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U.S. should look to Europe for processing technology

Thomas Dermody, Industrial Hemp Research FoundationThomas Dermody, Executive Director, IHRF (USA)
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INTERVIEW: Thomas Dermody, Executive Director of the U.S.-based Industrial Hemp Research Foundation (IHRF), has worked across the non-profit sector in the USA in various capacities including membership services, major gift fundraising, and public policy related to agricultural commodities. At IHRF, Dermody takes a leading role in developing funding channels, coordinating the Executive Committee and managing the day-to-day operations of the Foundation. An alumni of the University of Maryland, Dermody moved to Colorado seeking a job in the recreational cannabis industry, but soon realized that a far better opportunity for growth existed in industrial hemp. The IHRF is a nonprofit, non-lobbying organization as defined in 501-C Colorado statutes.

HempToday: You mention IHRF “provides funding and support to its partners who will direct and manage research processes.” Who are the partners and who provides the funding? It looks like your Foundation is basically working on behalf of those who put money on the table for hemp?
Thomas Dermody: IHRF looks for funding from private and public sources to support R&D projects at institutions of higher education. To date, our funding base has primarily been corporate sponsors, but we’re starting to get support from private individuals and philanthropic institutions interested in supporting hemp-related research and education. Our funding is then distributed to research programs and educational institutions of higher education. Our primary focus has been universities based in Colorado, but we’re beginning to offer our services in other states. As more institutions become interested in fulfilling research applicable to sec. 7606 (U.S. Farm Bill), they reach out to IHRF to determine how to enact programs that will be attractive for partnership opportunities. Then they work with our members to craft research programs, with the end goal being verified research results we make available to the public.

HT: The projects you’re involved in so far seem to be general, which is understandable at this early stage. But how do you see the whole R&D picture unfolding?
TD: Two overarching topics must be addressed immediately. First, program administration. Which covers topics like how we fund and control resulting intellectual property; how traditional institutions can acquire hemp-sourced materials; and how to institutionalize various Standard Operating Procedures.

Second, there needs to be a focus on designing multi-phase projects to sort out various bottlenecks within the industry. This requires reverse engineering projects that address those issues.

Once those fundamental issues have been resolved, we can focus greater effort on value-added options. I think we’ll see the greatest advances from the nutraceutical and food science folks in the short term. Due to the relatively high capital requirements, fiber and biofuels will come to fruition in the next 18-36 months.

HT: Who conceived and started the IHRF?
TD: The IHRF was conceived by David Bush and Paul Isham. David is a hemp business attorney at Hoban Law Group (Colorado). Apart from being President of the IHRF, David sits on the Board of Directors for the Hemp Industries Association and its Colorado State Chapter.

Paul is an IT professional with a great passion for the “normalization” of hemp as an agricultural commodity. He’s served as a business adviser to various companies within the cannabis space and is currently working on a project that hopes to develop a “smart trash can” to handle cannabis related waste in a compliant fashion.

David and Paul met in 2015 and saw an opportunity to facilitate potential public-private partnerships made possible by the 2014 Farm Bill. While the Farm Bill directed institutions of higher education to engage in hemp-related research, it failed to provide the necessary support structure to make it a reality. Hence the IHRF was conceived, to facilitate those opportunities in various ways.

HT: Your website mentions that the Foundation works to make hemp “a viable and tradable commodity.” What’s the key to advancing that part of the market?
TD: Research is the only way that we can push the needle toward making hemp a commodity like corn or wheat. While the IHRF is not a political organization, we do recognize that the research we support will likely affect public policy related to industrial hemp.

HT: How do you see the markets shaping up along the value chain: Raw material to processor/producers? Producers wholesale to retailers? Consumer markets especially?
TD: I think the greatest bottleneck we’re seeing along the value chain is among U.S. processors on the dual purpose side of the industry, and growth in domestic consumption.

