Hemp farming looms as budding NJ industry

Nestled in the hilly Skylands region of Sussex County, Michael Holub’s 5-acre farm in rural Lafayette Township has been relentlessly hounded by forces beyond his control.

His fields, typically covered in crops from squash to pumpkins, have been turned to mud by the rainy summer. And many farmers have folded their operations, he said, opting to sell their land to condominium developers.

So when news began spreading that the Legislature was looking to explore an industry for hemp, his ears perked.

“The whole point of this is to help bring another market to them,” Holub said. “It’s getting tougher and tougher for these guys. Their farms are getting less and less.”

Holub has wasted no time. He and his business partner in GreenGold Farms LLC, which operates the Lafayette farm, are in the process of purchasing a 17-acre farm with plans to set aside a portion of the land for the growth of industrial hemp.

While they still plan to use the majority of the land for their traditional crops, hemp will enable them to keep the business in the green.

“You plant one acre of hemp and you’re going to supplement your income, so you can do those things you like to do for other people,” Holub said. “I can’t see us going beyond five acres.”

Mary Beth Jennings, who with her sister owns and runs a 100-acre farm in Medford, is in a similar pickle. The farmland around theirs has been razed and in its place developers have built condominiums.

Jennings’ hope is that she would be able to set aside 20 acres solely for the production of hemp. The rest of the farm would be used for the staple crops, bale and hay.

“It hit me as an ideal crop,” she said of hemp.

The Assembly approved a bill that would direct the New Jersey Department of Agriculture to develop a pilot program exploring the viability of industrial-use hemp. The Senate also approved the measure, sending it to Gov. Phil Murphy’s desk.

Assembly Bill 1330 has moved quietly through the Legislature while attention has been focused on Murphy’s pledge to legalize adult-use marijuana and expand the state’s existing cannabis programs.

Under the proposal, the agriculture department would be able to keep tabs on who is buying and selling hemp, and have the authority to issue licenses to grow, cultivate, sell, possess and distribute hemp.

Hemp is versatile; it can be used to make clothing, industrial building block, paper, rope and even food seasoning. Proponents argue New Jersey has both the agricultural and manufacturing capabilities to cash in on this expanding industry.

And hemp, proponents add, contains only miniscule amounts of tetrahydrocannabinol, or THC, the active ingredient found in marijuana.

Under A1330, the agriculture department would periodically test products containing hemp to make sure the THC concentration does not make up more than 0.3 percent of a dry product’s weight, otherwise it would meet the state’s legal threshold to be considered marijuana, which is not yet legal in a recreational capacity and subject to state regulation for medicinal use.

Former Assemblyman Reed Gusciora, D-15th District, who introduced A1330 before resigning his seat to become mayor of Trenton, said New Jersey has been missing out on millions of dollars each year by not participating in the hemp industry.

As of 2017, 15 other states enacted their own hemp industries, which brings in a half-billion dollars annually, according to Gusciora.

“The quality and growing popularity of hemp products across the country can offer a lucrative agricultural industry in New Jersey,” Sen. Vin Gopal, D-11th District and a sponsor of the Senate’s version of the hemp legislation, said in a statement. “The ability to grow hemp on an industrial scale would allow our farmers to diversify their products by adding a new and profitable cash crop.”

Edward Tobias, a lawyer who testified last month about the bill to the Senate Economic Growth Committee, said he represents the Vermont-based hemp production business Colomont Inc., which hopes to expand into New Jersey pending approval of the pilot program.

“The company is looking to expand their operations to partner with the farmers and businesses of New Jersey,” Tobias said. “The company is considering utilizing the strength of the state’s industrial economy to process this already existing product.”

Tobias told NJBIZ that even though the harvest is fast approaching and the soonest local farmers could grow the crop would be 2019, the state could still benefit from processing and manufacturing hemp products imported from out of state.

Legal limbo

Hemp is a grey area in the eyes of the law. When Congress signed the 2014 U.S. Farm Bill that sets the national policy for agricultural and food, it included a provision allowing states to enact and regulate their own pilot programs.

The authorization is solely for industrial use; medical-grade hemp use has been barred under federal law. To that end, A1330 would direct the agriculture department to bar businesses and farmers from producing and selling hemp for medicinal purposes.

But until last month, the U.S. Drug Enforcement Agency classified hemp-based oils, known scientifically as cannabidiol, or CBD, as Schedule 1, meaning they had no accepted medical use.

Then on Sept. 21, the DEA reversed course by announcing that drugs including CBD with a THC content of less than 0.1 percent are now Schedule 5 drugs, which include regulation prescription medication. The CBD drugs would still have to be approved by the U.S. Food and Drug Administration before they could go to the market.

And the 2018 U.S. Farm Bill calls for removing hemp from the Controlled Dangerous Substances Act altogether.

CBD can be extracted from both marijuana and hemp and used for medical purposes. Holub said CBD medication could treat conditions ranging from pain to appetite enhancement to epileptic seizures.

Clearing misconceptions

Many businesses and investors are vying to take part in the growth of New Jersey’s hemp industry and to that end, have been tracking the proposed pilot program as it moves through the Legislature.

LaQay Juel, president and a founding partner of Obsidian Elite Investment Association, a North Bergen investment firm focused on financing promising marijuana businesses, said hemp has been in his periphery ever since the bill was introduced.

“Anyone who’s serious about this industry realizes that there are far more implications, not just for New Jersey,” Juel said.

Obsidian is already investing in three applicants for the six new alternative treatment centers to be licensed in November: Simply Pure NJ in Central Jersey, Relevant in South Jersey and Constellation Wellness in North Jersey.

Juel said he wants to clear up misconceptions about hemp while lawmakers are hashing out the bill so that if or when Murphy signs it, Juel and Obsidian would become the go-to sources of insight on hemp.

“Re-education … we believe is necessary,” Juel said. “If I told people that we can get CBD from hemp, they don’t understand what I’m saying.”

Holub said that he has also run into roadblocks, both for himself and other businesses, because of misconceptions others have about hemp.

“I talk to farmers and they say ‘I don’t want to grow hemp, I don’t want to grow weed’,” Holub said. “These famers don’t want to grow it and you have to sit down and explain the difference. There’s just this reefer madness thing attached to hemp.”