The introduction and subsequent passing of the 2018 Farm Bill, specifically the portion legalizing hemp, has generated a lot of buzz in the United States.

While there is a great deal of excitement over the once illegal crop, the fact remains that there is still a great deal of uncertainty in hemp and what its potential will truly be, especially in the eyes of the banks.

Wayne Mattingly, Independence Bank vice president and agricultural loan officer, has been involved in the agricultural game for years, having served on the Kentucky Agricultural Development Board as well as Daviess County extension agent, and has been watching the evolution of the hemp industry in Kentucky for more than a decade, he said.

"Do I think (hemp) it will replace tobacco, corn and soybeans? I think it is a long way from that," he said. "Right now, as a supplemental income, it is a positive thing as long as you can mitigate risks. Take small steps instead of big steps. Make sure the risk is quantifiable. We (the banks) understand that this is a legal product on an experimental basis and a valid enterprise and one that we are not by any means trying to tell our farmers that the potential isn't there. There are people that are developed and can grow anything, and there are others that see it as the next big gold rush and walking into a lot of unknown."

It is the unknowns that make Mattingly and many in the banking-world uneasy about extending lines-of-credit, especially for those jumping into the hemp game without farming experience, he said.

"Any bank has to answer the question of risk and reward," he said. "They aren't going to get into something that is highly speculative and isn't a growth opportunity. Everyone is trying to see if this stuff is for real and good for our clients and the bank. There are a lot of people making big claims. I'm not a person that necessarily believes the hype. I hope the opportunity is there, but I wouldn't tell anybody that I know the future of this yet. From a banking perspective, right now, (hemp) it is speculative. To put any kind of claim in whether I think it will be successful, again, the bank is open to any conversation that we think is good for the farmers of Daviess County and this region."

While lobbying is taking place on the state and federal level for farmers to have access to credit and crop insurance, this year, there is no safety net for farmers and any and all future aid from the banking end will take time, he said.

"There's so much to be considered in terms of legislation and so many things that we have to be conscious of," he said. "There are so many people coming in from out of state and are investing money and doing a lot of things, but until they can get a consistent product that can be sold; it will be difficult to pencil in this kind of revenue and expenses every year. It will take time for that to become standard. The first few years of this, farmers are buying an education. We don't want to close our eyes; we are open to having that discussion, but that is a conversation based on an individual basis for those that have experience. Our obligation is to not put someone in a position that they may not be successful. We look at the track record of the individual and the enterprise. We are going to see varying levels of success. Those with a good tobacco vegetable background will find the transition easier. You give a Kentucky farmer the opportunity to farm something, they will figure out how to do it."

The ability of the Kentucky farmer, as well as the wide-ranging potential of hemp to reach into various industries, is what Kentucky Commissioner of Agriculture Ryan Quarles and First District U.S. Rep. James Comer are counting on to make the burgeoning industrial hemp industry sustainable in the long-term.

Comer, a former commissioner of agriculture, was and remains a major champion for hemp. During his time as commissioner, he became the chairman of the Kentucky Industrial Hemp Commission and spearheaded many initiatives both in Kentucky and Washington D.C. that ultimately led to the national deregulation in the Farm Bill of 2018. While he believes in CBD and its viability now, hemp for CBD was not his original intent, he said.

"When I made the move to make it (hemp) a reality, I envisioned a lot more fiber processors than CBD processors," he said. "Unfortunately, the overwhelming number of processors in Kentucky is CBD. We only have a few viable fiber processors in the state. For hemp to reach its potential, we need more fiber processors. Especially as we move forward and CBD will be challenged by pharmaceutical companies and the FDA (Food and Drug Administration)."

In fact, the FDA is being pressured by competing markets to regulate the CBD market which, in its infancy, is enjoying the full bounty of a free market, he said, which has its pros and cons.

"With any industry, if you have a solid history and a business plan, banks will loan you money," he said. "If you don't, they won't. CBD is viable. I take it every night and most of my friends do as well; it is viable. The problem right now is that there are a lot of it and a big movement for the FDA to regulate CBD oil. If that happens, that will dramatically change the way CBD is marketed and sold. That will disrupt the current market. There are more stable companies dealing with CBD that welcome oversight; the smaller guys don't. I don't want to see it resemble our tobacco. When the government gets involved, it usually messes up the free market. I'm on the farmer's side, but I don't want to see a product that causes a massive surplus."

The potentiality of the CBD bubble bursting is a certain eventuality given the number of people who are now growing hemp for that purpose. However, while there are short term obstacles, which are universal, he said, the future of hemp is bright.

"We are the largest industrial hemp state," he said. "With a higher number of processors and growers. For the first time that I can recall, we are the leaders in an emerging industry. I am confident about hemp in the future, but there are short term challenges and that is everywhere. I am bullish on the future; I think we need to have a more diversified processor base, especially in fiber production."

The reigns of Kentucky's hemp movement have been handed over to Quarles who, like his predecessor, is a staunch advocate for Kentucky hemp being the product on everyone's minds, at home and abroad, he said.

"The future of hemp is wide open," Quarles said. "We have major companies investing major players in fiber and grain production. We will see maturity in the markets and stability in creating a supply chain for legal products that originate in Kentucky that are sold nationwide. Despite the emphasis on CBD, we will be seeing growth in grain and fiber as well."

For Quarles, the overall sustainability and viability in the hemp market will require using all parts a plant with myriad practical applications.

"Long term, we are working aggressively with manufacturers to ink our hemp industry with industrial application such as auto parts, hempcrete for building, medical application and injection molding," he said. "The biggest untapped market that has gotten little attention is hemp for livestock feed purposes. With Kentucky being a livestock state, this could be a major advancement for hemp beyond human consumption."

He understands that developing a market and eliminating hesitancies on the parts of banks due to a lack of transparency, crop insurance and transportation across state lines will take time as the market stabilizes and confidence grows, he said.

"Over the next couple of years, there will be a precision evolution of the crop to make it look and be treated like other state crops," he said. "It needs to be treated no differently than corn, soy and tobacco. There will be seed certification programs to guarantee consistency. We will see the eventual creation of crop insurance as the market matures. In the evolution of market standards, consumers need the certainty of buying a product to know what is in it. My office has been working with the FDA to regulate, but not overregulate. We will continue to lead the way in pioneering hemp. One of those concerns with banking hesitancies and transportation across state lines is providing consumers what they want, transparency. Product standards should be welcomed and are needed. However, this needs to be done in an inclusive manner and the FDA does not regulate this business to death."

His overall goal is simple, that hemp is on the minds and tongues of people at home and abroad, he said.

"It is my ultimate vision that when you are from Kentucky and you travel the world, people will ask you about bourbon, the Derby and hemp," he said. "Just like Idaho potatoes and Florida orange juice. We are branding Kentucky as the epicenter for industrial hemp."

Jacob Mulliken, 270-228-2837,

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