After three years of hemp farming in West Virginia, Tiffany Fess is almost an industry veteran.
Fess, who is working on a doctorate in agriculture at the University of West Virginia, is farming hemp to help pay for her student loans. This year, she has just under seven acres of hemp growing for CBD production.
She is on the front line of an exploding industry, as hemp’s popularity as a potential cash crop skyrockets in her state, Pennsylvania and, now, Ohio. Permits have more than tripled in the region over the past year, but experts say it’s difficult to estimate the earning potential for the industry, which is expanding quickly.
The Congressional Research Service reported in 2018 that U.S. hemp product sales totaled nearly $700 million annually.
West Virginia and Pennsylvania both allowed hemp production for research before the 2018 Farm Bill removed hemp from the controlled substances act.
Ohio, however, did not allow hemp production until it legalized hemp in late July. The state is still waiting on the U.S. Department of Agriculture’s regulations to help it determine state-wide rules and regulations.
The USDA plans to have regulations in effect by fall 2019 to prepare for the 2020 growing season. Afterwards, states can either submit their own plans to the USDA for approval. Producers in states that do not submit plans will be able to operate under plans provided by the USDA.
While the hemp industry is expanding, however, there are still many unknowns.
History
Despite its dramatic rise, hemp is not a new crop in the United States.
Hemp was grown legally from the 1600s until the Marihuana Tax Act of 1938 prohibited hemp production, according to Purdue University’s Hemp Project.
The prohibition was lifted during World War II to support the military’s need for fiber supplies, according to Craig Schluttenhofer, research assistant professor of natural products at Central State University, in Wilberforce, Ohio.
The U.S. Department of Agriculture created the Hemp for Victory program, under which farmers grew about one million acres of hemp in the Midwest.
Production dropped after the war, according the Hemp Industries Association. The Controlled Substances Act of 1970 then declared hemp a controlled substance, until the 2018 Farm Bill passed.
Types of hemp
The three main types of hemp are grown for fiber, grain and cannabidiol, or CBD, extraction, which is currently the largest market for hemp in the U.S. CBD oil is believed to have medical or therapeutic benefits, however, the U.S. Food and Drug Administration is still determining how to regulate the product.
Schluttenhofer, who is leading CSU’s new USDA land-grant-funded hemp research program, said fiber and grain hemp are both grown fairly densely together. CBD plants, however, are spaced widely apart.
For CBD production, growers can purchase either regular seed, or feminized seed. Feminized seed, while more expensive, saves farmers time, since otherwise male plants must be removed to avoid pollination, which lowers CBD production. Farmers can also buy clones, produced through cuttings from existing plants, or seedlings.
THC testing
One of the biggest concerns for CBD-producing hemp is tetrahydrocannabinol, or THC, testing. Hemp must not contain more than 0.3% levels of THC, which is the intoxicating ingredient of marijuana.
While 0.3% THC is too low to intoxicate anyone, if testing shows higher levels of THC, farmers are required to destroy their plants, which means losing an entire crop and the thousands of dollars or more.
Schluttenhofer said THC levels are determined largely by genetics, though harvesting and growing conditions also play a role. Farmers growing hemp for fiber and grain can invest in certified seed to minimize their risk, but there is no certified seed for CBD plants.
Plants with genetics for high CBD production also tend to have higher THC levels.
Schluttenhofer said more research is needed to understand what causes fluctuation in THC levels. Until then, THC levels will be a major concern and uncertainty for many hemp farmers.
Costs
Because license fees and resources vary by state, and because there are several types of hemp with different growing methods, costs can vary.
In Kentucky, hemp production is well underway. The University of Kentucky’s budget model suggests variable costs can range from $800 per acre to $15,000 per acre depending on the type of hemp, the seed or transplants purchased and the way farmers choose to grow and harvest their crop.
In a March 2019 newsletter, Kentucky researchers Jonathan Shepherd and Tyler Mark said prices vary by processor or buyer. The market and contract conditions are currently the most profitable for CBD production.
Processing
Fess and Schluttenhofer both recommended new hemp farmers build relationships with processors before growing hemp.
“I think it’s really important for you to have a buyer or at least a few dialogues going before you put the stuff in the ground,” Fess said. She said farmers should reach out to extractors or processors and consider getting a contract with at least one processor.
Processors may also dictate guidelines for harvesting and drying, which can be helpful for farmers with little to no experience in hemp.
Schluttenhofer noted Ohioans may have to look to out-of-state processors in 2020, since the infrastructure for processing hemp in Ohio may not exist yet.
Markets
Alicia Anderson, Penn State Extension educator, said it is hard to put numbers on the hemp industry right now because it is so new in many areas. She noted she has seen demand increase for hemp production and processing equipment.
E-Z Trail Manufacturing in Fredricksburg, Ohio, has responded to that demand by shifting advertising for some products.
Eli Miller, of E-Z Trail Manufacturing, said the company has manufactured produce equipment since the late 1990s. Miller said since growers can use the same layers and transplanters for hemp as for produce, the company has not had to add products. Instead, it has just started advertising the products it already offered as equipment for hemp, as well as produce.
The company sells products across the U.S. and Canada and sold 30-40 transplanters for hemp this spring.
“It [hemp] kind of went wild, so they didn’t have enough equipment to do it,” Miller said. “That’s where our business got involved.”
Possibilities
Larry Smart is a Cornell University professor who has been involved in the university’s hemp research program. He said while prices could drop next year as the hemp supply increases, he also thinks the market could expand once the FDA regulations on CBD products become more clear.
“I think it’s a long-term product that will have a solid place in the marketplace,” he said. He also sees potential for fiber products made from hemp, including animal beddings. The research program, funded mainly by state dollars, is studying fiber hemp as well as CBD hemp varieties.
Specifically, he believes hemp fiber has potential to compete with fiberglass products and industrial paneling, especially if consumers value local and biobased materials and are willing to pay for them.
More processing facilities and entrepreneurs, however, are needed to develop these products.
