The ALCO building in Pine River is all but sold with nothing but a city permit standing between the buyers and their first production run of hemp seed for CBD (cannabidiol) crops.
Derek Barnes, with BDM Genetics in Fort Lupton, Colorado, and Travis Raguse, who owns Tru Ag LLC in Wheaton, Minnesota, are partners in Tru BDM Genetics, the company seeking to bring Pine River into the CBD business. CBD oil is becoming a popular medicinal supplement extracted from hemp and used in lotions, food products and other items. Demand for it is booming.
The Pine River facility, an agricultural seed production facility, would be a laboratory setting where plants are raised and bred under controlled, proprietary conditions to produce feminised seed that can be grown for CBD oil production.
It seems closed ALCO buildings are perfect for this type of use.
“ALCOs, Kmarts and Walmarts have all done really well for us for being retrofitted cost effectively to get the building operating the way we need to operate it,” said Barnes. “That's where it started, just searching for ALCO or similar buildings in the greater Minnesota area for planting production space.”
Laboratory settings allow Tru BDM to control the genetic makeup of their product, which is important for meeting state and federal requirements for CBD oil production. Tru BDM self regulates with help from a third party testing facility to guarantee their product has little or no THC - the active ingredient of cannabis - in it and has no recreational drug value. In addition, they have to meet standards with the U.S. Department of Agriculture and Minnesota Department of Agriculture for legal operation.
“In legal terms, we're producing a material with less than .03% THC,” Barnes said. “The THC is such a negligible level that it is incomprehensive to what you would take for a high.”
Barnes explained that THC is the chemical that produces a high in those who smoke marijuana for recreation. However, this does not change other characteristics of the plant. They look and smell indistinguishable from other members of the same family. As such, Tru BDM will host educational meetings to introduce curious or concerned parties to their business as early as December. They want a good relationship with Pine River, its citizens and its law enforcement.
“We take a couple botanists and a couple farm managers and bring them in and they bring literature in about real life, tangible plants and flowers to get a bearing on what it looks like and smells like, how similar it is to the funny stuff and give them the opportunity to ask questions,” Barnes said. “That's typically what most of the program revolves around, giving them the chance to ask questions. Most individuals have certain questions about things they looked up online. There's lots of misinformation on the online space, as most people are aware, especially in this industry.”
Once in production, Tru BDM hopes area farmers will incorporate their seed into their crop rotation, a proposition that is beneficial on several levels.
“It's agronomic and economic,” Raguse said. “From an economic standpoint, the revenues will probably be unprecedented compared to corn, soy and wheat or silage for normal crops we have. From the agronomic side, its ability to loosen up soil and make a better seed bed for other crops is important.”
Hemp is well known globally as a nitrogen fixer like legumes, as well as a green fertilizer and cover crop. It has several ways of improving soil health. In addition, it also has many usable products, including oil, fiber and building materials.
“It's super exciting,” Raguse said. “It's something different. It's an opportunity not only to make money on a crop but add value to other crops. If the ground produces better after hemp, you plant corn on it and it produces better. You put beans on it and it produces better and there's a huge opportunity for animal feed as a hemp byproduct in the regions that have animals.”
For farmers interested in trying out hemp production, Tru BDM will have ongoing education opportunities at their facility once in operation. The goal is to work to grow an industry they believe could be huge for the area.
“We have good universities to help support the Upper Midwest and I believe given the right tools and infrastructure we could be the place the world looks to for hemp - good quality hemp and not just seed,” Raguse said.
Raguse said it would be best for farms to start with planting only 10% of their farmland with hemp.
The Pine River facility will not be involved in growing CBD oil plants; however, once established they do expect to add a processing center where area farmers can bring their crops. The hope is that this facility will result in local industry growth.
“We will absolutely open a processing facility,” Barnes said. “Processing is crop processing for storage and shipment. That's a shucking and drying facility. That entails removing flowers from the stem and drying the flower to be shipped for extraction. Beyond that we don't have immediate plans. The opportunity exists for any local investment and extraction, absolutely. Bottling into an end user product production is an opportunity there. As soon as there is an extraction area that's typically when bottling takes off.”
The former ALCO building would house approximately 15-20 employees. Three to five management and genetic experts would be brought in from out of the state.
“The rest would be hired locally,” Barnes said. “Those positions would start, I'm assuming, somewhere between $40,000-$50,000 a year.”
The company would like to see operation start by the end of January. They would occupy the building on a lease-to-own basis. They have already secured support of the building ownership group.
“They were very excited to have the former ALCO building filled again and being a useful part of the community,” said Travis Voegele, commercial real estate agent for the owner. “They were very disappointed to see ALCO leave and have worked hard to try and fill the space. They are very excited to fill the space again and make it an active piece of property in Pine River.”
The Cass County Economic Development Corporation has also spoken in favor of the group.
“Industrial hemp production is an exploding industry: it’s safe to produce, it’s not a drug, it has myriad uses,” said Mike Paulus, EDC executive director. “In short, it’s not going anywhere. The city of Pine River has open-minded citizens and a progressive city council. They are accepting of this project into the Pine River community because it makes great economic sense. Tru BDM bringing its operation into the long vacant ALCO building re-fires the economic engine of Pine River’s largest facility, and that’s a really good thing.”
ALCO opened in May 2008 in Pine River, and the whole company sold in November 2014. The Pine River store closed in early 2015.
The group met with the Pine River City Council on Nov. 12 and met with a great deal of inquisitiveness and support. Because the ALCO building is zoned for retail sale and because the Tru BDM business is not exactly agriculture use, the city has scheduled a conditional use permit hearing at 5:30 p.m. before its next meeting, Tuesday, Dec. 10. Assuming the CUP is approved, Tru BDM will be retrofitting the building for production in December in preparation of its first production run.
BDM Genetics has two similar facilities in the Denver area, one in New Mexico and projects being considered in Wahpeton, North Dakota, and Kansas. The company also owns the third largest greenhouse in Texas. Tru Ag LLC is based out of Wheaton, where they have included BDM Genetics seed in their crop rotation with success.