The SAFE Banking Act Passes the House in a Landslide — Here’s What Happens Next

The SAFE Banking Act Passes the House in a Landslide — Here’s What Happens Next

Marijuana history was made again this week, but you’d be wise to keep the champagne on ice.

For the past three years, marijuana has taken Wall Street by storm. Even with cannabis stocks in a six-month funk, the biggest names in the industry are many multiples higher than they were three years ago on the expectation that legal weed sales will grow somewhere between five and 18 times the $10.9 billion in worldwide sales recorded in 2018 by the end of the next decade.

Being a Schedule I drug comes with its fair share of problems

The one major uncertainty in these growth projections continues to be the United States. Despite being the most lucrative cannabis market in the world, the U.S. federal government has remained firm on its classification of marijuana as a Schedule I substance. This classification means marijuana is on par with heroin and LSD as being entirely illegal, prone to abuse, and isn’t recognized as having any medical benefits.

In spite of being labeled a Schedule I drug, it hasn’t stopped 33 states from legalizing medical marijuana since 1996, 11 states of which have also legalized adult-use consumption. These 33 states are currently running circles around Canada, the only fully legal industrialized country in the world, in terms of sales, thanks in part of the federal government taking a hands-off approach to regulation.

Nevertheless, there are clearly defined consequences to Congress holding pat on cannabis as a Schedule I substance.

As an example, profitable businesses that operate in the U.S. marijuana space are subjected to Section 280E of the tax code, which was implemented in the early 1980s to keep drug smugglers from writing off “business expenses” on their taxes. In layman’s terms, marijuana companies aren’t able to take any deductions on their federal income taxes, save for cost of goods sold. If profitable, this can mean paying an effective tax rate of 70% to 90%, which leaves little income left over for reinvestment and hiring.

U.S. pot companies also have minimal access to basic banking services, including loans, lines of credit, and even checking accounts. Since financial institutions report to the Federal Deposit Insurance Corporation (FDIC), and the FDIC is a federally created agency, banks and credit unions fear possible financial and/or criminal repercussions for aiding cannabis companies. This has made marijuana an industry dominated by cash, which is both a security concern and an expansionary constraint.

However, certain members of Congress believe they have a solution to this latter problem.

The SAFE Banking Act passes in a landslide 

The Secure and Fair Enforcement (SAFE) Banking Act was introduced earlier this year in the House of Representative as a means of permanently protecting financial institutions in legalized states that want to offer basic banking services to marijuana businesses.

Since 2014, protections have existed for cannabis businesses in legalized states via riders that have needed to be passed with each successive fiscal year. However, the SAFE Banking Act represents the first piece of stand-alone cannabis legislation to be voted on in Congress. Were it to become law, Congress would no longer need to pass annual riders, since the Act itself would protect banks and credit unions from being targeted by the federal government for providing services to the marijuana industry.

On Wednesday, Sept. 25, the House officially voted on the SAFE Banking Act under a procedure known as “suspension of the rules.” This procedure is typically reserved for noncontroversial legislation in instances where lawmakers want to quickly pass a bill. Of course, a simple majority doesn’t work with suspension of the rules. Instead, a two-thirds majority (290, or more, out of 435 votes) is needed for passage.

When the gavel struck, members of the House voted overwhelmingly to pass the SAFE Banking Act: 321 in favor, to 103 opposed. A majority vote was certainly expected with the bill having 206 cosponsors heading into its historic vote. However, 321 yay votes are above and beyond expectations and demonstrate that cannabis banking reform has become a bipartisan issue. 

The big question is: Now what?

What’s next for the SAFE Banking Act? 

Now that the SAFE Banking Act has passed the lower house of Congress, it’ll move on to the Republican-controlled Senate. The problem is, the GOP has historically had a more negative view on marijuana than members of the Democratic or Independent party, making it less likely that banking reform legislation will have the votes needed for passage in the Senate.

Additionally, it’s been suggested that while Senate Republicans are open to discussion and a vote on banking reform measures, those measures may not mirror the exact bill just passed by the House. In order to persuade Senate Republicans to take up the issue and vote in favor of reform, certain concessions may need to be made, such as including protections for hemp and cannabidiol (CBD) companies, as well as possible stipulations that federal agencies won’t be able to target certain industries without valid cause, such as the firearms industry.

Even Senate Democrats may push back on the SAFE Banking Act. Similar to the minority opposition in the House, some Senate Democrats believe that it’s not prudent to consider reforming cannabis banking laws before broader marijuana reforms are tackled at the federal level.

And, of course, there’s always Senate Majority Leader Mitch McConnell. While it’s always possible that McConnell will allow some version of the SAFE Banking Act to make it to the Senate floor for vote as a means of courting 2020 election votes, it’s more likely that McConnell will aim to block the bill for vote, which is what he’s done with other forms of cannabis legislation.

