TALENT — Travel through southern Oregon at this time of year and the potent smell of the region’s signature cash crop is unmistakable.

Rows of big and bushy plants, their long limbs heavy with flowers, dot the landscape.

You’re thinking marijuana, of course. And you’d be mostly right.

But a growing number of the plants today are hemp.

Five years into the state’s experiment with the crop, the maligned and misunderstood cousin to marijuana is on track to become a billion-dollar juggernaut – fueled in large part to the CBD craze.

Hemp acreage has increased from about 100 acres to an estimated 27,000 in Oregon, one of the first states to license production. It’s touted as having the potential to become the state’s top commodity, edging out marijuana and traditional agriculture giants like nursery crops.

The number of growers has catapulted from a dozen to about 1,700 as farmers and marijuana growers move to diversify and speculators try to cash in on the gold rush.

Oregon’s prime growing climate, a shift in federal policy that began six years ago and consumer clamor for all things cannabidiol have uniquely positioned the state to become one of the country’s leading producers of hemp.

Jay Noller, the state’s top hemp scientist and director of a hemp research institute at Oregon State University, said the crop has infused Oregon agriculture with a new wave of younger farmers, a striking demographic that he said may make it possible for families to hang onto smaller farms.

“It forestalls the acquisition and consolidation of agriculture lands across the state,” he said, “because now a family entity can keep going rather than be subsumed into a larger farm.”

But with hemp’s rapid rise have come growing pains.

Longtime farmers and vineyard owners say large-scale commercial hemp operations have strained the region’s already tight labor market.

Enforcement, too, is a challenge. The plant is often mistaken for marijuana, its heavily regulated relative, prompting fears that hemp may be used as a cover to grow black market marijuana.

The only way to tell the difference is lab testing.

“If you pull somebody over and they have a truck full of green cannabis, how do you know if it’s marijuana or not?” said Sunny Summers, coordinator of cannabis policy for the Oregon Department of Agriculture.

And while federal policy has opened the door to hemp production, the latest round of federal rules mandates testing requirements that hemp advocates say are so onerous that they threaten the crop’s future.

The rules require hemp be tested for THC within 15 days of harvest. The entire crop then must be harvested within that window. If it isn’t, the grower must test again — a step that raises the risk of failure because THC levels increase as plants approach harvest even though they later drop off.

Mason Walker, 32, CEO of a southern Oregon company that grows marijuana and hemp, called the regulations “the number one existential threat” to hemp production here and elsewhere.

Federal law allowed states to operate their hemp programs under existing rules through next fall.

It’s a temporary lifeline that underscores the profound sway federal policy has over the young market. The crop is regulated by the U.S. Department of Agriculture and products intended for human consumption, such as CBD, fall under the U.S. Food and Drug Administration.

“The regulations of those two agencies will have the biggest impact on the future of the U.S. hemp industry,” Walker said, “far bigger than any market trends, far bigger than any state trends.”

CBD HAS ITS MOMENT

Early hemp advocates in Oregon talked about a super crop that could serve as fuel and fiber alternatives and they extolled the nutritional virtues of hemp seeds.

But that’s not what’s driving the state’s hemp boom.

Nearly all hemp grown in Oregon feeds the market for CBD.

The trendy supplement is legal in the United States, sold everywhere from gas stations to upscale markets and found in everything from makeup to beer.

Brightfield Group, a Chicago-based market data research company focused on the cannabis industry, estimates that the CBD industry will generate nearly $5 billion in U.S. sales this year.

The lack of scientific research into CBD has done little to dampen enthusiasm among consumers who use it to ease aches and pains, fall asleep and treat anxiety.

Market analysts at Brightfield estimate that nearly 1 in 5 American adults tried CBD last year.

Claire Kaufmann, director of client services at Brightfield, said fewer new consumers are entering the CBD market but those who do tend to stick with it and use it often.

“For Oregon farmers in the CBD space, I think the future is promising,” she said. “We are seeing consumers continue to rely on these products.”

Yet the industry comes with risk.

Jason Griffin, a hemp researcher and professor at Kansas State University, suspects the market for CBD will stick around but ultimately will be limited and may end up getting consumed by a major pharmaceutical company.

“I have just offered up caution to anybody who is interested: spend a year and do your homework,” Griffin said.

He added: “Don’t spend a dollar more than you can afford to lose in your first year.”

SOUTHERN OREGON CARVES NICHE

Nowhere has hemp made a bigger mark than southern Oregon.

The same conditions that have long made the region a prime spot for marijuana have drawn hemp producers.

Marijuana and hemp are different types of the same species, Cannabis sativa.

The gene that fires up marijuana’s production of psychoactive THC is essentially turned down in hemp. By law, the plant may contain no more than 0.3 percent THC­.

Bottom line: Hemp won’t get you high.

Agriculture scientists say Oregon’s climate means greater yields and fewer pests, giving the state a strategic advantage. Noller, the director of the Global Hemp Innovation Center at Oregon State University, said an acre of hemp here is poised to be seven to 10 times more productive than one on the East Coast.

The number of acres under production statewide has soared from about 100 in 2015 to about 64,000 last year. In a sign of the nascent market’s volatility, production dropped this year to 27,000 acres under production.

With an estimated 9,200 acres under cultivation, Jackson County ranks as Oregon’s biggest hemp producer, according to The Oregonian/OregonLive’s analysis of Oregon Department of Agriculture data. Neighboring Josephine County ranks third in the state in hemp production. (Deschutes County is second.)

