A hemp farmer who spearheaded Central Oregon’s hemp industry is now looking to prevent upstart growers from gaining an unfair financing advantage.
“All I’m asking for is a level playing field, everyone follow the rules,” said Yon Olsen, founder of Cascadia Crest LLC, a hemp operation based east of Bend on U.S. Highway 20.
By the standards of the new industry, Olsen is one of the more established hemp growers in Deschutes County, having planted his first crop in 2016, shortly after Oregon established guidelines for the industry. Olsen is concerned about a new trend: Small growers farming commercially on properties that have residential mortgages.
Olsen said favorable interest rates give these farmers a leg up in a competitive industry. He’s reaching out to user groups, state agencies and elected officials to make it harder to bend the rules.
Olsen and other growers want the Oregon Department of Agriculture to check mortgage contracts as part of its application process for potential hemp growers.
“Everyone’s going to try to take advantage and get ahead,” Olsen said. “So it’s up to the state to put guardrails in place that don’t allow this type of thing.”
If Olsen and other growers get their way, between 20 percent and 80 percent of the nearly 600 registered growers in Oregon would not be able to renew their applications without refinancing or taking similar steps.
So far, however, Olsen hasn’t gotten much traction at the state level. The agriculture department, which oversees the state’s hemp industry, hasn’t shown much desire to tweak its application. In an email, Andrea Cantu-Schomus, director of communications, wrote that the ODA considers the issue outside of its purview.
Olsen said he has reached out to the Oregon Department of Justice, and the offices of elected officials like Sen. Jeff Merkley, D-Ore., and Rep. Jack Zika, R-Redmond, to raise awareness about the issue.
Hemp is a variant of the cannabis plant, one that’s bred to be low in THC, the compound in the plant that gets users high. While the crop can be used in everything from clothing to oil, its chief commercial market is for cannabidiol, commonly known as CBD.
CBD lacks the psychoactive effects of THC, and hemp industry advocates claim it has a wide range of curative properties, helping with ailments ranging from nausea to epilepsy. Consequently, CBD has begun appearing as a food supplement in products like coffee and juice.
In Oregon, hemp was legalized separately from psychoactive cannabis, when House Bill 4060 established the framework for legalizing hemp in the state in 2016. Since, Oregon has become one of the leaders in hemp production, with 584 registered growers as of 2018, according to Cantu-Schomus. In Deschutes County, more than 930 acres have been converted to indoor and outdoor hemp operations, Cantu-Schomus wrote.
The federal Farm Bill, which was signed into law by President Donald Trump in December, legalized hemp at the federal level, which advocates say will allow interstate commerce and open many new markets for the industry in Oregon.
Legalizing hemp in Oregon opened doors to homeowners and hobby farmers living on large lots zoned for agriculture, leading some of them to intentionally or unwittingly break the terms of their mortgage contracts.
Olsen, who sold mortgages for 14 years in Deschutes County, said federally backed residential mortgage contracts typically contain language preventing the property from being used for farming.
“There’s a lot of speculation behind hemp; there’s a lot of excitement behind the potential,” Olsen said. “And no one wants to be the bad guy.”
There’s disagreement within the industry about what percentage of growers are violating the terms of their mortgage. Olsen said a majority of growers statewide may well be complicit, even without knowing it. “Pioneer” Pete Gendron, president of the Oregon SunGrowers Guild, a cannabis advocacy organization with about 700 members, said he believes the number is closer to 20 percent to 40 percent.
Gendron and Olsen want the state agriculture department to add an additional set of questions to its application for people looking to grow hemp. They want the state to ask whether growers have a residential mortgage that prevents commercial activity and require the applicant to attach a copy of the contract. If such a mortgage is in place, the application wouldn’t get processed.
“It’s relatively low-labor for the business owner,” Gendron said.
Matt Cyrus, president of the Deschutes County Farm Bureau, called for a different approach. He wants Deschutes County to reclassify its smaller parcels that are zoned exclusively for farm use to a zone that allows a wider range of uses. Doing so, he said, would reduce the incentive to circumvent the rules.
Gendron and Olsen agreed the hemp industry may take a brief hit by eliminating properties with non-compliant mortgages. Once the rules are established, however, Olsen said he expects the industry to bounce back.
“Long term, I don’t see this affecting anything,” Olsen said.
Olsen denied he’s looking to limit competition in a growing industry. He said his company owns and operates a farm in Columbia County that has such a mortgage, and said he was open to restructuring it.
“That’s fine; that’s the way it should be,” he said.
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