The First Legal Hemp Harvest: A Look Back

Posted on August 24th, 2020 by Bill Weinberg and tagged , , , , , , , , , , .

hempThe autumn of 2019 saw the United States' first hemp harvest since effective prohibition of the crop under the strictures of the Marihuana Tax Act in 1937. These strictures were overturned in the Farm Bill signed into law by President Trump in the closing days of 2018. This harvest was looked to eagerly across much of rural America, as legal hemp had been plugged as a salvation for the nation's struggling farmers—and the soaring popularity of CBD appeared to provide a booming market. The fashionable cannabinoid had also been legalized by the 2018 Farm Bill—when derived from hemp, or cannabis with less than 0.3% THC.

US retail sales of CBD in 2019 were estimated at over $1 billion by Hemp Industry Daily–a 133% increase over 2018 sales. The figure is projected to jump to $10 billion by 2024.  

According to estimates by Hemp Benchmarks, the 2019 hemp harvest for the CBD market may have reached 122 million pounds of biomass suitable for extraction, valued at over $2 billion. Cultivating hemp could generate up to $300 more per acre compared to corn and soybeans, according to Indiana's Purdue Hemp Project. A one-acre plot could yield about $70,000, far more than even high-end fruit crops such as cherries or blueberries, finds Oregon-based industry analyst Beau Whitney of Whitney Economics.

US hemp production quadrupled last year, according to Vote Hemp’s 2019 License Report, with estimates of 230,000 acres under cultivation. A US Hemp Crop Report released by Vote Hemp after the harvest found a 554% increase over the 2018 yield.

Over 40 states have now legalized hemp cultivation, bringing their laws into conformity with the Farm Bill, and some half of these have active hemp cultivation—with Colorado and Oregon the lead. The number of licensed hemp growers increased nearly 1,600% between 2018 and 2019, from 226 to 3,800, according to a study by the Pew Trust.

Is hemp the new tulip?
However, as seen in the famous "Tulip Mania" in 15th century Holland , high hopes for a commodity's market performance can lead to unsustainable overvaluation, inevitably followed by a painful correction. And there are already signs of this happening with the CBD hemp market. Additionally, farming is a notoriously risky business, and this also became inescapably clear in 2019.

The dashing of high hopes for hemp farmers in Southern Oregon last year actually led to at least four suicides, as many acres were wiped out by mold, according to the local Mail Tribune. The region's farmers lost anywhere from 30% to 100% of their crop—and this after Oregon went from 11,000 acres under hemp cultivation in 2018 to more than 60,000 in 2019. "Sixty percent of the people who planted this year won't plant next year," predicted Matt Ochoa of Ashland-based Jefferson Hemp Exchange. "A lot of people are broke."

Despite such disasters, high production still contributed to a decline in prices. Wholesale prices for biomass used for CBD extraction plummeted between 42% and 53% (depending on volume sold) between April and October, according to Connecticut-based New Leaf Data Services. The price for hemp flower with a 10% CBD concentration dropped from around $40 a pound in 2018 to less than half that at the end of 2019. "I'm two years in and I’ve made nothing." Brian Ford, a farmer in New York's Orange County, complained to the local Times Herald-Record.

A worrisome 65% of US hemp farmers could not find a purchaser for their crop this season, according to a July survey by Whitney Economics. The report noted that hemp still has less infrastructure than other crops, so growers can't depend on selling their harvest to a local grain elevator.

Poorly crafted state regulations have also been cause for concern. Ohio farmers voiced fears that the state's proposed hemp regs, which require that at least 1,000 plants be grown on at least a quarter acre, could squeeze out smaller operators, the Columbus Dispatch reported in November.

