The ‘hemp gold rush’: A look at the Routt County businesses leading the charge
STEAMBOAT SPRINGS — Twenty years ago, as a sophomore at University of Colorado Denver, Nathan Brough wrote an economics paper on hemp’s potential to grow the nation’s gross domestic product.
As he described, people have identified more than 25,000 uses for the plant, from textiles to building materials to homeopathic medicines. It was among the most important crops during the 18th and 19th centuries as colonists were cultivating the land into an agricultural powerhouse.
“Even the Declaration of Independence was written on hemp paper,” Brough said.
But since 1936, the plant has been effectively banned in the U.S. — that is, until Congress passed the 2018 Farm Bill in December. The legislation legalized the production of hemp nationwide and removed it from the list of controlled substances.
The move comes amid a growing interest in the plant, particularly for its medicinal potential. Hemp differs from marijuana in that it contains less than 0.3% THC, the cannabinoid that gets people high. Instead, it contains higher levels of CBD, which has become a popular alternative to pharmaceutical medications.
Since the passage of the Farm Bill, farmers and business owners have flooded into the industry, trying to stake their claim. Brough, who owns Mountain Strong Hemp Co. based in Routt County, calls it the “hemp gold rush.”
While analysts hail the crop as a money boom — cannabis researchers BDS Analytics and Arcview Market Research say nationwide sales of CBD could surpass $20 billion by 2024 — much confusion remains over how to regulate the industry and differentiate hemp from illegal marijuana.
Turning a new leaf
Brough discussed the benefits and challenges to the industry at his business’ farm in Oak Creek, owned by his fiance, Sulee Robin. He had never planned to own a hemp company, and before November, was indifferent toward the use of CBD.
That changed the day before Thanksgiving, when he broke his back snowboarding with his kids. His doctor put him on a regimen of painkillers, but by the time his prescription ran out, he still was in pain and suffering withdrawal symptoms from the medications.
He gave CBD a try and, within days, noticed an improvement.
“It’s the only thing that works,” he said.
After the Farm Bill passed, he wanted to better understand the plant that assuaged his pain and help others find similar relief.
Mountain Strong Hemp is Brough’s line of CBD-infused products, which range from lotions to dog treats. He and Robin also operate Evergreen Biotech, a genetics company seeking to cultivate hemp strains that have the maximum amount of CBD and the minimum amount of THC.
So far, business has been booming. He has built partnerships with farms in about 20 other states, a number that grows with time as more farmers see the monetary value of hemp.
According to Brough, a single acre of hemp can bring anywhere from $40,000 to $120,000 of revenue, depending on the amount of CBD in the particular strains. By comparison, corn and soybean farmers in the Midwest averaged about $700 in revenue per acre last year, according to a study from a Minnesota-based consulting firm.
“For the American farmer, this crop (hemp) is huge,” Brough said.
That is why he does not want to just be a part of the industry — he wants to lead it.
“We’re trying to build the first national brand in the hemp industry,” he said.
A walk through the garden
On Friday, Brough gave a tour of his company’s grow operation, housed in a humble, nondescript log barn near the home where he and Robin live. Hundreds of small hemp plants grew under lights, clones of a few mother plants selectively bred to contain high levels of CBD.
As he explained, Evergreen Biotech will grow the clones until they are ready to ship to four partner farms in other parts of the state with more favorable growing conditions than the Yampa Valley. There, they will reach maturity and produce flowers, which contain the greatest amount of CBD.
Through a crop-sharing contract, Brough will receive a portion of the mature plants to turn into CBD oil, which will go into Mountain Strong’s range of wellness-focused products.
Before that happens, the plant has to go through an extraction process, a similar process for making moonshine. That was how Steve Herron described it at his hemp business, Natural Path Botanicals, in Hayden.
Like Brough, the cornerstone of Herron’s company is its genetics program. He partners with several small, family-owned farms in the Gunnison Valley, giving them clones grown in a two-story, vertical farming system. In exchange, he gets large bags of hemp flower and leaves.
In a lab attached to the grow facility, his employees break down the plant material into a dark, viscous substance Herron called “hemp crude oil,” an homage to his years in the petroleum industry.
“It’s gooey, it’s sticky — it’s not the kind of stuff you want to get on your hands,” he said.
The substance contains about 90% CBD, which often will be distilled into a clearer, honey-like oil that can be put into devices like vaporizer pens for smoking.
But, as Herron made a point of mentioning, his products are meant to help people recover from workouts, manage pain, relieve anxiety or for other wellness purposes — not get people high.
“We throw a very hard line between cannabis and what we do — industrial hemp,” he said. “We are a company that’s committed to making health supplements that are legal in all 50 states.”
While the distinction is clear to Herron, the newness of the industry has raised more questions than answers. Legislators, banks and the farmers themselves still struggle to interpret and maneuver the laws, creating frustration for business owners like Brough.
In June, two shipments of his clones bound for a farm in Kentucky were mistaken for marijuana, which remains illegal to transport across state lines. The confusion cost him hundreds of dollars and delayed delivery of the plants.
The troubles continue. Just last week, a bank shut down Brough’s account because of its association with his hemp company, he said. Advertisements that he and his associates try to post to social media get flagged for inappropriate content and taken down. As of Friday, he was still banned from Facebook because so many of his posts had been mistaken for marijuana.
“It does cause me some migraines here and there,” he said of the legal snags.
Brough is not alone in his frustration. In a letter to federal financial regulators, Colorado’s U.S. Senator Michael Bennet urged them to provide greater guidance and certainty to hemp farmers and processors.
“In my home state of Colorado, farmers cultivated hemp on over 21,000 acres of land last year,” Bennet wrote in the letter. “Nonetheless, farmers generally continue to lack access to the banking system even though hemp is no longer a Schedule 1 drug.”
Despite the headaches and confusion, hemp growers and producers in Routt County remain optimistic the industry will thrive.
Brough continues to get calls from farmers in different states wanting to form partnerships. By next year, he hopes the clone operation turns a profit of about $400,000.
In June, Hayden Town Council members approved a financial incentive package to support Herron’s company, Natural Path Botanicals, seeing it as a way to provide jobs and bring in tax revenue.
Herron has plans for a significant expansion project, which he plans to announce in the coming days. He also is investing in technology to isolate other cannabinoids in hemp, such as CBN, a supposed sleep aid.
Like Brough, he has seen firsthand the medicinal benefits of hemp and was able to stop using prescription medication to manage his pain by taking regular doses of CBD. He wants others to find similar relief.
“As a company, we want to see what we can do to better the lives of our customers,” he said.
Construction of a new terminal at the Yampa Valley Regional Airport has been delayed at least until next year.