An Idaho man is accusing his onetime partner of foiling a hemp-processing venture in Montana and making off with some $2 million.

Jeremiah Skaggs says in the lawsuit that Clinton Boone was hired by Isotex Health LLC of Texas in 2019 to start a CBD processing facility in Lincoln, Montana.

Isotex promised locals that the CBD facility would eventually employ 120 people.

Skaggs says he moved to Montana to start the project and was supposed to receive 45% of its proceeds. However, Skaggs says, Boone diverted funds and machines intended for the Montana facility.

The project was terminated in 2020. Skaggs is asking a federal court in Montana to award him unspecified damages.

Law 360 first reported the lawsuit. Boone’s attorneys did not immediately reply to the complaint.

(Editor’s note: This column is part of a recurring series of commentaries from professionals connected to the hemp industry. Andrew M. Rosner and Kaelan Castetter are vice presidents of the New York State Cannabis Growers and Processors Association.)

Government officials nationwide are talking about banning the sale of hemp flower in the name of public health. But we know from experience that the prohibition could do more harm than good.

Three of the four most populous states – California, Texas and New York – have either passed smokable hemp bans or are considering them. New York provides a good case study to guide industry in addressing this issue.

In New York, the state Department of Health recently proposed regulations that ban the sale of hemp flower, which would result in harm to the many New Yorkers who prefer flower, a lower-cost item than other, more highly processed hemp products.

By permitting flower, states can address safety and access to this fast-growing market segment.

In fact, ensuring quality on unprocessed flower can utilize the same approaches for other manufactured products.

The New York Hemp Regulations require farmers and processors to maintain strict record-keeping and test their products for:

• Cannabinoids.
• Heavy metals.
• Microbial impurities.
• Mycotoxins.
• Residual pesticides.

Products sold in the marketplace must provide testing panels directly to consumers. Cannabinoid hemp products that contain levels that deviate from the allowable limits are considered adulterated and must be destroyed.

New York State can take a similar approach with smokable flower by creating testing panels and limits for combustible products.

Template for marijuana

As it works to legalize adult-use marijuana, New York will almost certainly adopt standards for smokable products. Smokable hemp can provide a template for adult use and begin developing the internal processes that marijuana will require.

The health department attempted to justify the smokable hemp ban by referring to its “efforts to reduce tobacco and smoking consumption.”

Surprisingly, the same proposed regulations allow for vapable products, and Gov. Andrew Cuomo’s recent proposal allows for smokable marijuana products.

New York’s health department rightfully took a harm-reduction strategy with hemp vaping products and should do so with hemp flower.

Public-health approach

Putting aside the current regulatory contradictions, a public health harm-reduction strategy should consider whether banning hemp flower will actually have any effect on people’s behavior. We know from studies of alcohol prohibition that consumption of alcohol remained steady over the period of the laws’ effect.

The banning of flower may actually lead to a rise in smoking tobacco — a known carcinogen with negative systemic health impacts.

Consumer data suggests that banning flower would likely increase tobacco use.

Market analytics firm Nielsen Global Connect found that 1 in 4 tobacco smokers consume hemp flower, while being three times more likely than the general population to purchase the product.

Whether this is due to familiarity of consuming the plant in its unprocessed form or accessible price point (on average one third the price of CBD oil), tobacco smokers are now spending on average $88 a year on hemp flower products, according to Nielsen.

These consumers will most likely shift that spending back to tobacco products, which lead to 480,000 American deaths annually and increased rates of addiction. Nicotine naturally occurs in the nightshade family of plants, such as tobacco, but not in hemp plants.

Importantly, the World Health Organization in 2018 cited studies supporting the non-addictive nature of cannabidiol, a naturally occurring compound found in hemp plants.

The report even goes so far as to mention the “possible therapeutic application” of CBD in addressing tobacco addiction in people.

In New York, state Assemblywoman Donna A. Lupardo recently introduced a bill to amend the public health law in relation to cannabinoid hemp.

