WISCONSIN DELLS — Just more than a year ago, on Nov. 30, 2017, Wisconsin Act 100 was signed into law, allowing for the first time in decades farmers in the state to grow industrial hemp under a pilot program. Legislators then turned to the Wisconsin Department of Agriculture, Trade and Consumer Protection to write emergency rules for the bill, giving them 90 days to assign staff, put together a team and get the rules organized.
“In a word, it was messy,” said Melody Walker, pest survey and control section chief in the Plant Industry Bureau at DATCP. “You don’t do things like this in a neat and tidy way.”
But the department was able to write rules with a narrow focus for the first year of the program, with some arguing that Wisconsin’s launch was the most successful one of any state.
Rob Richard, Wisconsin Farm Bureau Federation senior director of governmental relations, called the resurgence of the state’s industrial hemp industry “a classic tale of what’s old is new again.” He served as a moderator of a panel discussion at the Wisconsin Farm Bureau Federation’s annual meeting and conference on Dec. 2, inviting six industry experts to share their thoughts on the first year of the program and what farmers can expect in 2019 when it comes to industrial hemp.
“I was always excited about year one but I’m even more excited about years two and three,” Richard said.
A successful launch
“If you would have told me I’d be the lead author on an industrial hemp bill before I came into office, I would have told you no way,” said state Sen. Patrick Testin, who represents the 24th Senate District.
Like many others, Testin was skeptical about industrial hemp, but he did his research, immersed himself in the history and said “the light bulb went off” for him. Since 2014, all of Wisconsin’s neighboring states have instituted a pilot program for industrial hemp, with Testin asking himself why Wisconsin didn’t have its own pilot program.
He found the momentum was there, although he never dreamed that the legislation would pass with unanimous support from state government.
Ken Anderson, founder and president of Legacy Hemp Holdings, a parent company to Legacy Hemp Seed Company LLC, said, hands down, the reason the legislation passed unanimously was because of the work completed by the Wisconsin Farm Bureau Federation.
“That really woke a lot of other states up,” Anderson said. “That’s a really exiting part — to see how fast this is being accepted.”
Anderson admitted when Richard reached out to him in regards to educating government officials and persuading them to support a pilot program for industrial hemp in Wisconsin, he wasn’t at all interested. But after seeing the support and the opportunity, he decided to help bring industrial hemp back to Wisconsin.
He said Testin is the perfect example of someone who was able to filter out the noise associated with industrial hemp, become educated and reach the final conclusion of ‘why not?’ in Wisconsin.
Seeing the opportunity
Dr. Johnathan Vaught, CEO and co-founder of Front Range Biosciences, is relatively new to agriculture. He has worked in a number of other industries, with all those experiences pushing him into making an investment in the agriculture industry. His company, which focuses on bringing the best of modern agriculture to high-value cannabis, hemp and coffee crops through improvements in reliability, safety and efficiency, has been operational for two years, with facilities in California, Colorado and now Wisconsin with the establishment of a Clean Stock hemp nursery in Appleton.
“There’s an incredible opportunity in Wisconsin with its deep history in agriculture,” Vaught said. “And DATCP has made a good effort to put a good foot forward, allowing us to grow this industry together.”
To him, there is a huge amount of potential for a plant with over 130 known cannabinoids and compounds, with opportunities in pharmaceuticals, bio-fuel, food, fiber and grain. CBD is the hottest area with the highest margin for profit at the moment, but Vaught foresees prices eventually going down and other markets for industrial hemp rising to the top.
“As the infrastructure is put in place, I can see it competing with soybeans and corn,” he said. “There’s huge potential if we can use it in animal feed.”
“The grain market could explode in Wisconsin with the opportunity in the animal feed industry,” Anderson said. “What I’m excited about is the product innovation. What we’re doing with hemp right now is not nearly reaching what we could do; we have not touched what we could really do. Product development could be an area where Wisconsin could really shine.”
