The Future of Hemp is Genetics

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hemp genetics cannabis

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.


  1. 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.)

  2. 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.

  3. 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.

  4. 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.

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