Cashing in on CBD: Hemp farmers apply for permits as new rules go into effect

Essential reporting in volatile times.

Not a Subscriber yet? Click here to take advantage of All access digital limited time offer $5.99 per month EZ Pay.

Interested in Donating? Click #ISupportLocal for more information on supporting local journalism.


While it may be hard to describe what exactly hemp is, it is easy to say what it’s not: marijuana.

Industrial hemp is a strain of the cannabis sativa plant that has been cultivated for thousands of years, used extensively for making rope and textiles. Hemp-fiber remnants have been found in Mesopotamia from the B.C. era and China in the early A.D. years.

In West Virginia, hemp production began statewide in 2014 with a pilot program. Nationwide, industrial hemp legalization was included in the 2018 Farm Bill.

Hemp can be used for any number of products, ranging from rope to plastics to toilet paper to hand sanitizer. So far in West Virginia, the main use has been in the form of cannabidiol — or CBD — oils, which are believed by some to help with any number of ailments ranging from anxiety to high blood pressure (these claims have not been verified by the federal Food and Drug Administration).

The difference between industrial hemp and marijuana is the near-absence of THC, the psychoactive ingredient that gives users a feeling of euphoria. Many involved in the industrial hemp industry believe that public perception of the crop has improved over the years, but there is still room for improvement.

Bill Munsee, one of the earliest and most-successful industrial hemp farmers in West Virginia, said it can be difficult to change preconceived notions.

“It’s a tough one. You know, somebody will tell you if it walks like a duck, quacks like a duck, it’s a duck — but, in this case, it’s not,” Munsee said. “It looks like a marijuana plant, it grows like a marijuana plant — but it does not contain any THC, therefore it is not a marijuana plant.”

New USDA guidelines

Industrial hemp in West Virginia is overseen by the Department of Agriculture, whose current commissioner, Kent Leonhardt, was elected in 2016. Crescent Gallagher, communications director for Leonhardt, announced that the United States Department of Agriculture recently approved West Virginia’s guidelines for growing industrial hemp on a nationwide level.

The USDA regulations go into effect Oct. 31. This will be after the 2020 growing season (roughly June through October), so the first crops under the new guidelines will be for the 2021 season.

“The USDA issued their initial interim rules in October of last year, and from there we worked with the USDA. We had meetings with them and their staff to make sure we understood the rules and regulations,” Gallagher said. “The USDA sent us templates and outlines of what was expected to be in the plan.”

The DOA staff used those templates to come up with a state business development plan. Throughout the process, the DOA worked to be open and transparent with industrial hemp producers. Growers were invited to meetings and encouraged to submit comments or suggestions.

“We are trying to take public input to help the industry develop its best practices, but we’re also trying to meet federal guidelines as dictated by the USDA,” Gallagher said.

The state submitted a plan in January for the USDA to review. With minor changes, state officials resubmitted and got approval for the plan on April 2.

Interest sprouts

The industrial hemp industry was slow to take off in the Mountain State after the 2014 law went into effect. The first year saw 24 permits issued to grow industrial hemp. Three years later, in 2018, fewer than 50 permits were issued.

2019 saw increased interest as farmers began to take notice. That trend has continued this year.

“We have not issued all of the final permits for this year, but it will be over 400,” Gallagher said. “That’s just an increase of people being interested in wanting to get into this program. We’ve seen a huge growth in the number of producers over the last several years with the legalization of industrial hemp state- and national-wide.”

The CBD market

While industrial hemp has the potential for many different uses, the biggest market in West Virginia is for cannabidiol products — generally abbreviated as CBD — in the form of oils, gummies, salves and tinctures. The oil for the CBD products is extracted from the hemp biomass, which is a CBD-rich material contained in the flower portion of the plant.

Chris Yeager spent a few years in Colorado learning about the cannabis trade, then returned to West Virginia and founded the Appalachian Cannabis Company at Cross Lanes in 2017. He and his partner, Kristee Montgomery, soon added a location in Charleston Town Center and one in Morgantown.

“When most people talk about cannabis, the first thing that comes to mind is THC and the psychoactive components — but, the plant is so much more than that,” Yeager said.

Yeager concedes that he cannot refer to CBD oils as a medicine, but is unwavering in his belief that the product can be beneficial when used for therapeutic reasons.

