In the 2018 Farm Bill, one of the major changes was allowing the production of industrial hemp. The number of uses for the crop numbers in the thousands and early estimates say the market could be worth up to $10 billion by the year 2025.
During the snowy days of winter, Grand Forks, North Dakota farmer Chris Adams has plenty of time to reflect on last year’s harvest that included not just corn or soybeans but hemp.
“My my theory was, if you’re in on the ground floor of something new then you have quite the advantage,” says Adams.
He now has hemp in bins and plants stacked in barns waiting on a trip to a processor.
“I would be lying if I said money had nothing to do with it because the financial part of it is huge,” says Adams.
Adams, like many in agriculture, is looking at continuing to add hemp acres as a path to better profits.
Michael Bowman, with the North American Industrial Hemp Council, believes American farmers are poised to capitalize on this burgeoning market.
“I think if there’s anything that agriculture is good at, we’re good at innovating, creating and executing,” says Bowman
And while acreage isn’t huge it has the potential to grow.
Tyler Mark is an Assistant Professor at the University of Kentucky with the Ag Economics Department.
“I hear [nationwide] numbers are anywhere from 77,000 acres to 100,000 acres could very well be possible,” says Mark.
He says the state of Kentucky is expecting 25,000 to 30,000 acres of hemp this growing season since the removal of industrial hemp from the schedule 1 narcotics list.
“It’s going to really open the door for hemp to see if it’s actually going to play a role in the U.S. economy and the US farm sector,” says Mark. “It puts another tool in the tool belt, so to speak, for producers around the country.”
Currently, there are three paths of possibility for farmers considering planting hemp.
1: Grow the plants for fiber. Farmers are paid on tonnage.
“Plant 50 pounds per acre you get 175 to 200 plants per square meter, and then grow that for fiber,” says Bowman. “You’re going to drill it in, you’re going to air seed it, then you’re going to harvest it with a dual head combine and equipment that’s available today that the world uses.”
2: Grow Hemp Seed to used as a food grain.
For grain growers, existing equipment will likely get you started but there may other issues like storage to think about.
“It’s probably going into the food system,” says Mark. “So you have to think about how you rotate this crop through the bin to keep mold issues and issues inside the bin down.”
As far as profit potential goes Bowman says it depends on how much of the plant farmers want to harvest.
“They’re seeing returns in the $300 an acre range but keep in mind that’s only being able to capture the value of just the seed,” says Bowman. “The value of the stalk and the hurd and if there are investments made to take those products and do something with them then [returns] are estimated to be in the in the $3,000 to $5,000 range.”
That doesn’t compare to option 3: Growing hemp plants for oil.
The Cannabidiol Oil, also known as CBD, is credited with helping treat a host of medical problems from epileptic seizures to anxiety to inflammation. It’s extracted from the flowers and buds of hemp plants.
“CBD production is going to be a female plant that is planted individually,” says Bowman. “It looks like a small Christmas tree farm if you are driving by.”
The work is labor intensive often requiring hand harvesting and weeding but the profit potential is high.
“So there you’re probably looking at somewhere between $10,000 to $15,000 of per acre return,” says Mark.
“The seed production is kind of a break-even deal right now the CBD production, assuming everything goes well, is quite a bit more lucrative,” says Adams.
Adams is trying his hand at a small plot of CBD production this year. Last year he ran into problems including having plants with the greater than .3 percent THC, the psychoactive compound found marijuana, which meant the crop couldn’t be sold. He blames a bad batch of seed.
” I would just remind everybody that the 0.3 THC is a global standard and it’s one that didn’t have any science behind it,” says Bowman. “It was a political move back in the 1930s when Western Europe was wrangling Eastern Europe for who got to own the seed production.”
Bowman thinks as research improves, the industry will see more discussion on where those standards will go.
As with any new industry, experts expect challenges to growth. The largest seeming to be infrastructure or having a place to take that crop once it’s grown.