The Oregonian/OregonLive’s analysis of the state’s hemp registrations found that the vast majority – 90 percent – are linked to people who live in the state.

That breakdown holds true for Jackson County, where only about 1 in 10 people registered to grow the crop have an out-of-state address.

The crop’s rapid growth has caused friction in local agriculture and pitted some longtime farmers and vineyard owners against hemp growers as they all compete for the same small labor pool.

Vineyard owner Michael Moore said he’s lost several dozen workers in the past two years to nearby hemp farms. Some, he said, lure workers with promises of wages that are not only higher but also under-the-table, a violation of state and federal law.

“We cannot compete,” he said.

Brandon Ross, who operates an organic vegetable farm, Ella Bella Farm in Talent, said he, too, struggled to find workers this year.

“We have been advertising for labor since April and the only people that come out ask if we will pay in cash and we say, ‘No, we can’t. You have to be on payroll. It’s illegal.’

“People turn away and they say, ‘Well, I can make $20 an hour in cash in hemp,’” said Ross, whose farm is adjacent to hemp and marijuana fields.

Without enough workers, Ross said it was a challenge to get all of his crop to market.

“We lost about $75,000 in tomatoes that were here that we just didn’t have sufficient labor to pick,” he said.

The Oregon Department of Revenue has conducted 17 “compliance” checks on hemp operations since 2019, said spokesman Robin Maxey. He declined to discuss the nature of the investigations, their outcome or any enforcement action that the agency may have taken, saying that information is confidential.

Moore, who owns Quail Run Vineyards, cultivates about 350 acres in Jackson County. He said the wage practices of some hemp operations “a complete and total threat” to local agriculture.

“It’s at a point where I don’t quite know how we will continue as a business,” he said. “If you don’t have a stable labor pool, you can’t farm.”

HEMP COMPETES WITH MARIJUANA

Oregon has had a hemp law on the books for more than a decade but it wasn’t until 2015 that the state began to allow its cultivation.

The federal farm bill that passed a year earlier cleared the way for limited research and pilot programs run by universities and state agriculture agencies, a move that led to the birth of an industry.

Oregon was one of the first states to operate a pilot program before CBD emerged as a trend.

The 2018 farm bill then created a federal hemp program that allows states and tribes to oversee production.

Today only a couple of states don’t allow hemp production.

In places like southern Oregon, it’s common to see the plant near marijuana operations – two plants under radically different rules.

Oregon voters approved recreational marijuana in 2014. It’s subject to heavy state regulation. Requirements include thousands of dollars in annual licensing fees, security systems, background checks for owners and workers and reporting requirements that track plants from seed to sale.

Licensed marijuana businesses are subject to inspection and enforcement actions that can include thousands of dollars in fines for violations.

And when it comes to marijuana, everything grown in Oregon is supposed to stay here: The federal prohibition on the plant means it can’t cross state lines.

Hemp, on the other hand, faces little scrutiny.

For the most part, the state treats hemp like any agricultural crop. There are no limits on who can grow it. Hemp farms are subject to zoning rules but not the same time, place and manner restrictions that apply to marijuana operations.

Growers are required to get their crops tested before harvest to make sure their plants don’t exceed 0.3% THC, the state and federal requirement for legal hemp.

If the crop fails the test, it’s up to the grower to destroy it. Summers, coordinator of cannabis policy for the state Department of Agriculture, said the state may show up to verify or ask growers to submit photos showing the plants were taken down.

Unlike producers of legal marijuana, hemp farmers can – and do — ship their products across the country.

CARVING OUT A HEMP BRAND

To understand hemp’s ascendance, consider East Fork Cultivars that Walker operates in Takilma, a remote hamlet in Josephine County.

The community of about 400 people sits just a handful of miles north of the California border and has long been associated with marijuana cultivation.

Today an acre of East Fork Cultivars falls under the state’s recreational marijuana program. It’s fenced off and security cameras are posted overhead.

A few steps away sits a hemp field — nine acres in all.

Walker summed up the contrast between growing legal marijuana and hemp with one word: “Freedom.”

“It’s like we are growing tomatoes,” he said, sitting under a collection of tall oak trees on the farm as the hemp harvest got underway. “There are rules we have to follow here, but they are way easier.”

East Fork pays the state a fee to sell its hemp in legal marijuana shops, but it also runs a mail order business, where consumers can order hemp oil, seeds and dried flowers rich in CBD.

And while the company plans to hang onto its marijuana operation, its revenue projections for next year show hemp becoming the dominant money-maker.

Walker said that’s because businesses can grow a lot more of the crop and they can sell to a national market and eventually, he hopes, a global one.

He said his company relies on full-time salaried staff to help with harvest and used an employment service to help hire seasonal workers who were paid $20. He said the company follows federal and state tax and labor laws and doesn’t pay any of its workers in cash.

“We’ve got seven different insurance policies, we have a fleet of vehicles, we have workers’ comp, we have health insurance, we have retirement benefits,” he said.

Over time, Walker expects the CBD market to settle down. He said farmers will diversify and grow the crop for fiber and seed, though he expects hemp flowers like the ones his company specializes in will always have a place in Oregon, where cannabis cultivation and consumption are part of the culture.

Rural Oregon has experienced “a boom and bust cycle for so long, with the timber industry and you can go back even further to the mining industry,” he said.

Hemp, he said, “offers a glimmer of economic hope for rural Oregon in a way that hasn’t existed.”

The Oregonian/OregonLive’s Mark Friesen contributed to this report.

— Noelle Crombie; [email protected]; 503-276-7184; @noellecrombie

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