According to Senate Banking Committee Chairman Mike Crapo (R-Idaho), the chamber will vote on cannabis financial services legislation before the end of the year. Unfortunately, this doesn’t narrow things down too much in regard to when or if we can expect the Senate to vote on a complete bill. While industry enthusiasts and investors remain cautiously optimistic, signs continue to point to no resolution on banking reform anytime soon.

Something big just happened

I don’t know about you, but I always pay attention when one of the best growth investors in the world gives me a stock tip. Motley Fool co-founder David Gardner and his brother, Motley Fool CEO Tom Gardner, just revealed two brand new stock recommendations. Together, they’ve quadrupled the stock market’s return over the last 17 years.* And while timing isn’t everything, the history of Tom and David’s stock picks shows that it pays to get in early on their ideas.

This story originally appeared at Fool.com.

Colorado City Hemp Facility Looks to Fill 250 Positions

Colorado City Hemp Facility Looks to Fill 250 Positions

Paragon Processing, the nation’s largest hemp processing facility, is looking to start full-scale operation in the Colorado City area within the next 20-30 days.

“We’re actively hiring people so that we can ramp up,” said William Chavis, partner of Paragon Processing, located about 23 miles south of Pueblo. “It wouldn’t make sense to ramp up with our current staff, so it takes time to get people in the building, train them, have a good understanding of what’s going on.”

Paragon Processing currently employs between 30 and 45 staff members. It is looking to expand to 250 workers by the end of the year and 500 in approximately two years. Available positions include maintenance people, general laborers and skilled tradesmen, according to Chavis.

“We have found very strong people out of the oil and mining industries that have experience using these types of equipment, but not necessarily for this purpose,” Chavis said. “We invite as many local people as we can to come in and help out with some of the general labor.”

The Paragon Process extraction facility is 256,000 square feet. At the facility, hemp biomass is tested for pesticides, heavy metals, and microbials. Biomass that passes each test is stored and processed. Currently, the facility is capable of processing 1 million pounds of biomass each month. Climate controlled storage is available for 50 million pounds.

“In the event that a farmer has 2-3 million pounds, we’re able to take that all in at one point in time, even if we can’t process for them in a single month,” Chavis said.

Through extraction, a winterized crude is produced from the biomass.

“That crude material consists of some of the other plant extracts other that the actual cannabinoids,” Chavis said. “That crude is around 50% cannabinoids, a mixture of everything from CBD, CBM, CBG, CBC as well as minute amounts of THC.”

Product must contain less than 0.3% THC content in order to be transported out of the facility.

“Just on the science side alone, if you were able to take a product that started with 0.3% and you concentrate it, it’s likely going to have over 0.3%,” Chavis said. “To further refine it, we use distillation.”

After distillation, THC content can also be removed through THC remediation or through production of a CBD isolate, a 99% or pure CBD product that contains no THC.

“Hemp is currently one of the largest cash crops that people are switching to,” Chavis said. “There is actually 15 times more volume of hemp being grown and produced this year than previous years.”

Paragon Processing currently has a sister facility located in Colorado Springs handling goods manufacturing. CBD distillate and isolate produced at the extraction facility may be used for food products, lotions and other consumer goods.

“We’re very interested in taking applications of all sorts,” Chavis said. “We invite people to go to our website to take a look and fill out the application.”

This story originally appeared at The Pueblo Chieftain.

Taking Hemp to Bio-Plastics

Taking Hemp to Bio-Plastics

Hemp, Inc. (OTC PINK: HEMP) announced today the Company was featured in “Plastics News” regarding the Company entering the hemp bioplastics industry.  The Plastics News article titled “Hemp, Inc. taking hemp into bioplastics” details the operations at Hemp Inc.’s facility in Spring Hope, N.C., where the Company has begun processing industrial hemp for bioplastics. Within the article, the outlet describes the operations that will help fill the growing demand for hemp-based and natural materials.

According to the news source, the material that is being processed at the facility has completed positive beta testing. A quote from the original press release that is included in the article states, “This is a venture no one else is doing in America and what hemp was put on this earth to do,” said Hemp, Inc. CEO Bruce Perlowin. “While everyone focuses on CBD, we are here focusing on the next big thing, which is the industrial part of the plant – the part that can help save the world.”

In addition to the announcement regarding Hemp, Inc.’s entry into the hemp bioplastics industry, Plastics News also highlighted that the Company has two additional natural product ventures. These two product ventures include DrillWall™ and Spill-Be-Gone™ for the oil industry, making hemp bioplastics the Company’s third natural product venture. The outlet also included Hemp, Inc.’s promotional video entitled “Could Hemp Save the Planet?

