Politicians and producers have been eager to advertise the possibilities for hemp in Kentucky, especially with the state’s traditional commodity crops on the wane. But alongside hemp’s enticing profit potential comes new risks.
Go searching for hemp’s cheerleaders and you won’t need to search for long. Kentucky’s senior senator, Mitch McConnell, has been key to reintroducing the idea to Congress and securing a spot in the front of the line for his home state.
"States like Kentucky got a chance to explore the plant's potential, to show us just what hemp could do," the Republican told colleagues. "And the results have been nothing short of extraordinary."
By many measures, the commonwealth does have a leg up on other states.
"Kentucky is leading the country in what they're doing here as far as production, processing, research," a recent visitor to Lexington said. And that’s not just the opinion of a state official hoping to woo more companies to the region. Meet Lisa Benson.
"I'm the executive director of NASDA Foundation, and that is the National Association of State Departments of Agriculture. Very long title," she explains.
Benson's brought a small group of congressional staff to the University of Kentucky’s Spindletop Research Farm to hear from the front lines of an emerging – or technically re-emerging and complicated – industry.
"And a lot of what they're going to hear is 'it depends' and 'we're still learning' and that's the matter with a Wild West industry like hemp," she says. "It's different in different states."
Once a thriving crop in Kentucky, hemp, and its cousin marijuana, were effectively outlawed in 1937 under the Marihuana Control Act and later formally banned in 1970. But that changed in 2018’s Farm Bill, which removed hemp from the federal controlled substances list. So while industrial hemp may be making a comeback, for farmers, producers, and policy makers, it might as well be an entirely new crop.
UK agronomy specialist Tom Keene says that’s led to some overpromising.
"Well, that you're going to be able to pay off the family farm, it's going to replace tobacco, that you can make X tens of thousands of dollars per acre, and those kind of things," Keene says. "That's just not true in many, many cases, and so I think it paints a rosier picture. While they always talk about those large numbers for potential income, seldom do they mention the risk that's involved with that. With the possibility of high return always comes the possibility of high risk."
One risk: Jumping into the fray with too little information.
When growers opt for corn or soybeans, they have decades of data, research, and plain old tradition to draw upon. Not so with hemp, a crop and industry that’s revival is still in its infancy, according to University of Kentucky farm management specialist Jonathan Shepherd.
And while that means lots of room for growth – think of those increasingly ubiquitious CDB signs popping up all over Lexington – it also carries a few caveats. And Shepherd says, with a long list of unknowns especially when it comes to regulation, farmers should be aware that the race toward CBD could create a bubble.
"So as an economist and being pessimistic by nature, that is a real concern for me," he explains. "I think it's very possible that we could oversupply the CBD market in a very short period of time and I can tell a story where we reduce the price of CBD 50 percent within one year."
Right now, Shepherd, says, most Kentucky hemp production is focused on CBD – as opposed to grain or fiber – and the market for the oil extract is where the most lucrative returns could materialize. But he warns growers to be cautious while the rules are still being written.
"There are a lot of well-intentioned companies out there that have different funding methodologies and things that we just don't typically associated with agricultural crops and that makes geting paid sometimes a challenge," the economist says.
Quizzed on how long it might take for supply and demand to stabilize, Shepherd is hesitant to put forward a timeline, but he expects the market to shake out relatively quickly. In the meantime, he predicts a process that’s sometimes “not pretty” as the hemp market gets sorted in the coming years.
That means winners and losers, new FDA rules that could shift the landscape, and ongoing research into the medical claims about CBD – all of which could sway consumer interest.
For now, Shepherd doesn’t deny the money-making potential is certainly there, but he cautions the full costs, too, have yet to be realized.