As one of the authors of New York’s law giving the health department the role of regulating hemp, Lupardo understands the layers involved in hemp production and the legislative intent behind the original bill.

Her recent actions indicate that the health department went too far in banning smokable flower. The prohibitive stance against hemp flower undermines the purported mission of the state — to ensure that New Yorkers purchase tested, labeled and quality-controlled hemp products.

Lupardo recognizes the prevalence of people smoking hemp flower and wants to protect New York State residents.

Lessons for the industry

Using a multipronged approach, the hemp industry within states can play an instrumental role in opposing bans.

First, start early to advocate directly with state representatives on statutory and regulatory language. Support from elected officials can help in significant ways in applying pressure on administrative bodies that may go rogue.

Second, like in New York, consider independent legislation that legalizes smokable hemp flower. This can help prevent covert efforts to impose flower bans from outside sources.

Third, like in Texas and Indiana, industry representatives can bring a lawsuit against the state for harms caused by the ban.

Ideally, the hemp industry within a state will use a number of the above approaches in tandem with a vigorous social media campaign.

Nothing beats getting the word out and letting other people know the impact of the ban on their family, friends and neighbors.

Ironically, New York’s proposed flower ban came a century after the U.S. Constitution was amended to ban alcohol.

Alcohol prohibition took 13 years to undo. We only hope that what started in 2020 with the release of the flower ban sees a much shorter period of prohibition and we learn from the mistakes of the past in creating hemp regulations that protect all New Yorkers.

Andrew M. Rosner can be reached at [email protected] Kaelan Castetter can be reached at [email protected]

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Hemp farmers are gearing up to plant their fields only two weeks after Texas froze over during Winter Storm Uri – a freak snow and ice storm that caused more than $600 million in damages to the state’s agricultural economy.

According to early data from the Texas A&M Extension Service, other industries such as citrus, livestock and horticultural crops were among the sectors that were hardest hit.

“Freezing temperatures and ice killed or harmed many of their crops and livestock as well as causing financial hardships and operational setbacks, said Jeff Hyde, director of the AgriLife Extension Service at Texas A&M University.

“And the residual costs from the disaster could plague many producers for years to come.”

According to AgriLife, some of the state’s biggest agricultural losses by commodity were:

• Citrus: At least $230 million.
• Livestock: At least $228 million.
• Vegetables: At least $150 million.

Hemp dodged a bullet

It’s likely that hemp farmers with interests in other segments sustained damages.

But when it comes to hemp itself, farmers were mostly spared, as many in the new hemp state hadn’t planted their crops yet. Texas came online and allowed for commercial hemp production for the first time in 2020.

“Generally here in South Texas, we won’t be planting until March or so, but the further north you go, that will be closer to June,” said Noel Garcia, chief operating officer and head crop production consultant with TPS Lab in Edinburg, Texas.

But hemp might be tough enough to withstand snow and maybe some cold, depending on the intended use of the crop, according to Eric Singular, director of communications and business development with International Hemp, a hemp-genetics provider based in Denver.

Singular said a Texas farmer who had planted a test plot containing one of the company’s fiber varieties last fall was monitoring a volunteer crop that has reseeded to see whether it would survive the deep freeze – and so far, it looks as though it has.

“As people have always suspected, it is a robust crop, and especially when you get snow, before you get really low temperatures, you have that insulation effect of the snow that’s protecting it from going from getting too cold. That seems to be really helpful,” Singular said.

He saw the same thing happen in Colorado last September, when an early snowstorm blanketed hemp crops before the temperatures dropped.

“Once it melted off, they seemed to be protected, whereas crops that had to deal with freezing-cold ice are the ones that did not make it – and it is very different, from a fiber and grain crop to a cannabinoid crop,” Singular said.

Another sector that experienced significant losses was the Texas greens industry, which includes 4,000 nursery, greenhouse and related businesses – some of which are home to young-plant producers who grow hemp seedlings and clones for farmers and might produce smokable flower indoors.

Texas currently bans the sale but not the production of smokable hemp, though the ban is on hold pending a lawsuit to be heard later this month.

