More than forty states have legalized the farming and processing of industrial hemp. In 2018, the United States Congress passed the Farm Bill legalizing hemp that contains less than 0.3% tetrahydrocannabinol (THC).
With the passage of House Bill 1325, Texas Department of Agriculture will develop regulations to govern the hemp program, subject to approval by the U.S. Department of Agriculture. The regulations will require licensing for those wishing to participate in farming industrial hemp. This legislation will not legalize the use or cultivation of psychoactive marijuana.
Industrial hemp products, such as clothing, twine and oils, are already legal in Texas, but manufacturers must source hemp from other states to make their products. This does not make economic sense for Texas. Industrial hemp is also a drought-resistant crop, making it a good alternative in our harsh and unpredictable climate.
Elemental Processing recently acquired a 1,200,000 square foot processing and fulfillment facility which sits on 18 acres at 3900 Harrisburg in Houston with the capacity to process over 100,000,000 pounds of hemp biomass a year. It has long been a landmark in Houston's Second Ward.
Prior to closing in June of 2018, the ACS industrial campus was one of the largest soluble coffee operations in the United States. It contains the world's largest chemical-free decaffeination plant and is the world's only fully integrated coffee production facility with decaffeination, soluble processing, roasting and packaging all at a single location.
Prior to the acquisition of the facility by Elemental Processing, the owners of the site were planning on a 3 - 5-year demolition and redevelopment project which would have subjected the neighborhood to years of blight, decay and attractive nuisance. However, engineering and site development planning has already begun to refurbish and transform the existing facility into a truly sustainable supply chain model in hemp product production and fulfillment without changing the look or feel of the neighborhood.
The aggregate economic impact of construction and refurbishment of the facility alone could be as much as $149.7 million in economic activity/output, with $85.0 million in value-added. The aggregate economic impact of annual operations at full capacity of the facility could be as much as $947.9 million in economic activity/output, with $280.8 million in value-added. This increase in regional economic activity will support 4,007 total permanent jobs with labor income of approximately $199.8 million each year.
The nearly 300 jobs that were lost in June of 2018 will be replaced once the facility is operational and the 700 jobs ACS provided at its peak of operation are expected to be outnumbered by the new jobs the facility will create as a fully integrated hemp processing, packaging and distribution center.
However, the legislation does present a problem for crime laboratories. Most crime laboratories in Texas do not have the ability to differentiate between marijuana and hemp. The two are the same plant, and the only legal difference is the percentage of THC in the product, which requires a more specialized testing that almost no crime laboratories conduct.
The bill did not provide funding for crime laboratories to purchase the equipment and training needed to do the additional analysis. For Houston's crime lab alone, it would take about $2 million and more than a year to do such quantitative analysis. As such, the labs will likely add a statement to their marijuana reports stating that their testing does not distinguish between hemp and marijuana.