At a city council meeting May 12, Arvin, Calif., officials voted 5-0 to pass a new hemp ordinance. The ordinance for the Kern County city will go into effect 30 days after the recent vote, allowing the city to begin permitting for hemp businesses, said Pawan Gill, the city’s director of administrative services.

Once the ordinance is effective, the city can regulate odor, “public nuisance abatement requirements” and other aspects of hemp growth and processing, Gill told Hemp Grower in an email.

RELATED: Following Nearby Destruction of 500-Acre Hemp Crop, Arvin, Calif., Moves to Regulate Industry

“We have been in discussions with various parties throughout the development of this ordinance that are interested in farming and manufacturing hemp products within the City,” Gill said in the email. “Notable companies that have expressed strong interest in coming to Arvin include Apothio and SLOCO [H]oldings.”

The ordinance provides clarification on which hemp activities will be permitted within the city, while encouraging collaborations between public- and private-sector entities that are involved in hemp, she said. Cultivators and manufacturers must receive a permit from the city or enter into a development agreement with the city to commence operations there.

Developments in Arvin follow the Kern County Sheriff’s Office, California Department of Fish and Wildlife and multiple individuals’ alleged destruction of 500 acres of hemp that Apothio grew near Arvin. The company estimated the crop was worth about $1 billion, according to a complaint it filed in the U.S. District Court for the Eastern District of California.

Gill previously told HG that the alleged destruction of Apothio’s crop was a “catalyzing moment” for city officials to decide to draft an ordinance.

She also pointed to a Kern County ordinance that regulates hemp—passed by the county’s board of supervisors in February—as a contrasting approach. While the two ordinances have some similarities, the largest difference, Gill said, is that the county ordinance “limits hemp cultivation for researchers to 1 acre per permit holder.”

Kern County’s fraught relationship with the cannabis industry is also exemplified in part by its 2019 closure of medical dispensaries in unincorporated parts of the county.

Arvin City Manager Jerry Breckinridge weighed in on the city’s ordinance in a prepared statement. While other cities tend to pass ordinances, as he put it, “in a vacuum,” Arvin city officials requested and receive input from the hemp industry on the ordinance. As it turns out, he said, he discovered multiple advantages of hemp.

“After the research we conducted, I am pleased to see that hemp is not just about CBD oil, there are so many beneficial uses for the product from industrial to environmental,” Breckinridge said in the statement. “I am just glad that Arvin will be instrumental in providing an environment where the hemp industry can flourish, research, and educate."

CV Sciences recently released its first quarter earnings of 2020, illustrating COVID-19’s widespread consequences on even some of the largest companies in the hemp industry.

The San Diego, Calif.-based cannabidiol (CBD) supplier and manufacturer reported first quarter revenue of $8.3 million, down 45% from the first quarter of 2019. 

Last quarter, the company lowered its 2020 first quarter revenue expectations to between $6 million and $8 million in anticipation of fallout from the coronavirus. While the company slightly surpassed its revenue projections, it still represented a year-over-year decline of $6.6 million and a quarterly decline of 11%. 

CEO Joseph Dowling attributed the sharp revenue decline to, in addition to COVID-19, increased market competition in the natural product category and the ongoing regulatory uncertainty of CBD. 

The revenue declines comes even as CV Sciences’ number of stores has grown by 42%, from 3,308 stores in March 2019 to 5,799 stores as of March 2020. 

Dowling said during a conference call May 8 that the company has taken initiatives, including lay-offs and salary reductions, to save an estimated $10 million across the company.

“We are pleased with our ability to deliver on expectations amid a very challenging environment,” Dowlings said. “To address the changing industry environment, we right-sized our operations during the quarter to reflect near-term business trends. During the first quarter, in connection with our enterprise-wide cost reduction efforts, we reduced our staff by approximately 20%, reduced salaries across our leadership team and implemented other cost savings initiatives across all company operations.”

Dowlings said last quarter that the company “decided to temporarily slow down our drug development efforts while we wait for certainty in terms of the breadth and scope of the patent protection we expect to obtain.”

