Effort to create hemp conglomerate lands in Bodo Industrial Park

Saturday, July 14, 2018 4:21 PM
CJ Murphy, owner of Cannagenics Inc., talks about the type of hemp he is growing in central La Plata County.
CJ Murphy, owner of Cannagenics Inc., has begun growing a hemp field in central La Plata County.
CJ Murphy, owner of Cannagenics Inc., takes out weeds growing in his hemp field in central La Plata County.

If things break CJ Murphy’s way, Durango will be known for hemp the way Detroit is known for cars and Silicon Valley is known for high-tech.

In an out-of-the-way location in Bodo Industrial Park, Murphy has established Cannagenics Inc. with its subsidiaries:

HempTech to manufacture pharmaceuticals based on cannabidiol, or CBD, extracted from hemp.Pharmafields, to grow hemp in Southwest Colorado.United States Hemp Marketplace to conduct transactions in hemp from farm to product and to provide transparency and security of transactions via creation of the go-to website for U.S. hemp trading.“We want to create a venue where people can be comfortable in this industry,” Murphy said during a recent tour of HempTech, 278 Sawyer Drive. HempTech is the only business currently extracting CBD in the Four Corners.

“Right now, everyone wants to make a quick buck,” he said.

The idea is to create the first vertically integrated hemp company in the United States, with three different subsidiaries managing different aspects of the supply chain.

Cannagenics Inc. currently is conducting a private offering of nonvoting shares in an attempt to raise about $2.3 million. About $1.2 million would be used to purchase equipment for HempTech and $1 million would be used to pursue taking the firm public.

Regulation, a four letter word for most people in business, is something Murphy would embrace for the fledgling hemp industry.

“Regulation would give us more reputability, standardization and stability. We want hemp buyers and sellers to have more security in their transactions,” he said.

He noted that the testing procedures to find the percentage of CBD in hemp now varies widely, and one of his goals with increased regulation in conjunction with the United States Hemp Marketplace would be to standardize testing procedures.

Standardization, he said, would facilitate mass transactions of the crop, with buyer and seller assured of the accuracy of the plants they were trading.

“We’d like to see a regulatory structure in place,” Murphy said.

“We’d even like to work with regulators. We’d like some base rules set, for example, for the use of solvents. Right now, the biggest regulator we’ve had to deal with is the fire department.”

Before beginning Cannagenics and its subsidiaries, Murphy founded True Earth Medicine in Durango, and opened a medical marijuana dispensary in Cortez. In 2015, he sold True Earth to Durango Organics.

After the sale, Murphy studied going into the coffee industry. Instead, he put his focus on the hemp industry after serving as a consultant on a hemp farm.

After working on the farm, he saw so many inefficiencies in the hemp and CBD industry that he realized there was an opening for a firm to come in and take advantage of the Wild West atmosphere and provide a reliable, secure source for all aspects of the hemp trade.

The 2018 Farm Bill, which appears headed for passage, excites Murphy because it would legalize hemp growing across the United States.

“To produce CBD at a mass level, you need a massive amount of flower,” he said.

Hemp was once widely cultivated in the United States. George Washington grew hemp to use its fibers in ropes, clothing, sailing canvas and to repair fishing nets.

Despite hemp’s long history of cultivation and use, growing the crop for commercial purposes has been federally prohibited for almost 50 years. With the passage of the 2014 Farm Bill, however, hemp is once again being legally planted on American soil.

Under a section of the 2014 Farm Bill, “Legitimacy of Industrial Hemp Research,” authorization was granted to state departments of agriculture and institutions of higher learning in states that have legalized hemp cultivation to grow the crop for research and pilot programs.

Since passage of the 2014 Farm Bill, more than 30 states, including Colorado, have passed laws regarding industrial hemp. At least 16 of those states, again including Colorado, have approved laws allowing for industrial hemp production, giving growers rights beyond those listed in the farm bill.

Despite federal laws regulating cultivation of the crop, hemp-derived products such as supplements, body-care products, food, paper, clothing and building materials are legal to purchase in all 50 states.

The current 2018 Farm Bill, on the verge of being sent to President Donald Trump, would legalize hemp cultivation, the nonpsychoactive cannabis cousin of marijuana, throughout the United States.

Hemp legalization has a powerful ally in its main congressional backer, Senate Majority Leader Mitch McConnell, R-Kentucky.

“Consumers across America buy hundreds of millions in retail products every year that contain hemp,” McConnell said in a Senate floor speech last week. “But due to outdated federal regulations that do not sufficiently distinguish this industrial crop from its illicit cousin, American farmers have been mostly unable to meet that demand themselves. It’s left consumers with little choice but to buy imported hemp products from foreign-produced hemp.”

For Murphy, the movement at the national level to legalize hemp cultivation comes at the perfect time for his nascent operation.

“This is the time for farmers to be able to grow,” he said.