With the rapid changing and expanding of the hemp industry, we wanted to sit down with our founder, Mike Leago, and get the facts as he sees them. Here’s the story along with his insights…
Q: How has the signing of the Farm bill changed the industry?
The Farm Bill has certainly created an influx of individuals, businesses, and investors that are interested in getting involved in the hemp industry now. We’re hearing from a lot more farmers across the country that are excited to start growing hemp. We’re hearing about major investment happening across the world, and particularly here in the US, as a result of the Farm Bill.
We see it having a massive impact on the potential for the industry and starting to bring about a lot of the basic necessities that have been missing, like banking, insurance, protections for interstate commerce. It’ll take some time to really have its full effect, but the Farm Bill is going to give the Hemp Industry the support it needs so that it can grow. Those investment dollars are going to trickle down from CBD into some of those other categories, like food, fiber, and building materials, allowing those industries to also get more of a foothold here in the US. The economic impact of the signing of the Farm Bill is going to last a long time.
Q: Have all the logistics, like banking and insurance, started to pop up yet?
It’s slowly but surely happening. Banks that have been more progressive but didn’t feel totally comfortable yet are finding out how they can make it work for their shareholders and their executives. With the major banks, though, it’s going to be a while. They may start with only supporting the Hemp Farmer, without touching anything related directly to CBD sales. There is still clarification that is going to have to happen over the next couple of years—hopefully not too much longer than that—to finalize some of those uncertainties for the major banks and insurance companies. Slowly but surely, tides are turning in all those categories.
Q: What states are leading the charge in hemp farming?
The states that are leading the charge are Colorado, Oregon, Kentucky, Nevada, and North Carolina. Most of those states were on the early-adoption side. States like Colorado and Oregon were certainly at the forefront of open-market sales and marketing of the byproducts of hemp as part of RND that needed to happen under the 2014 Farm Bill.
Our business was fortunate to be here in Colorado where we had the Department of Agriculture on our side helping and supporting us to create more of a free market for these products. Like most of us predicted, the rest of the country is trying to play catch up. Thanks to the states leading the charge, there is a community of hemp farmers nationwide that have had a head start in this industry and helped pave the way for a larger pool of individuals and businesses to get involved with a reliable hemp supply chain. Now it’s really game-on all over the country and all over the world.
Q: Where are farmers able to obtain seed?
When it comes to seed, there are not a lot of proven, reliable options. State-by-state we’re starting to see a handful of companies emerge that are showing longer track records of producing solid seed that is working for farmers and staying compliant in producing the results that people are looking for. This year there is an overwhelming demand for seed with masses of new people getting involved with the global demand picking up after the passing of the Farm Bill. At this point, word of mouth is the best way to find seed. There are a handful of companies that are advertising—we’re certainly one of them–but you can’t go into a store and buy seed. As a consumer, you are typically dealing with companies online or making personal connections with sources directly to be able to work with them. We’re seeing a lot more small seed companies pop up and start to fight for the remaining market share, but only a handful of companies that have been around for longer than a year or two.
Q: Are there any regulations or issues currently holding back the industry?
Education and misinformation. A lot of politicians that are less progressive say things like, “because hemp looks so similar to marijuana, we don’t want it in our state because it would be indistinguishable and people would be trying to grow that instead.” We just need to get past that closed-minded mindset, otherwise those states are going to miss out on this economic opportunity.
Also, a lot of people would say that the FDA is trying to shut down the hemp industry. While I don’t agree with everything they’re doing, I do agree that there is a bit of regulation that needs to start happening for the consumers’ sake. Hopefully the FDA can assist without trying to just shut the CBD industry down on behalf of big pharma like some people are worried about. I think there is a middle ground to be found, but there is a lot of uncertainty about the FDA. That’s one big thing preventing a lot of the big groups from jumping in and investing, it’s probably the stance of the FDA right now which is a little up in the air. There was a request from congress asking the FDA clarify their stance on it, and it looks like they’re attempting to do so in a way that is a path to consumers having access to these products.
Q: What is their current stance in regard to CBD?
