The Paonia board of trustees voted last week to approve a special use permit for AllHemp Trading Limited (AHT) to operate a hemp nursery and testing facility at 719 Second Street.

During a more than two hour public hearing held Aug. 8, AHT CEO Elliott Brown fielded numerous questions from trustees and the public on issues including chemical use and storage, public safety, noxious fumes and odors, noise, traffic, lighting and hours of operation.

Mayor pro tempore David Bradford called the vote a "complicated decision," and the hearing the "most intense interrogation" of an applicant in his nearly four years on board. He said he went back and forth on this issue, and was on the fence moments before the final vote. He heard from one neighbor who favored it, and another who was against it. He also received more letters from concerned constituents than on any other issue in his almost four years on the board. "So obviously there's a lot of interest," said Bradford, who used comments as the source of his long list of questions for the applicant.

The four-member town planning commission recommended approval of the application at a July 20 planning meeting. Town staff also recommended approval. Town building official Dave Coleman said that issues related to safety, International Building and town code were discussed with the applicant. "There's just a plethora of things he knows he has to follow before he can open the doors to do business," said Coleman.

The facility will consist primarily of a testing laboratory for monitoring of delta-9-tetrahydrocannabinol (THC), the chemical compound in cannabis responsible for creating the psychological "high," and plant nursery for producing genetically stable plants for field cultivation. The primary goal, said Brown, is to propagate the plants en masse and make them available to local farmers through a co-op system. Brown plans to help farmers enter the industry without the existing high costs, assist with product and sales after harvest, and to navigate compliance with the Colorado Department of Agriculture. In exchange, AHT will receive a portion of the harvest. No wholesale or retail products will be sold at the facility.

Of the dozen citizens to speak, almost half spoke against approval or had questions and concerns. Others recommended approval and saw Brown as bringing innovation, jobs and economic value to the community.

Of major concern was the possibility that Brown would grow marijuana. Town administrator Ken Knight explained that the 2012 passage of Amendment 64 legalized recreational marijuana use in Colorado and "carved out a separate category for industrial hemp." Governmental agencies may not regulate industrial hemp any differently than other agricultural products, said Knight. However, the town retains certain rights to require regulatory restrictions, just as it would any other agricultural facility within the community.

The 2014 federal farm bill allows farmers to grow hemp in states with industrial hemp legislation in place. In Colorado the hemp industry is overseen by the Colorado Department of Agriculture. State permitting requires that grows be tested regularly for THC.

"Hemp is legally defined by the THC content," explained Brown. A self-described "plant nerd," he holds a bachelor's degree in agronomy from Purdue University and has more than 20 years' experience in the industry. Hemp must measure no higher than three-tenths of one percent or less of THC on a dry weight basis, he said. Plants testing higher than one percent THC could result in the loss of the hemp permit.

A primary focus is to produce plants with the right genetics to ensure they test within that legal THC limit. A farmer can invest several thousand dollars of plants per acre -- currently a high of about $4,000 per acre, that might test high for THC and have to be destroyed.

As part of the approval the applicant is required to: make all THC test results available to the town; allow reasonable inspections of the facility by town staff on a quarterly basis, the date and time to be set by the town; notify the town of any substantial change in ownership of AHT. If changes occur, the permit would be subject to a new review by the town; and that the town develop a fee structure to cover the cost of quarterly inspections. The permit is not transferable to another property.

In addressing concern that approval would go against 2010 and 2014 town ballot issues that were voted down -- in 2010 with medical marijuana and in 2014 with recreational marijuana, "Industrial hemp is not within the definition of either of those questions," said town attorney Bo Nerlin. "The definition of marijuana in the Colorado Constitution does not include industrial hemp."

A hemp processing facility operated at the same location last year and drew numerous complaints of odors. Because the property is zoned "I-1 Light Industrial," that operation was approved at the administrative level by a former town manager, said Knight.

"I think a lot of people are looking at the last people that rented the building," said owner Mary DiFranco. They were drying mature hemp, which produces a lot of odor, and had a poor ventilation system. "Elliot is not drying hemp."

Brown originally looked at the Front Range for his business. Last fall he toured the state to gauge the market before meeting with hemp growers in Collbran and Crawford. After considering a half dozen other properties in the county, he opted for the Paonia location. Since it doesn't require construction of a facility, he plans to begin operations this year.

Brown has gathered a small team of horticultural scientists specializing in plant science and tissue culture and is growing hemp in unincorporated Delta County to provide material for the facility. "I've never seen it grow as robustly from seed as it does here," said Brown.

Because cross-pollination is a concerns, they do not allow male plants to grow. "We are going through a lot of effort not to affect anyone else's plants," he said.

Growing hemp is more complex, labor intensive and costly than growing hay, said Brown. It's more akin to growing vegetables. When it comes to hemp, says Brown, Colorado has a significant advantage over other states, since it's among the roughly 30 states that allow for production of hemp for cannabidiol, or CBD, the main medicinal compound in cannabis and hemp. Unlike THC, CBD does not produce a psychoactive effect and has numerous health benefits.

The facility will also allow for pilot-scale processing and testing of CBD oil and other compounds found in hemp. In looking to the future, Brown hopes to later on produce plant stock for grain and fiber production. Once the co-op is running they must be able to process raw hemp for sale on an acreage scale.

As of now, he said, growing hemp for fiber isn't financially viable since the state has no fiber processing facilities. By providing genetically sound seed and cutting stock at an affordable rate AHT will address a number of barriers that exist in the hemp industry, said Brown. On problem is a lack of reliable and affordable sources for seeds and plant stock to meet the growing demand by industry.

Brown estimates that growing hemp can mean in one or two jobs for every two to four acres of crop. It also is currently yields "significantly higher profit margins" than hay and corn and other crops common to the area. A harvest of high-quality hemp could be worth $5,000-$8,000 net profit per acre after all expenses, he said.

AHT can also produce hundreds of genetically identical shoots from a single plant through a process known as plant tissue culture. As a co-op they want to provide area farmers with as reliable and certain a product as possible. The shoots will not reach maturity, thus almost completely eliminating any possibility of odor.

His long-range plan is to produce varieties for all uses, oil, seeds, fiber, and wellness products, and to eventually build a full-scale hemp processing facility in Delta County. If his team can demonstrate consistency and produce a large supply, Brown says, they may already have a buyer.


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