Source: BloombergMarkets

It looks like pot. It smells like pot. But it’s hemp, marijuana’s legal cousin, and it’s taking over the Bluegrass state.

Across the rolling hills of Kentucky, which just two decades ago was the most tobacco-dependent state in the country, farmers are planting less of the crop after growing health concerns shrunk demand. Instead, they’re increasingly turning to hemp and have more than doubled sowings of the cannabis variety in 2016 to become the No. 2 producer in the U.S., trailing Colorado.

Unlike marijuana, hemp is a variety of cannabis that won’t get you high as it contains less than 0.3 percent of tetrahydrocannabinol, or THC, the former’s psychoactive ingredient. Hemp can be processed into more than 25,000 products, and main uses include rope, linens food and personal-care products.

“The profit is promising,” said 32-year-old Giles Shell, who farms with his dad and brother on 200 acres 45 minutes south of Lexington, Kentucky. The family next year plans to dedicate 80 acres to hemp, land that for four generations was seeded with tobacco. “We’ve been willing as a family farm to be able to take this adventure.”

Production Restrictions

For the past several decades, there were strict controls on hemp amid anti-drug sentiment, making it illegal to grow without a government permit as the plant got lumped in with marijuana. In 2014, the U.S. farm bill authorized state agriculture departments to create industrial hemp research pilot programs, reopening production opportunities. Only 33 acres were planted in Kentucky that year. Seedings rose to 922 acres in 2015 and jumped to 2,350 acres in 2016, according to the state’s agriculture department.

That’s still a relatively tiny amount. By comparison, in 2015, Kentucky farmers planted 72,900 acres with tobacco, an annual U.S. Department of Agriculture report shows. Hay, the state’s No. 1 crop, was seeded on 2.37 million acres. Still, the state accounts for almost 25 percent of the 9,650 hemp acres grown nationally this year, data from the Hemp Industries Association show.

Changing national views on pot can also give hemp a boost. Voters in Washington and Colorado were the first to approve recreational use of marijuana in 2012. Now, eight U.S. states and the District of Columbia have moved to legalize, permitting a fifth of Americans to consume weed freely in their home states. The Colorado initiative also included legislation governing the cultivation, processing and sale of industrial hemp.

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