“There have been so many people who have benefited in many different ways,” Yeager said. “We’ve had tons of people come in who were on a prescription cocktail — blood pressure medication, things of that nature. As they started to use the products, a lot of people have gotten away from the pharmaceuticals. It feels good to offer a safe, natural alternative.”

Most farmers in West Virginia just grow the hemp and hand off the oil processing elsewhere, but Yeager grows, processes and sells his CBD-infused products.

The process of turning the hemp plant into a CBD oil can be loosely compared to a distillation process for alcohol. After the first processing, it is referred to as a crude oil. The second processing, in the distillate, is more of a refined product; some of the cannabinoids that might not be as valuable are burnt off in the process.

“You start to really increase your level of things like CBD — and in the cases of legal states, THC could be involved in that,” Yeager said. “But, you have a more refined, or polished, product. The last step is basically the triple distillation, and it allows you to identify individual cannabinoids. When we pull that product out after that third distillation process, we’re looking at a very pure CBD cannabinoid.”

With more farmers getting into the industrial hemp industry, there have been various questions and concerns, and Gallagher said he is happy to see growers reaching out to each other.

“Farmers are excited,” Gallagher said. “They’re developing cooperatives just to help people learn to grow hemp and find markets. We’ve seen a huge growth in just the last couple years. West Virginia is one of those states that’s leading the way in seeing production ramp up rapidly.”

West Virginia Farmers Cooperative was formed by J. Morgan Leach, who said he wants to help the industrial hemp farmers in any way possible.

“The goal is to leverage resources — for example, say we all have a common need for equipment, we will pool our money and go buy that piece of equipment and share it around our membership,” Leach said. “That way, nobody has to drop $20,000 on something that we all need.”

Another example is buying power. “If I can get 20 people to throw in on a seed order, then I can get a bulk discount and give everybody a better price,” Leach said. “That also applies to equipment or other supplies like fertilizer.”

Selling the hemp crop is also easier with the co-op, according to Leach. “We’ll aggregate our crops and then take them to the market together,” he said. “It’s hard as a small farmer to get a large contract if you can’t supply it. So, pulling in the aggregate harvest of our members and then seeking contracts is another way that we can help out.”

Leach notes that West Virginia is focusing on the CBD oil market for the simple reason that other suppliers have been ahead of the curve, especially in Canada, which has been in the business for two decades now.

“Grain and fiber are not big products yet,” Leach said. “Those are still on the horizon — people are pushing to use hemp fiber for many different things, but we have no availability to market hemp fiber right now. Canada has a really thriving hemp grain market, so for us to get in and compete on the grain side is not really viable.”

New regulations, potential issues

A new rule that farmers are concerned about is the requirement for how much THC is allowed in hemp crops. Under the original statewide regulation, a hemp plant could be 1% THC (marijuana is generally around 20% THC). The new regulations lower that amount to 0.3%.

Munsee, who sold more than $1 million in industrial hemp last year, said that the tougher regulations could lead to failure for some farmers.

“Right now, our main focus is 0.3 THC total or less, which is making things a lot more stringent,” Munsee said.

“I think 90% of the hemp farmers next year are going to fail — that’s my personal opinion. I don’t think it’s anything they can do; it’s just genetics [of the hemp plants], and it’s highly unlikely that everybody is going to pass.”

Yeager agreed that the new requirement could wind up costing farmers money, as crops only slightly over the 0.3% level might have to be destroyed.

“You would have a court date with the Department of Agriculture, and they would try to determine whether it was what they consider negligent,” Yeager said. “If you have a field that is testing 25% THC, then that’s not an accident. But, if you are testing at 0.4 or 0.5%, a lot of those farmers will have to burn their crop. You spent labor, time and resources, and you will walk away with nothing.”

Yeager believes that since the industry is new, lawmakers aren’t thinking about the big picture, noting that it is possible to take a plant that tests over the new legal limit and distill it to the 0.3% requirement. He wants a remediation process put into law so that if a farmer tests over the mark, the plants can be distilled and then tested again before being destroyed.

“We have talked to legislators to allow farmers who tested over the legal limit to go through remediation extraction to be able to have a compliant sample,” Yeager said.

Despite this issue, Yeager sees positives in the new USDA regulations and is optimistic about the immediate future.

