Minnesota hemp industry is growing like a weed

From downtown Minneapolis to hundreds of rural Minnesota farms, millions of dollars is being invested in the budding Minnesota hemp industry, released to grow after several years of testing by the 2018 federal farm bill.

In the trendy Minneapolis North Loop, Josh Maslowski has opened Stigma Hemp, which sells hemp flowers, CBD oils, rubs and creams. Also a manufacturer's representative, Maslowski, 38, grew interested in cannabis-based treatments due to the cancer illnesses of two close acquaintances who benefited from medical marijuana.

"We're not trying to cure cancer here," he cautioned, noting that he can't make medical claims about CBD. "And not everybody wants to get high, but everybody wants to feel better.

"We do believe this is the right time. We're going to be vertically integrated by the end of the year, partnering with Minnesota farmers, and we're setting up our own hemp-growing indoor operation in a warehouse."

Maslowski said he and a partner have invested something shy of $500,000, including consumer-educational materials, product development, marketing and legal fees. He's borrowed against his house and pooled savings to get Stigma's store and website up and running.

"The biggest risk is regulation … between the FDA and the state and making sure this thing isn't overregulated," Maslowski said. "That would limit what we can sell."

At Stigma's shop, you can buy hemp flowers for $9.99, 250 milligrams of lavender-scented rub for $39.99, or 500 milligrams of CBD oil for $59.99.

Different varieties of hemp are grown for food, fiber and oils used for health.

CBD, short for cannabidiol, is one of the two compounds in marijuana, or cannabis, that affect the human nervous and endocannabinoid systems. The other is tetrahydrocannabinol, or THC, which produces the drug's "high'' effect. Hemp is a version of marijuana that is grown with little or no THC. Minnesota's medical-marijuana program permits certified patients with chronic pain and 13 other conditions to receive cannabis products containing varying levels of CBD and THC from two state-sanctioned distributors.

Customers are buying hemp products for soothing relief from pain, arthritis and anxiety. And there is at least anecdotal evidence that it works, without the intoxicating effect of marijuana.

"We want Minnesota to be the hemp capital of North America," said Jim Zimmerman, a veteran food-product developer and marketer for Pillsbury and General Foods. Last year, after a lot of research, he joined with Cargill veteran Dave Rye and others to form C4Life.

"We are working [with farmer partners] to establish a gold standard," Zimmerman added.

C4Life operates an online store and is also a wholesaler buyer, soon-to-be hemp processor and distributor, working with Waseca-based Midwest Hemp Farms.

C4Life's five investors have raised $1.2 million in equity capital and are about to try and raise another $5 million, according to Rye.

It has contracted with Minnesota farmers planning to grow 2,000-plus acres this year and large retailers who are interested in uniform standards and quality.

"CBD has been a cottage industry," Zimmerman said. "There are hundreds of brands in smoke shops and CBD stores [nationally]. Many will fall by the wayside after 12 months or so and by that time you will be able to buy CBD oils at Target and Lunds and other retailers.

"We want to bring testing, education and premium-quality products to market from Midwest Hemp to retail. Third-party testing of every batch. Just the CBD oil side of the business ..."

The Brightfield Group of Florida, which follows the cannabis-related industry, has predicted that the hemp trade will be worth $22 billion in sales in 2022.

"Hemp-derived CBD has been gaining huge momentum in the shadows of its oft-spoken about cousin, marijuana, allowing its growth to be largely overlooked by analysts in the nutraceutical, medical and cannabis industry," Brightfield said in February.

Margaret Wiatrowski of the Minnesota Department of Agriculture, said farmers made 400-plus applications to grow hemp compared to 65 last year. The department has approved around 6,500 acres for outdoor growth. Various strains of hemp are grown for seed, food and fiber.

Minnesota entrepreneurs also are testing hemp byproducts as lightweight substitutes in plastic pallets and building materials.

John Strohfus, a farmer-rancher near Hastings, also the owner of Minnesota Hemp Farms since 2016, sells planting seeds to participating farmers, buys harvested product and sells it to processors of hemp products.

Hemp is a good diversification crop, can require less water and chemicals to grow than depressed-price corn and soybeans, the Minnesota mainstays, and has longer taproots that help replenish the soil with nutrients.

"Hemp is a legitimate crop," Strohfus said. "However, we need the Minnesota Legislature to help us this session pass the bill before it that would change [the] state definition of industrial hemp to match the federal one. Also, we need to add protections for retailers and consumers that states that CBD is not a Schedule 1 drug, a narcotic or a medicine. And is legal to sell and consume."

The hemp industry is struggling with varying state-and-federal rules and calling on the FDA to promulgate national standards.

Stigma, Nothing But Hemp and about a dozen other retailers have popped up in the Twin Cities over the last year.

Cody Wiberg of the Minnesota Board of Pharmacy, told the Star Tribune he wants CBD products regulated like prescription drugs. "CBD is pharmacologically active," he said. "It acts like a drug."

Maslowski of Stigma Hemp and other early entrants bet that public acceptance and favorable, consistent regulation will drive sales of what they consider a benign substance. If things don't work out, Maslowski and his wife, a church youth director, have a Plan B.

"We'll move to Costa Rica, where we got married," he said. "[Cannabis-based] products are legal."

Neal St. Anthony has been a Star Tribune business columnist and reporter since 1984. He can be contacted at nstanthony@startribune.com.