Perhaps indicative of spending habits brought about by COVID-19, e-commerce sales for the company made up nearly a quarter of net revenue compared with 15% in the first quarter of 2019.

The company is trying to capitalize on those sales with the launch of its +PlusCBD Oil website, where it exclusively sells its products.

CV Sciences also announced it has received an allowance from the U.S. Patent and Trade Office for proprietary CBD and nicotine formulation as a treatment for smokeless tobacco addiction.

The company’s full earnings report is available on its website.

Sunflower Hemp Co. is planning to build a 20,000-square-foot CBD extraction facility in Pittsburg, Kan., according to a recent Morning Sun report. The plan is to refine extracted CBD oil into consumer products.

It’s a big moment for hemp in Kansas. Just last month, the U.S. Department of Agriculture (USDA) approved the state’s regulatory plan for commercial production. Now, it’s up to state officials to go back in and approve that plan as a formal operating procedure for hemp farmers next year. Kansas farmers began growing hemp in earnest just last year, and the state intends to continue working under the auspices of its industrial hemp research program in 2020.

The state is accepting applications for the 2020 season until June 1.

In Pittsburg, the city commission is working with Sunflower Hemp Co. leadership to learn more about how this industry will work and how it can benefit municipalities like this small city of 20,000 in the southeast corner of the state.

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“In light of our current economic climate it’s nice that we’re still bringing projects where people are wanting to start new businesses and create new jobs here in Pittsburg and Crawford County,” Director of Economic Development Blake Benson said May 12, according to Jonathan Riley’s reporting from the city commission meeting. The newly legal hemp industry is on one hand an economic engine, a new path forward for American farmers interesting in broadening their agricultural portfolio and finding new ways to navigate a sector in peril. It’s also a potentially disruptive business—one that could rewrite the script on anything from medication to clothing.

Based on conversations happening in Pittsburg (and elsewhere, as the USDA continues to approve new hemp regulations on a state-by-state basis), that much is clear. But there are questions to be asked.

Sunflower Hemp Co. is investing about $1 million into its proposed facility, and owner Colby Terlip is seeking a $110,000 grant to fund the city-mandated fire safety sprinkler system.

The city commission didn’t make a decision on the grant this week, but certainly probed the matter. The underlying issue was a tentativeness on the subject of hemp’s nascent legal status. It’s a new industry, complete with evolving relationships between the business itself and the banking sector and law enforcement. It’s complex on its face. (Kansas does not, for instance, have a state-legal cannabis program in place.)

“I don’t have a problem with it going forward,” Commissioner Larry Fields said, according to Riley’s report. “I think EDAC has been through it, and this is four months old and they’ve seen it; and it’s legal, it’s not illegal.” EDAC is Pittsburg’s Economic Development Advisory Committee.

Much of the conversation with the city commission involved the reiteration that hemp is a legal crop in the U.S. (“Obviously what we’re all talking about is the subject matter,” city manager Daron Hall said. “If Colby was making balloon animals, we probably wouldn’t be having this conversation.”) The relationship between private business and public officials revolves around this education, and Terlip spent time explaining that it’s an increasingly competitive space that requires cooperation from both sides of the private-public split. What level of risk, if any, is the public sphere willing to take on this emerging industry?

“We feel that a lot of players in the game now, their facilities won’t be able to pass those certifications, inspections,” Terlip said. “So that will probably weed some people out when the FDA comes down with what it’s going to take to actually produce a product and put it for human consumption in the retail space.”

Hall pressed Terlip on the U.S. Food and Drug Administration’s ongoing CBD regulation conversations. He asked whether processing CBD oil into edibles products, like gummies, something that Terlip pointed out is not yet permitted under FDA guidance. Another open question.

Last fall, more than 200 hemp growers in Kansas harvested their crops under the first year of the state’s research program. This year, like most U.S. states will see, interest is expected to increase. The back-and-forth conversations between companies like Sunflower and city legislators like those in Pittsburg will become a dominant feature of the early years of hemp in the U.S.