greater demand for processors — thereby opening the industry to new jobs, according to Jack Mazurak, communications director for the state economic development cabinet. In 2019, the state is starting to see the impact of a maturing hemp industry.

Sixteen hemp processors have announced locations in Kentucky since December 2015. More than half announced their move to the Bluegrass state in the past year, according to Mazurak, which has contributed to the recent job boom.

“Hemp has exploded,” Mazurak said. “We are almost in disbelief about the number of inquiries we’re getting (about the crop).”

Although several processors have located in Winchester, a healthy smattering of manufacturers have set up in other locations around the state, including Fayette, Ballard and Henry Counties.

Just this week, International Farmaceutical Extracts announced construction for a $6 million CBD extraction plant in Danville. Last week, Atalo Holdings announced the opening of a large hemp processing facility in Winchester. That facility — Atalo’s second in Kentucky to date — will clock in at over 50,000 square feet.

Over 60 full-time jobs will be created by the new Atalo Holdings and International Farmaceutical Extracts processors. Atalo CEO William Hilliard said he expects more employment opportunities to open up inside the new facility in time.

Although it may come as a surprise to some, Kentucky’s prominence in hemp is no coincidence, but instead the product of a hard-fought legal battle. The battle was fought by people like Jonathan Miller, who served as Kentucky’s State Treasurer for eight years from 1999 to 2007, and who now acts as general counsel for the U.S. Hemp Roundtable. With the Roundtable, Miller advocates for the legalization of well-regulated hemp around the nation. He is fresh off a legal victory — on Wednesday, July 17, Ohio became the 47th state to legalize hemp production.

Miller said Kentucky was “the catalyst for the country’s federal legalization,” with politicians like former Commissioner of Agriculture and current U.S. Rep. James Comer advocating for hemp’s legalization as early as 2011. Senate Majority Leader Mitch McConnell, R-Ky., has also pushed to revive the hemp industry, with language in the 2014 and 2018 Farm Bills that legalized hemp as an agricultural product and sponsoring the Hemp Farming Act of 2018 .

The work of hemp-friendly politicians has put Kentucky “way out ahead of other states,” according to Mazurak.

A little bit of ecological luck doesn’t hurt, either.

“We’re fortunate to have the climate, the limestone topography,” Mazurak said. “For all the reasons tobacco grows well here, hemp grows well here.”

It’s only fair that it should grow well, given hemp’s long history in the state. Before it became a controlled substance in 1937, hemp was a Kentucky cash crop. Many revered public figures in the Commonwealth, including politician Henry Clay, grew the plant in private plots.

And then there are the modern forces that make Kentucky a friendly home for hemp processors, like tax laws that encourage investment into well-paying, job-creating facilities.

Although there are no specific incentives for hemp facilities, most processors of the plant in Kentucky have been approved for up to thousands of dollars in tax incentives based on three key factors, according to Mazurak: initial investment, number of jobs created and estimated hourly wage. For example, Curaleaf — a national hemp processor with a new facility coming to Lexington — has invested over $6 million in its new facility and anticipates 150 new jobs with an average hourly wage of $17. Based on these estimates, the company is eligible for up to $1.5 million in tax incentives from the state over the next 10 years, according to financial records.

Long-time players like Curaleaf and newcomers alike have invested millions into Kentucky hemp since the 2014 Farm Bill. According to the Kentucky Cabinet for Economic Development, over the past four years, nearly $90 million has been invested into hemp ventures in Kentucky, with over $75 million invested since December 2018. On average, hemp investors in 2019 are spending more: The median investment for the first half of 2019 has increased 15 percent from the previous year, from $4.7 million to $5.4 million.

Earlier this year, Kentucky Agricultural Commissioner Ryan Quarles said he anticipates generous returns to these investments. Quarles predicted that $100 million in Kentucky-grown and Kentucky-processed hemp products will be sold in the U.S. — again, in 2019 alone.

“Hemp products” is an increasingly broad term. Unlike tobacco, Kentucky’s former cash crop of choice, every part of the hemp plant is usable. Mazurak said this is one of the reasons hemp is so intriguing.

“The first thing you tend to think of (with hemp) is CBD oil extraction, but we have worked with companies that are using the stalks, the fibers. One in particular is making compressed wood products… There are companies that are specializing in genetic variations of the plant. There are companies that specialize in food and beverage. There are companies that are putting it in granola,” Mazurak said.

Eclectic uses of the plant are beginning to trickle into the mainstream as stigmas surrounding hemp and its connection to marijuana erode. Lexington’s burger week this year featured a “Peaches & CBD Cream” burger; hemp history week was celebrated last month with festivals, complimentary samples and several historical tours; and earlier this year, Winchester-based hemp processor GenCanna announced the creation of a hemp strain containing no THC. (The term “hemp” refers to portions of the cannabis sativa plant containing a concentration of less than 0.3 percent THC, an industry and legal standard.)

As destigmatization continues, Kentuckians will likely see an uptick in hemp processors in the state and more jobs.

“We want to be the location of choice for hemp processors. We can make a strong case for why they should be here,” Mazurak said. “We have a tremendous amount of the product being grown here. We have an increasingly thriving ag-tech sector… We have all the groundwork laid.”

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