“It’s good that we are moving in the process to allow this industry to get up on its feet and move forward, but there is so much education that still needs to be done,” Yeager said.

Gallagher said that the DOA believes that West Virginia farmers will be at an advantage when the new regulations go into effect.

“Our farmers are going to be used to those regulations and know what is to be expected of them much quicker than a lot of other states,” Gallagher said.

Looking to the future

According to Gallagher, the USDA is adding hemp to their agricultural census each year. This will help the state better understand the economic impact of industrial hemp.

“We will finally get some data on production, value — things of that nature — like we do with soybeans or poultry,” Gallagher said. “Within this next growing season we will finally have some hard data from the USDA that will show what it means to West Virginia. That’s a good thing for the state.”

The 2021 growing season will see an influx of growers, with around 460 applicants. Gallagher expects 400-plus to be approved by the DOA. As of now, there has not been a cap put on the number of licenses for the state.

“Whether it’s sustainable or not, I don’t know,” Gallagher said. “It depends on what these guys are producing and what the demand is. There’s still a ton of uncertainty in the market for farmers.”

Munsee is not optimistic about 400 growers being able to have success at the same time.

“I do not think West Virginia can sustain that,” Munsee said. “I believe West Virginia — and I hate to say this — needs to separate actual farmers and actual agricultural conglomerates from ‘mom and pop’ operations. I support them 100%, but I also know that it’s not an easy route to go and there’s going to be a high failure rate.”

With that said, Munsee thinks that if hemp farmers are committed, they can succeed.

“I really do want people to be successful in West Virginia,” Munsee said. “If they’re not prepared to grow the crop, market the crop, sell the crop and reach out to distributors, then it’s not a good idea to grow.

“As a hemp farmer, you must do your due diligence — do not just hope or pray that somebody is going to knock on your door and buy your crop.”

Munsee sees a potential game changer happening if the FDA begins to regulate hemp and CBD oils as a food product.

“If the FDA would schedule this in a class of foods and beverages, then this is something that every major food company in the country would potentially use as an additive in their food,” Munsee said.

“Because the USDA and FDA have not come up with any type of guidelines for CBD, it’s hard to say when that’s going to open up. Right now, it’s really the creams and lotions, but I do see it moving into the food and beverage market.”

Yeager calls the hemp plant “absolutely amazing,” and sees a future where it can impact and change major industries.

“We’ve seen a nationwide shortage of toilet paper, and you can also make toilet paper out of hemp fibers,” Yeager said. “We’re talking textiles, hemp plastics — we’ve got a problem with plastic overproduction in this country, and that’s another solution. Hemp plastics are biodegradable in 90 days.”

For now, the best way to ensure the future for the industrial hemp industry is to support local businesses in the present, according to Leach.

“If you’re buying CBD oil, look at the label and know where you’re getting it from,” he said. “If you’re buying CBD oils, buy from local farmers. That will ultimately help your economy, your state and your farmers.”

Chris Slater is a freelance journalist living in Charleston. He can be reached at chrisslater86@gmail.com or on Twitter at

@chris_slater.

Funerals for Wednesday, May 27, 2020

Adams, Mary - 1 p.m., Ohio Valley Memorial Gardens.

Bibbee, Naomi - 1:15 p.m., procession to leave O'Dell Funeral Home, Montgomery.

Bordenet, Effie - 2 p.m., Sunset Memorial Park, South Charleston.

Dorsey, Charles - 11 a.m., Ravenswood Cemetery, Ravenswood; also streaming live, see obituary.

Evans Jr., Frank - 1 p.m., St. Timothy Lutheran Church.

Fleck, Rosia - 2 p.m., Britton Cemetery, Charleston.

Fox, Helen - 2:15 p.m., Beech Grove Cemetery, Eleanor.

Hedrick, William - 1 p.m., Wallace Memorial Cemetery, Clintonville.

Johnson, Barry - Noon, Mt. Moriah Cemetery.

Mathes, Helen - 1 p.m., Morris Funeral Home, Cowen.

McClure, Karen - 11 a.m., East Lawn Cemetery, Canvas.

Mikeal, Chelsea - 1 p.m., Hafer Funeral Home, Elkview.

Parog, Drema - Noon, Mt. Tabor Church of God, St. Albans.