The hemp industry is expected to jump from $1.1 billion in revenue in the year 2018 to an estimated $2.6 billion by the year 2022, according to New Frontier Data. Additionally, bioplastics are predicted to control five percent of the plastics market by 2020 and rise to 40 percent by 2030, according to Grand View Research.

Read the Plastics News article “Hemp, Inc. taking hemp into bioplastics”. 
Hemp, Inc. is a global leader in the industrial hemp industry with bi-coastal processing centers.  
WHAT IS HEMP, INC.?
What is Hemp, Inc.? With a deep-rooted social and environmental mission at its core, Hemp, Inc. seeks to build a business constituency for the American small farmer, the American veteran, and other groups experiencing the ever-increasing disparity between tapering income and soaring expenses. As a leader in the industrial hemp industry with ownership of the largest commercial multi-purpose industrial hemp processing facility in North America, Hemp, Inc. believes there can be tangible benefits reaped from adhering to a corporate social responsibility plan

Vote Hemp Releases 2019 U.S. Hemp Grower License Report

Vote Hemp Releases 2019 U.S. Hemp Grower License Report

Vote Hemp, the nation’s leading grassroots hemp advocacy organization, has released its 2019 U.S. Hemp License Report.

The report documents state-by-state progress of hemp legislation passed in 2019, reported licensed acreage of hemp, identifies states with active hemp farming programs and estimates the amount of hemp that will be planted in this critical year following the federal legalization of hemp through the signing of the 2018 Farm Bill. To view the complete 2019 U.S. Hemp License Report, please visit: https://www.votehemp.com/u-s-hemp-crop-report/.

“We are seeing hemp cultivation dramatically expand in the U.S. in 2019, with over quadruple the number of acres licensed in hemp compared to last year and the addition of 13 more states with hemp programs,” said Eric Steenstra, President of Vote Hemp. “Now that we have lifted federal prohibition on hemp farming, it’s time build the infrastructure and expand hemp cultivation and the market for hemp products across the country so that all can reap the benefits of this versatile and sustainable crop.”

Since the passage of the 2018 Farm Bill, hemp cultivation in the U.S. has grown rapidly. The number of acres of hemp licensed across 34 states totaled 511,442 in 2019—more than quadruple the number of acres licensed from the previous year. State licenses to cultivate hemp were issued to 16,877 farmers and researchers, a 476% increase over 2018. Licensing is a good indicator to show intent but we know from previous years that significantly less hemp is planted than what is licensed due to a variety of factors including access to seed and/or clones, a lack of financing as well as inexperience. This will be the case again for 2019 and Vote Hemp estimates that 230,000 acres of hemp will actually be planted and 50-60% of that will be harvested due crop failure, non-compliant crops and other factors resulting in 115,000-138,000 acres of harvested hemp.

Hemp processors are critical to the growth of the industry and the report also documents dramatic investments and growth in hemp processing facilities. States which license processors reported 2,880 processing licenses, an increase of 483% over 2018. Several key states including Colorado do not license processors so processing capacity is actually significantly higher. The growth in processors is largely for extraction and positions the hemp industry well to meet market demand for extracts but more investment is needed for fiber and grain processing.

The new 2018 Farm Bill, signed into law by the President on December 20, 2018, includes Section 10113 titled “Hemp Production,” which removes hemp from the Controlled Substances Act, places full federal regulatory authority of hemp with USDA, and allows State departments of agriculture to submit hemp program plans for approval and regulate hemp cultivation per their State specific programs. The USDA is expected to release new federal regulations for hemp cultivation this fall as required by Section 10114 of the Farm Bill and states with approved plans can begin regulating hemp cultivation under the new Farm Bill provisions starting in 2020.

In addition to defining hemp as cannabis that contains no more than 0.3% THC by dry weight, the 2018 Farm Bill asserts a ‘whole plant’ definition of hemp, including plant extracts; and removes roadblocks to the rapidly growing hemp industry in the U.S., notably by authorizing and encouraging access to federal research funding for hemp, and removing restrictions on banking, water rights, and other regulatory roadblocks the hemp industry currently faces. The bill also explicitly authorizes crop insurance for hemp. For more details on the specific hemp provisions in the 2018 Farm Bill, please check out Vote Hemp’s blog post, “Hemp in the Farm Bill: What Does It Mean?” https://www.VoteHemp.com/hempinthefarmbill.