“There’s a lot of interest from the private sector right now and with the descheduling of hemp we now have opened the door to USDA funding for value-added grants and infrastructure grants,” says Bowman. “Those are things that any other crop has enjoyed.”
Experts recommend having a contract before planting and as acreage increases supply, demand will need to go with it.
“One of my biggest fears is are we going to overproduce so fast that we completely swamp the demand for these products and drop prices down to really low levels,” worries Mark.
But for farmers like Chris Adams, hemp holds potential and for now, that’s enough.
“If the market maintains the dollars that it’s showing right now I can see more people jumping into it just because nothing else is really making any money,” says Adams.
The high-profile hemp seizures have the booming CBD industry wondering how much they can trust the Farm Bill’s guarantee that “no state or Indian tribe shall prohibit the transportation or shipment of hemp or hemp products.”
Hemp entrepreneurs are facing jail time and hefty legal fees for transporting the plant across state lines, despite a federal guarantee that states can’t block legal hemp transport.
Massive police seizures in Idaho and Oklahoma raised questions about how state and local law enforcement are supposed to tell the difference between hemp and marijuana.
Since the Farm Bill passed:
Four men working for a hemp-transportation company, Patriot Shield National Transport, were stopped in Pawhuska, Oklahoma, for running a red light. All four were charged with drug crimes for allegedly carrying some 18,000 pounds of Kentucky cannabis destined for Panacea Life Sciences, a CBD manufacturer in Louisville, Colorado. The men said they were carrying legal hemp; federal drug authorities say the plants had too much THC to be considered hemp and not marijuana.
An Oregon truck driver was arrested in Boise, Idaho, for carrying roughly 6,700 pounds of cannabis from Oregon to Big Sky Scientific, a CBD manufacturer in Aurora, Colorado.
The cases suggest that local and state law enforcement don’t understand that interstate commerce is legal now for the plant.
Industrywide chillThe cases also raise an uncomfortable prospect for the booming CBD industry: raw cannabis materials destined for CBD extraction can start out as legal hemp – testing at or below 0.3% THC – but it can mature during storage or transport so that the material becomes illegal marijuana.“We had a license for every single box in the truck,” Dickinson said. “We still believe that what we were carrying was legal hemp – and even if it wasn’t, we did our due diligence.”In the Idaho case, for example, a Big Sky official said the company will be hurt even if the hemp is released and Idaho concedes the commerce was legal, because supply-chain disruptions can hurt any new business.
“They’re paying attorney’s fees for something that was settled in federal law,” Watkins said. “They have contracts to fulfill. This is a burgeoning market.”
Patriot Shield’s Dickinson said its hemp-shipping business
has gone ice cold while folks await an Oklahoma resolution.
“Any local law enforcement can mess with any hemp shipment and delay it until the hemp is destroyed,” he noted.
Some CBD companies say they’re sticking within state borders to guard against improper police seizures.
Michael Falcone, CEO of Southern Tier Hemp in Binghamton, New York, said his company plans to extract only hemp grown in his state.
Keeping the hemp local saves money and gives law enforcement time to figure out hemp-transportation laws in the Farm Bill, he said.
“The issue we are all facing right now is that this is so new,” Falcone said. “A regulatory framework is being built as we speak.”
Most of the earliest works of art discovered today are in fact, ancient tools. People created things with care and love because they had to last and would ultimately be passed onto the next generation.
The industrial revolution eliminated the care and effort that went into making these earlier objects so that people could work faster and cheaper in the face of economic competition. The Industrial Revolution brought us modern economic theory that introduced us to the theory of externalities. Wendell Berry in his 1989 essay “Nature as a Measure” writes “for a long time now, we have understood ourselves as travelling toward some sort of industrial paradise, some new Eden conceived and constructed entirely by human ingenuity. And we have thought ourselves free to use and abuse nature in any way that might further this enterprise.” In other words, we have forgotten our place.
