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by Duane Stjernholm
Executive Summary
The Colorado Hemp Processing Cooperative (CHPC) is a Limited Cooperative Association formed to bring much needed Economic Stimulus to Colorado and all of Rural America. The CHPC is a Tier 1 whole Hemp plant processor that is structured to protect and reward the people doing the work, the Patron Members, and Bring the highest possible return to the Investor Members in perpetuity. In addition, 2nd Tier Processors and Manufacturers will be assured that they have a stable Supply Chain to provide the materials necessary to produce their wholesale and consumer products. Our Sense of Urgency is predicated on preempting other entities who will take all profits out of Local Communities. In addition the CHPC has incorporated a methodology to increase Local Economic Stimulation while maintaining Local Control, and has extended that Collaborative Model to empower diverse, wide-spread, like-minded groups with similar objectives. The CHPC provides the Model for a true Win, Win, Win, Win scenario for all Shareholders involved… including Mother Earth.
Introduction
The Colorado Hemp Processing Cooperative (CHPC) was formed to bring economic stimulus to rural Colorado and rural communities throughout the world. Farmers and growers throughout the world are currently being held hostage by the big Agriculture monopolies. This has gone on long enough as growers are now little more than indentured servants. It is said that farmers buy everything at retail, sell everything at wholesale, and pay the postage both ways. Big Agriculture (Big Ag) dictates GMO seed prices and what chemicals have to be used to make those GMO seed grow. Big Ag dictates the price of those chemicals that have to be applied, and further handcuffs the growers with non-propagation agreements so they have to buy new need every year. Additionally, big Ag exerts undue control over the sale prices of the harvested crops. How is the grower, the ultimate entrepreneur, supposed to survive when battling both big Ag and the uncertainties of farming in general? This is an unsustainable business model that has resulted in poisons in our food, our water, our air, our clothes, and our homes, not to mention the fact that the applied chemicals are killing the soil microbiome to the point that nothing will grow in that soil without the applied chemicals. Is this the future you want to leave to your children and grandchildren?
Limited Cooperative Associations
Limited Cooperative Associations are one of the newest types of business formulations in the United States. They are the ideal business model for the 21st Century because they allow for both Patron Shareholders (the people doing the work) and Investor Shareholders. A National Template was proposed and approved by the Council of State Governments in 2008. According to a NCCUSL (National Conference of Commissioners on Uniform State Laws) summary:
“The Uniform Limited Cooperative Association Act (ULCAA) is designed to promote rural development by creating the option of a statutorily-defined entity that combines traditional cooperative values with modern financing mechanisms”. ① Because the Statutes allowing Cooperatives are State specific, each State has to revise and adopt their own version of the National Template. “Three states enacted The Uniform Limited Cooperative Association Act during the 2007-2008 state legislative session; Nebraska (LB 848), Oklahoma (SB 1708) and Utah (SB 69)” . ② Colorado approved it in 2012 (Article 58).
“The Act will be equally useful in an urban setting, where the cooperative value of individuals getting together to democratically own, run, and share in the benefit of their business can be combined with modern financing techniques. The ULCAA builds on traditional law governing cooperatives, but recognizes a growing trend toward the “New Generation Cooperative” (NGC), which can include combinations of features not readily available under traditional law, such as legally binding delivery contracts or the opportunity for outside equity investment. This Act creates a new form of business entity and is an alternative to other cooperative and unincorporated structures. It is more flexible than most current law, and provides a default template that encourages planners to utilize tested cooperative principles for a broad range of entities and purposes.
The cooperative industry includes many interests, including, but not limited to, farmers, consumers, financial groups, and insurance organizations. In the Act, a “cooperative” is defined as an unincorporated association (a “limited cooperative association”) of individuals or businesses that unite to meet their mutual interests by creating and using a jointly owned enterprise. The Act contemplates the formation of various types of limited cooperative associations, including marketing, advertising, bargaining, processing, purchasing, real estate, and worker owned cooperatives. A limited cooperative association under the Act can be organized to pursue any lawful purpose. For example, the Act would allow a group of wheat farmers to build a value-added pasta facility, keeping their business in a cooperative form while being able to attract and utilize investment capital. It might also be used by an urban food cooperative to attract investment capital to build facilities for the operation of the cooperative’s business.” ③
Protecting the Patron and Investor Shareholders
The Importance of the Limited Cooperative Association is that it protects and rewards the people doing the work (The Patron Shareholders) and likewise rewards the Investors in the most equitable way possible. Like a more traditional Cooperative, every Shareholder (Patron or Investor) is only allowed one vote unlike corporations which allow weighted votes according to the number of shares owned. This protects the shallow pocket Patron Shareholders from the deep pocket Investor Shareholders who only want to skew voting results of the Cooperative for their own selfish benefit. Cooperatives don’t make a profit per se, but they do generate Excess Revenues and these Revenues are distributed to ALL Shareholders on a yearly basis on a pro rata basis. Shareholders are also responsible for all taxes on those Revenues. By Statute, a minimum of 50% of these Excess Revenue distributions have to be given to the Patron Shareholders. A higher percentage can be allocated, but 50% is the minimum. Again this protects and rewards the Patron Shareholders and assures them that they will receive just payments for their labor and participation. In the case of the CHPC, we will distribute the 50% to the Patron Shareholders and we will distribute the other 50% to the Investor Shareholders in order to pay them back their Full Investment. Once their full investment is paid back their Investor Share will revert to a Patron Share and they will continue to receive Excess Revenue Distributions in perpetuity along with the other Patron Shareholders. Currently CHPC Patron Shares are $100 per Share and Investor Shares are $1,000, so upon full repayment of their investment, Investor Shareholders receive at 10% ROI and will continue to build on that ROI in perpetuity with their yearly Patron Share Excess Revenue distributions. This provides the Investors with a potential to make a much larger ROI a than a simple loan that is paid off with a low interest rate after a few years. Yes, there is some risk involved, but the higher the risk the higher the rewards. However, the risks the Patron Shareholder growers take on a yearly basis are quite a bit higher in addition to providing all the labor.
