Marijuana Business Magazine March 2019

Marijuana Business Magazine | March 2019 38 F or decades, there’s been a clear and sizable gap between companies that operate in the marijuana sector and those that do business in the hemp market. That line has become more and more blurred in recent months, as com- panies that began in the marijuana space have leapt into hemp. If the shift has been growing since last year—in part as U.S. states have loosened their own hemp cultivation laws—it exploded after Congress approved the 2018 Farm Bill in December. “My phone has not stopped ringing,” said Michael Bronstein, co-founder of the American Trade Association for Cannabis and Hemp (ATACH). “The industry took notice that there may be another avenue here to create businesses that are federally compliant.” ‘The Other Side of That Wall’ Companies in Canada and a number of U.S. states including California, Colorado and Oregon have begun dipping their toes into hemp—or, in some cases, eagerly inking investment deals or direct production contracts. “There were always steel slats you could see through between the hemp and marijuana industries, and now what we’re seeing is people are taking a much bigger interest in what’s on the other side of that wall,” Bronstein said. Mason Walker, the CEO of East Fork Cultivars in Oregon, jumped into hemp cultivation just last year—in large part because the company’s cannabis farm was already focusing on low-THC, high-CBD strains and because Oregon’s marijuana market was enduring a wholesale marijuana price crash at the time. “In Oregon, if you grew a lot of can- nabis and you literally can’t sell it for anything … growing the same plant in the same place but being able to sell it all is compelling,”Walker said. “The crossover is happening naturally.” Walker predicted “hundreds and hundreds of hemp farms” in south- ern Oregon will be growing this year, in large part to replace marijuana crops for which there is simply no legal market because of the state’s vast oversupply. “It offers different promise, because it offers access to a much larger mar- ket,”Walker said. “Hemp offers this kind of light, where there’s very little regulation, and you can just grow it and sell it anywhere in the world.” But, Walker added, that situation isn’t the same in every state or for every cannabis farmer. Rather, it depends on the market demand and whether a given farmer can still turn a solid profit. “If you’re growing and selling all of your cannabis, you’d have less of an incentive to switch over” to hemp, Walker said. And it’s not as though there’s a groundswell of business interest from marijuana companies to take full control of the hemp industry, even though the two plants are essentially cousins. Rather, the development of the hemp sector—especially in the United States—will likely remain state-by- state, reflecting how states have also taken the lead on regulating marijuana commerce. Wind Makes for Bad Neighbors There's been a backlash in plenty of regions from cannabis growers who want nothing to do with hemp, in part because of outdoor cultivation logistics, said California-based Optimal Growth CEO David Najera, who runs a modest consulting business and a small farm in Mendocino County, in the heart of California’s Emerald Triangle. “If I put 20 or 30 acres of hemp in the middle of Mendocino, on a windy Marijuana and Hemp Industry Crossover Gets Underway Trends & Hot Topics | John Schroyer Editor’s note: For more information about marijuana companies pivoting to hemp, see page 60.