The “understanding” Berry speaks of comes directly from our belief and participation in modern economic principles. Berry continues and claims “we have bought unconditionally the economist line that competition and innovation would solve all problems, and that we would finally accomplish a technological end run around biological reality and the human condition.” What Berry is calling for in his essay is the recognition that nature and our environment are equal participants in all of our transactions – a partner that once deserved the same equity but now requires more because of previous neglect. For decades now, we have used nature to suit our needs without any regard for the externalities.
Perhaps one of the biggest disconnects we have today is in fashion. Most people have forgotten that their clothing and other textiles can be traced back to the farm; even more so, they have forgotten how the methods used to produce them impact the environment. According to a World Wildlife report, more than half the clothing in the world is made of cotton. Globally 2.4 percent of all farmland is planted in cotton, which uses twenty- four percent of the fertilizer, eleven percent of pesticides, and a quarter of the water consumed by agriculture annually. It is now estimated that less than half of the world’s cotton crop is of a genetically modified variety, meaning the pesticide number could increase significantly in the coming years. Today, your average cotton t-shirt has been treated with over a pound of pesticide and seven hundred gallons of water. Using Berry’s logic, this is a direct threat to our community and our survival that must be addressed.
It was in this spirit that I became involved in industrial hemp advocacy. You see, not only is the planet in the midst of an ecological crisis, but also America is in the middle of a farm crisis that is alarming and largely unknown. In the past five years, over one hundred thousand farms in this country have ceased production.
For those farmers still producing, expenses are up over thirty percent, while the value of production has risen by only about twenty- five percent. This means that even with higher prices at the farm gate, farmers are still losing money. In 2012, over half of Americas farmers lost money. In my home state of Kentucky, we lost ten thousand farms between 2007 and 2012. About six thousand of these were new and beginning farmers, while over half of Kentucky’s seventy seven thousand farmers lost money last year. In hemp farming, I saw an opportunity for farmers to produce higher value crops and reestablish some rural processing infrastructure.
One of my favorite quotes is taken from the writings of Roman Naturalist and Naval
commander Gaius Plinius Secundus. “Out of so small a seed springs a means of carrying the whole world to and fro”. It reminds me of how critical agriculture is to our existence. From a simple seed came the means to make the cordage that was converted into the sails and ropes that brought the first explorers to the Americas. Those ships opened up trade and ushered in a new era of mobility for people all over the world. Those sails brought our ancestors to this land, and later would feed the printing presses that would organize our first Militias and ultimately helped us declare our independence. Hemp literally built this nation and it could do it again. But it must be done responsibly and with care, as if we intended to hand it off to our children to use for future generations.
It is often heard in hemp circles that this crop “will save the planet” because of all the things we can accomplish with it. This plant can provide everything from a simple length of rope to the complex Nano technologies that will store our future energy– and that is exciting– but I fear we have forgotten where we came from and how we got here. A tool in the hand of a skilled craftsman becomes a weapon in the hand of the wrong person and the same is true in this scenario. I came to hemp for the same reason as most people: it presented an abundance of possibilities to solve some of the structural problems that we face as a planet, not to add another element to structures causing our problems. This is where I fear we are heading with this plant.
Let us not forget that this is a plant that helped build empires. The same sails that brought our founding fathers here also brought the slaves that built this nation. The canvas that covered the wagons brought the settlers westward on this continent, together with the weapons and soldiers that occupied and overthrew the natives who called this place home before us. Often it can be heard that if we switch all of the plastic bottles in the world to bio-based polymers like hemp, it will make us more sustainable. While this statement is accurate, it addresses only the input issue, not the structural problem.
Whatever we put the water in, it is still pulled from aquifers and shipped thousands of miles using carbon based inputs to get to you. The industrial hemp plant offers us many opportunities to change our inputs, but the path to its revival will depend solely upon human willingness to accept and pay the true costs of this life that we have purchased together. That will require change to the structural issues that threaten us all. The industrial hemp plant offers many opportunities for input change, but the path to hemp revival will depend solely upon human willingness to accept and pay the true costs for the lifestyles that we have acquired together, with the structural issues that may equally threaten us all.
