Seymour company to be one of the state's first processors of cannabidiol or CBD

Under the name Thrive Well LLC, Kocolene Development Corp. plans to begin commercial production of CBD this fall.

Kocolene announced last week it has received an industrial hemp license, becoming one of just a few Hoosier companies legally allowed to grow and handle hemp in Indiana. It acquired the license in January after a two- to three-month process that included background checks.

Thrive Well’s position in the market will be as a CBD processor, extracting the cannabidiol from the hemp and then selling it to other businesses to produce CBD products.

CBD is available in a variety of products on the market today, including consumable oils, pills and gummies, bath bombs, topical ointments, bottled water and even pet products.

Although hemp and marijuana both come from the cannabis plant, hemp contains little to no THC and does not cause the “high” associated with marijuana.

CBD, which contains hemp, has been said to alleviate inflammation, pain, anxiety, insomnia, seizures and a host of other conditions without the dangers of addiction.

Kocolene is using its existing real estate in Freeman Field for Thrive Well operations and is partnering with B & A Thompson Grain Farm and Myers Sod Farm, both in Jackson County, and Purdue University. Purdue is the company’s research sponsor, which is required by the state for anyone growing hemp.

Doug Prather, president of Kocolene, said because the company is employee-owned, the idea to get into the CBD market came from its employees.

“A little over a year ago, we had an internal leadership conference, and we challenged our two operating divisions to come up with ideas that they thought could help grow their businesses,” Prather said. “Both of them, independent of one another, came back with their top idea being CBD.”

Kocolene began selling CBD products made with outsourced cannabidiol at its discount tobacco stores in March 2018. Its first line of hemp extract product is called 1938 in honor of Kocolene’s first year in business.

“We saw the demand these products had from our customers and customers in general to improve their well-being,” Prather said.

Prather does not see the CBD market as a trend, and that is another reason Kocolene is investing in the market.

“This is not a quick, jump in and jump out type of play for us,” he said. “This is a future-forward statement and something we are taking very seriously and want to make sure we do very well and are very trusted.”

The company’s goal is to be in a position to begin learning the extraction process this summer.

“In order to do that, we’ll have to buy biomass from places other than our local farmers because it will not have come to harvest yet,” Prather said.

When it’s time for a local harvest of hemp, Thrive Well will be ready to extract and process.

“We will have a lot more information and expertise because we will have been doing it already,” Prather said.

But he doesn’t want to make any assumptions as to what production levels will be by the end of the year,” he said.

“It’s so early in the process,” he said. “To determine a number right now is making so many assumptions about processing efficiency and growing efficiency. We haven’t grown this product. There are a lot of assumptions about what yields should be both in terms of farming to processing. Right now, we are very much about research and best practices.”

District 69 State Rep. Jim Lucas, R-Seymour, said Kocolene’s announcement is a big deal for Jackson County.

“I think it’s huge,” he said. “It just shines the glaring spotlight on the limitless potential of that market. There are countless uses of hemp, obviously the CBD oil, but also food, clothing and industrial applications.”

But state lawmakers still aren’t widely supporting industrial hemp and have yet to make it legal for unlicensed production of the crop.

“We’re just as screwed up as we’ve ever been,” Lucas said of the state’s current stance on industrial hemp production.

Lucas has been heavily advocating and supporting the industry and continues working to change people’s minds.

“It’s very frustrating,” he said. “There was only one hemp bill that got a hearing this year, Senate Bill 516. I had one last year that was drafted and passed through the House unanimously, and the governor’s office came in at the 11th hour and just put a poison pill in it.”

Lucas ended up killing his own legislation.

His attempt this year was based on the federal farm bill, and it never got a hearing, he said.

“It’s politics,” he said. “I’m frustrated and aggravated. If we had leadership that was committed to getting behind and supporting this issue 100 percent, the sky’s the limit. But we can’t get our leadership to just stay out of the way and to quit inserting obstacles for these businesses.”

Lucas said the pushback is coming straight from the governor’s office.

“His office is difficult to communicate with,” he said. “We’re not getting any solid answers from them. It doesn’t make sense. I don’t know how I can possibly try to educate people any more than what I already have.”

Industrial hemp is a multibillion-dollar industry that would benefit the state in many ways, Lucas said.

“Education K-12 and higher education gets almost two-thirds of our state budget. Now you couple with that we spend a billion dollars retraining workers in workforce development,” he said. “This is an industry we wouldn’t have to spend a dime on.”

Kocolene plans to hire employees for multiple positions for its hemp operations. Prather said he isn’t sure how many new jobs will be created, but he hopes many.

“We are in the process of looking for an extraction manager,” he said. “We will have opportunities internally for our employees, and we’ll need external help, as well. If we’re as successful as we plan on being, that will run the gamut from high-level operational and salespeople to additional labor in our warehouses and to run the extraction equipment and manage the supply change.”

Educating the public about CBD is vital to the company and the industry’s success, he said.

“Education in this emerging industry is critical in understanding the efficacy and safety of CBD,” he said.

Kocolene employees participated in the CBD Expo Midwest on Friday and Saturday in Indianapolis to connect with other CBD brands, manufacturers and consumers. Lucas also attended the event.

“It’s a great opportunity to learn more about this industry and what it has to offer,” Prather said. “We were able to talk with people from around the country who are already doing a lot of the things that we would like to do as well as potential customers and potential growers.”

Kocolene has a proven record of developing and marketing businesses, Prather said.

Kocolene started its business with gas stations and then added convenience stores, discount tobacco stores and a logistics company.

In 2015, the company exited the convenience store industry with the sale of its assets to Circle K and the sale of wholesale fuel assets to Herdrich Petroleum. It operates 15 discount tobacco stores in Indiana along with Ranger Enterprises in Seymour, a third party logistics and warehousing business.

Prather believes the Kocolene name brings a level of credibility to the young CBD market.

“This industry is in so much of its infancy,” he said. “Our product will be available for anyone. It really could be available around the country for people who want to take that and make it into an end product for the consumer.”

But right now and for the future, the focus is on Indiana and what Kocolene can do to help maintain and grow the economy here.

“The Midwest is positioned very well for hemp growing from a farming perspective with our soils to our abundance of water,” he said.

“For us, CBD is a natural next phase,” he added. “With 80 years of operating experience, we understand what it takes to develop and bring a service to the market. Our operating philosophies, combined with a strong tenure in retail marketing and warehouse distribution, support our entry into this exciting and emerging industry.”