Kentucky's first hemp crop growing quickly; sprouting interest

FRANKFORT, Ky. (WDRB) -- Using money from a settlement with cigarette makers, Kentucky has invested in Boer goats, honeybees and even prawns to help shift the state's farm economy away from tobacco. Now, hemp is joining that list.

The state board that manages the settlement funds has approved $500,000 in grants and loans to a Winchester company that plans to process hemp seed grown in Kentucky into hulled hearts, protein powders and other legal commercial products.

Atalo Holdings has contracts with 30 farmers from 12 counties that are raising nearly 550 acres of industrial hemp under a state-sanctioned research program, according to the Kentucky Agricultural Development Board, which agreed to fund the project in June. Gov. Steve Beshear and Agriculture Commissioner James Comer are among the board’s members.

The award marks the first settlement funds set aside for a hemp-related project, said Joel Neaveill, chief of staff of Beshear’s office of agricultural policy.

The money will help Atalo buy equipment for the processing plant located inside a building once owned by F.W. Rickard Seeds, a supplier of burley tobacco seeds, said Andrew Graves, Atalo’s CEO. The rest of the project’s $1 million cost comes from private sources that already are lined up, he said.

“It’s kind of fitting that we’re retrofitting an old building that was burley-involved and going into hemp,” said Graves, who describes himself as a seventh-generation hemp grower.

In 2013, Kentucky lawmakers passed a bill allowing industrial hemp, a cousin of marijuana, to be grown in the state – as long as all federal rules and laws are followed. The Farm Bill approved by Congress last year exempts hemp growing and research programs in Kentucky and other states from federal law that treats the crop as a controlled substance.

Atalo is among 24 hemp processors approved in Kentucky to work with more than 120 growers in the state, according to the tobacco settlement board. In all, roughly 1,742 acres are devoted to growing hemp this year.

Graves said in an interview that the farmers growing hemp for Atalo are mostly in central Kentucky and are on schedule to harvest their plants in the fall. He doesn’t expect that more than 10 employees, including the owners, will work at the Clark County facility.

The funds approved by the state come from two streams of tobacco settlement dollars -- money controlled by individual Kentucky counties, and a pool of state funds. The state matched funds contributed by 19 counties, Roger Thomas, executive director of the agricultural policy office, told lawmakers in Frankfort on Wednesday.

“Obviously there’s a lot of interest and support out in rural Kentucky, in the counties, for this project,” Thomas said at a meeting of the General Assembly’s tobacco settlement oversight committee.

Atalo must repay the grants and loan if state or federal laws make growing industrial hemp illegal in the next 10 years, according to state documents.

While raising questions about the feasibility of the Atalo plan, lawmakers largely spoke in favor of the project and Kentucky’s hemp-growing program.

“This is absolutely the research we need to be doing. I think we’re going to learn some things as we move forward with this important project,” said Rep. Tom McKee, a Democrat from Cynthiana.  

Graves said the money will be spent “slowly, but surely.”

“We know that it’s uncharted waters for any company that’s been located in Kentucky,” he said.

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