Hemp’s Hard Lesson
Inside a portion of a large industrial warehouse in Gas City, Indiana, farmer-owned Heartland Harvest Processing is at the forefront of the effort to move beyond the initial boom — and near bust — of the hemp-growing CBD (cannabidiol) oil market.
The company is the creation of Kline Family Farms — Jim Kline and his son, Adam, an attorney by trade — in an attempt to diversify their row-crop business. The 2018 Farm Bill essentially legalized the growing of hemp, the cousin to marijuana that doesn’t create a “high.” The CBD oil derived from hemp has been touted for its multiple health benefits, and national interest in the product and acres devoted to hemp has exploded (see “Demand Now and in the Future,” below).
In early 2019, a liter of CBD oil (slightly more than a quart) was worth about $7,000, and a grower who could produce 25 liters on 1 acre could gross $175,000. Numbers like that drew a lot of attention — so much so that the supply ballooned, and the price nosedived.
By the end of 2019, a liter of CBD oil was worth as little as $300 per liter, a cataclysmic 95% drop in price. The $175,000 gross per acre plunged to $7,500. The market had become flooded with too much product, and growers and processors stockpiled the oil waiting for better prices.
One problem with that plan is that a little CBD oil goes a long way. Less than 1 acre’s worth of production, 16.5 liters, is enough CBD oil to produce 8,300 oil retail bottles if each contains 1,200 milligrams of CBD.
Not only did the Klines suffer when the market tanked, they learned (and are still learning) a hard lesson about how difficult it is to grow hemp for oil and expect to handle the crop mechanically. Their acres devoted to hemp the past three years tell the story — 60 acres in 2019, 43 acres in 2020 and 2.5 acres this year.
“We tried to mass-produce hemp like a row-crop farmer,” says Jim Kline, “believing we could mechanically find a way to efficiently harvest it and handle a large volume. Guess what? It did not work.”
He now better understands why tobacco farmers in the South still hang that crop by hand in ventilated barns. “If you want a good quality product you have to hang dry it — and that takes a lot of space,” Jim Kline says. With all that in mind, 2 1/2 acres now seems like plenty.
That’s the Catch-22 when it comes to hemp, says western North Carolina’s Brian Lyda, who has years of experience growing medical marijuana and now hemp. If you want to grow more than a few acres, there is a desire to find a mechanical way to harvest, store and dry the crop, because otherwise, the labor needed to do it all by hand “will kill you,” he says.
However, “hemp is a tough plant to handle mechanically,” says Lyda, whose family members have been growing apples and produce in this mountainous region near Hendersonville for seven generations. Mechanical harvesting greatly adds to the amount of biomass — stalks and stems — that will have to be processed to derive the oil. This adds greatly to the time and cost to move from plant to oil.
Mechanical harvesting is also hard on the plant’s open flowers, where the trichomes, which produce most of the oil, are located. The trichomes are the fine crystalline hairs on mature flowers and leaves. Densely packed and ripe, trichomes are laden with oil and have a “frosty” appearance.
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Lyda helped establish the hemp-growing business, Healthy Harvesting LLC, with its line of CBD products under the HempOfy label. Under his direction, their hemp is largely handled by hand. In 2020, they grew 6 acres, enough to occupy nine workers for weeks on end weeding, pruning, fertilizing and harvesting.
Harvest on their 6 acres begins in late August and lasts for nearly three months. Workers cut off the plants’ branches by hand, leaving a solitary stalk in the ground. They then hand-strip the individual leaves and flowers, which are placed on racks inside one of six climate-controlled trailers at 60 degrees F with dehumidifiers running.
After three days drying, the plant material is ready for processing, which Healthy Harvesting does itself. Even so, as summer 2021 approached, they were still working through plant material from 2020. Bottlenecks often occur at processing. Lyda’s operation can only produce about 4 gallons of oil per day, derived from about 300 pounds of biomass.
Like Lyda, Adam Kline understood that in order to make the venture worthwhile, Indiana’s Heartland Harvest would have to process the hemp themselves to capture existing margins.
“Pricing is the way it is for two main reasons,” Adam Kline says. “First, a little oil goes a long way; and second, regulations as to what hemp can be used in have been slow to develop.” The U.S. Food and Drug Administration (FDA) still hasn’t issued regulations regarding various uses and the sale of CBD oil products.