And there were other production snafus. The Seattle Times reports that Kentucky firm Elemental Processing filed a lawsuit in September claiming it was supplied with 6.4 million unusable hemp seeds from Oregon-based HP Farms. Elemental sold these seeds to Kentucky growers—who ended up having to plow under their crops. Elemental claims the seeds were almost entirely males—and, of course, it is the female plant that produces the cannabinoid-laden flower. The suit seeks $44 million in damages. HP Farms denies the allegations. The case is currently pending in Multnomah County Circuit Court,

The 0.3% dilemma
Hemp's uneasy relationship with marijuana (THC-laden psychoactive cannabis flower) also caused trouble for farmers—and especially the somewhat arbitrary 0.% THC limit, which makes hemp "hemp" under federal law. Enforcement protocols for this limit were outlined in the US Department of Agriculture regulations for hemp cultivation that were belatedly released in October.

Much hemp had to be destroyed for exceeding the limit (which actually falls significantly short of the THC percentage needed to have an actual psychoactive effect). The USDA actually predicts that In 2020, one in five lots of hemp will need to be destroyed for exceeding the THC limit, according to estimates the agency released in October. This disturbing figure, published by the USDA in the Federal Register, was reported by Hemp Industry Daily.

The report did note one redeeming point in the agency's new regulations: farmers won't be considered in violation of the law unless their hemp tests above 0.5% THC. Growers will not be prosecuted if their hemp tests within the range of 0.3% to 0.5%. However, all hemp that fails to meet the 0.3% limit must be destroyed—and, surreally, even in states where cannabis has been generally legalized, like Oregon. And the new regs require testing just of the buds—the pat of the plant with the most cannabinoids, by far. The testing must be conducted at a DEA-approved lab, within 15 days of anticipated harvest

National Public Radio in November interviewed Wisconsin hemp farmer Phillip Scott, who grew 37 acres that season—but had to burn 10 of them to the ground for testing 0.1% over the THC limit. Reuters quoted Dan Maclure, a farmer who similarly had to destroy part of his harvest for testing "hot" in Vermont—a state with legal cannabis. "It's heart-wrenching thinking about all the work and money you put into it," said Maclure, who farms in Barton, just below the Canadian border. "I'm not sure I'm going to be venturing out in this again."

Having to keep the THC level so low can also pit hemp farmers against nearby outdoor marijuana growers. You'd think these two groups would be natural allies, but the risk of cross-pollination from hemp fields threatens the high THC levels in a product highly valued for exactly that. In October, the USDA awarded $500,000 to a Virginia Tech research team to study the question of cannabis pollen drift, the Denver Post reported. Meanwhile, Northern California's Humboldt and Sonoma counties temporarily blocked hemp production to protect marijuana grows from potential cross pollination.

The confusion between hemp and marijuana caused other mishaps. In November, New York City police confiscated 106 pounds of legal hemp after mistaking it for its psychoactive cousin. Felony drug trafficking charges were brought against Green Angel CBD, the local retailer who ordered the shipment from Fox Holler Farms in Vermont. Fortunately, the Brooklyn District Attorney dropped the charges in December—and the hemp was returned to Green Angel.

Then there was the maddening case in Idaho, where last January state police seized a truckload of what turned out to be hemp. The cops called it the "biggest drug trafficking bust in state history," and a judge ruled the material would not be returned to the company that shipped it. The case was brought by Colorado firm Big Sky Scientific, which had ordered the hemp from Oregon. The Idaho courts remained intransigent even after the USDA itself issued a legal opinion in favor of Big Sky.

Lingering legal ambiguities
Unlike the Agriculture Department, the US Food & Drug Administration (FDA) has still failed to issue regulations on use of CBD as a food ingredient or additive, or as a medication. The FDA is dragging its feet on the regs despite Congressional pressure, instead issuing dubious warnings about CBD possibly causing liver damage. Meanwhile, the FDA in 2019 officially censured 15 companies for selling CBD products as dietary supplements, additives or medications.

Another legal ambiguity is whether the law now allows importation of hemp. After the Farm Bill was passed, California's Innovative Nutraceuticals went to court seeking restitution for a shipment of hemp it had ordered from Spain in 2015 that was seized by Homeland Security for containing CBD. A federal district court in Los Angeles turned down the request, as CannaLaw blog notes.

