Industrial Hemp Plant

In this Aug. 21 photo, an industrial hemp plant is shown in Clayton Township, Mich. The legalization of industrial hemp is spurring U.S. farmers into unfamiliar terrain, tempting them with profits amid turmoil in agriculture while proving to be a tricky endeavor in the early stages.

A 40,000-square-foot warehouse in Port Lavaca sits empty. The owner, Mike Nichols, said he’s been waiting to use it as a processing facility to turn hemp crop into products such as CBD oil.

But he can’t do that yet.

Nichols, a Port Lavaca resident and Formosa contractor, said he’s been anxiously waiting for the Texas Department of Agriculture to submit its hemp plan to the governor, attorney general and the USDA so the process of licensing can begin.

“I’ll be the first one to apply for a license,” Nichols said.

Although Jim Reaves, the coordinator for intergovernmental affairs with the Texas Department of Agriculture, has received hundreds of phone calls from hopeful hemp growers, he said he’s only heard rumors of three or four potential processors, like Nichols, being developed.

Reaves said he worries about this potential marketplace imbalance.

“We’re trying to warn them that we’d hate for supply to outdo demand,” Reaves said. “We’re telling them to make sure they have someone to process it.”

Justin Benavidez, an agricultural economist with Amarillo’s AgriLife Extension office, said he recommends potential hemp farmers line up a processor ahead of time and obtain an attorney-reviewed contract.

According to an economic assessment included in the USDA’s hemp production rules released Oct. 28, the per-acre returns from hemp farming for individual growers nationwide could vary anywhere between a gain of about $6,000 and a loss of about $17,000.

What’s more, seed uniformity hasn’t yet been worked out.

Josh McGinty, an AgriLife crops expert, said growing hemp in Texas is risky because if THC levels spike about .3% in a farmer’s crop, which will be subject to testing, they’ll have to throw out the entire crop.

Reaves said the TDA is working out a plan for per-acre deviations in THC levels.

Even if Nichols does get a license to process hemp in time for the growing season in March, he said he’ll wait to see what the farmers grow before he invests in processing technology.

“There’s a lot of risk,” Nichols said.

Morgan O'Hanlon is the business and agriculture reporter for the Victoria Advocate. She can be reached at 361-580-6328, mohanlon@vicad.com or on Twitter @mcohanlon.

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