The big question they’re asking is what to classify it as. Is it a drug, is it a food product, is it a supplement? CBD isolate has been shown to be a pharmaceutical product, but most of what’s being sold on the market has a wide range of cannabinoids and compounds outside of just CBD. Most of our products have the full spectrum. While CBD has a pharmaceutical classification, hemp extract and other cannabinoids do not. While the FDA is trying to say that it’s not allowed in food products—because you can’t have something classified both as a pharmaceutical ingredient and a food ingredient—there is precedence that goes back to early 1800s of Hemp and Cannabis being used in food products that tested for THC and CBD. That shows you can’t say it’s only a pharmaceutical. So it’s things like that that are still being figured out. I have faith that the industry is going to continue to find plenty of pass to market regardless of where the FDA’s stance finally lands.
Q: Is hemp profitable?
Yes, hemp is extremely profitable right now. It can also be relatively modest money, so it just depends on what type of hemp you are growing. The guys that are growing CBD are seeing some unheard of numbers for farming per acre. Upwards of $200,000 an acre which just seems ridiculous but it happens. We’ve heard of people hitting more than that per acre seeing that return selling the raw biomass from their farms. I think the average is going to be a lot closer to maybe $50-100k right now, but for a farmer that is used to be making $1000 an acre, that is a pretty significant increase. Hemp is extremely profitable if you do it properly and find a path to market.
Hemp fiber, food, and building materials can still be profitable, but you will see returns that are more in line with traditional agricultural farming operations . Maybe a couple thousand bucks an acre, which is slightly better than the average farmer, but it is the CBD right now that farmers are flocking to for high returns.
Q: How long will this trend continue? In five years will the numbers be the same?
No it will fall a lot faster than that. I think farmers have just a few years to do pretty well in hemp. I think in the next 5 years we will see prices drop significantly as the global market picks up in terms of quality and production output. This will cause a lot of farmers to reevaluate whether they want to continue growing hemp or switch back to other crops they were growing previously. But it is common in farming to bounce around when there are opportunities or when there is a new crop demand or there are tariffs that are introduced that make growing crops like soy or corn more or less profitable. There is no better time to get into hemp than today.
Q: How would farmers go about converting their crops to hemp?
Most people are germinating their seeds indoors or buying seed starts, then using a transplanter behind a tractor to get these into the ground. It’s all relatively accessible equipment even if someone doesn’t have it on hand. Drip irrigation and field flooding are the most common practices from an irrigation perspective, which are pretty common in the farming industry. It’s really on the harvesting side–bailing and drying–where the equipment is getting to be a bit more custom. A lot of experimentation, research, and development going on with the major farm implementation companies. John Deere, Case, and plenty of others are putting out equipment now that can bring hemp fields down in a number of different ways; but all that comes back to how you plant it and how you treat it during the season when it comes to how you get it out of the field. Once you get it out of the field you have you figure out how you are drying and storing it. If you can’t dry it and store it, you need to figure out if there is an option for you to bail it that is not going to degrade the material too much so you have something that can be dried once you have the capacity for drying.
Q: Can iHempx assist with supply chain?
Yes, particularly in regions like Oregon, Colorado, California, Nevada, Kentucky, and North carolina. We really have some great resources at our disposal in Oregon, Colorado, California, and Nevada. We’ll continue to expand and have more reach with farmers all over the country.
Q: Any existing guide to converting to hemp?
Not at the moment. Most people are focused on trying to benefit right now, and it hasn’t become mainstream enough yet. The people that know how to do it are often keeping their heads down and trying to expand their operations or charge for their services, so I haven’t seen any great resources for farmers that serve as a tutorial or guide on how to do it.
Q: Where does iHempx fit into this equation?
iHEMPx is here to service the industry by being a trusted, vetted, and reliable supply chain partner from seed to finished product. We can assist in all aspects of the supply chain. Whether you are trying to find buyers for your products and services, or if you are looking to get into the industry for the first time and are looking for the highest quality and most reliable seed and farming partners that exist, iHEMPx can find or be that partner for you.