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Financial Times: US Farmers Have High Hopes For Hemp Crops

PanXchange

Alexandra Hamer

Alexandra Hamer

Chief Executive Officer of PanXchange Julie Lerner discusses the rapid growing industrial hemp industry.

Trade wars have crushed US grain sales. Tobacco is in terminal decline. However, for farmers in Kentucky the future may lie in a crop of the past: hemp.

The fibrous plant once prized for rope and sailcloth is poised for a second life as a source of cannabidiol, or CBD, a substance added to everything from hamburgers to dog treats, which enthusiasts claim has therapeutic qualities.

Hemp is a variety of Cannabis sativa, the same species as the marijuana plant. The US Congress late last year legalised the industrial form of hemp — defined as cannabis with less than 0.3 per cent by weight of THC, the chemical in pot that provides its high.

Once a fringe cause championed in Grateful Dead concert parking lots, hemp has been embraced by lawmakers including Senate majority leader Mitch McConnell of Kentucky. “This product is incredible. The food, the clothing, the wellness products. What a diversified product,” Mr McConnell said at a hearing on hemp production last month.

But the path ahead is rocky. There is no government-backed harvest insurance for hemp as there is for traditional crops. And most banks will avoid the sector until financial regulators can “distinguish legal hemp from federally illegal marijuana with extreme confidence”, the American Bankers Association said.

“There is a need for capital in this space,” said Nicholas Mortimer, co-founder of Sanitas Peak, a $50m private equity group devoted to industrial hemp. “Nobody knows how to lend to it.”

Hemp, a tough stalk with spiky leaves, is also labour-intensive to cultivate, requiring hand work in the fields. Farmers rely on foreign workers on temporary visas. The supply chain for hemp seedlings is shaky, too.

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