Enhancing Demand for Industrial Hemp
Industrial hemp seems to finally be making headway, and while it won’t be an easy task for those charged with maximizing its growth, it is definitely an exciting time. Industrial hemp has been a hot topic for many years, but legalization and public opinion are now leaning in its favor, making research and product development possible. Many people have been waiting a long time for this opportunity to present itself, and many more are waiting to see how it unfolds.
The possibilities exist for industrial hemp to grow and scale in a number of ways, and while product developers and manufacturers will have an easier time with oil, paper, composites and just about anything other than with textiles, it can’t be ignored that textiles is the big one, meaning that there are huge opportunities within this sector for hemp, actually the product category for which it was originally best known.
The reason? The textile industry ranges from maker-space artisanal shops to vast industry complexes that globally serve thousands of end uses. Even if hemp is only viable for a micro percentage of these end uses, an initiative in this direction provides opportunities for volume and product exposure that make other products and markets pale by comparison. But there are entry barriers in every direction. And so if you don’t care about natural fibers or textiles, this probably isn’t the piece for you.
That said, HEMP activists, depending on their roots, see the industry’s potential from different perspectives. Some are growers, some are involved politically, and some are product implementers. But everyone participating wants to see industrial hemp maximized. They contribute time, expertise, and energy in different ways, but what they all have in common is that they believe they have “lightening in a bottle”, and they might be right.
Why hemp? Speaking with Mike Lewis, a Kentucky grower, he states “Farmers are hungry. The cost of production is up and the prices at the gate are down. Conventional Agriculture is literally starving the family farm that is forcing farmers to think outside the box and find things less conventional to support their bottom line. Industrial hemp certainly fits that bill and represents an opportunity for farmers to reinvest in the infrastructure that was consolidated away from the communities they produce in. In many ways, farmers are turning to hemp out of hope for the old economy of rural farm communities.” Looking at the industrial hemp industry as a textile technologist and part-time flax farmer, hemp has a lot of things going for it but it has issues to resolve.
Industrial hemp for textile end use refers to varieties of cannabis sativa that are cross-bred to achieve long, uniform, and strong textile fiber that is flexible enough to be spun into yarn. And yes, the plant must contain less than .3% psychoactive ingredients (THC), but truly, the textile industries only care about the yarn’s shape, size, cost and strength, and not necessarily in that order.
Industrial hemp is not a miracle. It is a bast fiber, meaning that the usable textile fiber is bundled in the stem like flax or jute, rather than from lint protrusions from the seed, such as cotton. Industrial hemp (Cannabis Sativa) is not related botanically to flax (Linum Usitatissimum), but to a textile technologist, they might as well be cousins. From harvesting forward, bast fibers require different processing practices and machinery than do seed hair fibers like cotton, for which the global industry is well set up. Due to volume, difficult processing will impact its marketing ability, at least for locally grown industrial hemp.
Roughly 90% of the short-staple spinning frames in the world are for cotton-based spinning systems, which include cotton yarn and any fiber that is to be blended with cotton. Included in this assortment is what is called “cottonized” hemp, referring to hemp fiber that is guillotine chopped to about 1.5”, and modified to compatibly spin with upland cotton. But blended or pure cottonized hemp will have a different hand, luster and texture than traditional long line hemp.
Competition
To provide a sense of reality and scale in market positioning, cotton last year produced over 22 million metric tons of fiber globally, flax about 320 thousand metric tons, and hemp weighed in at about 56 thousand metric tons. Both industrial hemp and flax are not on cotton’s radar simply because cotton has bigger problems to deal with, specifically polyester, which has reduced cotton’s market share of world fiber consumption to below 25% and increased polyester’s own share to over 52%. If industrial hemp becomes important enough, there is more to fear from synthetic fibers than there is from other natural fibers. Polyester can simulate the look and hand of hemp, including the natural inconsistencies and it can be done at a heart-breaking low price. Not perfectly, but enough for all but vigilant consumers. At the moment, polyester is focusing on larger markets.
