NC trend: High on hemp
By Page Leggett
If you were to grab a bit of industrial hemp, roll it into a joint and smoke it, hoping for a marijuana high, you’d be sorely disappointed. The distinctive star-shaped leaves look like pot and smell like pot, but weed’s cousin is legal and transforming another tobacco state, Kentucky. North Carolina is next, according to two distinctively different hemp evangelists: Bob Crumley, an Asheboro lawyer, real-estate developer and president of Founder’s Hemp, and Las Vegas-based Hemp Inc. CEO Bruce Perlowin. Crumley expects hemp to be a $1 billion industry here in the next decade, bigger than tobacco, which was worth about $800 million in 2015. Perlowin, who spent nine years in prison for drug smuggling in the 1980s and has been called the King of Pot, plans to employ 100 people at his hemp-processing plant in Spring Hope, near Rocky Mount.
A big part of their mission is educating people on the difference between illegal marijuana and hemp, a crop so respectable it was grown by the first five U.S. presidents. Yep, Mount Vernon and Monticello were hemp farms. The durable natural fiber is used in thousands of products, including clothing, paper, textiles and food for people and pets, but growing it was banned in the U.S. in 1937 with the passing of the Marihuana Tax Act. That changed when President Obama signed hempinto law as part of a major farm bill in 2014. Now, 31 states, including North Carolina, have passed legislation allowing farmers to cultivate hemp, which should replace some of the $300 million in hemp products imported to the U.S. every year, mostly from China and Canada. In 2016, U.S. farmers in 15 states planted nearly 10,000 acres of hemp, most of it in Colorado and Kentucky, where plantings doubled last year. Kentucky grew 2,350 acres in 2016. North Carolina grew none, though that’s expected to change this year now that the N.C. Industrial Hemp Commission has approved rules for a pilot program. It is expected to begin issuing licenses this month.
The commission’s chairman tempers the enthusiasm of hemp advocates. “Anyone forecasting industry size or impact would be very premature, due to so many market unknowns,” says Tom Melton, who is also deputy director of the N.C. Cooperative Extension Service.
Marijuana, hemp and cannabis are common names for plants of the genus Cannabis, but they are not synonymous. Tetrahydrocannabinol, or THC — marijuana’s psychoactive ingredient — is present in hemp only in trace amounts. “A mule is not a donkey. A donkey is not a horse … industrial hemp is not marijuana,” Crumley and lawyer Marshall Hurley wrote in a white paper for the N.C. Industrial Hemp Association.
But medical marijuana led Crumley down this path. “I had three friends die of cancer in quick succession,” he says. “It was ugly and terrible, and I started looking into alternative treatments. That led me to medical marijuana, which led me to hemp. Then, I wondered: Why did we ever outlaw hemp? What I found angered me.”
As Crumley tells it, William Randolph Hearst used his newspaper empire in the 1930s to spread the fallacy that marijuana and hemp were linked to violent crime. (There’s an intriguing subplot involving the DuPont family becoming concerned that hemp could be used as a cheaper substitute for their company’s synthetic fabric, nylon.)
Crumley has signed on about 20 people who will grow hemp specifically for Founder’s using the poultry industry model in which farmers build the chicken house and a well, and poultry companies supply chicks and then transport grown chickens to meet their fate. Crumley supplies his farmers with the seed then takes the harvest to market.
Waylon Saunders plans to grow 10 acres of hemp on his 200-acre farm near Asheboro. He’s a third-generation farmer who also joined Crumley, a longtime family friend, as director of farm operations at Founder’s. “Hemp is gonna be big,” Saunders says. “It’s my opinion that, in three to five years, it’s gonna be the biggest crop in North Carolina.”
Crumley broke ground in December on the state’s first processing plant that will turn hemp into food — hemp can be used in products such as milk and cereal. It’s in Asheboro, where he’s lived since he graduated from law school.
Perlowin, too, has big plans for his processing plant in Spring Hope. “Everyone said, ‘Go to Colorado where pot’s legal,’” he says. “But North Carolina can outproduce Colorado any day. Colorado is not an agricultural state. North Carolina is.”
His company owns 3,000 acres, including 1,000 purchased in January, for growing hemp in eastern North Carolina. He also expects people “from all over the country” to attend his Hemp University classes starting this month in Spring Hope.
“I’m pretty famous in this sector,” Perlowin says. After founding cannabis penny stock Medical Marijuana Inc. in 2009, he left to create Hemp Inc. in 2011. He purchased the Spring Hope plant, the largest natural fiber manufacturing and processing plant in North America, where he plans to employ 100 people though the plant is not yet operational. Hemp Inc. has lost more than $25 million over the last four years and its shares traded for 5 cents in late January. “The company has generated lots of press releases and additional shares but little in terms of revenue,” according to cannabis industry analyst Alan Brochstein. Federal securities regulators filed a complaint last summer against Perlowin, accusing him of selling hundreds of millions of unregistered shares.
The next hurdle for hemp is logistical — when the U.S. outlawed the crop, the government destroyed all of the seed stock. In addition to importing seeds, Crumley is asking N.C. farmers who have signed on to put hemp into their crop rotation and see which varieties are the most successful. The response has been encouraging. So many farmers wanted to attend his November information session, Crumley had to move it to a bigger venue.
Once hemp is reputable again, there are many possibilities. The people of Robbins in Moore County could decide to change the town’s name: Before the crop was outlawed, it was known as Hemp, N.C.
If Crumley has his way, the entire state will soon think highly of hemp.