From on-site to secondary processing we need a vast ramp-up in available technology, or companies need to work on licensing agreements that let them bring over European tech to handle the vast amount of raw material we could see by harvest season. By some estimates, we could see 35-46K acres in Colorado alone, but where are we going to process all that material remains to be seen.

Consumer markets will continue to grow at a rapid pace, but I think the sheer quantity of products can make the decision-making process daunting. Companies that heavily invest in marketing and incorporating their products in public-facing research opportunities will see the most tremendous growth this year and beyond.

HT: Don’t you see the scales tipped a bit too much in favor of the CBD gold rush in USA? When do you expect that the other derivatives/markets will be addressed — hurd and fiber for construction and insulation, for example? When will there really be hurd available as needed in North America, specifically for building?
TD: I think the CBD/phytocannabinoid market is taking up a considerable amount of attention, but I don’t believe the hype that the scales are somehow tipped in their favor. Their issues are very similar to the high-THC marijuana industry; access to credit, challenges related to misleading claims, the DEA and now they’ve flooded the market with so many products that consumers find it difficult to judge the merits of one line versus another. That said, I believe that various cannabinoids and terpenes deserve far greater study as they do seem to help people who are suffering with various ailments. IHRF is working with a number of institutions to provide hemp sourced cannabinoids for research purposes.

On the other hand, seed, hurd and fiber folks have something that the CBD folks can only dream of: readily defined markets. If you have quality seed, you can sell it in a heartbeat. Mills will take high quality fiber as quickly as they can get their hands on it, and there’s no shortage of companies looking for hurd, so long as it’s not moldy. I think the biggest issues these groups are facing relate to quality controls, which rest on the ability to develop strong standard operating procedures (SOPs) and, Self-Regulating Organizations (SROs) specifically for the hemp industry and, or abiding by standards readily available on the international market.

HT: Why did you establish as a Foundation instead of just as a consultancy?
TD: The Foundation’s mission aligns with the directives of a 501c3 (non-partisan, non-lobbying) organization in the United States. We provide a public benefit, and for that we can provided tax deductible notices to our supporters. On top of that, 501c3s play a critical role in the non -profit support structure commonly found in the US, which would includes 501c6 (like the U.S. Hemp Industries Association) and 501c4 (like Vote Hemp). In addition, thanks to our tax status we can apply, and be party to, various grant applications, which may not have been an option if we were a consulting group.

HT: If we agree Colorado is the “epicenter” of American hemp, who’s next in line? Rank the top five state programs in the U.S.
TD: We see advancements over the next 24 months in Kentucky, Indiana, Washington, Virginia and New York. After that, California (if they get their act together), and North Dakota. I’m also keeping a close eye on Maine and Nebraska.

HT. What do you find when you “vet for research value, academic validity and ultimate benefit to the projected market or use case”? What kind of things have you steered clear of?
TD: We look for soundness of the research design. Does the project have the full support of the host institution? Does our review board have any concerns about the design, and how does the principle investigators respond to such criticism? Where and when have the principle investigators supervised previous research that compliments their current request? Is this novel or replicated work? We also look at “benefit use” — What kind of impact this research will have. Is this a project for technically proficient readers, mass consumption and, or will it help inform those charged with making key policy decisions?

HT: How’s the uptake in terms of members and sponsors?
TD: We’re on track to exceed our fundraising goal ($701K) this year thanks to the generous support of our members. We anticipate we’ll be able to reach $1.4 million in recurring funds by Q4 of 2018. Corporate sponsorship is growing steadily and we’re starting to see a significant upswing in individual membership.

HT: What kind of assets were gathered for the IHRF startup?
TD: When I came on as the Executive Director I was still working another job. I built out our infrastructure and services package with the help of our board and volunteers after hours of work, and made it to as many events as I could. In March 2016, I had enough money in my savings where I could justify a 3-month “sink or swim” phase and decided to give my undivided attention to the work of the Foundation. A little over a year has passed and we’ve seen tremendous success. I’m proud to say it was worth the risk and I’m excited to see what the future holds for the IHRF.

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