These remaining ambiguities are contributing to the stigma that still attaches to hemp and CBD, as a kind of hangover from prohibition. For instance, the Hemp Industries Association has joined with Denver's Hoban Law Group, Colorado CBD producer Bluebird Botanicals and Nebraska-based farm equipment supplier Bish Enterprises to launch a "Hemp is Legal" campaign, hoping to overturn Facebook’s policy of barring any hemp promotion or advertising.

Legal hemp farmers are also being dropped by financial institutions that deem the industry too risky, reports New Food Economy.

In August, that strange political animal Rep. Tulsi Gabbard (D-HI) introduced the Hemp for Victory Act, which seeks to clear up some of these dilemmas and encourage the growth of the industry. It is named after the World War II-era USDA campaign that encouraged hemp production for the war effort, under an emergency dispensation from the 1937 prohibition. The bill would instruct the USDA and other federal agencies to carry out research on the various applications and benefits of hemp (not only for CBD), as well as provide legal clarity.

Some sleazy elements within the industry, however, are hurting efforts to erode the stigma. Five employers who co-own a hemp facility in the Oregon town of Murphy were fined $165,000 each by the state Occupational Safety & Health Administration for substandard conditions. Some 25 workers at a vast trimming and packaging complex apparently lived, ate and worked in a structure that was architecturally unsafe, leaky and rodent-ridden—and had padlocked doors that prevented escape. Regulators cited "reckless disregard for workplace safety and health requirements," Willamette Week reported in November.

Whatever happened to food, fuel and fiber?
Project CBD spoke with Peter Allis, a homesteader in upstate New York's Cayuga County who has for years been growing vegetables for local markets and is now hoping to transition to hemp. Like many hemp cultivators, his crop was badly damaged by mold this year. He is also intent on going organic. He notes that nearby Cornell University, which has established a hemp extension program, is recommending 200 pounds of nitrogen and 90 pounds phosphorus per acre. "Farmers say they can't afford that much, especially if there's no market for it," Allis says.

He used no fertilizer—"just planted and let it go," initially to good results. "It was averaging five inches of growth a day until it matured, but it only got six feet or a little more instead of 10 feet. Allis says it cost him just $150 per acre to grow, as opposed to the $1,000 per acre if he had used chemical fertilizers. He attributes the growth leveling off to competition from weeds, and believes this could be corrected by using more seeds per acre, making for a tighter canopy that will deny the weeds sunlight. 

Allis sees an ecological imperative to grow hemp, and to do it without chemical fertilizers. He also fears that the traditional industrial uses of the crop, especially for fiber, are being forgotten amid the CBD craze. "Hemp builds soil by shedding biomass as it grows," he says. "It sheds leaves, which go back into the ground—as opposed to cotton, which is one of the heaviest feeders on the soil that there is. A third of the world's herbicides and pesticides are used on cotton, and hemp produces 10 times as much fiber per acre."

In Allis' vision, diversified uses of the plant are critical if it is to be the boon to small farmers it was once hailed as. "Every one wants to go plant 100 acres, and then they complain that they lost all this money. If a lot of people grew a small crop instead of a few people growing a big crop, the learning curve would increase. Processors won't come and build anything until there is something to process, but nobody's interested in fiber because they think they can make more money off the CBD."

"My whole thing is soil health and air quality," Allis elaborates. "Hemp removes heavy metals and contaminants from the soil, and removes carbon out of the air, and puts a huge amount of organic matter into the ground every year. I'd want to see several million acres planted coast to coast, and CBD can't sustain that."

"My grandfather grew hemp, and as a boy I remember him saying, 'It's better than fertilizer'," Allis recalls. "He said that banning it was the biggest atrocity the government ever did, and it had a huge impacts on family farms. A lot of farmers didn't know the Congressmen were talking about hemp, because they just kept saying 'marijuana, marijuana, marijuana.' But now that it's legal again, we can get farmers to start planting land that's been taken out of production and help save local farms."

This story first ran Jan. 19 on Project CBD

 

Image via Project CBD 

 

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