Source: 50statesofblue.com
One of the largest tobacco companies in the world, Alliance One International, and a global alcohol behemoth, Constellation Brands, have been making significant investments in Canadian pot growing companies. But until the United States government legalizes pot and removes it from the list of controlled substances, that kind of big money investment won’t be happening in California or any other state any time soon.
Alliance One, publicly traded as AOI on the New York Stock Exchange, recently announced it acquired a 75 percent stake in Island Garden and an 80 percent position in GoldLeaf Pharm. Terms of those deals were not announced.
In October 2017, Constellation brands announced it was taking a 9.9 percent interest in Ontario, Canada-based Canopy Growth for $245 million Canadian (about $190 million US).
Chris Walsh, vice president of editorial at MJ Biz Daily, confirmed that the move makes sense for both companies and their industries.
“I think they’re trying to get a foothold in a fast-growing industry,” Walsh told 50 States of Blue. “They’re doing what they should do to explore all of their options.”
Recreational use of marijuana in Canada is expected to become legal this summer. That move has opened the door for companies like AOI and Constellation brands to invest in marijuana businesses that began setting up operations ahead of the expected legal use date.
Hemp is starting to gain similar attention in the United States
While AOI announced their investment in the two pot companies in Canada, they also announced a 40 percent stake in North Carolina-based hemp grower Criticality. What made that possible is a provision in the 2014 Farm Bill that legalized hemp growing, but with some stipulations. Mainly that the grow had to be associated with an approved research institute, like a college or university.
Thus far, only a handful of states have tackled the regulations necessary to ensure that they aren’t crossing the marijuana line. California is one of them, thanks to the passage of Proposition 64, which legalized recreational marijuana use in the state, and left a backdoor open for what many thought would be a quicker path to state-wide industrial hemp production.
In an article from January 2017 in the San Diego Union-Tribune, several California hemp business leaders predicted things would be different by now. In particular, that the state would have quickly moved to develop the necessary regulations to get the nascent industry off the ground, and growers and the state would start reaping the profits from an expected multi-million-dollar industry.
Hemp regulation is still behind.
The problem is that while the legalization of pot also legalized hemp, it left no provisions for how to regulate it. The same happened with pot use in Proposition 64, and it took state legislators and regulators nearly two years to figure that out before the Jan. 1, 2018, due date when anyone over 21 could light up. Consequently, the state’s still trying to figure out how to regulate hemp, and doing so has fallen to the state Food and Agriculture Department.
Steve Lyle, the director of public affairs with the California Department of Food and Agriculture, wrote in an email that only research facilities or growers associated with them could legally grow hemp.
“At the moment, the only industrial hemp production permitted is by an ‘established agricultural research institution,’ as defined in Food and Agricultural Code,” Lyle added.
Lawrence Serbin started a legal California-based hemp company, called Hemp Traders, in 1993. But he doesn’t grow it. He sells hemp products made elsewhere. He’s also on the California Industrial Hemp Advisory Board, which was established to advise state lawmakers on how to regulate the hemp industry.
He said the advisory board created a simple half-page registration form and recommended a license fee of $1000 for two years. They thought both would be approved last July. So far, it’s stuck in legislative and legal review and the required 90-day public comment period.
“The registration process and getting viable hemp seed are holding up hemp production in California,” Serbin said. “The law says it has to be registered seed, but since the FDA won’t allow imported seed to be registered, people are having to get seed from wherever they can.”
Serbin said Colorado and Kentucky are the two largest hemp producing states in the country right now. Colorado got ahead of the game as the first state to legalize marijuana production and hemp was included in that move. Kentucky’s department of agriculture is driving hemp production by approving certain farmers.
There are three products that can be created from hemp that make it a viable farm product, explained Serbin. That includes growing it just for CBD for its medicinal qualities, growing it for seed to sell to other growers, or growing it for textiles. All of which, he iterated, could attract big company investment from various industries.
“Once companies see that one company is jumping into it, they’ll follow,” said Serbin.
However, that’s not going to happen until enough farmers start growing it. Serbin said the farmers are out there, and some are finding ways to work with research facilities now. But it’s not enough.
Until the regulation process gets worked out, California will be watching other states move ahead while it gets its hemp left behind.
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