Hemp
was
legalized
federally
just
over
a
year
ago.
During
the
run-up,
legislators
from
Mitch
McConnell
to
Ron
Wyden
said
things
like
“[b]y
removing
hemp
from
the
federal
list
of
controlled
substances,
farmers
can
explore
the
bright
future
of
this
versatile
crop,
found
in
everything
from
a
coffee
mug
to
your
car
dashboard.”
One
planting
season
in,
however,
farmers
aren’t
doing
so
much
“exploring”
with
respect
to
hemp:
instead,
the
Brightfield
Group
estimates
that
87%
of
2019
hemp
acreage
was planted
for
CBD
extraction.
Among
the
many
hemp
farmers
our
law
firm
represents
in
Oregon,
Washington
and
California,
that
number
feels
closer
to
100%.
Will
people
get
rich
farming
hemp
for
CBD?
It’s
hard
to
say,
given
the
newness
of
that
market,
apparent
oversupply
issues
and
pricing
volatility
for
CBD.
Assuming
long-term
and
robust
demand
for
CBD
products,
though,
it’s
likely
that
large
family
farms
will
eventually
dominate
output,
just
as
in
U.S.
agriculture
generally.
It
also
seems
likely
that
the
margins
for
these
large
farms
will
expand
and
contract
similarly
to
margins
for
other
crops,
based
on
many
complex
factors.
Today’s small
hemp-CBD
start-ups
growing
from
1
to
99
acres
will
likely
diminish
in
profitability
and
prevalence.
And
that’s
where
genetics
come
in.
If
hemp
is
to
be
like
other
crops,
it
seems
probable
that
the
truly
big
money
will
not
be
in
hemp
production,
but
in
the
creation
and
licensing
of
proprietary
plant
material.
Along
those
lines,
Oregon’s
biggest
hemp
company
already
is
a
seed
company
called
Oregon
CBD.
That
oufit
is
approaching
$1
billion
in
annual
revenues
after
just
a
few
short
years
in
operation.
If
you
want
a
certain
CBD-rich
strain–or
a
CBG
strain,
or
a
CBN
strain,
or
any
other
kind
of
hemp
strain–you
would
go
to
a
seed
company.
You
would
do
this
even
though
seed
certification
is
not
addressed
under
the
2018
Farm
Bill
because
you
want
to
be
sure
that
you
get
females
and
those
females
do
not
germinate
into
0.3%+
THC
plants.
You
would
do
this
because
you
want
proven
genetics
and
you
want
warranties
around
those
genetics.
And
eventually,
you
would
do
this
because
you
want
to
be
sure
your
hemp
seeds
are
designed
for
production
with
certain
types
of
herbicides
in
mind,
a
la
Roundup
Ready
corn.
The
federal
regulatory
environment
is
shaping
up
to
facilitate
success
for
firms
with
valuable
hemp
genetics.
Currently,
hemp
genetics
firms
are
able
to
formally
register
and
protect
their
intellectual
property,
design
products
with
specified
epigenetic
factors
in
mind
(i.e.
approved
pesticides),
and
count
on
clear
federal
parameters
for
their
business
models.
Some
of
these
are
helpful,
others
less
so.
Each
crucial
plank
is
briefly
summarized
below.
-
Intellectual
Property.
Earlier
this
year,
USDA’s
Plant
Variety
Protection
Office
(PVPO)
began
accepting
applications
of
seed-propagated
hemp
for
protection
under
the
Plant
Variety
Protection
Act.
PVPO
examines
new
applications
and
grants
certificates
that
protect
varieties
for
20
years.
Elsewhere,
the
U.S.
Patent
and
Trademark
Office
(USPTO)
already
has
granted
its
first
hemp
plant
patent,
with
more
in
the
pipeline.
Plant
patents
afford
similar
protections
to
protected
plant
varieties
with
respect
to
duration
and
scope.
(For
a
good
explanation
of
the
interplay
and
differences
between
plant
variety
and
patent
protection
for
plants,
go here.) -
Epigenetics. Last
month,
the
Environmental
Protection
Agency
approved
a
list
of
ten
pesticides
to
be
used
in
hemp
production.
This
means
that
firms
creating
and
registering
hemp
plant
media
will
have
crucial
guidelines
for
seed
design.
It
seems
very
likely
that
hemp
strains
eventually
will
be
built
with
the
application
of
certain
chemical
agents
in
mind,
again
like
Roundup
Read
corn,
if
this
type
of
research
and
development
is
not
underway
already. -
Crop
Insurance.
The
USDA’s
Risk
Management
Agency
(RMA)
recently
announced
a
pilot
insurance
program
for
hemp
growers.
Farmers
will
now
have
greater
incentive
to
grow
hemp
at
scale
and
to
innovate,
which,
in
turn,
means
a
more
lucrative
and
dependable
market
for
seed
genetics
firms.
In
the
bigger
picture,
the
USDA
itself
will
also
encourage
cultivation
by
providing
a
federal
plan
for
producers
in
states
or
tribal
territories
without
their
own
USDA-approved
plans. -
Crop
Testing
Rules.
The
problematic total
THC
testing
protocol in
USDA’s
final
interim
rule
will
create
demand
for
innovation
in
genetics–
unless
we
see
major
changes
following
the
close
of
public
comment on
January
29.
But
wherever
we
end
up,
seed
firms
will
strive
to
create
and
refine
cultivars
that:
a)
express
certain
cannabinoids
predominantly
and
b)
pass
testing
strictures.
It
has
already
been
argued,
for
example,
that
the
current
testing
rules
could
eliminate
the
viability
of
current
CBD
strains
altogether.
Time
to
innovate.
In
all,
some
farmers
will
do
well
growing
hemp,
particularly
the
larger
family
farms.
Others
will
inevitably
fail.
But
the
big
money
will
be
made
in
plant
genetics,
including
the
design,
sale
and
licensing
of
intellectual
property.
As
certain
hemp
cultivars
move
to
the
fore,
the
next
few
years
will
be
crucial.
And
the
owners
of
those
cultivars
stand
to
profit
handsomely.