While Legacy Hemp Seed Company is currently focused on bringing certified genetics of industrial hemp to farmers, they are moving into providing markets and infrastructure for farmers growing the crop as well.
Farm bill implications
There are four main components of the proposed Farm Bill that address industrial hemp. If passed, industrial hemp would be removed from the Controlled Substance Act, essentially legalizing the crop. Industrial hemp would also be eligible for crop insurance coverage and the USDA would have the ability to award research grants to study industrial hemp. A fourth component would allow each state to set a regulatory system for industrial hemp, with the approval of the USDA.
“We’re hopeful the Farm Bill will pass and some of these (stipulations) will go away,” said Kurt Mansavage, a representative of Rural Mutual Insurance Company. “If the bill passes and hemp is taken off, we can now cover that commodity.”
Scott Birrenkott, assistant director of legal with Wisconsin Bankers Association, also hopes for more clarification if and when the farm bill is passed. WBA has been interested in the movements of Wisconsin’s industrial hemp program since the beginning, seeing opportunity to provide information to others about this new, emerging business.
However, “there is still gray area in this matter,” he said. “But as we move through this, we hope this gray area will clear up.”
At this time, he encourages open communication between farmers and lenders when it comes to an industrial hemp business, adding that it’s important for growers to understand how heavily regulated banks are.
But “if President Trump signs the Farm Bill, it will significantly change the way financial institutions view this,” Birrenkott said. “If there is a specific and clear carve-out for hemp, that would be significant.”
Changes to support industry
Now that Wisconsin has endured the first year of the industrial hemp pilot program, officials at DATCP are revisiting their rules and finding there are some areas that can be improved. Walker said that the department heard from growers that there needed to be a change in the application deadline date, so that was already extended to March 1, 2019, so growers can find seed and organize other aspects of the business. The department is also planning a spring meeting for all licensees to review requirements of the industrial hemp pilot program.
The department also wants to increase compliance and has already prohibited one variety of hemp, C4, that was testing too high of a delta-9-tetrahydrocannabinol concentration to comply with the program.
“Law enforcement is starting to take a more active interest in our program,” Walker said, encouraging growers to “do some good neighbor work” and talk to the community about what they are doing.
She also suggested talking directly to local law enforcement about what they are growing so there is an understanding amongst all entities.
“This is challenging for them,” Walker said. “Things are more complicated.”
Work is also continuing at the state level pertaining to product labeling, food safety and standards for laboratories interested in testing industrial hemp. DATCP is also considering year-round registration, allowing for more flexibility for farmers, and aims to make licensing and reporting more automated on their end.
Currently, information reported to DATCP, including the names and locations of processors and growers, is kept confidential. Walker would like to see an option for those processors and growers to release some of their information to better connect them with each other.
Reflecting on first year
The pilot year came with some disappointment as the weather grossly impacted the yield. As soon as the crop was planted, many areas of Wisconsin were plagued with historic rainfall, causing the crop to not emerge from the soil well and accelerating weed pressure.
“The successes definitely weren’t yield,” Anderson said. “If we were basing the success of the program off this year, we wouldn’t be here. Yields just weren’t where they should be.”
However, the seed company proclaimed success in the areas of industrial hemp grain marketability, and discovered that a lot of farmers couldn’t clean store their grain, leading the company to commit to the establishment a hemp grain processing facility in Prescott, Wisconsin.
With markets expanding and a processing facility in the plans, Legacy Hemp continues to seek farmers willing to grow the crop under contract — both conventional and organic.
“In Wisconsin, our farmers are problem solvers,” Anderson said. “You guys figure it out and make it work — and that’s what we’re excited about.”
“One thing we know for sure is that this is a new crop and it hasn’t been farmed for a long time,” Vaught added. “There’s really a lot of work to do and it’ll take innovation, good years and bad years to really get a feel for it.”
Testin argued that there still is a need to better educate the public about the benefits of industrial hemp.
“I see it as economic development for our rural communities,” he said. “It’s clear we’ve lead the nation in production in the past and we’re poised to do it again.”