That said, industrial hemp competes with flax and ramie and a few other cellulosic fibers in the textile market place. Hemp will compete to a lesser degree with locally farmed protein fiber (wool, cashmere, alpaca) in the fashion markets, since protein fibers have different properties. Hemp, like flax and cotton, will more than likely be used in developing blends that maximize the properties of both fibers. At the farm level, industrial hemp will compete with corn, soy, potatoes and what ever grows profitably in a given region. But in the product markets, if re-shoring is to remain part of the strategy, then there will be no greater competitor to hemp than hemp coming in from other parts of the world like China, Russia and Eastern Europe and other areas where the infrastructure is already in place and the price is low.
Hemp’s Properties
Industrial hemp is not the strongest fiber in the world as is sometimes claimed, and not even the strongest in the world of natural fibers. Flax in some cases is stronger than hemp, but it really doesn’t matter. Synthetic fibers like nylon will embarrass hemp or flax in a strength test, either tear or tensile, day or night, and the new generations of synthetic spider silk made from sugar, water, salts and yeast are coming on strong, promising strength beyond any fibers in existence. But who cares? How strong does your shirt have to be?
Sustainability
Industrial hemp will also not save the planet. As a low feeder – better than most competitive fibers – it still requires water and nourishment like every other living thing, and it is susceptible to some wilts and pests.
But industrial hemp scores high in overall sustainability, or at least it can depending on who is growing it. Hemp has a fairly low impact on the environment, grows well in a lot of places and conditions, provides food and fiber, and as a locally grown crop, has the ability to help alleviate rural poverty and provide farmers with a viable new product. It fits well with the local fiber theme, and can support artisan communities. Hemp’s profile in the market place is closely related to keeping that image.
Processing
Hemp and flax have some things in common, because they are both bast fibers. They are both relatively easy to grow, but harvesting, processing and spinning operations are different. Flax plants must be pulled from the ground by a special tractor or by hand to achieve the maximum usable fiber length, and to keep the ground as free and clear as possible from fusarium wilt which can cause a complete crop failure. Industrial hemp growers can cut the raw plant rather than pulling it, which is an advantage.
Every step in bast fiber processing is important, but most agree that successful retting is critical. Retting prepares the harvested fiber for the successful removal of the fiber from the bark (shives) by encouraging microbial action to “rot” the bark. Removing the bark from the fiber, sometimes called decortication, is really a three-stage process that includes retting, breaking, and scutching. It entails a lot of crushing with gears and rollers to enable the shive to fall off and separate from the fiber.
Modifying the hand (how it feels) is critical to hemp– as well as flax– because both fibers are naturally scratchy and need softening. Softening of fibers is done by more gears and rollers, and in some countries even by slamming thick skeins against doorways and walls. Softening can also be achieved chemically, and so it should not be assumed that it is organically grown and processed unless the product is certified.
Certification
Like every new product, the certification organizations will have their role. They will create standards to ensure fiber and product quality, apply existing test criteria from other fibers to make sure it is what it says it is, and then the organizations will crash into each other when attempting to harmonize these certifications.
Moving Forward
And so what are the options available to those who wish to grow, or grow with, industrial hemp? Hemp, like flax and some other specialty fibers, has the ability to develop a portion of its positioning as “heirloom quality”. Combining good design, high quality fabrication, and interesting design can achieve this and can raise hemp to luxury positioning. This is the smallest part of the market, but is appropriate for hemp’s current production capability. This low volume and high profit market segment can create the umbrella for building brands and will enable other market levels to flourish over time.
Local Fiber: Circular Farm to Fashion
Industrial hemp is showing up in the farm-to-fashion movement, which is a logical place to develop the high end of the market, especially for “one of a kind” or “few of a kind” products. The farm-to- table model that has been so successful for farms and restaurants has taken root in farm-to-fashion programs. Fashion circles are forming all over the country, usually as an extension of the textile maker-space community. These initiatives usually include groups of artisans who cooperate to combine their skills and activities, creating communal value in textile based products.