The lack of regulatory rules and oversight has prevented, for instance, more widespread introduction of CBD oil in foods and beverages. Heartland Harvest is working on formulations of water-soluble CBD that might be added to myriad beverages such as coffee, water or beer.
“There is almost no competition in the drink space,” Adam Kline says. “Water-soluble CBD is rapid-release, and the targeted effect happens quicker.” According to a 2019 Gallup poll, one in seven Americans uses CBD as an over-the-counter treatment for pain, anxiety or sleep problems. There are positive anecdotes about CBD by the thousands but few, if any, definitive scientific studies yet to back up the claims.
Originally, the Klines’ plan was to grow hemp, process the oil and provide so-called “white-label” oil in bulk to other companies and retailers, which would then sell under their own label. While they still may do that, they are also preparing to produce CBD oil products — for foods, beverages and pet products — under their own label.
“The oils have gotten a bit commoditized,” Adam Kline says. “This isn’t necessarily a volume game for us. We want to cut out some of the middlemen to get to a more attractive price point.”
Either way, there is more CBD oil than buyers right now, Adam Kline and Lyda agree. “It is definitely a buyers’ market,” Adam Kline says.
North Carolina’s Lyda sees their business as continuing to produce oil tinctures along with smokable hemp flowers from hemp plants raised indoors. “CBD oil is selling (prices ranged from $700 to $1,200 per liter at the time this was written) if you have a good product,” he says. “Just not as fast as the industry would like.”
Not surprisingly, growers such as Lyda and Kline — in a young, semiunregulated market — want value-added products.
“It’s as if a tomato grower produces the tomato, processes it himself into ketchup then markets the ketchup to a store to get shelf space,” Lyda says. “That’s the way you have to do it with hemp right now.”
Demand Now and in the Future
In 2018, there were 3,500 licenses issued nationally to grow hemp on about 80,000 acres. Even though the crop wasn’t made fully legal until the following year, numerous states had had pilot programs. The next year, with legalization, there were 19,000 licensed growers planting hemp on 320,00 acres across the country.
“The market was hot,” says Eric Steenstra, a longtime veteran of the industry and the president of Vote Hemp, a national political advocacy group. “The vast majority of farmers were growing for biomass at $3.50 to $4 per pound.”
Instead of following up on USDA’s full legalization with regulations on the crop’s labeling, marketing and handling, the Food and Drug Administration (FDA) threw up red flags or simply delayed offering guidance on cannabidiol (CBD) products. Their waffling deterred big-box stores and grocery chains from stocking those products.
The combination of thousands of new growers in the market with fewer-than-expected outlets for products created a “perfect storm” to cool the market, Steenstra explains. Prices for biomass dropped to 50 to 75 cents per pound. Adding to the dismay was that many growers decided to grow hemp on speculation, with no buyer contracted.
There are 14,000 licensed growers in 2021, but Steenstra says there are still processors and growers sitting on oil — and biomass from last year and even from 2019.
CBD oil, however, is not the only product to come from hemp. After all, growing hemp for fiber was once common in the U.S., particularly for use in ropes during WWII. In addition, the hemp seed itself has use as a grain like most any other. There are already growers in the U.S. producing hemp seed for $1.15 per pound with an average yield of 700 to 800 pounds per acre, Steenstra says.
BMW, as well as other companies, already use hemp fiber in dashboards and other composites in vehicles.
How to Grow Hemp (What You Need to Know About Growing CBD Hemp)
So, you want to grow hemp? It’s the perfect time to start learning everything you can. With the passing of the 2018 Farm Bill by the federal government, it’s now legal (once again) to grow hemp in the USA. While regulations on growing hemp haven’t yet been determined, it’s only a matter of time before growing hemp could become one of the most commonly cultivated crops.
The money in hemp isn’t bad either. While the legal status of CBD varies from state to state, by some estimates, the hemp market for CBD could be worth up to $30,000 an acre. Plant hemp with a 10, 20, 50, or 100-acre hemp farm, and you’re looking at a rather lucrative crop. There seems to be no stopping for the hemp industry. For those that know how to harvest hemp and cultivate hemp, crops like hemp are helping farmers see potential growth from this industry. While many farmers are growing a small crop of hemp right along with all of their other crops. So Let’s dive right in and find out how farmers can make hundreds of thousands on this incredible cash crop.
