Ohio is missing out on lucrative hemp industry – Crain’s Cleveland Business

Serial cannabis entrepreneur Garett Fortune may call Northeast Ohio home, but he's been forced to build his hempire elsewhere because of Ohio laws — or rather, the absence of them.

Fortune is chairman of Rocky River-based Capital G Ltd., the parent company of a variety of brands serving the hemp and marijuana industries. His businesses include FunkSac and HempSac, which provide smell-proof packaging manufactured in Cleveland to marijuana and hemp companies.

There's also Commodigy, which Fortune founded in 2009 as a nationwide exchange for recyclable materials. In the last couple years, he rebranded that operation as a buying and trading platform for hemp in response to market trends.

Commodigy now includes a $5.5 million lab in the Las Vegas area, where hemp purchased from farms in Nevada, Colorado, Oregon, Kentucky, New York and even Canada is processed for cannabidiol (CBD) extracts. Those extracts are supplied to manufacturers who infuse other products with them, from lotions to seltzer water.

With a business strategy firmly rooted in hemp and orders piling up for packaging and CBD isolates, Fortune is projecting revenue growth of some 1,000% this year. Now in expansion mode, one of his goals is to build a second CBD plant in Kentucky to service demand along the East Coast.

He would've tried to do that in Ohio, but he simply can't.

That's because the Buckeye State is one of just 15 in the country that have neglected to develop a hemp program, something that's been permitted since the passage of the 2014 Farm Bill.

“I would love to put that in Ohio. And we have lots of people who want to grow (hemp) here,” Fortune said. “But since Ohio doesn't have a program yet, we can't.”

While there are efforts underway to create a regulatory framework for hemp here under Ohio Senate Bill 57, Fortune isn't waiting around for that.

“We need to cover East Coast operations. Investors wanted to be in Ohio, and we would be if Ohio would've had their stuff ready,” Fortune said. “But because there are no regulations and no pilot program, we are going to states that already have that established.”

Hemp is hardy and easy to grow. Its fibers have a wide variety of uses, from clothing to construction materials to paper. Hemp seeds are processed for CBD extracts, which are increasingly popular because of their uses in treating a host of ailments from arthritis pain to anxiety.

The 2018 Farm Bill officially descheduled hemp, opening up the industrial hemp sector and legitimizing hemp programs in states that launched them years ago. It also paved the way for the USDA to set parameters for CBD extracts in food and drink.

Gary Pierzynski, associate dean for research at the College of Food, Agricultural and Environmental Sciences at The Ohio State University, said hemp qualifies as a high-value crop, a term applied to plants where gross revenue per acre is about double that of traditional commodity crops.

Chip Kepford, who grows corn, wheat and soybeans on a 5,000-acre family farm in Marion, said he would replace everything with hemp if he could.

But farmers and other aspiring hemp businesses in states like Ohio are left in the lurch because there is no regulatory framework for it.

“Ohio never created a pilot program,” said Thomas Haren, executive vice president of the recently formed Ohio Hemp Association. “Now we need to create a hemp program or be cut out of the market, and Ohioans will miss out on an immense opportunity.”

Pierzynski, meanwhile, can't work with the plant or study it at the college for the same reasons.

He joined OSU in July. By August, he was already fielding inquiries from companies in Kentucky that wanted to work with OSU faculty to develop Ohio crops.

“I had to say we can't accept that at this time,” said Pierzynski, who has no affiliation with the hemp trade group. “Ohio has been kind of on the sidelines with this, and now it's at risk of getting left behind.”

Those fears of being left in the dust are creating a sense of urgency, even though S.B. 57 was introduced in February.

The bill would allow for industrial hemp cultivation along with possession, shipping and sales of the plant and its derivative products, including CBD oils or CBD-infused products, which under current Ohio laws are only allowed to be sold legally through the nascent medical marijuana sector's state-licensed dispensaries.

While there's no timeline for when the bill may be passed, “make no mistake about it, there's momentum behind hemp legislation in Columbus,” Haren asserted.

“And once the USDA finalizes rules and we have a clear regulatory structure in Ohio, we are all going to see an enormous amount of activity within our research institutes and private sector, such as (Scotts Miracle-Gro Co.),” added Jen Lynch, Ohio Hemp Association president.

But until rules are in the books, Ohio is missing out on an industry that saw an estimated $1 billion in product sales in the U.S. in 2018, according to New Frontier Data, which estimates the industry could easily grow to $1.9 billion in 2022.

Projections vary, of course. Analysts at the Brightfield Group have issued a much loftier forecast, projecting hemp as a $22 billion industry by 2022. Brightfield's head of research has acknowledged that such estimates are “shocking,” but added that “we stand by them.”

Whatever the growth may be, it's sure to be significant.

And until Ohio supports the hemp sector legislatively, folks like Fortune will simply look for ways to tap into this growing, lucrative industry elsewhere.

“You're missing out on tax revenue, on jobs, the education, the farms and the agricultural side being able to farm hemp instead of soybeans and corn,” said Fortune, an Ohio Hemp Association board member. “Hemp is something they're all going to immediately make money on. It's a cash crop.”

Source: https://www.crainscleveland.com/finance/ohio-missing-out-lucrative-hemp-industry