The consortium usually includes a farm that produces natural fibers (cellulosic or protein) and possibly natural dyes. Communities of hand spinners and weavers or knitters add a burst of creativity not usually found in the mass markets, and their connection to the market through fashion designers and micro brands is critical. The major textile and design schools are involved, offering laboratory facilities, industry connections, structure, talent and credibility. If you wish to participate in a fashion circle, a College or University is a good place to start. Creating heirloom quality and high-end pieces occurs there.
Regional Study Groups
The New England Flax and Linen Study Group is an example of regional artisans who pool their talents and provide the expertise needed to create unique flax fabrics. There are groups like these who specialize in industrial hemp and they can be found in former industrial hemp producing regions or by way of the local museums in those regions.
The participants in these regional study groups come from all walks of life. They are re-enactors, educators, hobbyists, spinners and weavers. High volume is not expected at this level of the market, but quality and design ability is. While hand spinning is not the answer to the overall industrial hemp strategy, it is the critical transition point to develop textile applications. Hand spinners will bridge the gap from farm to fabric, and build the showcase needed for capital investment. According to NEFLSG’s Lisa Bertoldi, “we find that there is an increase in interest in locally sourced, locally produced textiles. Beyond that, we see that groups of like-minded people are banding together to do the work: to make usable household textiles and garments from local sources. We are seeing this in wool, which is perhaps the easiest fiber with which to see the process through, and increasingly in plant fibers namely cotton, hemp and flax.”
Improved Mechanization Prototype fiber processing equipment is currently being designed and manufactured and is already making its debut. This means that retted fiber can be turned into yarn mechanically, and that is a major development. Taproot Farms in Nova Scotia is in the final stages of offering pilot-sized, but mechanized, breaking, carding, hackling and spinning equipment. It works for nettles, it works for flax, and according to Taproot, the new equipment, with some modification, should work for hemp as well. Speaking with Patricia Bishop, the Owner of Taproot Farms and a true believer, “we are excited by the interest in how our machines will work to process hemp, flax and nettles.
We are eager to test with hemp and nettle in the coming weeks”. This is a tremendous step for industrial hemp, flax, and a whole series of natural alternative fibers as it enables limited but mechanized yarn production. The next step would be for small farms to organize into cooperatives, much like cotton growers do with cotton gins, offering the ability to process fibers regionally while generating modest volume. Enough volume could be generated to penetrate high-end markets with limited yardage, like decorative interiors, and create a vehicle for maker-space creativity to flourish that will attract additional markets.
Ways of Scaling Up
Scaling up is directly related to how much of the manufacturing process is to be done domestically. Knowing that the infrastructure exists outside of the U.S. to produce hemp yarn, fabric, and products provides an automatic pricing advantage to those countries with inexpensive labor. While there is some fabric-forming (knitting and weaving) capacity in the U.S., there is limited staple yarn spinning capacity available in general, but virtually no mechanized long staple bast spinning capacity. This brings forth the decision of whether or not to send raw hemp to countries to perform contract processing, which only makes sense for initial development.
The way forward is to work with countries and regions that can produce the products efficiently for now to help build the markets domestically. Since the production in the U.S. (both growing and processing) can only support low volume, then creating a low volume, high margin business makes a lot of sense. If low cost offshore producers can help build the market to support offerings and provide proof that the industry is attractive to investors, so much the better. As comes the equipment, so will come the market.
And so, industrial hemp has exciting and interesting times ahead for those who plan to participate. For farmers who believe in industrial hemp for textiles, they are at least partially in the fashion business, and for designers and merchandisers, they are partially in farming. And all are involved with textile fiber processing, because it will take that kind of effort and stamina.
By Mike Lewis. This story originally appeared in New Observations
In December last year, US President Donald Trump raised some eyebrows when he signed the 2018 Farm Bill — a bill including the Hemp Farming Act of 2018, which sees hemp officially removed from the Controlled Substances Act.
In short, this means that hemp can now be regulated as an agricultural crop, representing a major win for hemp growers and hemp CBD companies (CBD stands for cannabidiol — you can learn how CBD interacts with the body here).