How to Grow Hemp: The Basics
Seeing as the topic of hemp growing could encompass an entire book, here we’re simply going to cover the basics of hemp cultivation. If you’re interested in hemp farming, but don’t know much about a hemp harvest or have the slightest idea of where to start, consider this written especially for you.
What is Hemp?
Like marijuana, hemp is a member of the Cannabis sativa L. plant species. While both cannabis plants are from the same species, these cannabis plants contain a unique biological structure which makes them very different plants indeed. While marijuana plants produce thick, dense buds and grow to be relatively bushy, hemp plants are tall and thin, and they don’t produce the buds that marijuana is famous for. When you look at a hemp and marijuana plant side by side, there is no mistaking the difference between the two. One of the biggest differences between hemp and marijuana, however, is the cannabinoid content each contains. While marijuana can contain 5-30% THC (or more), hemp plants contain less than 0.3% THC. Since the controlled substances act came into effect, the possession, cultivation, processing, or distribution of industrial hemp has limited purposes. Most of them fall under agricultural or academic research carried out by a state department of agriculture, and a farmer will need special licenses to grow, cultivate and farm hemp.
What is Hemp Used For?
Hemp cultivation exists for a few different reasons. Years ago, growers have been looking at hemp for industrial purposes (such as for making hemp fibers). The hemp plant is also grown for the nutritional value found in the hemp seed that can be eaten by itself or used to make hempseed oil. Hemp is a hardy plant and is mainly used for rope, textiles, paper, animal feed, and much more. Most recently, hemp has been widely cultivated for CBD. When discussing hemp farming techniques, it’s vital to determine what you’re interested in growing it for. Fiber? Seed? CBD? Currently, farmers growing hemp for CBD is making the biggest buzz and industry experts expect that new markets for CBD will continue to grow. Why? Because the CBD industry has exploded and is estimated to be worth some $22 billion by 2022. And now that it’s (almost) legal to grow in the US, there are plenty of people that want in on the action. Let’s take a deeper look at the different categories of industrial hemp. We’ll cover some topics every would-be hemp farmers should know.
For years, farmers have traditionally grown the hemp plant for its fiber. Fibrous types of hemp can be grown to produce paper, textiles, fuel, building materials, and much more. Hemp grown for fiber is typically done on a large-scale production (including harvesting, processing, and transporting).
Hemp seeds are one of the most nutritional food items that exist. Seed/grain food types of a particular hemp plant will typically contain a significantly lower cannabinoid content but are prized for their precious seeds as a nutritional food source. Farmers take great care when they plant these hemp seeds because they are extremely delicate and must be harvested, processed, and transported with extreme care. Storage is also vital to ensure the highest possible quality.
Cannabinoid-rich types of hemp are the most popular, as they contain significant amounts of cannabidiol (CBD) that can be used to make oil and various products. Growing CBD hemp strains requires a certain level of mastery when it comes to cultivation in order to achieve the highest CBD levels while keeping THC levels under 0.3%. Hemp grown for CBD typically only employs female plants because male and female plants grown together will increase seed production while decreasing CBD levels. The very first thing you should ask yourself when learning about hemp farming is what type of hemp you want to grow. You see, hemp grown for fiber, seeds, and CBD oil is grown much differently. CBD is extracted from female hemp. On CBD hemp farms, there are typically 1,000-1,600 plants grown per acre and all are tended to individually by the farmer. Related article: Hemp Oil and CBD Oil Compared It’s grown similarly to marijuana, with the big difference being the levels of THC contained in the plant itself. Both female and male plants are grown in a crop of hemp. There is a planting level of some 400,000 plants per acre. When compared to marijuana harvesting, hemp is reaped more like a crop of wheat.
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Hemp Production for CBD – Revised
University of Nebraska-Lincoln Extension information typically is based on the interpretation of research information from Nebraska or elsewhere in the Midwest. However, such information is not available for hemp production due to previous restrictions on research in the U.S. This publication relies heavily on research findings from Europe and Canada and learning from growers’ experiences. See more stories in this series at https://cropwatch.unl.edu/tags/hemp.