In 2020, Texas licensed 1,103 hemp farmers with 5,646 outdoor acres and more than 15 million square feet of indoor production.

Texas’ greenhouse industry is still assessing the damages to greenhouses and nurseries, a process that will likely take several weeks.

Most greenhouses, however, are sturdy enough to withstand sufficient snow-loads, and young-plant operations are typically high-tech enough to keep backup generators on hand to maintain a comfortable environment for seedlings and clones, TPS Labs’ Garcia said.

Village Farms International, one of the largest producers of greenhouse tomatoes, bell peppers and cucumbers in North America, converted half its 1.3 million-square-foot Texas greenhouse facilities to hemp.

The company said last week that operations have continued uninterrupted amid the recent power outages and water-supply shortages that much of Texas experienced because of the winter storm.

Ready, set, plant!

Planting outdoors is safe now, but Texas farmers will need to move rapidly to get their seeds or young plants in the ground before May 20.

After that, the soil temperature gets too warm and seeds won’t germinate, said Troy Owens, a farmer in Bay City, Texas, who grows organic corn and organic hemp.

Last year, he planted 500 acres of hemp for grain and applied chicken manure fertilizer, only to have rains wash out the crop.

By the time he replanted, the ground temperature was too hot and he lost much of his crop.

“I feel comfortable planting after the last freeze, all the way up to May 20,” Owens said.

Owens said he waited to plant his corn and plans to sow hempseed this week, though the fields are still a bit wet. This season, Owens has scaled back his hemp production to 150 acres.

Laura Drotleff can be reached at [email protected]

A coastal Texas smoke-shop owner facing criminal marijuana charges after a police raid Tuesday says the cannabis flower, vapes, gummies and other products taken were legal hemp, not illegal marijuana.

Faded Smoke Shop owner Alexandra Degollado faces charges of manufacture or delivery of a controlled substance, the Victoria Advocate reported.

One of her store employees was also charged during the Tuesday raid in Port Lavaca, a town of about 12,000 on the Texas coast southwest of Houston.

Degollado’s attorney, Lisa Pittman, told newspaper that the store owner relied on legal certificates of analysis that showed the products were made legally.

Texas allows the production and sale of hemp, but not high-THC cannabis. The shop had a current license to sell edible CBD products, a requirement under Texas law, the newspaper reported.

Local police have said the seized products contained elevated THC levels.

“People have to understand that, right now, (marijuana) is still illegal. I realize it might be legalized in a few years, but it is still illegal here,” Port Lavaca Police Chief Colin Rangnow told the paper.

Dallas-based Generation Hemp Inc. has acquired a processing company in Kentucky with a 48,000-square-foot facility for $5.1 million.

The acquisition of Halcyon Thruput LLC  will be payable in $2.5 million of restricted common stock, $1.75 million in cash and a $870,000 promissory note, Generation Hemp said Tuesday. Generation Hemp will also take over $1 million in existing debt.

Halcyon Thrutput processes harvested hemp directly from the field and wet-baled hemp at the company’s facility in Hopkinsville, Kentucky.

“The drying services technology greatly increases efficiency and capacity during harvest for farmers who need to quickly move harvested hemp while preserving the cannabinoid potency,” according to Generation Hemp.

The facility can process about 4,000 wet pounds per hour.

A looming legal challenge to Texas’ ban on smokable hemp sales has been delayed until March.

Travis County District Court Judge Livingston rescheduled the smokable hemp ban hearing back to March 22, 2021. The hearing had been scheduled for Feb. 1.

The delay was first reported by the Texas Cannabis Collective. It comes at the request of the plaintiffs, a group of hemp producers who say Texas health authorities went too far in banning smokable hemp sales. The Texas Department of State Health Services says the ban was required by law.

The ban took effect in August but hasn’t been enforced. Livingston blocked enforcement until the matter could be resolved in court.

The Texas dispute is the first attempt to challenge a smokable hemp ban through state courts, rather than the federal judiciary.

A lawsuit challenging a similar ban in Indiana is pending in that state’s federal system.