The bill has been fully passed and enacted into law, removing any federal regulations preventing companies from growing, marketing and selling hemp.
It’s a significant milestone that will make it easier for companies to access federally regulated services like insurance or access to capital, as well as access to utilities like water — a key concern when growing hemp.
This would seem like a predictable move, as part and parcel of Trump’s broader deregulation agenda, except for the fact that the legal status of cannabis is still a controversial topic in the Republican Party — despite the fact that both medical and recreational marijuana use is now legal in multiple US states.
The US President’s attitude towards legalizing marijuana could make him an unlikely champion for the cause. Given the overwhelming popular support for the change, he may be eyeing the opportunity to improve his chances of reelection in 2020.
What ever Trump’s reasons for signing off on the bill, there are plenty of companies and investors who now stand to benefit, and this could well precipitate a further boost to the burgeoning cannabis and hemp markets.
CLI is an award-winning, New Zealand-born ag-tech company which offers farmers and growers of irrigated crops the latest in science, agronomy and technology through its key software, CropLogic realTime.
CropLogic: several steps ahead
In November, CLI announced it was looking closely at opportunities within the Oregon industrial hemp market (which is the third largest in the US), and had appointed two consultants to help: corporate advisor Green Rush Advisory Group and law firm Green Light Law Group.
CLI launched its CropLogic realTime product offering into Washington State last year, and the small-cap services a significant number of horticultural growers in the region — holding up to 30% market share in some crops.
The ag-tech junior believes it is well-placed to take advantage of the emerging agronomy and digital agricultural trends in hemp and CBD production and currently sees Oregon as the place to be.
Today, the company revealed it has received a significant report as part of its engagement with Green Rush Advisory Group.
That report includes details relating to the current trends and demand for hemp and CBD products, licensing and growers, the addressable market, and the future potential of this market for CLI.
The report compares the market and growth drivers for industrial hemp with that of the medical and recreational marijuana industries, noting that industrial hemp growth is due to the “relatively low cost of engagement, comparatively lower owner and investor risk regarding hemp production, continual research and confirmed benefits of CBD products which can be manufactured using industrial hemp, as well as scalability advantage with there being no limit on the scale of hemp production in Oregon”.
Furthermore, the report has provided CLI with insight into which license type it would require for industrial hemp — grower, handler or agricultural hemp seed registration — with the company determining it would seek to obtain the grower license.
Oregon currently has 576 registered industrial hemp grower registrations, which represents a 4369% increase since licensing began in 2015. Moreover, the acreage used for industrial hemp has grown 960% to 11,000 acres.
The company compares the rate of growth to that of the hops market in Washington, which CLI is already servicing.
The report also identifies three potential ways forward for CLI, with Green Rush recommending that the small-cap either start a new hemp business, buy an existing hemp business or create a stakeholder engagement campaign in order to develop prospective collaborations with hemp licensees. However, before the company makes the final decision, it will wait to receive the advisory report from Green Light Law Group.
Oregon hemp market set to explode?
With the 2018 Farm Bill now enacted into law, these times could prove prosperous for CLI and any company with an interest in the US hemp growing market.
It’s a convergence of events that could see hemp growers begin to crop up (so to speak) all over the place. With the effects of rising carbon emissions — and with them, the earth’s temperature — growers of irrigated crops are going to need help managing water resources, among other things.
An article in Oregon Business from October last year describes the Oregon hemp industry as “like a raging river, restrained by a dam that might soon break and allow products to flood an array of new markets”, citing the 2018 Farm Bill as a potential (at the time, future) turning point.
Forbeshighlighted the news in an article published December 30, although with the US government shutdown beginning on December 22, the weight of the event got lost amid the furore.
However, Twitter users have begun to pick up on the news in the last few 24 hours with an influx of tweets on the topic.
A promising point to note for CLI — and other hemp/cannabis-related small caps on the ASX — is that the decision by the US President is sure to be looked at closely by other countries, including Australia, which would not want to fall too far behind in the burgeoning field of medicinal cannabis and hemp products.
