December 20, 2018

As the U.S. Federal Farm Bill has been passed by Congress, and with expectations that President Trump will sign off on it on December 20, Kentucky-based hemp company GenCanna Global USA announced it is investing $40 million to build a new multi-processing facility in Mayfield, Kentucky.

GenCanna plans to purchase land in the Graves County Opportunity Zone for the new 100,000-square-foot facility, which will include production, drying, extraction, and processing operations, as well as storage. The company’s original 120,000-square-foot location in Paducah, Kentucky, will serve as a supply chain partner to the new Mayfield site.

As one of the first members of the Kentucky Industrial Hemp Pilot Program, GenCanna began operations in 2014 – making the company an early player in a growing industry in the state, which saw hemp acreage climb from 2,300 acres in 2016 to 6,700 in 2018, making Kentucky second in production only to the state of Colorado.

“Kentucky is quickly establishing itself at the forefront of the hemp industry, as this agricultural product begins to take root nationwide,” Gov. Matt Bevin told the Northern Kentucky Tribune.  “This valuable cash crop has tremendous upside potential in the commonwealth. GenCanna was one of the first companies to capitalize on the Agriculture Act of 2014, and we are grateful that they have chosen to operate and expand in Kentucky.”

Passage to Profits

With signing by the President, the passing of the $867 billion Farm Bill will pave the way for industrial hemp to become a multi-billion dollar crop and a new investment opportunity. By removing hemp from the list of controlled substances and legalizing its production, the Farm Bill will be the catalyst to turn what has been a boutique activity since 1937 when the Marihuana Tax Act of 1937 made the possession of cannabis and hemp illegal, into a business that has the potential to generate revenues of more than $20 billion per year by 2020.

Although not the same plant, hemp has long been conflated with marijuana for decades (hemp does not contain the levels of THC that marijuana does). Through the Farm Bill’s removal of hemp from the Controlled Substances Act, it effectively shifts all regulatory oversight of the crop from the Drug Enforcement Agency (DEA) to the U.S. Department of Agriculture (USDA). And although regulations will remain in place governing its production, it is important to note that hemp will now be treated as a mainstream commodity crop, and its growers will be entitled to the protections afforded under the Federal Crop Insurance Act.

One factor to consider that the Farm Bill does not change, is the federal standing on legal cannabis production. To date 33 states have legalized cannabis for medical needs, and 10 states have legalized cannabis for personal use – the Farm Bill does not change federal policy on cannabis production in any way.  However, to hemp growers, this is a mute point.

“It’s a marketable crop, [as they spoke about earlier], farmer Ron Conyea told local Kentucky news outlet, WPSD.“We’re just waiting for a market. Now that we have that it’s legal now, it’ll be a commodity just like corn and soybeans and tobacco, so we’re ready to go. Farmers here are excited.”

With such a positive market horizon, GenCanna is investing to position itself as an early leader in the category.

“This new facility in Graves County represents the consistent and sustainable growth of both GenCanna and the hemp industry as a whole,” said GenCanna CEO Matty Mangone-Miranda. “We’re proud to continue scaling our economic impact in Kentucky communities by helping farmers farm and making strategic steps like this to expand our leadership position.”

-Lynda Kiernan