Demand for CBD, a non-psychoactive compound derived from hemp, has soared for un-validated treatment of many conditions and illnesses. However, an approximate 75% plummet in prices for the CBD feedstock during 2019 indicates that the supply exceeded demand.
CBD-containing products marketed in the US range from cosmetics to chocolate bars to bottled water to pet treats, all with no regulation. The Food and Drug Administration warned marketers of CBD products against the use of non-validated health claims to sell their products. In June 2019 the FDA approved the first CBD-based drug, called Epidiolex, to treat seizures caused by extreme types of epilepsy. The efficacy of CBD for treatment of chronic pain, neuro-inflammation, anxiety, addiction, and anti-psychotic effects has not been well-validated by clinical research.
Hemp grown for CBD is a high-value crop grown more as a horticultural than as an agronomic crop. It has a high labor demand, putting US production at a disadvantage with production in China and other countries with relatively inexpensive labor.
Hemp CBD varieties have not been well-validated for Nebraska but possibilities may include ‘Abocus’, ‘Autopilot’, ‘Boax’, Cherry Wine, Cherry Blossom, Cobbler, and Sweetgrass for high pharmaceutical-grade CBD yield but having less than 0.3% THC.. High CBD varieties are generally grown only as female plants, as the combination of male and female plants leads to seed production and decreased CBD yield. Breeders continue to improve the processes for creating stable feminized seed. Farmers need to be wary of the source of their feminized seed stock and to check test results for validation of feminized seed.
Farmers need to know state regulations for testing hemp for CBD and THC. The Nebraska Department of Agriculture (NDA) regulations for industrial hemp production have been approved by USDA. Plant sampling by NDA staff to test for THC needs to be within 15 days before the date of harvest with the grower present during sampling. If the THC level is >0.3% by dry weight, the crop will not meet the legal definition of industrial hemp and need to be destroyed. Again, THC is expected to increase with stressful growing conditions.
CBD varieties have short plants with much branching, growing as squat bushes. The suggested spacing at this time is 2-4 feet x 6 feet. Planting practices may change for higher plant densities when seed supply is sufficient to greatly reduce the cost of seed. Given the high cost of seed, seedlings should be produced in a greenhouse for transplanting. If planting more than five acres, machine transplanting is recommended which may allow transplanting 2 acres per day. Plants can also be produced from cuttings with similar vigor and productivity compared to plants from seedlings. Propagation from cuttings may improve plant uniformity and is a means to all-female plants. The potting mix for greenhouse production of seedlings is important but needs to be well-drained with good available water holding capacity and nutrient supply. The mix probably should include sandy loam soil, perlite, and some organic material.
The CBD levels can be much reduced by cross-pollination with wild or non-CBD hemp. The CBD plants must be well-separated by distance or time of pollination from hemp weeds or another hemp crop. Also, a few rows of corn or forage sorghum can planted around the plots to reduce pollen flow.
The highest concentration of CBD is in the bracts of female flowers but CBD oil may be extracted from the whole plant. Harvest may be by topping plants for the harvest of mostly leaves and flowers, by picking the leaves and flowers from the plant, or by taking most of the plant cut at 8-12” above the ground. The whole plant harvest may be by shredding such as with a silage chopper or by keeping the plant intact.
Drying the plant material is a major operation as the water content is high when harvested. To reduce the quantity to be dried and handled for CBD production, the woody stems may be removed for land application, composting or dried separately for fiber production. Artificial drying at up to 100 o F should be continuous flow but the temperature of the plant material should not exceed 75 o F. Suspending plants or branches upside down by wires indoors out of the sun and with good air movement for air drying at up to 75 o F is a common practice if the harvest is not too large.
The ground-up plant material is soaked in grain alcohol or ethanol to extract the CBD oil. After soaking, the mix is pressed to extract the liquid. The alcohol is then evaporated off leaving the CBD oil.
Drying for smoke able buds is an option. Smoking of CBD is reported to be more effective than oral consumption. The buds are preferred but some upper leaves may be included. Well-dried material can be kept and sold in sealable plastic bags or glass jars.
Market information is too weak for prediction or advice but information is improving such as with a USDA ERS Feb 2020 report.
For information on budgeting for hemp grain, fiber and CBD production, see worksheets from Pennsylvania State University and from the University of Kentucky.