Collaborating With Tier 2 Processors and Manufacturers
As a Tier 1 Processor, the CHPC will process the whole Hemp plant into 5 raw materials, these are the seed, the residual flower, the bast and the hurd from the decorticated stalks, and the biochar from the waste biomass which we have trademarked as CannaChar ™ (from the medical and recreational cannabis waste) and HempChar™ (from the hemp processing waste). This is the total extent of the Cooperative’s processing activities. These raw materials will then be sold at wholesale to contracted Tier 2 processors and manufacturers who will perform their value added processing and manufacturing to produce more refined raw materials for specific industries or completely manufacture their consumer products. Because we will be contracting with our Patron Shareholders for their hemp crops and they also receive a portion of the excess revenue distributions, we will have a strong and stable supply chain which is immensely important. This will encourage 2nd Tier processors and manufacturers to contract with us for the raw materials they need to produce their wholesale and consumer products. Thus, CHPC will be as horizontally integrated as possible, provide the key link that everyone needs in a solid Hemp Products Supply Chain, and produce these materials in the most cost effective manner to the benefit of all of our Shareholders, Patrons, Investors, and 2nd Tier Processors and Manufacturers.
A Sense of Urgency
The Agriculturally Cultivated Hemp Industry is still in its infancy. We have the unprecedented opportunity to revive this Industry so that it is the most fair and equitable for everyone involved. In addition we will do it with 21st Century Technology. However, as cautious as we would like to be in rebuilding this Industry in the most beneficial manner, we must have a sense of urgency in getting it operational as quickly as feasibly possible. The reason for this is that there are foreign entities such as China who are looking at coming in and building processing facilities owned by them which will funnel all the profits back to their countries. We can’t afford to let this happen as we want to keep all generated excess revenues for Patron Shareholders in the communities that produced them as well as protect the interests of the Investor Shareholders in sharing the risks involved (however small) in reviving this exceptional Industry. If foreign interests are first in the markets it is going to be much more difficult to promote the American interests while playing catch-up. The advantage that the Cooperative Model offers is that the foreign interests will probably treat the growers just like Big Ag currently does which is a modern form of indentured servitude. The CHPC will treat all Shareholders as valuable allies in helping us to build this Industry. The Cooperative Model will produce true Trickle-Down economics to keep the much needed economic stimulus in the local communities, and will do it with local communities maintaining local control. In addition, we can take the model much further and add 2nd Tier processors and manufacturers to the mix in the same proximities, and additionally stimulate the local economies with the jobs and products these additional employers produce. Regionally, different processor facility locations can specialize in a certain segment of the Hemp products market and produce economies of scale. For example, one location could specialize in the production of Hemp building materials, another location could concentrate on Hemp foods, and a third area could concentrate on the production of thread, twine, ropes, and textiles. A third element is a consolidation of the retail side of the equation where Hemp Factory Outlet Stores can be situated in a central location for a third stimulus to the local economies via the jobs the retail setting will provide.
Nationwide Connections for Collaboration
A final piece of the puzzle that is advantageous to all the Cooperative Communities is that Cooperatives can be Shareholders in other Cooperatives. Because, as stated above, Cooperatives are state specific, the ideal situation would be to have similar Cooperatives in every state and every Cooperative be a Shareholder in every other Cooperative. This provides the ideal setting for Collaboration instead of the unsustainable competition that we are currently encumbered by. If all Cooperatives are Shareholders in every other Cooperative, they still maintain the all important Local Control, but they can all benefit from the Collaboration of sharing Standard Operating Procedures, Best Practices, production machinery, cultivars, and the sales and marketing of the raw materials and finished goods that they all produce to name just a few of the many advantages.
A Win, Win, Win, Summary
To help us on this Mission to create for the Greatest and Highest Good, we need your Help. The Colorado Hemp Processing Cooperative (CHPC) was formed to bring Economic Stimulus to Rural America and we need your help to get it done. The Collaborative mindset is sustainable, but we need to unite and make it happen together. We’re not asking for anyone to do it alone, but please join us and make it happen together by becoming a CHPC Shareholder at COHPC.ORG. We need a significant number of you to join us to do the work that needs to be done to Co-Create our planet into the Edenic Utopia it has the potential to be. With widely dispersed individual risks and lucrative shared collective returns we can develop the Hemp Industry for the Greatest and Highest Good. We can’t rely on governments or corporations to do this so it has to be done by WE The People! The Colorado Hemp Processing Cooperative’s model is a Win for protecting and rewarding the growers (Patron Members), a Win for protecting and rewarding the Investor Members, and a Win to provide the Tier 2 Processors and Manufacturers a stable Supply Chain for the production of their products. In addition, there is a 4th Win for Mother Earth by using the properly prepared and “Charged” CannaChar ™ and HempChar™ to protect the soil microbiome from the damaging chemicals and pollutants that are threatening to extinguish the human population. In addition, these biochars can be used effectively for water filtration and also as a key element in the production of bio-degradable plastics. This is the True Win, Win, Win, Win that we need to make happen as soon as possible.
Thank you for your time and consideration. You can learn more and become a Shareholder at:
Thanks!
© Copyright 2020
Compiled and Written By:
Duane Stjernholm
Co-Founder and Operator
Colorado Hemp Processing Cooperative
303-525-2611
COHPC.ORG
info@COHPC.ORG
① ②③ https://knowledgecenter.csg.org/kc/content/uniform-limited-cooperative-association-act-statement