Among the fastest-growing categories in the natural foods industry, hemp seed is a rich source of Omega-3 and Omega-6 essential fatty acids (EFAs), providing both SDA and GLA, highly-digestible protein, and naturally-occurring vitamins and minerals, such as vitamin E and iron. An excellent source of dietary fiber, hemp seed is also a complete protein—meaning it contains all ten essential amino acids, with no enzyme inhibitors, making it more digestible by the human body. Advancements in hemp research and manufacturing demonstrate the remarkable versatility and product-potential for hemp. Hemp bast fiber has shown promising potential to replace graphene in supercapacitor batteries, which could then be used to power electric cars and handheld electric devices and tools. Hemp fiber can also be used to create environmentally friendly packaging materials, and hard bio-plastics for use in everything from airplanes to car parts. Hemp houses are also on the rise, as hempcrete, which is energy-efficient, non-toxic, resistant to mold, insects and fire, has many advantages to synthetic building materials, lumber and concrete.

To date, forty-six states have defined industrial hemp as distinct and removed barriers to its production. These states are able to take immediate advantage of the industrial hemp research and pilot program provision, Section 7606 of the Farm Bill: Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming.

This story first appeared on Vote Hemp.

Oak is Out, Hemp is in – HempWood Factory Opens in Kentucky

Oak is Out, Hemp is in – HempWood Factory Opens in Kentucky

“Oak is out. Hemp is in,” says HempWood leader Greg Wilson, whose 15,600-square-feet factory is now officially open for business in Kentucky. 

HempWood is a reverse-engineered wood substitute with advantages over traditional oak hardwood, says Fibonacci, the company behind it. Those include a higher availability, a much quicker grow time of six months, and a 20 percent higher density. HempWood can be used in furniture, flooring, and other woodworking projects.

“We’re taking something that grows in six months and we’re able to able to replicate, if not out perform, a tropical hardwood that grows in 200 years,” Wilson said at a ribbon-cutting ceremony Monday. Wilson and Congressman James Comer cut the ribbon at the ceremony, later demonstrating how HempWood logs are manufactured. The plant will consume $1 million a year in raw materials (all coming from local farmers and neighboring counties) and have a significant impact on labor, generating another $1 million a year, WPSD Local 6 News reported. The one-of-a-kind HempWood plant will run two presses over two shifts.

Around 12 employees and three managers are needed each shift – reaching around 50 employees overall by the end of the year. Wilson is currently taking job applications at work@hempwood.com. Two people will be hired each month through the year’s end. Eight employees currently work at the plant. HempWood will be available in blocks, pre-sawn boards, flooring, and finished products such as cutting boards and skateboards at prices lower than oak. The Kentucky Economic Development Finance Authority approved $300,000 in tax incentives for the operation.

The incentives, based on performance, will allow Fibonacci to keep some of its investment by meeting job and investment targets. The company will also receive no-cost recruitment and job placement servies from the Kentucky Skills Network. “The commonwealth’s burgeoning hemp industry is quickly gaining national attention, and this exciting project will significantly intensify that spotlight,” Kentucky’s Governor Matt Bevin said. “This hardwood alternative opens up new possibilities within the construction and woodworking industries and emphasizes the capabilities hemp has across numerous sectors.

We are grateful to Greg Wilson and Fibonacci LLC for locating the United States’ first HempWood operation in Kentucky, and we look forward to the powerful impact the company will have on the region’s economy and the overall industry.” Wilson was inspired to create the HempWood product after working for a bamboo flooring company. He co-owns SmartOak, which manufacturers engineered wood products from would-be waste logs. 

Wilson told the Murray Ledger that he is planning seven other HempWood facilities around the country. Wilson hopes to add another press at the Murray plant by next year and double the employees. 

This story originally appeared at Woodworking Network.

DEA Affirms Hemp’s New Status, Sends Notice That Plant is Legal

DEA Affirms Hemp’s New Status, Sends Notice That Plant is Legal

More than six months after hemp was made legal in the United States, federal drug authorities have updated their guidance to remind law enforcement that hemp is no longer a controlled substance.

A notice posted Monday by the U.S. Drug Enforcement Administration (DEA) cited the 2018 Farm Bill in noting that “certain forms of cannabis no longer require DEA registration to grow or manufacture.”

The agency went on to say that “hemp, including hemp plants and cannabidiol (CBD) preparations at or below the 0.3 percent delta-9 THC threshold is not a controlled substance.”

The DEA notice didn’t change the law or make hemp legal; that occurred last year.

But because the agency had yet to remind national law enforcement through its regular bulletins that hemp is legal, some hemp businesses found themselves fighting legal confusion about the plant’s status.

Attorneys who represent hemp clients told Hemp Industry Daily that the DEA statement is an overdue affirmation of cannabis legality.

The DEA also announced Monday that it will expand research on higher-THC varieties of cannabis classified as marijuana.

This story first appeared on Hemp Industry Daily.