According to the Brightfield Group report (2018), hemp CBD sales in the US are forecast to grow from US$174 million in 2016 to US$22 billion by 2022.
If the prediction is right, it would represent a runaway CAGR of 138%.
Oregon Hemp farmers are looking forward to shipping and selling product in other states
For some farmers in Oregon, the nationwide legalization of hemp is great news because it means exporting product to a wider market.
The Boring Hemp Company is one local business ready to jump on the opportunity. Barry Cook, one of the company’s owners, said allowing more people to grow hemp and export it legally will open many doors previously closed to farmers.
Senator Jeff Merkley and Barry Cook of the Boring Hemp Company hosted a press conference Wednesday to celebrate the changes recently made to the 2018 U.S. Farm Bill.
Last month, President Trump made hemp legal in all 50 states. Hemp is now treated like any other regular agricultural crop.
Industrial hemp is a species of cannabis that doesn’t produce a “high.”
It’s farmed for a variety of reasons.
Hemp fibers can be used for clothing and rope while
Hemp seeds can be pressed into oil or made into milk.
Merkley said some local farmers, including Cook, have already been working with hemp since 2014 as part of a federal pilot program.
“Here in Oregon we have quite a head start to take advantage of this, stemming from the 2014 Farm Bill Pilot Project,” Merkley said. “We have 568 registered farmers in our state; we have 71 registered hemp handlers … who are in the business of removing the CBD oil from the hemp.”
Meanwhile, Senator Ron Wyden wants cannabis legalized across the U.S.
Wyden has said that the longer federal legalization is delayed, the longer Oregon misses out on economic opportunities that come from taxing and regulating cannabis like any other legal substance.
Adam Smith, the founder of Craft Cannabis Alliance, said the cannabis market in Oregon is starting to experience over saturation. Smith said the issue could be resolved if Oregon growers were able to export and sell product to other states — to other markets that will, Smith hopes, legalize cannabis in the near future.
Smith said if lawmakers don’t find a way to allow states like Oregon to export to other markets within the next two years, small businesses and local farms could disappear in Oregon as they’re bought up by international companies.
“What we have is a market access problem,” said Smith.
An expert panel has outlined the politics, agronomics and economics of industrial hemp at a workshop at the American Farm Bureau Federation’s 100th Annual Convention. Federally outlawed for more than 50 years, industrial hemp is making a comeback.
Rep. James Comer (R-Ky.), a staunch supporter of hemp as an agricultural crop, explained how he helps people understand the difference between hemp and its more infamous cannabis cousin, marijuana.
“Hemp and marijuana are two plants in the same family, the same way that broccoli and cauliflower are in the same plant family,” Comer said.
Ken Anderson, founder and president of Legacy Hemp, the leading U.S. contractor with hemp farmers, strongly advised anyone who is considering growing the crop to first secure a buyer.
“There are a lot of opportunities but it can be expensive to start growing hemp,” Anderson said. He credited Farm Bureau’s advocacy with playing a key role in the recognition of industrial hemp as a legitimate farm crop.
Calling industrial hemp “the little engine that could,” Katie Moyer of Kentucky Hemp Works discussed the broad range of hemp varieties and advised farmers to carefully consider which one to cultivate. “The crops are completely different,” she said, referring to varieties grown for cannabidiol oil vs. fiber, grain, seed, etc.
The availability of labor should also be carefully considered when thinking about growing hemp, according to Anderson.
“Hemp grown for CBD uses is much more labor-intensive,” he said, referring to those varieties as a horticultural crop while others are agricultural crops. In addition, he recommends farmers starting out with hemp add it to their crop rotation, rather than growing it as their only crop.
The 2014 farm bill gave states the authority to establish hemp pilot programs to study its growth, cultivation and marketing. To date, 35 states have taken advantage of the opportunity. The 2018 farm bill removed hemp from the Controlled Substances Act. This deregulation benefits growers, who may now transport hemp and no longer face barriers related to insurance, banking, etc.
